Good morning from Paul & Graham.

Agenda

Paul's Section:

MJ GLEESON (LON:GLE) - it warns that the cancellation rate has shot up recently, which shouldn't come as a surprise to anyone. Being a low price, starter home builder, GLE should be relatively well protected from any downturn, because some buyers are expected to trade down, partially offsetting reduced demand from existing customers. Housebuilders look stunningly cheap to me, with the whole sector trading well below net tangible asset values. Hence I would see any continuing share price weakness as increasing the buying opportunity. They generally don't have any debt, and are sitting on cash piles, as well as owning huge land banks outright. So this time it really is different, even allowing for a housing market downturn.

Graham's Section:

Liontrust Asset Management (LON:LIO) (£727m) - H1 numbers are released at this fund manager, following the detailed H1 update last month. Outflows were large and with sales reportedly remaining difficult, it’s too soon to bet on the trend reversing to inflows at this time. The bounce in asset prices since the end of September has at least produced a recent uptick in AuMA. H1 revenues are slightly higher than a year ago but unadjusted profits are sharply lower as they digest the acquisition of Majedie. There is a huge emphasis these days from many quarters on sustainability, ESG and Net Zero, and Liontrust is very focused on these trends. It’s not my top pick in the sector but I do suspect that Liontrust shares, like most others in the sector, are underpriced.

Northamber (LON:NAR) (£13m) [no section below] - this tiny company has a 63% shareholder and continues to be a case study in bad capital allocation. Net tangible assets are £23m and they remain locked up in a business that is inherently unable to earn an economic return. Perhaps some day, the assets will be released and put to good use, but who knows when that might be? Today’s full-year results (FY June 2022) reveal the company has made a fresh operating loss on £66m of empty revenues. Northamber has not made a meaningful operating profit since 2005: if markets and economies were efficient, a company like this would have released its assets to more productive use a long time ago. [no section below]


Explanatory notes -

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