Small Cap Value Report (Fri 2 Feb 2018) - Share Tips, NTBR, MAI, FCRM, MOS, PURP, KWS | Graham Neary

1st Feb '18 by Graham Neary

33 comments 16694 reads

Good morning!

Thanks for your suggestions - they are a key element in my decision-making.

Today on the radar we have:

Northern Bear (LON:NTBR) - trading update.
Maintel Holdings (LON:MAI) - trading update.
Fulcrum Utility Services (LON:FCRM) - acquisition.
Mobile Streams (LON:MOS) - trading update.
Purplebricks (LON:PURP) - trading update.
Keywords Studios (LON:KWS) - trading statement (from yesterday).

Cheers!

Share tips - I thought I'd add a few comments on my thought process when shares in my portfolio are tipped in the mainstream press, as happened this morning.

Two of my shares, Record (LON:REC) and PCF (LON:PCF), were tipped for the first time by the Investors Chronicle, as "Bargain Shares" for 2018.

For the avoidance of any doubt, this was bad news as far as I was concerned. I didn't want their share prices to go up, because I had absolutely no plans to sell them and in fact I had been hoping to buy more shares in PCF (LON:PCF) very soon.

One attitude to take is that it doesn't matter, because anyone who buys shares on a magazine tip probably doesn't know very much about the company, and will be a seller in due course. Some investors even sell into these tips, because they are so confident that the share price will retreat over the coming weeks and months, enabling them to buy back in at a profit.

For me, though, having researched a company, I don't want to take the risk that the share price doesn't come back down, with the result that I never get to buy as many shares as I originally planned.

So I went ahead and bought my last slice of PCF (LON:PCF), getting the full quantity of shares that I was originally going for.

I had to pay a bit more than I intended, but it would be much worse if the price continued rising, and I never got them.

My particular concern with PCF is…

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gus 1065

2nd Feb '18

Morning Graham.

Micro cap builder Northern Bear (LON:NTBR) out with a bullish (almost effusive) trading statement this morning.

https://www.investegate.co.uk/northern-bear-plc--ntbr-/rns/trading-update/201802020700037094D/

Share price and stock ranks have tailed off a lot since last Autumn. Maybe worth a look if you have a mo’.

Gus

mercury61

Morning
Northern Bear (LON:NTBR) too for me. Can't understand the SP decline.from july 2017
Thanks

MrContrarian

My morning smallcap tweet: Just the one.

Northern Bear (LON:NTBR)

Northern Bear (NTBR) Q3 trading strong. Rev and adj pretax (cont) are currently ahead of management expectations and prior year. I hold.

matylda

Well Graham, if you're bored your views on Maintel Holdings (LON:MAI) would be much appreciated.

Those in the know liked it yesterday before the update and it seems the general market now likes it.

I note Paul wasn't overly keen a couple of months or so ago, considering it may be in Amazons cross-hairs.

Thanks in advance and wish you a great weekend.

ACounsell

Acquisition announced this morning by Fulcrum Utility Services (LON:FCRM) looks interesting so your views on that would be interesting. The market seems to like it with shares up over 4% this morning.

Ramridge

Morning Graham - Second request for Fulcrum Utility Services (LON:FCRM) please
It looks like a substantial acquisition. I make it that revenues and EBITDA of the acquisition would add roughly 50%. P/S approx. 1 , EV/ EBITDA approx 6. . Placing was done at only 1% discount. Can't find anything negative? Of course no idea about the profitability of the acquired co.
All IMO

Damian Cannon

If you have time it would be nice if you could cover yesterday's trading statement from Keywords Studios (LON:KWS) ? Everything seems pretty tickety-boo with this games development aggregator at the moment!

fwyburd

HI Graham
If you feel like it, Mobile Streams (LON:MOS) brought out an update after the open this morning. And if you have any additional thoughts on Spectra Systems (LON:SPSY) which Paul commented on yesterday, that would be great.

And if anyone missed it, I posted my notes from the very interesting Growth and Innovation Forum earlier this week here. https://www.stockopedia.com/content/report-on-the-growth-and-innovation-forum-30th-january-2018-307038/

have a great weekend

Francis

andrea34

I'm also interested in Northern Bear (LON:NTBR) and Fulcrum Utility Services (LON:FCRM) following the announcements; personally I think Northern Bear (LON:NTBR) is very good value, with a PER of under 10.

Paul gave a positive overall view of Fulcrum Utility Services (LON:FCRM) in early December when the interims came out. Since then I've kept a close eye on the price and it's dropped over 10% since then... so on this announcement I have taken the "plunge" and bought a dribble of a shareholding.

Anyone got an idea why Titon Holdings (LON:TON) is up 20% on no announcement? It's been covered here before...

Howard Marx

Re Fulcrum Utility Services (LON:FCRM), the company they are acquiring (The Dunamis Group Limited) was incorporated in Sep-15. Their last published accounts were for the y/e 30th April 2017.

The acquiree's Balance Sheet showed NAV of £14.2m. However, this is mainly intangible asset value as Dunamis itself grew via two large acquisitions (Matrix Networks & Maintech Power services). So the tangible asset value is close to zero.

Dunamis had Sales of £10m, gross profit of £3m but an operating loss of £0.8m. However the key reason for the loss was a £2m amortisation charge related to the mentioned acquisitions.

Unable from the accounts to estimate what economic moat (if any) Dunamis maintains.

https://s3-eu-west-1.amazonaws...

gary3980

Interested on thoughts on Northern Bear (LON:NTBR) too please - not saying much but what can we imply. Graham you have been positive before on this company. Cheers.

InvestedGeordie

Titon Holdings (LON:TON) was tipped by Simon Thompson in the IC, last night. As was Record (LON:REC) hence bounces from both

Re. Fulcrum Utility Services (LON:FCRM) Thanks for this additional info , Marx.
From today's RNS,
" For the 6 months ended 31 October 2017, Dunamis achieved unaudited revenues of £10.2 million and EBITDA of £1.8 million"
So it looks like their sales at least are well ahead of previous year's. FCRM's revenues forecast is £41m. Acquisition is bringing in around 50% additional revenues?

Small Cap Value Report (Fri 2 Feb 2018) - Share tips, NTBR, MAI, FCRM, MOS, PURP, KWS

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Graham Neary

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