Small Cap Value Report (Mon 12 June 2023) - NETW, AO., STAF, FUM, LTG, RWI, OMG, IDOX

12th Jun '23 by Paul Scott

53 comments 7205 reads

Good morning from Paul & Graham!

Mello Monday starts at 5pm tonight, and it's free - details here.

Today's report is now finished.

Weekend podcasts went up as usual through the main podcast channels, or here on the web. I tinkered with the format to include lots of reader comments, but it doubled the length to over an hour, so I might need to re-think that! Apologies for the poor audio quality on part 2, I'm not sure what went wrong, but I'll invest in a new microphone this week. Do spread the word, if you think they're useful. I'm amazed anyone is listening, given how awful small cap markets have been for some time. Still, bear markets lay the groundwork for the next bull market, and valuations are looking very cheap!

Also I updated my SCVR summary spreadsheet yesterday (a quick reference tool), see below in reader comments for the link (not for sharing outside Stockopedia please!)

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review 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 are analysing the company fundamentals, not trying to predict market sentiment.

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.

What does our colour-coding mean? Will it guarantee instant, easy riches? Sadly not! Share prices move up or down for many reasons, and can often detach from the company fundamentals. So we're not making any predictions about what share prices will do.

Green - means in our opinion, a company is well-financed (so low risk of dilution/insolvency), is trading well, and has a reasonably good outlook, with the shares reasonably…

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Paul Scott

12th Jun '23

How lovely, thank you, I'm glad you enjoy my podcasts :-) I enjoy making them too, it's a good chance to have a recap, and a good moan occasionally!!

Rusty2

I just don't understand their figures at all. Utilities are down, is that because we are using less energy now we are in summer? Utility prices have not come down yet, they will be from July. Housing costs are going up not down.

Where can you find the breakdown for the UK, I can only see fir the USA, Utilities there are only about 5%.

TRADERWEEKS

Paul, great audio posts over the weekend - sound track to our motorbike rides round Romania a few weeks ago!

Good to hear your looking at an interview with OMG - I have held for the last few years and I appreciate the summary notes on the webinar. Stuck away in the LISA for the long haul with top ups on dips I think! Like you said - hopefully the cash is used wisely !!

wildshot

Thanks for sharing Paul and appreciate the resources provided which are to be exclusive for Stockopedia subscribers as ourselves. Maybe worth pointing out someone drunkly shared this link on Twitter on 5th June I believe.

martinji

hi Paul, really enjoyed the podcasts as usual - in fact even more so than usual with the bumper extended edition!

I think it might be a good idea to have a weekly thread on here with a link to your podcasts, for people to put their thoughts and comments? Now that you are no longer hosting them on your own site, there's no obvious place to feedback comments apart from on here, where they get muddled together with the daily SCVR comments.

That's kind, thank you! Not another thing to set up! Just bung the comments in here for the podcasts :-)

Thanks! I've just left a voicemail for OMG's CEO, asking if he'll do an audio interview with me, so I'll report back if he responds.

rogerh

It would be interesting to hear why the directors sold over £3million of shares this February, which included the CFO offloading almost all his.

Wimbledonsprinter

Following WE Soda’s announcement last week of its upcoming IPO in London, ACG (a SPAC /blank cheque company) announced today it will raise $1bn (backed by Glencore, VW and Stellantis) to form a London listed nickel miner (based on two Brazilian mines it will acquire). A second vote of confidence in the Lindon Stock Exchange (at least from primary producers).

There is an impressive list of backers of this project, which highlights how important sourcing battery grade nickel is seen by automobile OEMs. Hopefully this is a positive read across to Horizonte Minerals (LON:HZM) - I hold . HZM is currrently constructing its first nickel mine, Araguaia, in Brazil, where the nickel is not targeted at the battery market. Although HZM’s second Brazilian project is supposed to be producing nickel aimed at the battery market. Glencore has also bought into Horizonte Minerals (LON:HZM)

davidallen77

More news out on Wentworth

rmillaree

According to Truflation's methodology the UK inflation rate is 13.36% vs. govt reported rate of 8.7%!

i suspect we can get whatever stats we want if we look hard enough !!

ref your quoted amounts

note if you flip to usa the equivalent figure is only 2.75% with the rate showing reasonably straightine decreases from peak of 12% last year.

The uk rate has showed decent decreases from over 20% in january

In summary there is a very clear downward trajectory here - if you are using this stat to suggest real inflation is out of control "high" it seems reasonably obvious the "trend" in numbers per this site looks most obviously downward in nature so i would take positive outlook from the numbers being quoted here even though they may be higher than elsewhere..

Roger Baron

Thanks for comments about Oxford Metrics (LON:OMG) . (I hold) I watched too and asked a question re the directors share selling earlier this year. Didn't get an answer but I did send quite late on in the presentation. Maybe you could ask if you get your audio interview.

Helvellyn

Oxford Metrics (LON:OMG)

Regarding their £60 million cash pile, what interest rate can Oxford Metrics (LON:OMG) realistically expect to receive on this sum ?

I am aware of current rates but I would like to know for sure what a business can get on deposit on a balance of his size.

TIA

1James1n1

Not necessarily. Some companies buy shares via their Employee Benefit Trust for share awards to keep the share count static. There is obviously a cost for this (which you would incur if you paid a higher salary or additional bonus), but it does not necessarily result in additional dilution. Clearly, many companies are not so disciplined!

planetx

That was a quote from Warren Buffer by the way .

Mulberry

I hadn't heard of Renewi until your excellent write up. Searching their site, I can see no exposure to EV battery collection and recycling which is what could have propelled growth for this share. Without this exposure, it's a relatively high-PE, low margin business driven by volume. It would be interesting to compare their revenue per site as they mention 180 locations which seems like a high number. Can you compare to Fortum and Veolia's rev/site?

andrewkidney

Futura Medical (LON:FUM)

Paul,

I think you should focus on investment comment solely, and be very careful about making such bold judgements as you have, about the efficacy of Eroxon unless you have some medical specialty, and have spent the time to research the product.

Regards, Andrew

Paul, the tags have gone again apart from one stock today. Also some are still missing from last few week and probably before that.

16th Jun '23

Hi adnrewkidney,

FUM's product isn't a medical product. It's just an over-the-counter cream, that looks like tiny tubes of bonjela. I've mystery shopped it, and it doesn't do anything at all. Literally nothing. Many reviews on Boots website say the same thing.

I didn't want to specifically mention mystery shopping the product, as that would have triggered the usual tidal wave of innuendo! But obviously, I wouldn't make comments on any product without having tried it.

Hence why I wanted to warn readers about the shares.

Regards, Paul.

Thanks for flagging the missing tags. I try to check these each weekend, it's such a nuisance!

Small Cap Value Report (Mon 12 June 2023) - NETW, AO., STAF, FUM, LTG, RWI, OMG, IDOX

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Paul Scott

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