Small Cap Value Report (Fri 2 Dec 2022) - PMI

2nd Dec '22 by Paul Scott

47 comments 6296 reads

Good morning from Paul! There's hardly any news today, and I'm suffering a bit from having my covid/flu jabs yesterday (nothing serious, just a bit groggy), so apologies for this report being a bit sparse.

Agenda -

Paul's Section:

Premier Miton (LON:PMI) - full year results for this fund management company. Very simple accounts, and this share looks attractively cheap on a PER basis, with very generous divis too. Balance sheet is adequate, but not a huge amount of asset backing. Thumbs up from me.

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.

Premier Miton (LON:PMI)

106p (up 16% at 09:03)

Market cap £154m

Full Year Results

Premier Miton Group plc ('Premier Miton', 'Company' or 'Group'), the AIM quoted fund management group, today announces its final results for the year ended 30 September 2022.

Graham normally covers this sector, and has been flagging up lots of cheap brokers & fund manager shares of late. Obviously they’re cyclical, and earnings drop when markets drop. As we’ve discussed here before, it makes sense to buy these cyclical shares when sentiment is on the floor, then sit back and enjoy (hopefully) a share price recovery, and a decent flow of divis.

Some key numbers from PMI today for FY 9/2022 -

Assets under management (AuM) fell from £13.9bn a year ago, to £10.6bn at 30 Sept 2022 - of which £1,076m was client outflows, with the rest being market…

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jonthetourist

2nd Dec '22

Those guys have a tight focus on Midlands real estate, so I see that as a very bullish signal.

gmtrader

some of those small trades will actually be spreadbet buys or sells

Tommy H

Looking just now it is 30.9p to add so having got at 28p they have done well, or had someone who was wanting out!

Tommy

Ps. I hold Real Estate Investors (LON:RLE)

Thanks John

MattH

I hold Twentyfour Select Monthly Income Fund (LON:SMIF) and similar in an Interactive Investor ISA with no problems.

Thank you

I had bought a long while back too, but sold along with everything else. So hence having to go through the you let me hold this for years, I used to be able to buy but cannot now what is going on??? Do you not communicate withdrawal of things to existing holders? Etcetera etcetera. But having looked wider more things are not available to buy, ok some of them I can kind of understand but at the same time it is thinking maybe time to split the funds and use someone better.

Cheers

Thank you Danto

Similar, I am not in anyway an expert at Bonds, or even very knowledgeable, but slowly learning more. I know that some of the holdings have higher risk bonds so BB and lower rating, and hence part of the research is understanding the discount to par offered, the typical default history, the number and spread of holdings and all that and then most importantly keeping to a small position (~1%) with a manual capital loss protection in place (up to the last couple of months this was down 20% from purchase or peak).

Though no doubt if I dig deeper there will be overlap between the different funds purchased all seeking the same yield, a bit like anything FTSE Income will typically hold British American Tobacco (LON:BATS) for example.

I hold Invesco Bond Income Plus (LON:BIPS), well mum does already.

I have some other Henderson Funds such as Henderson Far East Income (LON:HFEL) and Henderson High Income Trust (LON:HHI) I will have a look at Henderson Diversified Income Trust (LON:HDIV) tomorrow evening. I need to remember to also look at the bottom right for the similar things too.

I hold Invesco Bond Income Plus (LON:BIPS) Henderson Far East Income (LON:HFEL) & Henderson High Income Trust (LON:HHI)

RichardK

Micro-transactions in shares

Many thanks to all of you who took the trouble to respond to my query. There are clearly several explanations, and I feel much enlightened by your explanations.

Good w/e to all.

Richard

shopping365

Hi Tommy

This article explains General Complex Investments quite well and when you have to compete the form.

https://medallionguarantee.co....

I was recently asked to complete one because I held a couple of ETFs and Oakley Capital Investments (LON:OCI) which is a private equity investment trust.

ken mitchell

TommyH and others who’ve posted on Investment Trusts today:-

1. They are not complicated or dangerous investments (except for obscure sectors). They are similar to but usually FAR superior to the much more popular Open Ended Funds/Unit Trusts. Since they have portfolios just like ours, they are less dangerous than any single share as if a share they hold goes badly wrong the loss is mitigated by all their other holdings,

2. The need to sign that risk form is a technicality. It’s very quick and easy to do. Use your common sense and give the answers that means your application will be successful. E,g yes to being experienced or whatever with Investment Trusts.

3. They are usually very easy to buy and sell and are traded in exactly the same way as shares.

4. Investment Trusts are a great way of investing all round the World and for high dividend sectors like UK Commercial Property.

5. I haven’t the time to post regularly or in detail here.

www.michaelwalters.com

has a lot on Investment Trusts including an Investment Trust portfolio that has been running for several years and includes a wide range of Investment Trusts. That portfolio doubled before the market falls this year but is still up 75%.

Michael Walters’ site is run by ex Deputy Daily Mail City Editor. He favours very high risk shares as do a lot of his subscribers but there’s also a thriving thread on Investment Trusts. Though it’s a subscription site (£70 a year) Mike usually allows potential subscribers to try it for a ŵeek or so.

6. By FAR the best site for Investment Trusts is the aic site run by the Association of Investment Trusts.

Here’s a link that gets you in to the Country Specialist sector:-

https://www.theaic.co.uk/aic/f...

I’ve chosen it as it includes the 3 Vietnam Trusts which I’ve held for much of the last 10 years as it’s a young and fast developing Country and is now attracting ever more big US and other Companies switching from China.
Just click on each Trust for a wealth of information including performance, Announcements (e,g brilliant monthly fact sheets etc etc.

DO check out the discounts to NAV. This is just one of the big plus points for Investment Trusts. Unlike Open Ended Funds they can be bought for less than they are worth and sometimes way less!

e.g Phoenix Spree Deutschland (LON:PSDL) which I bought recently is on an extraordinary near 50% discount to Net Asset Value. Phoenix Spree Deutschland (LON:PSDL) invest in Property in Berlin. Temporary problems and that explains the huge discount to NAV but longer term very positive (check out Announcements). Phoenix Spree Deutschland (LON:PSDL) used to trade at a premium to NAV.

And then do the same for every other sector and Trust that you want to follow up.

e.g The UK Equity Income Sector here includes Trusts that have been in existence since the 1800s! And a few have increased their dividends for more than 50 years in a row. e.g £CTY

Finally you asked for monthly dividend payers. Here are 3 of them (again easy to check out on aic)

Twenty Four Select Monthly. TwentyFour Income Fund (LON:TFIF) 8.5% dividend

NB Global Monthly Income. NB Global Monthly Income Fund (LON:NBMI) 7.3% dividend

EDISTON Property £EPIC 7.8% dividend

Boon

3rd Dec '22

Some brokers have a fill or kill trade option. Either it completely gets filled, or the trade doesn't get executed. You set a limit price.

Interesting on Appreciate (LON:APP)

Looking at the shareholder register, it looks like the maximum is 2 out of the top 5 shareholders supporting it so far. Not great for Paypoint. Top 7 shareholders hold 62% so they have some collective power in their hands.

On the other hand, Paypoint pulling their offer will see this crash to 30-35p is my guess. So there's some risk, holding out for an offer which I don't think likely to go above 50p.

(I hold in the Boon Fund)

Rusty2

Yes HL have that. HL only fill whole orders, IG fill orders at your price which maybe only 1 share.

Adding a bit more to my previous post.

Though the Stockopedia stock pages for each share are so useful for shares they are not imo for Investment Trusts as they don’t and can’t cover things like discounts to NAV and whether the current discount is narrower or wider than usual. (As always happens in bear markets a lot of Trusts are on wider than average discounts at present, providing great buy opportunities as there’s the double plus of an increasing share price in time being given an added boost by a narrowing of that over large discount).

Also the Investment Trust stock pages do not cover must know things like the Top 10 holdings for each Trust. Or say for Commercial Property Trusts any detail on their Property Portfolios (e.g retail and if so with big names like Aldi or Next or retailers in trouble). Or mostly retail parks (good) or mostly High Street (not so good) or Offices or Warehouses etc etc. Nor do the stock pages cover must knows like rental collection figures.

Hence the suggestion to use the aic site which covers all that and much more on top.

I subscribe to Stockopedia and Sharepad, with key reason for continuing with Stockopedia being the brilliant small share value reports and subsequent comments.

But only investing in UK smaller Companies is far too narrow imo bearing in mind how so many Markets often perform much better than ours. e,g US and Vietnam for starters. And what about Emerging Markets?

Paul Scott is a fantastic commentator and analyst and it’s worth subscribing just for that and to take advantage of his extraordinarily detailed understanding of balance sheets. But Paul freely admits he is not clued up on Investment Trusts or sectors like Commodities. I think he and others are missing out and would vastly improve their own investment performance by branching out more via Investment Trusts,

e.g Quality Commodity Investment Trusts like Blackrock World Mining Trust (LON:BRWM) CQS Natural Resources Growth and Income (LON:CYN) and Blackrock Energy and Resources Income Trust (LON:BERI) have superb performance records and pay big dividends too. And Black Rock World Mining Top 10 holdings include large stakes in the major miners like RIO and Glencore etc. I’ve held all 3 for years.

mjfgs

Just to add to this, holding Investment Trusts (CEICs) as opposed to Investment Funds/Mutuals (open ended) can work out far far cheaper if holding with Hargreaves Lansdown:

If held in a SIPP or ISA, HL charge 0.45% pa.

This is capped at £200pa or £45pa respectively for investment trusts or shares.

There is no such fee cap for holding funds (which are surprise surprise, heavily promoted by HL!!!) - the fee is 0.45% on the first £250k of your holding then 0.25%.

So, if I held £250k in investment trusts and/or shares in my SIPP it would only cost me £200pa, and in my ISA only £45 so £245pa to hold £500k.

If I held £250k of mutual funds in both my SIPP and ISA it would therefore cost me £2250pa.

If my maths is correct (which it might not be!), that difference of £2005pa (2250-245) compounded over 15 years at, say 7% with the yearly 'fee saving' of £2005pa added each year, makes a difference of nearly £60k - not insignificant!

HL do very very well from people holding funds rather than investment trusts.

Also beware the 'Costs' tab on the individual fact sheets for each share or fund on the HL website - the assumptions made are often incorrect and do not reflect HL's fee structure as detailed above. Investment trusts are usually shown as being more expensive to hold than they actually are - obviously this benefits HL and their push for people to hold mutual funds.

Exactly. You’ve shown a key reason why the likes of Hargreaves Lansdown rarely if ever promote an Investment Trust. Yet Hargreaves happily promoted that disastrous Woodford Open Ended Fund until the very day it was suspended for good. Woodford incentivised them well.

Investment Trusts are better than Open Ended Funds for many reasons, including better performance overall.

A key negative with Open Ended Funds is in bear markets. Unlike Investment Trusts they have to sell or part sell their holdings to pay out investors who want out once they’ve run out if cash held to cover that. Investment Trusts never have to sell any of their investments however large the selling gets. Instead the Trust goes to a big discount …which provides buy opportunities for clued up investors. Unit Trusts/Open Ended funds always trade at NAV. I.e if the Unit Trust NAV is £1 investors buy at £1. If an Investment Trust NAV is £1 but is (like Phoenix Spree Deutschland (LON:PSDL) now) at a 50% discount then investors can buy at just 50p!

A very good example of this is with Property Open ended funds. Whenever there is heavy selling they cannot suddenly sell properties to pay out leaving investors. So they have no alternative but to ban all selling by locking their investors in and they are unable to sell for several months sometimes! But Property Investment Trusts just go to very wide discounts to NAV when there is heavy selling. That’s just happened and hence there are some extraordinarily large discounts in the UK Commercial Investment Trust available right now. See here for more and see that 5 of them are on discounts above 40%!

Look at those big dividend yields too!

jamieswain

5th Dec '22

Samson Rock who have taken a 14.75% interest in Appreciate (LON:APP) post takeover offer are gradually increasing their short in PayPoint (LON:PAY) nb I am long both

JSLDUK

Thanks for your note, not looked at this share before but following your note looked at this over the weekend and today I now hold.

7th Dec '22

Small Cap Value Report (Fri 2 Dec 2022) - PMI

Premier Miton (LON:PMI)

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Paul Scott

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