Small Cap Value Report (Fri 13 Dec 2019) - Election Result, AFS, BOWL

13th Dec '19 by Paul Scott

47 comments 9219 reads

Good morning, it's Paul here.

General election - Tory landslide

I'm writing this at 00:42, so only a few results have come through so far. However, they're in line with expectations (!!) set by the exit poll which indicates a Tory landslide.

(Update at 05:14 - it's just been declared by the BBC that the Conservatives have officially won, with an overall majority.)

I'm extremely relieved, as the potential damage from a Marxist Corbyn Govt, would have clearly been utterly catastrophic for the economy & our investments, not to mention the country as a whole.

Sterling has strengthened further overnight - which makes imports cheaper (good for non-food retailers).

Removal of the political uncertainty (Corbyn was a bigger fear than Brexit, in my view), means that we could see some terrific rebounds in small cap shares in the next few days. I think we could see a lot of investors deploying their cash piles to buy small caps from the opening bell today.

I can foresee consumer confidence improving now (also good for retailers, and the housing market), plus backed-up deals & capex could now resume. This is the best possible election outcome in my view, and could be really bullish for bombed out small caps. Let's hope I'm right.

Expected timing - I've got to head into London, so this report will be short, and early - should be finished by 9:30 am. Therefore I won't have any time for reader requests today, I'm afraid. Friday is usually very quiet for news, so it shouldn't be a problem.

Update at 09:46 - today's report is now finished.

There are only 2 companies in my universe issuing updates today, so this is the agenda;

Amiad Water Systems (LON:AFS) - profit warning

Hollywood Bowl (LON:BOWL) - final results FY 09/2019

Amiad Water Systems (LON:AFS)

Share price: 220p (pre-market open - indicated opening price down 18%)
No. shares: 22.7m
Market cap: £49.9m

Trading update (profit warning)

Amiad (AIM: AFS), a leading global producer of water treatment and filtration solutions, provides the following update on trading for the year ending 31 December 2019.

I last looked at this company here in 2013, so am a…

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ambrosia

13th Dec '19

thats something i need to get better at, i was thinking; a bond focused ETF, but never got round to honing in on a specific one

Laughton

rmillaree - I guess it depends on what you call a "short period", whether you want to be able to change your mind and get the cash at a moments notice, how much cash and how much risk you want to take on.

I don't know of fixed rate etfs paying what I would call decent rates but you might want to consider Balfour Beatty (LON:BBYB) 10.75% Convertible Prefs It matures in July 2020, I've just been quoted 103.84p, it's XD so there is only the final paymentdue on maturity in July.

I THINK that makes an annual equivilent YTM of 3.3% allowing for broker charge of £10 and stamp duty.

Of course there are loads of equities making that much in a single day (today)

But PLEASE do check my figures if it's of interest. This is NOT a recommendation and I do OFTEN get things wrong.

dulciemo

I couldn't have put it better myself. Thankyou Purpleski….. come and live in Scotland!

Thanks for that. You can come and live in Scotland too!

Martin Verlaine

perhaps it is worth pointing out for anyone thinking of moving to Scotland, the following

1. It snows and rains a lot

2. The population of Scotland is declining which sure,y says something

3 income tax is higher than England

4 you get Nicola Sturgeon

ctoman

I use IGLT - an ETF of a basket of UK Treasury bonds - think it pays approx 1.3% p.a. dividend or alternatively, MINT, which is the US equivalent from Pimco. There is some fluctuation of the underlying price though unlike actual cash.

Mark Midmore

Great, bring on the bad weather and Nicola Sturgeon; rather that than the buffoon that the English have elected!

Ben1

On a site like this I hadn't expected to see simplistic statements like ' the reality of leaving the worlds largest trading block sinks in'. This is the sort of statement you see elsewhere, where people think that leaving the EU means no trade with the EU.

The future is much more nuanced than that, and will depend on the trade deals we get with the EU, USA and elsewhere, and the future business and economy related policies that come out of Westminster and Brussels in the long term.

Some sectors and companies will suffer and need to adapt, some will thrive. What we have to do is go in to the detail, and work out which is which.

bryans1311

Flip me, I thought I would avoid all the undemocratic whingers today by staying off Twitter. And here they are...

Thornabian

SHYU for a high yield Corp bond ETF.

My guess is they didn't believe in the Borris bounce!

Don't think you will have to wait long, :-)

Blissgull

It's hard to see how a comment such as "well I am so proud to live in Scotland. Well done for showing our disdain for Boris and all he represents." can be described as economic not political.

Stockopedia asked us to keep politics out of discussions here and this group has been much better for it.

Paul Scott

14th Dec '19

Please keep the political junk off this board.

It's very unwelcome.

pma

Paul, do you mean comments like, "I'm extremely relieved, as the potential damage from a Marxist Corbyn Govt, would have clearly been utterly catastrophic for the economy & our investments, not to mention the country as a whole." or are you exempted from the "no politics" rule?

jonthetourist

To be fair to Paul, he was commenting specifically on the investment consequences of a political outcome. And given the desire of one party to appropriate portions of companies, and nationalise others, I think it's fair comment.

Trident

I can only recommend that Purpelski and Dulciemo help drown their sorrows, whilst the rest of us toast at the nearest venue of a Revolution Bars outlet (search for the nearest venue below)

https://www.revolution-bars.co.uk/

The Scottish propensity for alcohol abuse, and no doubt others brimful of happiness could help propel this chain into a timely seasonal market beat performance!!

Cheers!

15th Dec '19

It seems people have also lost their sense of humour.

Ultimately it should be of no surprise to people on an investment board that when a party that says "no one deserves to be wealthy", and is hostile to business, loses, markets react positively and our UK share prices go up. That isn't politics, it is the reality of the situation.

Gromley

I do know that I am at risk of fueleing a flame-war, although I hope for a better response from our members here.

I was puzzled as to which party ALLEDGELY said "no one deserves to be wealthy" so I googled that phrase.

The results I got were (pretty much) all relating to a Mark Zuckerberg comment - which party was he representing?

mojomogoz

Well, just caught up on this SCVR...love a bit of ding dong. Let me stir some in to the pot...its all investment relevant obvs ;) ...

1) Scotland ain't leaving the UK. If Sturgeon is a master politician she'll work out how to moan about independence without triggering the vote. Why?...

2) Once the heat and stramash of brexit and the populist-socialist mania of Corbynism subsides the Scots will not fancy tearing up the status quo. Its not as popular as the hypermedia madness would have you believe (GE2019 and Corbyn is a good example of how that madness hides reality)

(Hey! I live in England but I'm Scottish...I'd quite possibly vote for independence if I lived there still not as I don't want to be British but as Scotland is a slowly failing state that maybe the shock of independence would be a cure....after a lot of pain that makes the extreme negative perceptions of Brexit look like strawberries and cream...and once the anti-Tory/Boris/English hysteria subsides a majority of Scots would see that...100% guaranteed independence ain't happening)

3) The UK electoral and governance system has demonstrated its strange brilliance once again - our seemingly mad and anachronistic first past the post and unwritten opaque constitution have proved to be strokes of genius/luck. Rather than face the excruciating incoherence of US and European systems we have 5 years of clarity with our democratic benign dictatorship.

4) As a result of 3 the UK will become the most influential European democracy and as powerful globally (soft power obvs) as is possible to be. Think Thatcher or Blair in the their pomp

5 Brexit will go swimmingly well from here. Europe and the UK can now deal with the process as a proper grown up geopolitical negotiation rather than a bitter huffy rotary club dispute.

6) Johnson won resoundingly despite not being well liked. This is such an amazing gift for him. In 5 years time it is highly likely he will be one of the most popular incumbent PMs in history.

7) Change has cost, but change is also growth. One of the maddest assessments about Brexit pumped out all over our talking head hyperbolic hypermedia is that it would only have costs as a result of change...undeniably there will be these costs....but change also brings response and this activity is what we also call growth. Economists are awful at this (I have dealt with many) as they put the the known loss into their model and produce a number that says minus x% growth impact but they can't put anything "with confidence" on the other side....but when you ask economists to look back and say why we had growth they will attribute to many instances of surprise and change (much of it unforeseeable). Ask yourself...will we be ostracised and will the UK just shut up shop and down tools as stuff changed on us? Come on! Cut out the hysteria

Yeah baby, give me those red thumbs!

mojovision out

PS If you are interested in more I wrote this short piece after the last general election when everyone was wonder struck by the Corbyn effect - https://medium.com/@mojomogoz/time-to-chill-the-corbyn-euphoria-6871bee3890b? - it was well on the money even if I do say so myself.

PPS before someone calls me a fascist wingnut...I'm a Labour Party member...which I suppose means I have backed a party with a leadership with totalitarian instincts since 2015...thank god the awful Corbyn lost and I'll be going to my next local party meeting to make sure I can say he should f off immediately!

Small Cap Value Report (Fri 13 Dec 2019) - Election result, AFS, BOWL

General election - Tory landslide

Amiad Water Systems (LON:AFS)

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Paul Scott

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