Small Cap Value Report (6 July 2015) - TRAK, ATQT, MONI, VLK, RBG, BILN, VLS

6th Jul '15 by Paul Scott

19 comments 29790 reads

Good morning!

Greece yet again dominates the agenda, with the surprise "No" vote in their referendum yesterday. The Futures were indicating a 2% sell-off today in the UK, but as it's turned out, the FTSE 100 is currently down only 50 points, less than 1%, which is well within the range of normal daily movements.

The Greek finance minister seems to have been pushed out this morning, and I've read soothing comments from Germany, saying they won't leave Greece in the lurch, so from what I can gather, those two things seem to have calmed the stock market. Although there are only small volumes traded in the small caps which I monitor, suggesting that most investors have discounted the Greek situation already, and are not inclined to panic sell on bad news any more.

So perhaps Greece is now subject to the law of diminishing returns, in terms of its impact on UK shares? I do hope so anyway, as the whole thing is now beyond ridiculous, having dragged on for what, seven years now?

The market crash in China doesn't seem to be bothering anyone here either, probably because it's a fairly self-contained & over-valued market, which went on a speculative bubble of its own, that is now unwinding with a crash.

So against all this kerfuffle, our market seems to be holding up pretty well. Although the FTSE 100 looks weak, the small and mid cap indices are actually quite strong at the moment - as you can see from the two year chart below - so certainly in 2015, small caps have been the right place to be, after a poor 2014:

Trakm8 Holdings (LON:TRAK)

Share price: 179.5p (up 2.3% today)
No. shares: 28.9m
Market cap: £51.9m

Final results y/e 31 Mar 2015 - I'm really impressed with these figures, from this small telematics group. Turnover has risen 94% to £17.9m, although it's worth noting that some of this increase is due to an acquisition in Oct 2013 (called BOX) contributing a full year's figures to the latest results, whereas it only contributed half a year in the prior year group results.

The narrative points out that organic revenue growth was 73%, which is extremely impressive. The gross margin has fallen considerably though, from 57.2% to 45.2%, which they say is due to the greater contribution from BOX, which…

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grumpy5

6th Jul '15

Paul - you have adopted the (in your case) superfluous "in my view" as a caveat a lot! This is a dread phrase imposed by compliance departments on analyst research. I think here we all know that what you write is your view and no one else's, so spare yourself some typing!

Paul Scott

Hi grumpy5,

It's a fair point, although I tend to use the phrase "in my opinion" to emphasise that particular points are open to interpretation - e.g. the one about development spending, which I like to write off fully as it's incurred, but other people prefer to follow a different approach.

Also, you'd be amazed at the number of times people on advfn accuse me of being a share tipster, when clearly that is not at all what these articles are about - I never give buy or sell advice, because the whole point of these articles is to show how I assess companies, then throw it over to readers to make up your own mind. Most people get it, but a few sadly don't! So all I can do is make it clear that these articles are just one person's (fallible) opinions.

Regards, Paul.

Peter171

Fair assessment, but as he says, if the smallest of things go wrong or there is a blip, then a nose dive is inevitable. I am a holder and have cashed in 50% thankyou very much. Lets see if they can hit 220p

herbie47

Paul, thanks for Trakm8 Holdings (LON:TRAK) review. I did look at this a while ago but the Stockopedia ratings were not very good, in January it had SR 36 since then the sp has almost doubled. Impressive results but sp is down 8% today.

Ramridge

grumpy5 - You need to be an "approver person" by the FCA in order to provide investment advice.
Individuals who, on purpose or inadvertently, give advice when "not approved", are regularly fined by the FCA, in six figure sums.
Paul is right to continue to pepper his articles with the phrase "in my opinion" !

Hi Ramridge,

That's right, although there is a (completely unjustified in my view) loophole whereby journalists can actually give buy or sell advice - hence why the newspapers & magazines are allowed to give buy or sell advice.

So if I wanted to, I could claim a journalist's exemption, but the whole point is that I don't want to give advice! My articles are meant to be educational - I enjoy explaining concepts, and discussing it with readers. So combining that with Stockopedia's great toolkit, and it's all about empowering people to make their own decisions.

If you do give people advice, it's a thankless task anyway. People will just slag you off when you get it wrong, to avoid taking responsibility for their own decisions! Why would anyone even want to put themselves in that position? It's not for me.

Regards, Paul.

00mrmark00

Hi Paul, I came across a statement from Billington Holdings Plc this morning which seems quite bullish. I have not come across this company before. I see you relegated it from the watch list back in early 2014. Any thoughts on recent developments?

Cheers, Mark

marben100

Hi Paul,

I generally applaud your conservatism but there is a problem with this approach:

The company flags adjusted EPS of 6.24p in the highlights section, with the main adjustment being share based payments. This is a personal judgment, but in my view share based payment is remuneration, so should not be adjusted out. - See more at: http://www.stockopedia.com/content/small-cap-value...

The problem is that the value (expense) of share-based payments generally rises when the company's share price rises, as option value increases. Hence unadjusted profits decline simply due to a share price rise - nothing to do with operating performance, which does not really help assess valuation. It's a bit of a conundrum, because payment in shares/options is certainly an expense for shareholders, which cannot simply be ignored but it can cause significant distortions.

A similar issue was a real problem at Judges Scientific (LON:JDG).for several years, where reported profits were heavily impacted by gains in the value of convertible notes, simply due to the rising share price. Luckily Judges has now paid off those notes, so the distortion has been removed.

Cheers,

Mark

Paul, thanks for your thoughts on - Billington Holdings (LON:BILN)

Just pulled this from the companies website:

The percentage of securities not in public hands is 71.4% (9,240,937 shares).

Is there an easy way to determine the free float for companies, just for future ref?

Cheers, Mark

janebolacha

Mark, the free float is shown on the Stockopedia stock report, on the bottom left, below "Profile Summary":

"Last Annual December 31st, 2014
Last Interim December 31st, 2014
Incorporated July 10, 1989
Shares in Issue 12,934,327
Free Float 2.43m (18.8%)"

marben100 - I think your argument can equally be applied to currency movements for companies trading internationally.
The reported figures as far as I understand it include the vagaries of currency translations which can distort the real underlying performance ( as the strength of the dollar vs sterling has shown recently for some UK companies with heavy exposure to the US).

Granted that the narrative of the reports tends to show both data on constant currency and net of currency impact.

jraitt

tried your link re VLK it worked but would not let me add my details. Any idea why?

Yantomawr

Jraitt - You first need to click on the top line (in blue) where it states: "Shareholders: click to enter your holdings and opinion" and then enter your details.

7th Jul '15

thanks janebolacha - if only i could afford a stockopedia subscription ;)

Look on it as an investment,
the best investment you could make,
before you buy any shares!
Good luck!

As a small investor it is quite a lot of money however since joining my investments have been more successful and compared to some other subscriptions like a certain share magazine much better value in my opinion. I suggest doing the 2 week trial and see how you get on. You can do monthly subscriptions as well.

carmensfella

My thanks to every shareholder who has joined the campaign to change the badly designed and greedy share awards. Do add your name and thoughts on the website if you have not already done so and incredibly we already have 100 without one single shareholder coming out in support of the scheme (the directors clearly too shy !! lol)

http://www.freesharedata.com/vislink-poll

I will be speaking to the institutional holders to find out what they think about it and I have spoken to the Remcom chairman and made him well aware of the website containing comments from all his unhappy shareholders who were never consulted. I have given him seven days to set up a meeting time for him to address us all and explain the merits and alignment of this scheme. I do not expect the executive directors to be there.

ShareSoc (www.sharesoc.org) are being briefed and the whole issue surrounding how this can happen so easily without shareholder consultation and just after an Agm is up for debate and will be fully aired using this as a test case I am sure. Do support everything we are doing and if not already a member of ShareSoc please join and support our aim to help all investors.

David

slartybartfast

Hi Mark

If you do decide to subscribe, do it via this link http://j.mp/S7sVuq and I'll send you a £30 cheque in favour of the charity of of your choosing.

8th Jul '15

I do feel there is a need and desire for splitting the roles of Chairman and CEO at Vislink...Hawkins is being paid for both roles but clearly cannot fulfil both full time. It also means there is no independent chairman to communicate with and it feels like he dominates the BoD. I actually like Ian Davies the FD and I am generally a good judge of character but the way this has been pushed through I feel changes are needed and a couple of new totally independent NEDs may be required. Two of the non execs have been there ten years which is probably too long and certainly not good practice as highlighted by the UK corporate governance code guidelines.

There are quite a few detailed issues that are surfacing here and I would really like to see a committee of active private investors getting involved in some of the support work that will be needed. I can help set things in motion but there will be quite a bit of admin to link all the shareholder group which is building into 250 plus holders and we may have an EGM and lawyers to liaise with if we need to mount a successful challenge to this Award scheme.
I am also thinking at some point there may need to be an official Vislink SHAG (Share holder Action Group) and hopefully ShareSoc will be involved in Press and media assistance.
Do email me if any of you want to get involved and help the group in any way.
First on my own agenda is to set up a meeting with the Remcom chairman and if any of you would want to join me and can contribute to that meeting then once again contact me.

Small Cap Value Report (6 July 2015) - TRAK, ATQT, MONI, VLK, RBG, BILN, VLS

Trakm8 Holdings (LON:TRAK)

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Paul Scott

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Small Cap Value Report (6 July 2015) - TRAK, ATQT, MONI, VLK, RBG, BILN, VLS

Trakm8 Holdings (LON:TRAK)

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About the Author

Paul Scott

19 comments

Discover the metrics that are affecting Fatal error: Call to a member function get_name() on a non-object in /var/www/pro/modules/core/views/template/partials/app/app_template_signup.php on line 12

Discover the metrics that are affecting
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