Small Cap Value Report (Fri 20 Nov 2020) - TFW, WINE, SRT, QUIZ, TCM

19th Nov '20 by Paul Scott

132 comments 11826 reads

Good evening/morning, it's Paul here with Friday's SCVR.

Timing - I've got a Zoom meeting just after 3pm, so will need to be finished by then. Today's report is now finished.

Agenda - the first 3 items are backlog sections from yesterday;

Fw Thorpe (LON:TFW) - AGM statement (done)

Naked Wines (LON:WINE) - Half year report (done)

Srt Marine Systems (LON:SRT) - Interim report (done)

Quiz (LON:QUIZ) - (I hold) - stores update (done)

Telit Communications (LON:TCM) - another sub-optimal offer approach (done)

Let's start with some catch-up items, left over from yesterday, which I wrote up last night.

Fw Thorpe (LON:TFW)

Share price: 322p (down 2% at 14:43)
No. shares: 116.5m
Market cap: £375.1m

AGM Statement

This is a group of companies selling lighting equipment.

It issued an AGM statement at 15:15, which is most inconvenient. Far better to issue the text at 7am, so everyone can see it before the market opens, than issuing it during the trading day, when many smaller shareholders will be busy in their day jobs.

This trading update relates to FY 06/2021. It says;

"I am pleased to report that during the first few months of the 2020/21 financial year, despite the significant issues generally in the global economy, orders and revenue remain broadly similar when compared to the same period last year.

That’s encouraging, but the period covered is from July onwards, which was when lockdown had been lifted, and plenty of companies are reporting improved trading.

Lightronics factory fire in Sept 2020 - only minimal operational impact.

Outlook - sounds OK, but caution expressed;

Whilst management is satisfied with the current order situation, with order books around the Group generally healthy, both the COVID-19 pandemic effect and Brexit transition concerns are foremost in our minds. We plan for the future carefully, but at this present time we remain cautious about the Group's second-half performance."

My opinion - Stockopedia shows it on a PER of 24.3 times forecast EPS of 13.5p for FY 06/2021. Given the lacklustre growth in recent years, I really cannot understand why the PER is that high? Although the balance sheet is excellent, with surplus cash.

It’s quite a nice company, but it looks 20-30% over-priced to me, based on the figures available. Maybe holders/buyers…

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Anthony127

20th Nov '20

UK Investor 8888

Congratulations and thanks for sharing your great story.

What an incredibly volatile year. But it shows what is possible. This will help me to keep persevering.

Cheers

UK_Investor_8888

"I'm still not fully invested, still holding nearly 50% in cash, and slightly kicking myself over it"

Its a tricky one.

I recirculated or added £200K between 04/03/2020 and 31/07/2020, so picked up either high StockRankers or Magic Formula leaders at rock bottom prices.

I figured, if The BBC / Guardigan / Media were saying "we're all doomed", there was a good chance the opposite was the case, 75:25 chance we wouldn't end up like "Mad Max II".

Also, I was exceptionally lucky to have £170K investment in Plus500 (LON:PLUS) from Autumn 2018 which I was able to close with around about £50K's gain including the dividends. Pure luck, that my biggest loser became a massive winner. I thought 1375p was good, and sold too early.

I also sold my builders Taylor Wimpey (LON:TW.) and Persimmon (LON:PSN) at a good capital gain in their summer rally, thinking they would pull back after their good news. They did, but they have resurged in this rally.

I can't be certain...

I think we will see another 10% added in values in the next month or two, until some bad news finally catches up. Gut feeling is I'm looking for a Santa Rally, then I've probably got to sell 2/3rd to buy a house in 2021 Q1.

I am very impressed with Paul's SCVR from Monday. He's written a credible argument for some stocks. Its a market for careful selection as always based on a rational conviction.

None of us saw the bug coming 12 months ago.

Samsgrandad

Possibly the last word on wine. I worked in Malta for six weeks in the early eighties. It was late in the season and the nights were getting longer so with a a young family evenings in were made slightly more bearable with a glass of wine . At the beginning a bottle lasted two nights between my wife and me, at the end we struggled to keep to one bottle a day. This marvellous (by then) local wine was cheaper than the bottled water at 50p including 20p returnable deposit on the bottle. Happy days.

rmillaree

I need to learn new stuff and double my brain capacity! Gurus please!

How about taking the bookies for £1k and donating proceeds to Zane - i can provide tips :)

George00

Love your posts effortless, acerbic but with credibility.......

Boon

For those holding shares in companies with final salary pension scheme liabilities...

Might want to dig into today's court ruling on equalising payments back to 1990 of those who withdrew from those schemes. Could be an extra hit to pension scheme deficits... https://on.ft.com/3pOssGn

What do you think of Tp Icap (LON:TCAP) given you like financial....... Looks a buy to me. I don't hold but used to....

Effortless Cool

Thank you, George - acerbic is my middle name (which made my school days challenging).

JohnEustace

There is a quite well known national chain in the US called Walmart.

I never went in one either so can't comment on their wine selections. I was in Pennsylvania where you can only buy from a state controlled liquor store. Those Puritan roots run deep.

Paul Scott

Very kind Tony, but I'm hopeless at managing my own portfolio! Too erratic, and unstable, I just don't have the right mindset needed to manage a portfolio. I just like doing the research, and occasionally hit a big winner, which is all I need. Once I realised that, things got a lot easier.

But today is all about UK Investor 8888 hitting a lovely milestone. Normally I think it's vulgar to talk about portfolio value, but when you pass a big milestone, you want to share it with your pals! And the ones who are REAL pals, will be happy for you. They're quite rare, in my experience.

Best wishes, Paul.

How about taking the bookies for £1k and donating proceeds to Zane - i can provide tips :)

I took £3.5K off Ladbrokes on BREXIT.

Paul,

I am always saying thank you to you, and the other great posters.

Also thank you to Ed Croft and his team for the StockRank toolkit.

Personally, I always feel like I am muddling by in this. My inverse-Midas anti-alchemy of turning £720K into £480K back in April wasn't exactly a great item for the C.V. nor of the art of investment.

We have two factors in our favour:-

Q+V+M +Yield
Time

Even if an investor picks a share that loses, its possible that time corrects it back to equal if one either sits it out OR just rebuys a substantially better share.

I think we've said this many times: If you can get 6 out 10 right, you should profit.

mark1308

21st Nov '20

Very true , he does tip often so will have some stinkers ! However you only need a few good ones to outweigh the bad. 6 out of 10 is usually more than enough to be a winner. I dont think ST does hide his poor picks either ! He still tips some and i seem to remember Kape Technologies (LON:KAPE) was a loser for ages until it shot up.

Logical David

My dad always told me that a man with £23 million is no happier than a man with £22 million. So what is a £1 million between friends!!

Congratulations are due UK_Investor_8888 on your achievement.

Regarding "I figure its just maths: Whether you have £1 or £1M, you should be able to grow that sum at roughly 20% PA."

I always remember my dad telling me that a man with £23 million is no happier than a man with £22 million. So what is £1 million between friends?

Good luck in finding a nice house next year.

Hi Berksbee, I have taken a glance at 600 (LON:SIXH) and I have to agree with Paul's view on the company, it is not a share I would want to invest in. Looking at the Stocko metrics there are too many things I don't like about it.

55555

Totally agree ... it's being open and honest, as well as being interesting and motivating.

dustyie

For those following naked wines Naked Wines (LON:WINE) i posted a link below to this week presentations (page 32 ... outlook )
As a share holder i think this company has it sights on a US listing next year or so . to fund its expansion plans ,it dosen't seem have any intentions of reducing it marketing budget. it sales will probable push sales over billion in two years . just my thoughts ... it could pay off .. it high risk.

https://www.nakedwinesplc.co.uk/investor-centre/results-centre/

click on pdf file for the presentation

Westway001

But I guess a man with £1 million is happier than a man with £480k....?

mojomogoz

Congratulations. Beers on you somewhere 8888....

Out of curiosity, what is the single personal quality you believe has been most important to success?

My experience of 2020 to date mirrors yours greatly....and it seems a lot of us are in similar position. I always feel nervous when I experience the same as everyone else as I'm trying to avoid the crowd!

IMO I'd generally caution against the idea that 20%pa is normal or readily achievable with diligence etc. Clearly some people will hit that high point on return distribution. I aim for double on a 3-5 years horizon (so 15-25%pa)...not a hard and fast target but a gauge of risk in that I must deviate far from consensus to get to it. So I must feel really uncomfortable and borderline stupid if I'm going to hit my target....If I feel over confident or relaxed then I am hubris.

I had a sort of semi academic career in investing whereby I researched markets and fund managers professionally (at the high and/or esoteric risk end of spectrum) with huge access to high profile investors and portfolio data etc. 20%pa is an extraordinary number to compound over long periods and if you are taking enough risk to get it you are also taking enough risk to lose very quickly. (Note, I wouldn't claim I'm stock picking expert either as I've only done it for about 5 years actively once outside of compliance restraints and I've got plenty to improve).

I think looking at high returns that some well known (and lesser too) Twitterati publicise is hazardous for personal wealth....my view is do your own thing and feel nervous when everyone agrees with you or you agree with everyone. There is some element of herd impact and success going on with those corralling the herd benefitting most.

I like QVM a lot....but I feel that people over believe in their ability to harness its power to their wealth....its not the good times that will tell but the bad. March 2020 was very bad and also historically asynchronous in terms of how well the recovery went afterwards. I feel that people have also come to believe that they can time when a big market correction is coming and/or when it's over and it's a very dangerous belief not borne out well by longer and global history.

My forecast is the 2020s will be like an economic renaissance (a boom after 2010s semi-depression to the mundane real economy) but quite challenging to markets....the reverse of 2010s...I believe a lot of PIs will wish they didn't take much risk thro this coming decade.

I'm not trying to be a curmudgeon! (I may succeed tho)

Small Cap Value Report (Fri 20 Nov 2020) - TFW, WINE, SRT, QUIZ, TCM

Fw Thorpe (LON:TFW)

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Paul Scott

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