Small Cap Value Report (Fri 16 July 2021) - RNO, EVE, LUCE, RBGP

16th Jul '21 by Paul Scott

65 comments 9720 reads

Good morning, it's Paul & Jack here with the SCVR for Friday. Welcome back Jack!

Timing - today's report is now finished. Time to enjoy some sunshine!

Disclaimer -

A quick reminder that we don’t recommend any stocks. We aim to cover 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 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) - don't blame us if you buy something that doesn't work out. Reader comments are welcomed - please be civil, rational, and include the company name/ticker.

Agenda -

Paul's Section:

Renold (LON:RNO) (I hold) - delayed results are in line with expectations. Strong closing order book, and positive trends throughout the year, markets recovering well. Management seem upbeat on analyst call, and now looking at acquisitions. Dramatic drop in net debt, due to very strong cashflow. This could be quite good long term, maybe priced about right for now, taking into account the big pension deficit?

Eve Sleep (LON:EVE) (I hold) - in line with expectations update is not enough to please the market. Super-low market cap, and cash pile, are the main interesting aspects of this company. I'm not convinced this will turn out well, and am not inspired by management/strategy either.

Jack's Section:

Luceco (LON:LUCE) - excellent results and an upgrade in FY guidance from a stock that has performed strongly over the past year. In truth, it has been growing well for a while now and this could be a well managed company with a bright future. The valuation is becoming a little rich, but some companies deserve their premium. Luceco might be one of them.

Rbg Holdings (LON:RBGP) - growing, acquisitive professional services group comes out with an in line statement. Perhaps the market is unimpressed with a setback in a large litigation financing case, but the…

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GrahamF

16th Jul '21

“ I don't suppose anyone really cares what I think but........I am pretty sure that relaxing all restrictions in one go will lead to a big rebound in cases and hospitalisations and to a smaller (hopefully) rebound in deaths (because of the vaccine effects).”

I think that we should care what each other think because we do need to try and all get behind whatever strategy we follow as a country regardless of whether we think it is rather risky.

I don’t buy the narrative that we are relaxing all restrictions at once. Seems to be some sort of Starmer sound bite. We’ve had gradual return to schools, to using pubs and restaurants, to meeting others outdoors and indoors. So, it’s certainly not removing restrictions all at once.

Seems to me that we cannot stay restricted in our movements forever just because there will always be vaccine refusniks. And my understanding is that the risk to someone under 18 who is unvaccinated is still less than the risk to a double jabbed person over 50 years old.

A possible alternative might be to legally enforce vaccination for the whole population, except medically exempt, but there’s no appetite for that so far.

On the investment front, being in cash hasn’t paid off so far during the pandemic so I don’t see a good argument for holding a large proportion of cash right now. I’m holding a bit for buying opportunities but, with negative real interest rates, cash seems especially unattractive right now.

Bluesky Ventura

I don’t buy the narrative that we are relaxing all restrictions at once. Seems to be some sort of Starmer sound bite. We’ve had gradual return to schools, to using pubs and restaurants, to meeting others outdoors and indoors. So, it’s certainly not removing restrictions all at once.

Do you live on another planet?

It is government policy to remove all restrictions, and it's a free for all, for anyone to do whatever they like with the protection of the law.

A possible alternative might be to legally enforce vaccination for the whole population, except medically exempt, but there’s no appetite for that so far.

What Orwellian world are you suggesting be created?

BSV

Boonboon

Looks cleaner here. https://www.bristolstreet.co.uk/used-car/2690201/volvo-xc60-d4-190-se-lux-nav-5dr-awd-geartronic-diesel-estate/

andywillz94

"A possible alternative might be to legally enforce vaccination for the whole population, except medically exempt, but there’s no appetite for that so far"

Lets just bin this idea right now. There would be riots en masse; you cannot force people to take a medicine which is completely unproven in the long term.

this would more likely cause a UK market crash than covid itself.

UK_Investor_8888

"A possible alternative might be to legally enforce vaccination for the whole population, except medically exempt, but there’s no appetite for that so far"

Natural Selection - let God sort'em out.

A small update from UK_Investor_8888

I received my new house at the end of June. Unfortunately, its been nothing but problems with over 50 snags and appalling delivery.

I've completely taken my eye off investing in the past 2 months doing nothing but with 4 Dividends rolling in.

The portfolio is at -10% of peak value with just two problems or holdings at less than +40%.

Tharisa (LON:THS) -10% and Sylvania Platinum (LON:SLP) -15%.

I am not really sure what's going on there, but suspect its just summer seasonal weakness and don't feel any concern.

We have spare cash too, and given I've sunk half my wealth into "The White Elephant", is a pretty good problem to have.

Not in a massive hurry to make my next investment but will as soon as the paint dries... literally.

Looking forward to when I have the time to just read Stocko, economics and financial articles instead of trivial domestic nonsense.

Cairo

Rbg Holdings (LON:RBGP) the original judgment in the case is here https://www.bailii.org/ew/case...

The judge's last comment was "I should, in conclusion, pay tribute to the highly efficient manner in which this case was prepared and presented. In contrast, I must sincerely apologise for my subsequent delay in production of this judgment"

Further hearing re monies awarded (may shed some light on potential sums RBGP could recover from the case) https://www.bailii.org/ew/case...

And latest Court of Appeal hearing https://www.bailii.org/cgi-bin...

Bouden54

Litigation finance is only one part of the business, and a fairly small part, so a small number of cases shouldn't be too much of an issue in this case.

marigold

This comment has been moderated

Well you could be right as the flu has disappeared, everything now gets labelled covid and as we have been unable to eradicate viruses this will go on forever or until we have all starved to death or been killed due to not being able to get treatments for illnesses other than covid.

Leebod

I'd recommend the latest edition of 'The Briefing Room' on BBC Sounds which is asking the same questions but gives no straightforward answers.

"I see parliament voted to make it mandatory for careworkers. But why? They have vaccinated all the residents so do the vaccines not work?"

Science and common-sense. We know that the (sadly) low paid care workers were a vector for cross-infection to more vulnerable citizens.

I am not convinced of the "experimental" argument. Humanity has 100 years experience with vaccines in both human and livestock, and the evidence is the human population is at its longest, largest, and healthiest yet.

I'm with you on the madness of lockdown though.

“ Do you live on another planet?

It is government policy to remove all restrictions, and it's a free for all, for anyone to do whatever they like with the protection of the law.”

Very disingenuous BSV. You know exactly what I mean because I explained it. Some major restrictions have already been removed.

“ What Orwellian world are you suggesting be created?”

Now you’re just being alarmist and resorting to hyperbole. Compulsory vaccination has been done before with small pox. Before COVID-19, locking down the whole country was unthinkable, but we ended up having to do it. So, what was unthinkable became a necessity. If the only way out of perpetual lock downs turns out to be compulsory vaccination then, distasteful as compulsion is, we may have to consider it.

“ Lets just bin this idea right now. There would be riots en masse; you cannot force people to take a medicine which is completely unproven in the long term.

this would more likely cause a UK market crash than covid itself.”

And, if the only alternative is to have never ending lockdown restrictions, are we not going to riot too?

Lockdown was unthinkable but we ended up accepting it. Perhaps, if we want to avoid more and more lockdowns, we may in due course have to go down the compulsory vaccination route. And can we really wait several years living the way we are now to see what long term data may show?

Roger Baron

Got to have doubts about validity of Covid numbers when I hear from a teacher that there are currently 340 kids in his school out of 1450 - and that you can get a false positive to avoid going to school with a simple use of Fruitshoots! Thought this was fake news at first but apparently true.

Indie

Hi Patrick L, I bought Renold (LON:RNO) mid-May at 26.78p, since when it's headed down. I was hoping that the share price would lift on the news that the delay in reporting was benign and the outlook seems ok, but it seems to have sunk a bit and then flat-lined today. I obviously don't share your wish that it goes below 21p but I wish you good luck if it does! I will continue to hold unless it clips my soft stop-loss of 20p. I can always go back in later.

Very disingenuous BSV. You know exactly what I mean because I explained it. Some major restrictions have already been removed.

People can only assume you mean what you write. I suggest it disingenuous to write one thing and expect readers to understand the meaning as something else.

Compulsory vaccination has been done before with small pox

Compulsory vaccination did not work so well. Only 2/3 of the infants were vaccinated 5 years after the Act was introduced. Not sure Governments should introduce failed policies of the past.

BSV

dcon85

Re: Renold (LON:RNO) I hold - Hi Indie, looks like very unfortunate timing really as the multiple accounting delays couldn't have been foreseen and have really knocked the momentum out of this stock. At a time when a lot of things are cooling from recent/all time highs its hard to see an in-line results providing much of an uplift. I've bought at 15.79p and 26.74p and my average is around 20p. Continuing to hold also as not much has changed since my original purchase but I really do like momentum.

carmensfella

18th Jul '21

Just to mention that RBGP will be discussed in the MelloBASH (Buy, avoid, sell or hold) session on the Mello Monday show tomorrow evening

https://www.stockopedia.com/content/mello-monday-and-a-halfway-review-of-the-2021-stockopedia-stockpicker-competition-838384/

Small Cap Value Report (Fri 16 July 2021) - RNO, EVE, LUCE, RBGP

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Paul Scott

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