Small Cap Value Report (Fri 23 Feb 2018) - DRV, SGI, RMV

Friday, Feb 23 2018 by

Good morning!

Stocks I've noticed so far are:

  • Driver (LON:DRV) - trading update, "comfortably ahead of Board's expectations".
  • Stanley Gibbons (LON:SGI) - proposed refinancing.
  • Rightmove (LON:RMV) - final results.

If you have any further suggestions, please let me know.

Also, Paul updated yesterday's article in response to many reader requests, so there are many stocks covered in that article now. You can read it here if you like.



Driver (LON:DRV)

  • Share price: 75p (+15%)
  • No. of shares: 54 million
  • Market cap: £40 million

Trading Update

This is a "global construction consultancy". It helps clients manage large building projects by providing a range of consultants from a wide variety of disciplines.

It was unprofitable during 2015 and 2016, then was refinanced in early 2017 and recovered to make a small profit last year. Paul described it as a "nice turnaround situation" when those results were announced.

The StockRank has recovered from a very weak score a year ago, to the current fantastic score:


Today's update informs us that performance continues to improve:

Trading results in the first four months of the financial year ending 30 September 2018 are significantly ahead of both internal forecasts and the equivalent period last year. Current activity levels are also high and the Group has a healthy pipeline of potential assignments for conversion in the months ahead. Taken together these factors indicate that the outcome for the year as a whole is likely to be comfortably ahead of the Board's previous expectations.

So we are "significantly" ahead for the first four months of the financial year, and therefore the full-year results are likely to be "comfortably" ahead of expectations.

Why the discrepancy in language used between these time-frames? There is no guarantee that business will continue to be lively, of course.

At the annual results statement, the Chairman reiterated that it is "notoriously difficult to predict activity levels", and that "fluctuations in activity" are a feature of the business.

I was badly stung investing in a firm providing professional services to the construction industry, which has soured me from returning to the sector. No matter how cheap a company in the sector looks,…

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All my own views. I am not regulated by the FSA. No advice.

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Driver Group Plc (Driver) is a United Kingdom-based company, which provides consultancy services to the engineering and construction industries. The Company conducts its operations through three operating divisions: Europe & Americas (EuAm); APAC, Middle East & Africa (AMEA), and Initiate. The EuAm and AMEA divisions provide various services, such as quantity surveying, litigation support, contract administration, and commercial advice/management. The Initiate division offers development, project and contracting management services to the infrastructure market in the United Kingdom. DIALES is its witness support service provider. Driver Project Management provides the strategic and leadership disciplines necessary to develop and deliver a project. Driver Project Services provides customer-focused project controls solutions across a project lifecycle. Driver Trett provides multi-disciplinary consultancy services to support delivery of its clients' projects. more »

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The Stanley Gibbons Group plc is engaged in trading in collectibles; dealing in antiques and works of art, auctioneering; the development and operation of collectible Websites, philatelic publishing, mail order, retailing, and the manufacture of philatelic accessories. The Company's segments include Investments, Philatelic, Publishing and Coins & Medals. The Company's Flexible Trading Portfolio (FTP) allows users to invest in rare tangible assets. It allows users to discuss their options and objectives with one of its Investment Portfolio Managers. more »

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Rightmove plc is a United Kingdom-based company, which operates as a property portal. The Company's principal business is the operation of the Website. The Company's Website and mobile platforms provide online property search. The Company's segments include Agency, New Homes and Other. The Agency segment provides resale and lettings property advertising services on The New Homes segment provides property advertising services to new home developers and housing associations on The Other segment consists of overseas and commercial property advertising services and non-property advertising services, which include its third-party and consumer services, as well as data and valuation services. The Company offers its services through estate agents, lettings agents, new homes developers and overseas homes agents offering properties outside the United Kingdom but interested in advertising to the United Kingdom-based home hunters. more »

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

42 Comments on this Article show/hide all

matylda 23rd Feb '18 3 of 42

Morning Graham, hope you're well, Driver (LON:DRV) comment would be welcome.

Thanks in advance.

Blog: Briefed Up
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iwright7 23rd Feb '18 4 of 42

Another vote for Driver (LON:DRV).

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yellowdog 23rd Feb '18 5 of 42

Off topic I know. I see this morning someone called Intrepid Capital Management have taken 7% of Gattaca. I know you have covered this company before many times and wondered what you make of this news?

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mojomogoz 23rd Feb '18 6 of 42

In reply to post #329448

Hello yellowdog

Excuse the interruption. I met these guys in their Jacksonville office about 10 years ago. I don't think they did global at that time and just US. They were small cap contrarian and special sits minded guys. The founder has a good track record in US. Detailed work and willing to take a lot of risk going against the grain (he's proper southern red neck and I think he'd be pleased with that description not annoyed...defo not Wall St standard issue...likes his Nascar and guns and thinks we Brits and Europeans are all a bit commie). I noticed them in the UK as they have a decent size holding in Quarto Inc (LON:QRT) a stock I know and have analysed in detail (I held, got out before it fell as realised the complex number didn't add up). FWIW I think they are making a mistake in seeing value in Quarto but I might be wrong and them right. I think the stock is a private take out at low to zero level due to debt its underlying earnings can't support...but the founder is buying stock and another interested party so looks like they may seek control even at a premium from current price...looks like madness or non financial motivation from what I can understand. To be fair to them they did buy in after the falls and somewhere around lows.

The global fund is very small so they can invest right down the cap scale. The US founder very good IMO. The Quarto thing made me doubt whether they were doing their work outside US.

All the above said, knowing they are interesting in Gattaca makes me think I should look at the stock.

Best wishes

Added for clarity: To be clear....the founder of Quarto is estranged from the company for approx 5 years and probably quite sore about how it not an insider

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drvodkaquickstep 23rd Feb '18 7 of 42

In advance of Graham's overview of Driver (LON:DRV), investors may be interested in this excellent presentation by Mark Wheeler COO of Driver. I have been invested since the mgt team shake up and refinancing and have high expectations for the group as they start to deliver strong margins off the back of a refocused business.

I anticipate them being acquired for in excess of £60m in the coming years although quite often this is not always the best outcome for investors.

AGM on 28th Feb at 3pm in London.

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mojomogoz 23rd Feb '18 8 of 42

In reply to post #329458

PS to be clear....the founder of Quarto is estranged from the company for approx 5 years and probably quite sore about how it not an insider

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andrea34l 23rd Feb '18 9 of 42

Off topic.... you're looking very smart in your new photo Graham ;-)

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Mrken 23rd Feb '18 10 of 42

A general question regarding notification of a major holding in a company via a Form TR1/ RNS. For example this morning a Killik reported a change in regard to Fulcrum Utility Services of 5.2%/6.02%. My question is - how can i tell if the holding went up or down??
Thankyou in anticipation.
Mr Ken.

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Effortless Cool 23rd Feb '18 11 of 42


These notification forms seem to be designed to make what should be a simple communication unnecessarily opaque and confusing. You will, however, find one %age is labelled "previous" and one is labelled "resulting". For example, the announcement you mention regarding Fulcrum Utility Services (LON:FCRM), the shareholding has been reduced.

Resulting situation on the date on which threshold was crossed or reached

Position of previous notification (if applicable)

EDIT: Simoan explains below that this was due to more shares being issued, rather than a sale by this shareholder - another example of how these announcements fail to communicate relevant information clearly.

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sharw 23rd Feb '18 12 of 42

In reply to post #329503

edit - answered by Effortless Cool while I was typing

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Funderstruck 23rd Feb '18 13 of 42

In reply to post #329478

HHMMM; is One allowed to say such things in the current Liberal, Liberal space...... corresponds methinks very much to a Whistle.

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Mrken 23rd Feb '18 14 of 42

Thankyou very much Effortless Cool. Also sharw.

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simoan 23rd Feb '18 15 of 42

In reply to post #329508


These notification forms seem to be designed to make what should be a simple communication unnecessarily opaque and confusing. You will, however, find one %age is labelled "previous" and one is labelled "resulting". For example, the announcement you mention regarding Fulcrum Utility Services(LON:FCRM), the shareholding has been reduced.

I have no idea why these RNS announcements are so confusing and very often misleading either. Something should be done about it. There was a share issuance on 6th Feb following an acquisition so Killik have not sold a single share, they just hold less as a % of the shares in issue. Quite why it's taken over two weeks for this announcement to see the light of day is another matter entirely...

All the best, Si

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yellowdog 23rd Feb '18 16 of 42

In reply to post #329458

Thanks lavinit for the comments. I like your description of the founder.
I've been in and out of Gatc for years but thought after the last trading statement that would be it for me as the company continued to disappoint. However after todays news i am going to revisit it.
They have gone to 7% fairly quickly. I assume from your reply that ICM are an investor not an activist?

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Graham Neary 23rd Feb '18 17 of 42

In reply to post #329393

re: Driver (LON:DRV)

Hi matylda, there wasn't much to discuss with it just being a short trading update but I made a few comments anyway :)

Thanks for the suggestion

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mojomogoz 23rd Feb '18 18 of 42

In reply to post #329558

I think they would self define as investors not activists. Frankly its quite a grey area unless you are someone like Ackman that shouts to the world you're an activist or total hard case battler. With Ackman I feel his activism is self-promotion and fund raising schtick (I've met him a couple of times and very pleasant and affable...but having met battler activists too I never felt he was in that mould...but I met him before the Herbilife stuff etc).

I'd compare ICM founder (don't know with global PM) to someone like Odey who I also dropping :) UK that is very forward on pointing out what is wrong with a company in private but not usually public with it. I'd love to have been in the room for discussions that Crispin and Mike Ashley would be sparky but I reckon they'd get on like a house on fire too.

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iwright7 23rd Feb '18 19 of 42


Thanks for covering Driver. On the face of it Driver (LON:DRV) is a construction consultancy.  However I notice it has very good quality metrics for its sector and after more digging I noticed this:

 Chairman Steven Norris said in December: "The Group's strategy remains to focus on those areas of expertise where we have a particularly strong position, in claims and dispute resolution and in expert witness work, and to consolidate the Group's position as one of the pre-eminent firms in its areas of expertise. Concentration on this clearly articulated aim has demonstrably so far delivered rapidly improved revenue growth and better profitability."

Perhaps Driver is more attractive than it seems and more upgrades are to come?    Ian  

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matylda 23rd Feb '18 20 of 42

In reply to post #329563

Nevertheless, much appreciated.

I didn't really know how to take the statement but it seems the market has taken it with much more bullishness than I am inclined to give it.

A great weekend to you and thanks again as always.

Blog: Briefed Up
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threeputt 23rd Feb '18 21 of 42

In reply to post #329543

I couldn't agree more about these holdings notifications, they are designed to confuse

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WhaleHQ 23rd Feb '18 22 of 42

In reply to post #329478

andrea34l is clearly Graham's mother :D

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

About Graham Neary

Graham Neary

Full-time investor and independent analyst. Editor at Cube.Investments, small-cap writer at Stockopedia. Previously a fixed income analyst in the City and institutional fund manager. I'm a CFA charterholder and have the Investment Management Certificate and STA Diploma in Technical Analysis for good measure. When I'm not talking about finance, I enjoy recreational poker, chess and Mandarin Chinese. more »


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