Small Cap Value Report (Fri 11 Feb 20220 - ADF

11th Feb '22 by Paul Scott

44 comments 9234 reads

Good morning, it's Paul & Jack here with Friday's SCVR.

Agenda -

Paul's Section:

Facilities By Adf (LON:ADF) (I hold) - a positive trading update from this recent float, which finished 2021 about 17% ahead of market expectations. Looks like the float was under-priced, not something I find myself saying often!

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

Facilities By Adf (LON:ADF) (I hold)

83p (pre market open) - mkt cap £62m

Trading Update

Facilities by ADF, the leading provider of premium serviced production facilities to the UK film and high-end television industry, today announces a trading update for the year ended 31 December 2021 ("FY21").

An excellent first trading update from this recent float on AIM (5 Jan 2022). Purely by luck (it was a quiet news day), I reviewed its Admission Document and came away impressed, here on 5 Jan 2022. So I hope some readers hopped on board at the time.

It’s become increasingly obvious that a lot of new floats over the last couple of years have been opportunistic (beneficiaries from lockdown) and over-priced, with the main purpose really being for an existing major shareholder to find a lucrative exit route.

However, ADF stands out because;

(a) the valuation was reasonable, cheap even.

(b) most of the money raised in the float was for expansion, rather than an exit for existing shareholder.

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davidjhill

11th Feb '22

I wonder if Altitude (LON:ALT) is looking good for a rise. Last 3 days Directors have all been buying, though nothing enormous, but perhaps suggests business is looking well placed and profitable. This has a strong operational gearing so if sales are indeed moving up then it will look cheap quite quickly. I haven't bought any at these levels yet but am mulling over a short/medium term trade. Anyone have any more useful insight?

danjamesbaker

Q4 NAV report released by Ediston Property Investment (LON:EPIC) today shows a 2.5% increase to 90.6p, although the share price has fallen back by 4% to 82p due to some investor disappointment in regards to a smaller-than-expected valuation increase in their retail warehouses, the impact of the office sales below BV and the late release of the NAV (for reasons unknown).

On the positive side the vacancy rate has fallen by 0.4% to 8.2%, 99.9% of rent is current and the company have over £50m cash to invest, where they are now solely focusing on the retail warehouse market. I think there's a concern that the retail warehouse market may be starting to get frothy with lots of real estate investors pivoting into this space due to solid rents but I continue to hold, with the discount to BV widening to nearly 10% today, which I think is not justified. I continue to hold.

simoan

On the late release of NAV and less than expected uplift of the warehouses... you need to remember how NAV is calculated for most REITs. It is based on Discounted Cash Flow principles. Maybe the delay and warehouse NAV miss is because they have had to revisit the discount rate used in the NAV calculation in light of recent BoE rate increases. Just an idea!

All the best, Si

Mark Penney

This comment has been moderated

Lochinver

Mark. You may not be aware but I find your approach is unnecessarily confrontational and now childish to boot. Can I respectfully ask that you modify your behaviour henceforth.

rmillaree

"Please could you tell me when you notified investors that you were going to increase your position size to offset losses,"

Mark do you not understand that what Paul does with regard to his personal trades is none of your business? - to me asking ref personal stuff is bad crack end of.

El_baek

Mark,

Please read Tuesday's SCVR. Sounds pretty to clear to me what Paul's intentions were.

Biffin

SCVR 1/2/22 comments :

'Also to disclose, that I've placed an order with my broker, to increase my JOUL position by over 60% today. Hopefully that's a rational decision, based on the facts,'

Reacher

For anyone interested, "Q&A with Paul Scott" recorded today, it seems, is now available.

https://www.voxmarkets.co.uk/

Should be good listening for a Friday evening with a glass of wine.

portugull

Paul I was very intrigued by your reply to Mark Penney at 11.43 today concerning £JOUL.

All week I have been wrestling with a decision of adding to my long term holding in Boohoo (LON:BOO) were I am 70% down having bought in between Jan & June last year.

I think £Boo is well oversold at 92p and at the right level I could reduce my cost of holding by 50%

However many wise investors say averaging down is for mugs.In my case I have made serious money on some shares eg Ferrexpo (LON:FXPO) by averaging down when I think a share is oversold.

When a share like Boohoo (LON:BOO) which increased its Revenue from £295m in 2017 to £1,745m in 2021 falls nearly 75% it is because the story has changed but like you I see into the future 3 to 5 years when I anticipate Boohoo (LON:BOO) could be a huge Company.

As they say in life it is all about decisions but you really set me thinking again by your post today.

Branoc

I see Cake Box Holdings (LON:CBOX) price has taken another hammering this afternoon. Lots of work to rebuild trust there I'm afraid.

Caduceus

are we able to see this without registering?

fwyburd

You pose a very interesting question: when is it a good idea to average down? I have lost money doing this recently with Boohoo (LON:BOO) Best Of The Best (LON:BOTB) and Loopup (LON:LOOP) mostly by failing to watch some key indicators, namely the 20/150/200MA, director sells/buys and the progress of shorters (I use this site https://shorttracker.co.uk/wat...).

With regard Boohoo (LON:BOO), I have saved myself losing much more money by exiting completely around £1.45. Apart from a quick trade 1.08 - 1.25 I have avoided re-entering for the long term because I watched shorters increasing their positions continuously despite how low the SP was at the time. You will note short positions increased 2 days ago which suggests someone (maybe?) smarter than me thinks the SP has further to fall. The failure of the BOD to make any significant purchases at these levels is also significant IMO.

For me I might re-enter but only when the SP climbs above the 200MA and short positions are smaller than they are now.

Hope that helps

Cheers

Francis

tindrum

Has anyone any insight into the near 12% jump in Clipper Logistics (LON:CLG) today? MCap is £740M so still of an appropriate size for this board. No RNS. Thanks in advance.

geoffish62

Hi tindrum :

Noticed this today as well - can't complain, having held for 4 years. Can't find any news/anything relevant. Note that today's published trades (using ADVFN) are three times the normal from earlier in the week, but all normal sized trades - tipped somewhere (IC anyone ?).

So will continue watching with interest.

All the best

Geoff

Boon

"I see into the future 3 to 5 years when I anticipate Boohoo (LON:BOO) could be a huge Company."

If you have that strong conviction on Boohoo then you should definitely be buying more shares. You're not investing just to "follow the herd" or "only invest if you get validation of your decisions". We're all here to do our own research, and invest in companies we personally have conviction in.

Unfortunately if you can't trust the numbers, then can you really ascribe a valuation? I'm guessing many investors are bargepoling CBOX and if there are a lack of buyers then the SP will only keep drifting down.

So El_baek, I thought I would apply some basic maths to this: If Paul bought an additional £10,000 of shares he would have acquired 16835.02 shares, on top of this would be the buying costs -circa 4.5% (given the spread), we then saw the price rise to 0.68p a share and so if you now top sliced out your profit we would see a gain of £1,448 -sales costs 4.5%(£389) =net profit before CGT(?) of £1,059 (circa 10%) but along the way we see even more volatility on our core holding!

My comments come from a desire to understand what we are: 1) Are we short term traders? or 2) Investors who seek out opportunities in well manged companies and are supportive of management, I cannot see how this approach can make friends of such management and more importantly why would they want to engage in open discussion in the future if all we were going to do is use such companies for short term exploitation.

What was it that Warren Buffett said about owning shares in a company....

I am not trying to cause offense to anybody. -I am no fool and have over 30 years experience in investing.

Thank you Francis (fwyburd) for your post at 5.01pm which I found very helpful.

Your comments on Boohoo (LON:BOO) are spot on and I will certainly remain on the side line for now.

I forget the famous investor who said "trading without a stop loss is like driving with no brakes" was it Mark Minervini? Boohoo (LON:BOO) is a good example of why many investors wiser than me always use a Stop Loss.

13th Feb '22

Glad that helped. You will see BOO shorts were reduced on Thursday but are still 4% (or more assuming some positions still exist below 0.5%). So short interest is still relatively high although of course any positive news could create a short squeeze.

I think Dahokolomoki's point below is well made - if you believe in Boohoo (LON:BOO) 's long-term, then adding makes sense. I did this with Saga (LON:SAGA), averaging down at 2.60 and 2.80 which made sense to me at the time but then I think their growth prospects are superior to £BOO. Time will tell...

Small Cap Value Report (Fri 11 Feb 20220 - ADF

Facilities By Adf (LON:ADF) (I hold)

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Paul Scott

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