Good morning. The backdrop is positive this morning, with the FTSE 100 Futures currently indicating an open up 27 points at 6,574. Of course the FTSE 100 has really been going sideways for a while, obscuring the fact that small and mid caps have had a remarkably strong year. Personally I think there's very little (if any) scope for further across-the-board increases in small cap valuations, but there are always stock-picking opportunities in any market. Also when you do find something that's under-priced, it tends to re-rate very quickly in a bull market. So it's been a pretty exciting & successful year overall. Capital preservation is my main theme for 2014, whilst also taking advantage of attractive stock-picking opportunities that do arise.

It's a quiet morning for news today. Troubled pawnbrokers, Albemarle & Bond Holdings (LON:ABM) has issued its final results for the year-ended 30 Jun 2013. They don't look that bad, with the business still decently profitable (albeit down sharply on the prior year). However, the sting in the tail is that (as reported before) they are now trading at an EBITDA loss. So results have really fallen off a cliff in the last year, driven they say by the fall in the Gold price. There has to be more to it than that. I'm wondering if, after 5 years of squeezed living standards for the poor especially, the supply of gold to pawn has simply dried up? There must come a point where people stop redeeming their gold pledged against loans, and run out of things to pawn? Maybe that point has been reached now?

I'm steering well clear of this share. The company is in a formal sale process, but it seems to me the logical next step for anyone wanting to buy the business would be to do a pre-pack Administration, thereby only buying the profitable shops from the Administrator. That possible outcome would leave nothing for shareholders. Who knows though, maybe the 30% shareholder will put in an offer for the whole company in its current form? The timing looks to be early Feb 2014 as crunch time with the Bank, who have currently been supportive. With gold stock being smelted down, and lending reduced, in order to keep within the Bank facilities, it looks pretty grim.




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