Small Cap Value Report - Fri 27 April 2018 - talk at Mello Derby last night

Friday, Apr 27 2018 by

Hello everyone! It's Paul here!

As promised, here are my notes from yesterday's talk about small caps at Mello Derby- opportunities & threats. (text follows below)

EDIT: Here is the video recording of my talk, which I hope people find interesting.

To start, I made this checklist, inspired by Mark Minervini. here it is again;

(Ideally, I want to see nearly all items below ticked, before even considering an investment)


PRODUCT - fulfilling an unmet need in customers. Desireable, with pricing power.

RECURRING revenues ideally, or at least not lumpy

INNOVATIVE company, which launches new products and services - ahead of the competition

MARGINS - should be high, giving operational gearing - big upside when sales rise. Must have some moat also.

ENTREPRENEURIAL management - preferably founders & still big shareholders

SCALEABLE - company must be capable of growing 5x or more (e.g. retail roll outs, cloud-based tech)

ORGANIC growth - strong, and preferably accelerating.(not by acquisitions)

ASSETS - balance sheet must be strong (NTAV)

PROFITABLE - or close to it

EARNINGS estimates - from brokers - should be rising, and repeatedly beaten by actual results

DIVIDENDS - nice to have, but not essential

Other things

Any DOUBTS about business model, management, or accounts, then don’t invest

(Main influence for above list is Mark Minervini - trade like a stock market wizard)

Hello everyone!

Thanks very much indeed to David, Georgina, and everyone else who has organised or participated in this event.

Mello is such a refreshing change from other shows, in that the quality of the companies presenting here is so much better than other investor shows. Also, David has filled the show with POSITIVE ENERGY- what a wonderful thing, and a refreshing change.

EDIT - please note that Mello welcomed the Stockopedia directory of summarised info about exhibitor companies. Why? Because people at Mello (investors and exhibitors) are intelligent enough to understand that the StockRanks system is just one way of looking at the market, which is proven to have a great track record overall, for a portfolio (not individual stocks).

Also, Mello attendees understand that a stock being classified as a "Sucker Stock" is just shorthand for a higher risk investment. I have a big personal holding in Sosandar (LON:SOS) - that is classified negatively on Stockopedia - which doesn't matter to…

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way


As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>

Do you like this Post?
136 thumbs up
1 thumb down
Share this post with friends

27 Comments on this Article show/hide all

Warranstar 27th Apr '18 8 of 27

A big thank-you for your master class!
I will use it to generate a list of improvements to my processes.

| Link | Share
Lgarvey 27th Apr '18 9 of 27

Many thanks for spending the time writing that. A great read for a relative novice such as myself.

| Link | Share
Mike888 27th Apr '18 10 of 27

Really excellent video Paul, I would love to learn more about your spread betting philosophy and techniques, I know this is what caused your now infamous challenges in 2008 but I also assume it was spread betting that got you back to where you are now, at least in part.

| Link | Share
porban 27th Apr '18 11 of 27

Thanks Paul - fantastic stuff and really interesting video. Shame I wasn't there being in Australia currently but watching this video in the sun makes up for it somewhat (a hard life LOL)!!! Hope you enjoyed a well deserved beer, crisps and cheese afterwards. Cheers Peter

| Link | Share
FREng 27th Apr '18 12 of 27

Great article, Paul

If you have time, I'd welcome your views on the results today from Dillistone (LON:DSG) which I hold and which has the ultra-conservative Mike Love (of SCISYS (LON:SSY) ) as Chair. They report a small loss for the year as expected but a positive outlook and an inreased dividend. They are GDPR beficiaries because they saw it coming and developed a new product.

| Link | Share
dpo1130 27th Apr '18 13 of 27

Where is the video link, please!

| Link | Share
dpo1130 27th Apr '18 14 of 27

Found it now!

| Link | Share | 1 reply
mmc071 27th Apr '18 15 of 27

LON:FCCN going bonkers this morning. Up 20% on no news (apart from Paul saying it was a no-brainer!)

| Link | Share | 1 reply
tomg23 27th Apr '18 16 of 27

In reply to post #358213

Must be Paul backing up the truck and loading up with more

| Link | Share
Lennart 27th Apr '18 17 of 27

In reply to post #358103

Paul is right about micro caps. Much easier to buy than to sell. Often illiquid shares can only be disposed of in tiny numbers and over a long time frame if at all. Come a bear market and you are stuck with them. They are only fit for a bull market.


| Link | Share
hayashi22 27th Apr '18 18 of 27

Perhaps you could tell us where the video is or provide a link!!!

| Link | Share
hayashi22 27th Apr '18 19 of 27

I've found it as well............go to 'Discuss' and it is there

| Link | Share
Edinburgh Investor 27th Apr '18 21 of 27

Just made the above required reading before any buy. Thanks.

| Link | Share
ezlifeme 27th Apr '18 22 of 27

Is that a halo around Paul's head on the video link page?
Could well be with his recent performances

Excellent info with a decisive in sight as always Paul

| Link | Share
LANE 27th Apr '18 23 of 27

Paul todays post gets 10/10 thank you.

| Link | Share
crystal tipps 27th Apr '18 24 of 27


Your knowledge has the attributes worthy of an essential investor small cap work of non-fiction.
If you already have one, where do I buy it?
If you haven’t, what are you waiting for; get scribbling!


| Link | Share
barnetpeter 27th Apr '18 25 of 27

Really good reports this week...thank you.

Anyone interested in oil and gas small caps check out JOG Jersey oil and gas.

Results yesterday noted " Cash balances at year end of £25.4m and no debt". Very unusual for an oiler and a lot less risky that most in a very risky business.

| Link | Share
Smudge 27th Apr '18 26 of 27

Brilliant post Paul! All I need to do now is to do it!

| Link | Share
purpleski 27th Apr '18 27 of 27

In reply to post #358208

Could you share the link with us?


| Link | Share

Please subscribe to submit a comment

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 »


Stock Picking Tutorial Centre

Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis