Small Cap Value Report (Fri 21 Dec 2018) - TUNE, CRW, IDEA

Thursday, Dec 27 2018 by

Good morning, it's Paul here.

I'm putting in one final & unexpected pre-Christmas appearance here, as I had an interesting company meeting this week. So I offered to write this (Friday's) report, and give Graham the day off, incorporating my company meeting with Ideagen (LON:IDEA) this week. Plus any other company news which might appear on the day itself.

Incidentally, both Graham and I are pleased that the readership count has held up here, in such dire market conditions. You do sometimes wonder if it's worth bothering to write anything, when seemingly everything is tanking every day, regardless of newsflow.

Focusrite (LON:TUNE)

Share price: 472.5p
No. shares: 58.1m
Market cap: £274.5m

AGM trading update

Focusrite plc (AIM: TUNE), the global music and audio products company that trades under the Focusrite and Novation brands around the world...

This is a brief, but positive update;

"When we announced our full year results on 20 November 2018, we commented that trading for the year to date was broadly similar to the prior year.

November 2018 was a strong month and our revenue for the financial year to date is now ahead of the comparative period last year."

If we look at the Stockopedia graphs, the current forecasts (lighter blue blobs below) show a flattening of revenue & earnings. Clearly that is not enough to justify a forward PER of 26 (which implies much stronger growth);


My opinion - this is a good update, from a good company. However, in current more sceptical markets, the company needs to deliver stronger growth (hence more forecast upgrades) to justify the current valuation, let alone an increase in share price.

I think this is why the share price did not react positively to this announcement - partly due to people winding down for Xmas perhaps, but also that continued good news is already baked into the existing share price.

Craneware (LON:CRW)

Share price: 2305p
No. shares: 26.7m
Market cap: £615.4m

Trading update

21 December 2018 - Craneware (AIM: CRW.L), the market leader in Value Cycle solutions for the US healthcare market, notes the…

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Ideagen plc is engaged in the development and sale of information management software to businesses in various industries, and the provision of associated professional services and support. The Company is engaged in supplying governance, risk and compliance (GRC) solutions primarily to the healthcare, transport, aerospace and defense, manufacturing and financial services sectors. The Company’s portfolio products include Q-Pulse, Coruson, Pentana Audit, Pentana Performance and PleaseReview. Q-Pulse, which provides quality and safety management. Coruson,which provides cloud-based software solution. Pentana is an auditing software within its internal audit.It has operations in the United Kingdom, European Union, the United States, Middle East and Southeast Asia. more »

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Craneware plc is a United Kingdom-based company, which is engaged in the development, licensing and ongoing support of computer software for the United States healthcare industry. The Company's Value Cycle Solutions span over five product families, which include Patient Engagement, Charge Capture & Pricing, Coding Integrity, Cost Analytics, and Revenue Collection & Retention. Its Patient Engagement solutions include InSight Medical Necessity, Trisus Patient Payment and Patient Charge Estimator. The Charge Capture & Pricing solutions include Chargemaster Toolkit Discovery Viewer; Physician Revenue Toolkit, Physician Management Toolkit and Physician Revenue Toolkit-Corporate; Pricing Analyzer; Reference Plus; Pharmacy ChargeLink; Supplies ChargeLink, and Supporting Modules. Its Coding Integrity solutions include Trisus Claims Informatics and Bill Analyzer. Its Revenue Recovery & Retention solutions include InSight Audit and InSight Denials. It also offers professional services. more »

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Focusrite Plc is a music and audio products company supplying hardware and software products used by professional and amateur musicians. The Company is engaged in the development, manufacture and marketing of professional audio and electronic music products. It operates through three segments: Focusrite, Novation and Distribution. The Focusrite segment includes the sales of Focusrite branded products. The Novation segment includes the sales of Novation branded products. The Distribution segment includes distribution of third-party brands, including KRK speakers, Ableton, Stanton, Cakewalk and sE Electronics. The Company sells its products in approximately 160 territories and countries around the world. The Company offers Scarlett, which is an audio interface; Blocs Wave application, which is used by musicians to create their own sounds and songs on any iPhone Operating System (iOS) smartphone or tablet, and e-commerce Websites. more »

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  Is LON:IDEA fundamentally strong or weak? Find out More »

46 Comments on this Article show/hide all

Effortless Cool 21st Dec '18 27 of 46

In reply to post #429623

Hopefully "insightful", rather than "inciteful"?!

The latter is likely illegal.

Happy Christmas to you too, Mark, so long as you do not let Paul and Graham encourage you to too many acts of violence.

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cojode 21st Dec '18 28 of 46

Dear Paul and Graham
I would like to echo the view that the value, insight and humour you both to bring to this site on a macro but particularly on a share specific basis is both enlightening and entertaining in equal measure. After 35 years of investing this is the only commentary I read. The rest (and there are plenty of them!) can't hold a candle to you guys. Best wishes and I hope you and your families enjoy the festivities. I look forward to catching up when the market re-opens.
PS Paul I am pleased to see that your twitter feed is still running. I think you threatened to close it down. Your late night/early morning revelations should be compulsory reading for all insomniacs.

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truegent 21st Dec '18 29 of 46

nice reassuring trading update from Craneware (LON:CRW) since the sp has tanked with everything else recently, however when it peaked at £36 a few weeks back it was trading on a p/e of over SIXTY times so i think even after the fall its still highly rated at twenty quid. i sold half at £24 and still hold the rest. fantastic company, proper warren buffet business. highly cash generative, so much cash on the balance sheet and no debt. quality. merry xmas !

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gary3980 21st Dec '18 30 of 46

Would echo the sentiment that these reports are most definitely worth writing - possibly even more valuable in these times. "Be greedy when others are fearful", indeed! Easy to say in good times, harder in bad!

Merry Christmas to all the community at Stockopedia and many thanks to Paul and Graham for these brilliant reports throughout the year. They would be missed if they stopped, and I don't think there will be many- if any -readers who haven't benefited from them in one way or another.

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barnetpeter 21st Dec '18 31 of 46

Would be interested in thoughts on SGI the stamps people. Remember going there at Xmas over 50 years ago. Late news today

5 million loan at 5 per cent....repayable in them a chance

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gbjbaanb 21st Dec '18 32 of 46

In reply to post #429508

I have a sulk on :-) "shareholders" didn't reject the proposal to finish winding the company up (which has been on-going for over a year), Thalassa (as a major shareholder) did. Nobody quite has a clue why they'd do this - LSR have a handful of properties left to sell (9 IIRC), so they're just going to make the lawyers rich.

Mind you, Thalassa Holdings (LON:THAL) are issuing preference shares to existing holders that come with 10 votes per share, that lose the entitlement once sold. So the voting rights will migrate to the point where the board (or I assume Duncan Soukup) can outvote the rest of the shareholders. Its all looking rather dodgy.

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herbie47 21st Dec '18 33 of 46

Merry Christmas to Paul, Graham and everyone else who is on here, hope 2019 is a better year than this one.

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Edward John Canham 21st Dec '18 34 of 46

In reply to post #429663

Thalassa Holdings (LON:THAL)

The MV of this company is £15m - as far as I can see there is no logic to moving up to the main market. I conclude this is all about ego.

The preference shares are a profound issue. If they are allowed to move to the main market with this in place then any distinction between AIM and the main market is invalid.


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mustwatch 21st Dec '18 35 of 46

During these interesting times of great buying opportunities we need your posts more than ever. Keep up with the great professional work and all the best

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rkells 21st Dec '18 36 of 46

Paul - keep writing. It is equally important to analyse and comment on the way down.

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tony akram 21st Dec '18 37 of 46

"You do sometimes wonder if it's worth bothering to write anything, when seemingly everything is tanking every day, regardless of newsflow."

I would say that it is even more important when markets are so volatile as both of you offer valuable insight .

To both of you keep up the excellent work that you do I would be lost without you guys

Merry Christmas

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Armorduck 21st Dec '18 38 of 46

Yes please keep the reports coming. They are very much appreciated, in good times and bad. Perhaps more so in bad! The different perspectives from Paul and Graham are I think really useful for us followers to try and find our way in this exciting but dangerous investing world. Happy Christmas and New Year!

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DJCP 21st Dec '18 39 of 46

"You do sometimes wonder if it's worth bothering to write anything, when seemingly everything is tanking every day, regardless of newsflow"
This may give you some insight into what to do ... If it's good enough for the BBC ! lol
... on 18 April 1930, the BBC's news announcer had nothing to communicate. "There is no news," was the script of the 20:45 news bulletin, before piano music was played for the rest of the 15-minute segment.

@Mark Clenshaw #26
"Others have already said it but a further sincere word of thanks to P and G for their excellent and inciteful analyses."
On a share-related website, mentioning 'P and G' immediately bought 'Procter & Gamble" to mind ! lol ... perhaps Paul and Graham should now be jointly referred to as 'The Cleansers' - you may have to be >50 years old to understand that, but who would be Roger Moore, and who Tony Curtis ! lol

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Docharty 22nd Dec '18 40 of 46

Paul and Graham - just to add my thanks to you both for your excellent work. I agree with some of the comments above that we need your analysis now more than ever. If we're to success as investors it's important to make the distinction between speculating on price movements, and investing in quality businesses. If we're truly doing the latter, then we need your help to identify those businesses and to buy into them when the prices are most attractive - which, in many cases, is right now.

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Camtab 23rd Dec '18 41 of 46

A very happy Christmas and Prosperous 2019 to both of you and your families. Many thanks for being my constant companions, weekday mornings wouldn't be the same without you. I still have to work a lot on my discipline but generally I think you are slowly making an investor out of me. All the best.

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matylda 23rd Dec '18 0 of 46

Paul - I've had many a long "working lunch" but seriously !!!!

Only kidding - Much thanks and appreciation for all you and Graham do - Have a great great Xmas and New Year. Long may you both continue...

ps - I am sorry for doubting you cycled home that night :)

Blog: Briefed Up
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stargate2009 23rd Dec '18 43 of 46

Greetings to all.
Just starting out and find Graham and Pauls articles very interesting especially in this bad climate, I have only known markets generally going up so this is an sobering time, if I can learn something who knows I may come out of this better prepared for next time.
Happy new year.

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croftboy 26th Dec '18 44 of 46

Dear Paul and Graham, I look forward every day to your reports. You have helped my investing enormously over the years and it's very much appreciated.
Hope you both have a lovely Christmas and new year.
I look forward to reading your reports again next year.

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purpleski 28th Dec '18 45 of 46

Dear Paul and Graham

Just wanted to echo various other comments here today (as well as giving them a thumbs up) and thank you deeply for your superb analysis and commentary in the SCVR this year and past years. For me it is when the market conditions are dire (the past three months have been the hardest of 4 years investing - watching Fevertree Drinks (LON:FEVR) halve for instance when it is your largest holding) that I find reading your and Graham's columns the most useful and calming!

Your column is the ONLY investment blog/comment/article I make sure I read every day since I joined Stockopedia in May 2012.

Frankly I am amazed at how you find the time and focus to do these reports every day and if in 2019 you feel like a duvet day or do take them! You would be missed but not nearly as much as if you stopped writing all together.

You might find the book "Why We Sleep" - Matthew Walker interesting and really reinforces the importance of sleep and rest.

Best wishes for the New Year.


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Paul Scott 6th Jan 46 of 46

I've just seen all these lovely reader comments.

Thank you everyone & it's much appreciated!

Regards, Paul.

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 Are LON:IDEA's fundamentals sound as an investment? Find out More »

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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