Small Cap Value Report (9 Oct 2015) - HOME, XPP, ADGO, AN.

Re. Adgorithms (LON:ADGO). Yes one of the fastest from IPO to profit warning, in less than 4 months!

As Paul pointed out, it would be wise to review others in this sector for read-across. I know of two other Israeli companies, both heavily into programmatic advertising.
Matomy Media MTMY
Taptica TAP (changed named to Taptica from Marimedia in Sept )

With Regard to XPP

I hold some - they seem to be moving more towards their own specially designed and customised stuff for Multinational type firms - this being the case this is exactly the kind of Moat i like to see as they should as time goes by be less drawn into sales where there are lower barriers to entry (anything bog standard basically)

They also seem to be doing a proper job with regard to the manufacturing that they have brought in house and they seem to have set up the new Vietnam Plant without any Banana skins - strangely it seems that most listed companies seem to fail miserably when they come up with cunning plans like this be it in sourcing or out sourcing.

The one slight negative is that its all slow and steady progress with ups and downs on the way - so it's not the kind of share i would expect to double in value but who knows maybe they will come up with something "best of class" that sells by the Billions. Hopefully as debt goes though they will have funds to invest in new products or acquisitions or pay a proper chunky DIvi.

Main thing is this company is no Volex - Yay!

Hi Paul

Thanks for the heads up re HOME. I've taken an entry level holding this morning, just a couple of points. I like the same day delivery and think that Argos could indeed morph into something like Amazon, has a cracking balance sheet. Op margin ROCE & ROE all very low, whilst this is not good it only takes a small increase in Op Margin to increase profits significantly.
Free Cash Flow poor over last 2 years mainly due to Capex, need to look closer at this as it could be investment in improving infrastructure etc. which could be very good going forward, despite this net cash still excellent.
Number of shares in issue reduced from 872m in 2010 to 800m this year ( I like a company that buys back shares at low multiples).

I make the Enterprise Value PE around 8.5. Will look to add further once I've had a better chance to look further at their last few years results.

K

In reply to post #107883

Home Retail (LON:HOME) seems to have had steady downgrades from the brokers, which Paul has previously regarded as worth treating with some concern.

Also, teething troubles don't explain the absence of an email apologising for the failure to deliver. That could damage customer good will.

It's an interesting development but I'm going to watch from the sidelines to see how it settles down.

Adblock seems to have been sold recently to an undisclused buyer, which has worried the geek mailing lists.

I use Adblock Plus, a free, open source blocker. https://adblockplus.org/

In reply to post #107886

I would agree with your points. In theory same day delivery as a concept sounds great, but there is little point in advertising the service and not being to deliver on this (excuse the pun!). Whilst I acknowledge they could achieve a First Mover advantage, I'd be surprised if Amazon didn't replicate if this was successful for Home Retail (LON:HOME).

From memory I think Amazon, are trialing same delivery in a couple of locations (London and Birmingham). Am also happy to wait on the sidelines for the time being.

Imran.

Amazon offer ONE hour delivery.

NI

Dont agree on Home. Its a fiercely competitive market and Xmas is coming up soon. This relies on a 'new electronic gimmick' for the kids but I dont see one this year.

XXP, i used to buy some of their "bricks" which is how the users describe the ac/dc units, The selectors just want flat DC and want a cheap product, it is only the final end users who really want efficiency, so I struggle to see how you make a "margin win" except by making in house using good design, that is what they now offer. Once they have a competitor who joins up the "design" with the "make" there is no margin premium.

So short term interest only for me

In reply to post #107865

XLMedia (LON:XLM) Media also down by 17% at the time of writing. As a general principle, I'd agree with Paul of steering clear of companies whose primarily business model is online/digital marketing, and that are foreign listed.

Best wishes,
Imran.

In reply to post #107904

Hello bobo

I have to admit i have no practical knowledge of how good the product is and how likely it is that someone else will muscle in on their "Niche", so if you are saying there is no competitor at present perhaps that is some indication that it's not worth the effort trying to set up something to Rival that - presumably the stuff will constantly need tweeking and improving and if XPP have the lead on this. I would also guess that its also the better the Devil you know - if their Units generally work reliably for their larger customers then would you want to swap away from that to something else if you were happy quality wise?

loads of competitors, technology is 15 years old, probably a commodity but since management is good they do stuff to drive costs down, never going to be amazing but nice niche market. Just check the divi/per share growth which is pretty consistent.

Hi Paul, how about real looking a telit, you covered in April

An interesting article in bloomberg?

http://www.bloomberg.com/news/articles/2015-10-10/internet-of-things-stock-you-ve-never-of-heard-just-rose-500-

Home, today £1.10 announcement last Wednesday.

Next target announcement 14 Jan 16, one to watch