Small Cap Value Report (Fri 27 Aug 2021) - AIR

27th Aug by Paul Scott

44 comments 7144 reads

Good morning, it's just Paul here today, with the SCVR for Friday.

Update at 08:28 - that was easy, only 1 company in our small caps area reporting today, so I'll sign off now, as have other jobs to do - wishing you all a lovely long weekend! Today's report is now finished.

Agenda -

Paul's section:

Air Partner (LON:AIR) - announces an acquisition. Positive trading update, with H1 profit of at least £3.7m. Lots of moving parts in this small group, some being helped by the pandemic, others being harmed, so it's difficult to work out how the group might perform once travel conditions normalise.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to cover trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

Paul's Section

Air Partner (LON:AIR)

84.6p (pre market open) - mkt cap £54m

Acquisition - of Kenyon International Emergency Services Inc.

Air Partner acquires world leading emergency planning and incident response company

Price paid: $10.3m, plus up to $1.4m deferred - so a fairly significant sized acquisition, relative to AIR's £54m market cap.

Funded from existing cash resources.

Post transaction, the Group has net cash of £8.3m, excluding JetCard cash, and access to a debt facility of £9.5m.

More details here - video is an excellent way to explain acquisitions, so I hope more companies do these -

Trading update -

Continues to trade strongly
H1 (Feb-July 2021) underlying profit before tax will be >£3.7m
Private jets doing well
US performing very well, with leisure travel for…

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sg31

27th Aug

I'm having difficulties with letter deliveries. I spoke to the postman who said they are short staffed and most letters sit in the depot for 2 or 3 days before being delivered. Doesn't matter if it's first or second class.

I asked if it was due to covid but he said it wasn't, they just wouldn't employ extra staff.

I've no idea if this is a local issue or not. I'm just mentioning it as something that might be of interest before investing..

RayStraw

I think investing in the technology will be expensive and may not work. The forecasts look pretty flat for the next 2 years although they have been revised upwards recently. Not sure I have much faith in the management and then there are the unions to contend with. I look for growth stocks more than value, I have ben tempted by a few VM (value/momentums) stocks this year that have not worked out, so I prefer QM stocks. RMG is a top QM stock but I'm struggling to see much growth, I'm inclined to feel that parcels could decline in the next 2 years. But the shares are down 20% from their peak so it could be a good time to buy.

sharw

sg31 - you are not alone - Royal Mail (LON:RMG) has this problem all over the place. Just put:

royal mail spokesman "disruption to service due to COVID related absences"

into google and see what happens!

imranawan

Out of interest who is your favourite YouTube commentator on shares?

rmillaree

Hello imranawan
As per the original post today the you tube channel is called "the popular investor"
here is link to you tube channel
https://www.youtube.com/channel/UC-CfltxhlMMCT5pJNIfQhlQ/featured
and here is live portfolio tracker detailing live performance of his portfolio including monthly stats - current holdings etc - you can click on current holdings to see when they were added.
https://www.etoro.com/people/robertmerc/stats
I would say for a one man band its a highly professional outlook this gentleman has with regard to everything he does - top notch interesting stuff IMHO.

MichaelFBS

Hi Paul

A bit late in the day but any thoughts on the announcemnt of the T Rowe Price holding in Boohoo (LON:BOO) I hold.

There are a couple of coments on the General Discussion page at

https://www.stockopedia.com/co...

Have a good weekend.

Regards

Michael

Roger Baron

Even later in the day - but good to see that Morgan Stanley bidco suggesting shareholder of Augean (LON:AUG) (I hold but sold 20% yesterday) do nothing. Would be nice to have a bidding war.

abtan

Hi Roger

Please accept my apologies for the slow reply.

I'm away at the moment and using my phone for comments during the day just doesn't work, especially for longer responses.

You asked for pointers on European stocks.

I must be honest and say that I'm not sure what I can add will be that useful, but here are some thoughts off the top of my head.

I generally source my ideas from 3 places:

Someone making a mention of an interesting company;
The Stockopdia Daily Biggest Risers page (it's only on the old version I'm afraid, which is sadly being retired in a few weeks);
My own Stockopedia screens.

2. and 3. are definitely the greatest resource for finding new stocks, both UK and European.

Beyond that, many European-listed companies publish their reports + do online presentations in English, so there isn't really much difference vs researching a UK-listed company.

https://www.introduce.se/ run fantastic day webinars full of presentations by predominantly Nordic-listed companies, with much (all?) of it in English.

I recall seeing a presentation on there from CTT and coming away very impressed.
I don't have a position, but I keep a close eye on it as one day I might do.

https://www.ctt.se/investors/

https://www.stockopedia.com/sh...

European broker notes do exist and sometimes are available for free on a company's website. For example:

https://www.ezag.com/home/inve...

https://www.northmedia.dk/en/i...

I have tried investing in foreign companies with no English Investor Relations page, but it just hasn't worked for me.

---

As for wanting to use Euros, I personally just take the FX hit when investing abroad. If I think a company will go up +100%, a 10% adverse FX movement is something that I can live with. I think there was a Discussion on this forum a few years ago, which provided interesting insight from quite a few people on this. Perhaps someone can find it and share here?

---

Thank you for your comments on Made.com.

I like the company and have my finger close to the buy button. but I'm holding off until I see the impact of the higher freight costs. Based on your son's experience, perhaps there will be a slow down in revenue soon too?

Westwing have finally announced increased freight hitting their operating profit margins, but the share price has not suffered (yet). I wonder whether Made's share price would suffer though given the sentiment of it being a recent IPO?

On a similar note to the above, I should add that many foreign companies, like Westwing, generally have webcasts in English, which are then published on their website. I find this most useful.

I've also found European Investor Relation teams generally quite good at engaging with English-speaking investors.

----

Apologies for rambling, I have no idea if the above helps in any way.

I should add that without a Stockopedia multi-region subscription I never would have found most of the international companies that I have invested in.

Good luck and happy investing.

gus 1065

28th Aug

Hi abtan.

Interesting comments about overseas shares. With a couple of exceptions (shares held over from previous employment/ company distributions) I only hold U.K. listed shares. All of my overseas stuff is either in ITs/OEICs or ETFs. With the possible exception of Saxo Bank I’ve yet to find an attractively priced/easy to use platform for dealing on other exchanges. (Most likely indolence too!) Was this the historic thread discussing FX charges you had in mind?

https://www.stockopedia.com/co....

Gus.

AndrewWebster

Hi, I wonder if anyone can advise me? I am relatively new to investing. I have invested about £40K since the beginning of the year in an ISA with H&L. Mainly large caps so I purchase a larger holding thinking this is sensible due to the £11.99 fee to buy & sell. Currently 12% up so not too bad for a beginner although I plan to hold for 10 years plus.

I have opened a freetrader plus acoount and invested about £15k in smaller companies. As these are smaller holdings I wanted to avoid the fees otherwise the % gain doesn't make sense to me and I don't plan to hold these for as long. Currently 15.9% up.

However, some companies are not always available. For instance I did some research on UPGS a few weeks ago but not available on freetrader so didn't make the purchase and they have gone up so missed the boat maybe. Was thinking of doing more research on Air Partner but just checked and not available on freetrader either.

Hope I don't sound stupid but am I missing something?

peterg

It looks like you need Freetrade + (£9.99 pcm) if you want to be able to trade a lot of stocks.

However, you should remember - there are no free lunches! If Freetrade are not charging commissions they are making it in other ways, and that will likely be via the prices they offer when buying and selling. That may make sense for smaller portfolios and trades, but as the trade size increases you may end up losing more money on poor trade prices than you would pay in commissions

There will be restrictions with platforms such as Freetrade, not all stocks will be available and prices may not be as good as the more expensive platforms, you may have more trouble selling if there is a problem. You could look at Ig Group (LON:IGG), £3 per trade, prices same as HL on all the ones I checked, sometimes even cheaper. They also have all UK stocks available same as HL as far as I know. I moved most of my account from HL, their fees are too high and their service has gone down. HL fees on foreign stocks are even worse with their 1% forex fee.

Thanks for your reply Peter. Funny you mentioned buying and selling prices on Freetrader because I suspected that but thought I was imagining things. As I have got a little wiser over the past 6 months I have clocked that the buying prices are slightly higher. I have experienced an attempted purchase being rejected over 5x in a 10mins period by which time the price has gone up 10% +

I will check out IG Group as suggested by Herbie.

Thanks for your reply Herbie I will look at IG Group. I think you are absolutely right about HL fees and their service. You have confirmed my decision not to put my next ISA allowance in. Of course thats 2022/23!!

Just looking at another company but yet again, not available on Freetrader! Doing my head in when the first thing you need to do is see if it is available before doing any research!

I also had a lot of trouble with HL transferring my cash to another ISA provider, they delayed it as much as possible, it took over 4 months. IGG are not perfect, their contact by phone is bad, but I rarely have to phone up.

Gnome2

29th Aug

Andrew, well done for taking the plunge and it sounds like you’ve got off to a solid start. I just wonder why it is that you have made a distinction between large cap shares which you intend to hold long term and small cap shares for shorter term?

There are many good quality small cap shares that could be good long term holdings. Up Global Sourcing Holdings (LON:UPGS) is one that I hold and intend to hang on to. I don’t hold £AIR but I think it’s one of Lord Lee’s holdings and he’s definitely in the long term buy and hold camp. The point is that it’s often the smaller cap shares held over the long term that can really power your portfolio.

Just something to think about.

Andrew - I agree with Gnome2 - don't get into large cap/small cap or long term/short term boxes, just find what works for you. My best share has been a company called Cadcentre. I bought it when it had a Mcap of £50m. It is now called AVEVA (LON:AVV) and has a MCap of £12.6bn. Were it not in my ISA I would have a potentially very large CGT charge.

As well as IG you could look at xo or iWeb. Both have low dealing charges and no standing charge, including ISAs.

Hi Gnome thanks you very much for taking the time to reply and I value your comments. I have reflected on what you have said and it has prompted me to have a rethink. Especially with the similar post by sharw. Large caps seem to be 'slow burners' and my % gain is higher on mid and small caps which seems to prove your point. I think I am right in saying this is the difference between value and growth investing. Both have their pros and cons.

I will still need to solve this issue of stocks not being available on Freetrader but you have all kindly offered me some good alternatives which I have time to research over the bank holiday weekend.

Hi sharw thank you for your reply. Yes I have wondered what I will do if one of my holdings in Freetrader skyrockets and I have to pay CGT because it is not in my ISA and think I have made a mistake. I sure am on a massive learning curve! I am definitely having a rethink after your comments. Thanks for the dealing suggestions, I will have a look at these options over the weekend. Well done with Cadcentre btw.

Time in the market not timing the market is one of my favorite sayings already!

I am 51 and wish I had started investing years ago but we can't turn the clock back. It will be interesting to see where I am in 5 years time with my investments but at the same time we don't want to wish our lives away!

Thanks once again for your suggestions.

It's hardly a mistake if you have made significant profits enough to need to pay some tax. Don't let the tax tail wag the dog.

Small Cap Value Report (Fri 27 Aug 2021) - AIR

Paul's Section

Air Partner (LON:AIR)

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Paul Scott

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