Small Cap Value Report (Fri 14 Aug 2020) - NRR, QUIZ, EZJ, TEG

14th Aug '20 by Paul Scott

83 comments 10335 reads

Good morning, it's Paul here with the SCVR for Friday.

Today I'll be looking at;

Newriver Reit (LON:NRR) - trading update

Quiz (LON:QUIZ) - extension to bank facilities (I hold)

Easyjet (LON:EZJ) - sale & leaseback

Ten Entertainment (LON:TEG) & Hollywood Bowl (LON:BOWL) re-opening tomorrow. (I hold both)

Plus a few other bits & pieces that are outstanding on my notepad.

Today's report is now finished.

Newriver Reit (LON:NRR)

Share price: 63p (up c.3% today, at 09:30)
No. shares: 306.1m
Market cap: £192.8m

Trading Update

About NewRiver: NewRiver REIT plc ('NewRiver') is a leading Real Estate Investment Trust specialising in buying, managing and developing essential retail and leisure assets throughout the UK.

Our £1.2 billion portfolio covers 9 million sq ft and comprises 33 community shopping centres, 25 conveniently located retail parks and over 700 community pubs.

We hand-picked our assets to deliberately focus on occupiers providing essential goods and services, and avoid structurally challenged sub-sectors such as department stores, mid-market fashion and casual dining. This focus, combined with our affordable rents and desirable locations, delivers sustainable and growing returns for our shareholders, while our active approach to asset management and inbuilt 2.5 million sq ft development pipeline provide further opportunities to extract value from our portfolio.

I don't cover many property companies here, but we've followed this particular one since it floated in 2016. I remember seeing them at a FinnCap meeting, and liking the value-focused retailers strategy & active management of properties to enhance yields.

The current share price is at a big discount to last reported (March 2020) EPRA NAV of 201p per share (down 12.3% on LY). The big questions are;

How much further will NAV decline in future?
Will that trigger debt covenant issues in 2021 or beyond?

Because I don't have any clear idea on these key issues, I previously sold my holding, and am sitting on the sidelines, until the picture becomes clearer, as mentioned here on 9 July.

Today's update - this comes across positively. Key points, with my comments;

The Company's trading performance in the first quarter ended 30 June 2020 was in-line with our revised expectations as outlined in our Full Year Results on 18 June 2020.

Rent collections - looks encouraging.…

Unlock with Email

Unlock with Google

Already have an account?
Login here

Jeffvshepherd

14th Aug '20

Look at companies that generate high levels of cash and reinvest it to grow then you might just be lucky enough to reach your target as an average over several years.

CBC19

Many thanks all for your responses to my earlier query. Lot's of valuable advice. Too many posts to respond to individually alas, and some time needed to reflect on responses, but I think some immediate takeaways for me are:

1. 8-10% is probably a more realistic 'target return' (any more, say 12%, is a bonus)

2. The emotional impact of drawdowns (potentially multi-year) should not be taken lightly and could scupper long term plans

3. Even with hard, intelligent work, there will always be an element of luck involved - a risk that can be minimised through stringent process and discipline, but not eliminated

4. I should factor in returns vs probable risk / stress. One probably (if this isn't too obvious a statement) needs to think more in terms of sharpe ratio and one's own risk appetite.

5. These are peculiar and unprecedented times we live in, making future returns potentially even harder to achieve!

Thanks again all and best of luck with future investing!

ISAallowance

No, it's not just you, and I'm really glad someone has come out and said it so clearly. As a software engineer myself, I simply can't understand what is going on with the transition to the new site. It has all the hallmarks of a software death march. I mean, why is there a transition to a "new" site anyway? I assume that this involves some sort of incompatible technology transition from old to new that may be better in the long run, but that is back-end stuff and should be totally invisible to the user. At the minimum, it would be helpful if it was explained to us why there is a disruptive transition going on involving 2 incompatible sites.

And then all the existing stuff that is simply broken on transition to the new site. I've already ranted on another thread about grey volume bars on the pop-up charts on the new site, compared to standard red and green on the old. I mean why?? Why not just copy "if(day == down) { colour = red }; if(day == up) { colour = green }" from the old site?? This is simply basic stuff. I read a comment somewhere that 20 or 30 developers are working on Stocko behind the scenes. If true, this is simply gob-smacking to me, somewhere there is a serious issue with development and testing.

Anyway, rant over, and I do appreciate the existance of Stockopedia that has certainly helped me make money, whilst not making money yet itself I believe. So consider this rant as frustration that something I like appears to be undergoing a totally unnecessary cock-up. I will be trying Sharepad as a trial a month before this year's Stocko sub expires though.

Gromley

In terms of what level of performance is achievable, it depends on a whole load of factors especially what approach you take and how good and disciplined you are with it also whether you can differentiate between your approach having a bad patch rather than ceasing to work permenantly.

Here's a useful benchmark perhaps.

Performance of SR > 95 , Market Cap > £50m rebalanced annually.

The performance is tracked from 29th April 2013 (so a little over 7 years)

Up until 24th Feb 2020 - this "portfolio" had a CAGR of 13%

By 16th March it had fallen to 7%

And has now recovered to 10%.

2020 is not a "proper" crash, SR 95+ only suffered a peak to trough fall of 33%, whereas you are likely to encounter a -50% event at some time, but maybe it is an "average" crash.

So there is some support here for the idea that you can maybe achieve 10% pa without doing anything too racey.

I chose the rebalance annually option because the reduction in churn means that you can perhaps assume that dividends received (most high SR stocks are dividend payers) broadly cancel out dealing costs and spread.

There should, I think be roughly 70 odd stocks in the SR 95+ bucket and as is being discussed in another thread you would probably want to hold ALL of them to eliminate random chance.

There would be a temptation though to invest in a smaller number of them, and employ some additional criteria that might improve returns - trouble is that sometimes it might have the opposite effect!

But the past may not look like the future.

Global economic growth to date has essentially been driven by productivity improvements and population growth.

I'll pass on commenting on the former (I have somewhere else to be tomorrow) but there is a lot of evidence to suggest that population growth will stall and then decline in the not too distant future. Great news in many ways, but not if you are reliant on riding the wave of global economic growth to make your living.

On a more immediate level, I have some strong concerns as to whether the StockRanks can continue to be predictive over the next couple of years as they will swing wildly for some companies depending on the company's reporting cycle relative to the lockdown period(s)

But hey ho enough of this, I've got a bag to pack!

Snowbum

If you used a short selling strategy via spread betting this could have potential to limit / cover falls in a bear market.

homosap

Others have given their year on year returns for 5 years or so or pointed to various studies showing expected average returns in various circumstances.

I am afraid after the first few years I have not bothered to note my annual returns. However, In 2001 I transferred most of my insurance company administered pension funds to a self invested SIPP. Since then the total returns including funds withdrawn have increased by just under 520%. I withdrew nothing for the first 11 years but in 2012 I started withdrawing funds and about 32% of the total funds have now been withdrawn but I am still up over 350% on my initial investment. I have invariably had investments in over 50 companies and tend to be over diversified. In addition I have often held up to 30% in cash for excessive periods through caution. So plenty of mistakes.

However, it does show that a reasonable return can be achieved over a fairly long period. I am not a finance professional but have benefited from regularly reading Motley Fool and more recently had a subscription to Stockopedia.

However, I have not had to rely on withdrawals to fund my life for over half the period of investment and I think targeting any particular return year on year and having to rely on on this to fund your living expenses would be a considerable mental strain unless you have a very large fund to start off with.

Indeed Forbsy, but don't get me started on that or I'll definitely not get anything done.

Northender

I agree about the Risers and Fallers and some other features missing on the new site. I contacted Stockopedia about this and received a fairly blunt reply saying that they were still available by looking at each market index on the new site. Hardly the same as having a list across the whole market.

Tommy H

15th Aug '20

I have found that if you put your comments into the green button (on the bottom right) a lot of the time they get actioned by the team and you get a thank you back too which is always nice.

A lot of the time we assume that others know what we want and appreciate from the site, I have been using since 2013(ish) but I realize now that Ed and the team are not like Mr Bezos and do not track every single click and minute of viewing in the website, so do not know all our exact habits and views.

Anyway cut and paste and send it to the team as a "please can you add this back in" or "is there a way you can do that" and a lot of the time they either come back with an answer this is how you can do it on the new site, or lets see what we can do!

pka

I keep trying the new site and then quickly going back to the old one. I view Stockopedia on a computer and I think the new site has been designed to work better on a mobile. I find the extra frames on the new site annoying and I waste time minimising them whenever I go to a new page, and I also find it annoying that pages seem to take longer to load on the new site.

Effortless Cool

I'm the same. There's a reason that other sites design bespoke mobile apps rather than trying to set up their site to work on a mobile. I think that Stockopedia has made a big mistake by not going down this route as, in my opinion, it severely compromises usability on a desktop.

Also, they seem to have made changes just for the sake of it. I mainly use Stockopedia for the discussion board. This looks good in the old version but horrible in the new version and there is also less information, eg the new site does not say how many are reading an item.

Grendel2112

Agreed, I miss the Risers/Fallers feature of the old site too. I did ask when this basis feature would be made available on the new site a but can't even recall what the answer was. However, all is not lost, there is a fantastic free site which provides daily R/F, 52wk H&L and many more technical features including Michael Taylors Volume Advancers and so on. For momentum/technical investors & traders this is a fabulous site. Pure objectivity without any bias subjectivity or a comments/rants section.

https://www.barchart.com/uk/st...

I fire this site up first thing each day, to catch the news see what the movers and shakers are. Also covers US and Europe for free too.

It's worth a look. I definitely find it useful in the filling the Stockopedia market colour gaps.

XTR

I've enjoyed reading forum member's comments about performance targets and note that they are all well below the 20-25% that Robbie Burns considers realistic for a full time investor (P.21 Naked Trader 5th edition). Also, Mark Slater inferred similar returns are available to PIs in his recent PIWorld interview.

Should these guy's opinions be taken with a pinch of salt?

GrahamF

Yes!

Slater Growth is up about 50% over 5 years (8.45% CAGR). Now, considering that Mark Slater is a top rated manager and likely to do better than the typical PI even taking into account fees, it is clear a typical PI will do nothing like as well as 20-25%. However, there will always be someone no doubt who happened to be lucky of being in the right stocks at the right time and will tell you they did much better. So, I expect that RB and MS are more referring to what what might be achievable by the best and the lucky rather than the typical.

lewisbabbage

16th Aug '20

Looks like you might be right about demand for bowling Paul, Hollwood bowl wrote this on Twitter yesterday.

"Thanks to all who bowled with us today. Many centres sold out due to our covid-safe reduced capacity, and we’re very sorry to anyone who experienced issues when booking online or by calling. Thanks for your patience and understanding - we look forward to welcoming you back soon!

8:59 pm · 15 Aug 2020"

UK_Investor_8888

If It is as flawed as some of his Software, I'd be worried.

Would you bet your life on Windows 95, Windows XP (v1), Windows Vista, Windows 10 and Azure?

Deleted

I describe my strategy as "tripple detonation".

I live on £10K a year mortgage free. Everything after tax and input costs from my two other businesses is reinvested. Dividends and Capital Gains are reinvested.

The ISA is filled first. I flip shares within the annual Capital Gains allowance. Everything else sits in a Corporate account.

2 hours a day reading and admin.

Can't quite say percentages since there is constant recirculation of cash.

I'd guess 15% to 20% PA growth.

Greedo

Over the years ( there have been many ) my "fees" in learning in how to be a successful investor boils down to, I believe, how much you lose in a true bear market. I think it is relatively easy to make good returns in a rising market. It's in a bear market that will probably make or break you - financially and mentally.

marigold

17th Aug '20

Yes and I wonder why when he is a software guy. The alarm bells go off when someone is so concerned about the wellbeing of people especially in the poorer parts of the world but they then stand to profit from campaigns such as vaccinations.....

Small Cap Value Report (Fri 14 Aug 2020) - NRR, QUIZ, EZJ, TEG

Newriver Reit (LON:NRR)

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

83 comments

But the past may not look like the future.

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...