Small Cap Value Report (7 Sep 2016) - TRAK, MCB, CMCX

Wednesday, Sep 07 2016 by

Good evening!

I'm finally back in the UK, after a very pleasant 3-hour Easyjet flight back from Corfu to Gatwick today. I always feel exhausted after flying - apparently it's due to the lower oxygen content of the air on planes. A notable difference was a flight earlier this year on a 787 Dreamliner plane - which the cabin crew told me was due to it having much better air supply.

Yesterday was fairly chaotic for various reasons, and there was so much going on in my personal portfolio, that I found it impossible to concentrate properly during the day. So I wrote most of yesterday's report in the evening - adding new sections on;

Interquest (LON:ITQ) - not so good H1 results, but had already warned on profits. Could be a potential recovery share, maybe?

Kainos (LON:KNOS) - looks a very good company, with a terrific track record of organic growth.

G4M - this one has really caught my eye, and I've increased my existing long position in it. The reason is a very strong H1 trading update - with sales growth (all organic) at a remarkable +73%.

It's an online retailer of musical equipment, and is growing rapidly (from a low base) into new markets in Europe. It's low margin though, but the rapid growth is likely to attract a premium rating in my view. So I see considerable upside in this share, if the market remains so bullish on rapid growth online retailers. It's difficult to trade in though, as 79% of shares are owned by >3% holders, mainly management.

Here is the link to my full report yesterday.

Clarification on Fundamantal Asset Management Ltd

I accidentally caused a furore this week, by referring to my activities where I have worked with FAM in the last 3 years on a small, experimental project which we called the Small Cap Value Portfolio service. This had nothing to do with their core activities, where the firm is a specialist IHT planning portfolio service provider - and very good at it too, with an excellent long-term track record.

I have no hesitation in recommending FAM to readers - indeed, I think that the IHT exemption for some AIM shares held over 2 years is a remarkable tax break, that more people should take advantage of. What better way of…

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Trakm8 Holdings PLC is a Big Data company. The Company, through its subsidiaries, manufactures, distributes and sells telematics devices and services. The Company focusses on owning the intellectual property that it uses in its products and solutions. It supplies its customers in the fleet management and insurance sectors across the United Kingdom. In addition, the Company provides hardware devices that can be integrated into third party telematics or Internet of Things (loT) solutions. It offers Configuration Manager, Product Datasheets, Radio Frequency Identification, Telematics Devices, Vehicle Connectivity and Accessories, among others. Its portfolio of solutions includes Trakm8 ecoN, Trakm8 Tacho, Trakm8 Secure, Trakm8 Logistics and Trakm8 Insure. Its portfolio offers telematics solutions, including dashboard cameras that enable customers to record driving incidents and mitigate the risk from crash to cash accidents. It provides bespoke solutions and engineering support services. more »

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McBride plc is a provider of private label household and personal care products. The Company is engaged in developing, producing and supplying its products to retailers across Europe. Its segments include Household and Corporate. The Household segment consists of UK; North, including France, Belgium, Holland and Scandinavia; South, including Italy and Spain, and East, including Germany, Poland, Luxembourg and other Eastern Europe. The Company's brands include Surcare, Clean and Fresh, McBride Direct, Limelite and Ovenpride. Its Surcare product range includes Surcare Sensitive Capsules, Surcare Sensitive Non-Bio Powder, Surcare Sensitive Non-Bio Powder and Surcare Sensitive Fabric Conditioner. The Company operates approximately 18 manufacturing sites in over 12 countries. more »

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CMC Markets plc is a holding company. The Company is a provider of online and mobile trading servicing both retail and institutional clients. The Company enables clients to trade over 10,000 financial instruments, including indices, commodities, foreign exchange (FX) and equities through its trading platform. It operates through three segments: UK and Ireland (UK & IE), Europe, and Australia, New Zealand and Singapore (APAC) and Canada. Clients can trade the markets via contracts for difference (CFDs), financial spread bets (UK and Ireland segment only) and binaries. With the Company's spread bet, a client bets a specific stake size per point movement of a product, rather than trading a specific number of shares or units. The Company offers four types of binaries: Ladder, One Touch, Up/Down and Range. It also offers Australian wholesale and retail clients the ability to buy and sell Australian Securities Exchange (ASX) and SSX (formerly APX) listed products and managed funds. more »

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  Is LON:TRAK fundamentally strong or weak? Find out More »

6 Comments on this Article show/hide all

doug2500 7th Sep '16 1 of 6

Trakm8 Holdings (LON:TRAK)
Could the H1 shortfall be due to the upfront cost of units? If growth is good would they be incurring more costs building units to sell in H2 proportionally than last year? I'm struggling to clearly put into words my thoughts, sorry.

That was the impression I got from the extract of the finncap broker note I read seemed to imply anyway.

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PJ0077 7th Sep '16 2 of 6

Welcome back Paul! 

Your comment on CMC Markets (LON:CMCX) surprised me...

"reduced market volatility has hurt their profit! What are they on about?! It's been a highly volatile period in recent months, what with all the Brexit chaos. So that doesn't ring true to me at all. Spread betting companies should have been doing a roaring trade in the last few months"

I'm not sure evidence bears this out. In the last six weeks in the US, the Dow Jones Index has traded in its least volatile trading range for 100 years < > Additionally, the VIX in the last two months is close to all time lows:


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Paul Scott 8th Sep '16 3 of 6

In reply to post #149697

Hi PJ,

I was thinking more about the UK market, not the US.

It's seemed very uncertain to me, and with Brexit, a lot of volatility.

So I would imagine spread bet punters zooming in & out. Perfect conditions for CMC.

Regards, Paul.

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JohnEustace 8th Sep '16 4 of 6

Plus 500 just announced record figures
"Asaf Elimelech, chief executive of Plus500, said: “Plus500 achieved record first half results whilst continuing to grow both its active and new customers.

“This performance was driven by continued marketing activity and market volatility; the UK's Brexit decision boosted customer activity in late Q2 – leading to increased new customer sign ups, customer re-activations, and customer trading levels."

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Trident 8th Sep '16 5 of 6


I hope you feel refreshed. The danger of working on holiday is that you feel you don't put any distance between yourself and the daily grind.

Just wondered if you had taken a look at the Joule results. As a Retail specialist would appreciate your overview.

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WhaleHQ 8th Sep '16 6 of 6

I'm very interested in somero as I think it is a cracking business however I don't know a thing about currency fluctuations except that £/$ is much closer to its 10 year low than its high. This recent dip in the valuation of the sterling coincided with the brexit vote, the reaction to which seems very much overblown which I assume means that sterling will rebound at some stage (perhaps when people realise that brexit probably won't change a huge amount).
Like I say I don't know a thing about currency but the volatility in the £/$ over the last 10 years almost gives me heart failure it fluctuates so much that 30-40% share price gains could easily be wiped out.

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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