Small Cap Value Report (Mon 15 May 2023) - RST, WG., CURY, FRP, CER

15th May '23 by Paul Scott

66 comments 7290 reads

Good morning, it's Paul & Roland here today! Many thanks to Roland for joining me today, as Graham needed some time for another project.

Update at 13:18 - I'm still working on CNIC, so will carry on until that's finished.

Update at 16:39 - I've just finished reviewing CNIC, but it's too late for today's report. So I'll type it up now, and put it into tomorrow report first thing. Took me a lot longer than anticipated, sorry about that!

Today's report is now finished.

Podcasts - from Paul, went up on Saturday morning as usual. Gave me a good chance to have a moan about a couple of little things that have been irritating me (!), and to run through the usual recap of small companies news. It's great taking stock each weekend, as the blizzard of company news stops for two days. I'm told my podcasts are popular with dog walkers, and gym members!

Tonight - Mello Monday investor show online, is free! More details here. I'm looking forward to the Q&A with Sosandar (LON:SOS) management (I hold).

Mello Chiswick - I'm looking forward to attending next week, I'll be there both days, in the afternoon/evenings, and look forward to seeing old friends, and new - do come and say hello if you're there, I love meeting Stockopedia subscribers in person!

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.

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Berksbee

15th May '23

Apologies that this isn't a small cap? but I know a few of the readers are likely to have a interest.

Investment Trust Valuations. Taking (LON: IVPU) (Invesco Select Trust) as an example.

On Stockopedia the IVPU NAV is 150p

On Hargreaves Lansdowne the IVPU NAV is 188p

Both say its based on Debt at Par and Fair Value. Both seem to be based on press releases dated 12/5. Am I missing something? Presumably they both cant be correct.

Effortless Cool

HI Patrick,

Acquisition-driven amortisation costs should definitely be adjusted out of earnings when valuing a company. Nobody sensible would include balance sheet intangible assets in valuing a company, so why would you include the amortisation cost of those intangible assets?

The cost of the acquisition is already included in full on the balance sheet, whether it be through a reduction in cash, an increase in shares, or some combination of the two. With regard to the benefit, what matters for valuation is the future cash flows from the combined businesses, not projected profits that include a somewhat arbitrary non-cash adjustment for amortisation.

peterthegreat

I agree with the positive views on Instem. I see the company as a serial aquirer of small B to B niche software and technical companies in a highy fragmented area of a global industry so the runway for growth is almost unlimited. However, the sale of Samarind is a reminder that not all Instem's aquisitions have a been successful. The ROCE has been unexciting up to now so I hope this figure improves.

yiannos1

Nice one.

It all depends if you offend their holdings!

About 2 years ago I wrote that most of the shares suggested in the Small Cap Report , were heading south and I have urged holders to exit and go 50% cash. I was attacked ( from all sides) , and some of the comments were embarrassing to read.

We all know what happened though. Some of these shares are not even listed now and most of them have lost over 80% of their value.

But I have to say that I can see a lot of improvement by the writers of this report , and this is one of the reasons I have renewed my subscription.

Thanks

Wolf of Small Street

Dont hold but they update NAV every day by RNS by the looks of things. Above chart shows discount to NAV.

Today-

"Invesco Select Trust plc

UK Equity class Ordinary shares (IVPU)

As at close of business on 12-May-2023

NAV per share (unaudited) with Debt at Par &
Fair Value

EXCLUDING undistributed current year revenue 188.80p

INCLUDING current year revenue 188.80p

The fair value of debt is not materially different from
the carrying value."

WDWombat

WG has fallen back to where it came from, as you said around 150. It has been around for decades, advising on oil and gas developments, based in Aberdeen but I am sure extremely international though Tory policy on 'windfall' tax is crippling N Sea investment. This is really a pretty specialised area but I would also love to hear the vews of somene who knows the copany and business. My ancient memory is that this was a highly respected outfit.

Apollo, however, seems to be a disgrace. Do they really have that much money under management? I hadn't heard of them until recently but they will have cost a lot of people and businesses a lot of money.

Bouden54

Investment trust NAVs are updated daily. As far as I recall, Stockopedia shows the NAV from the last set of accounts, so in other words could be very out of date! The AIC website is the best place to research investment trusts and has all the latest data where you can see the discounts, returns, etc.

Caper4

Yes it’s certainly encouraging and I also take some comfort in that not one Director has sold any shares in the last 5 years . And, of course, it’s one of our Paul’s largest holdings :)

JohnDoe2378

Share purchase by CFO of £SUP. 21K not a massive amount, but positive nonetheless!

mojomogoz

That's fair and up to you Caper4. I'm not aware that Paul Hill has been stopped from posting. I believe he chose to do that...hence why I said he'd taken the huff.

TBH if you are going to be an active stock promoter (v different from analyser IMO) then you should be able to take some disagreement/objection.

So what's the deal? Paul Hill should post rampantly here and we should all have awed hush? This all seems rather silly...and like has been said, if he can't 'take the very moderate heat' here then you can easily find all the same stuff in other places!!

Duplicate deleted

This comment has been moderated

Well...I'm a bit ornery sometimes. I accept that.

I do actually like people disagreeing with me though. I will probably tussle back...but I think the disagreement, with a bit of info in it obvs, is useful. We are all egotistical (me for sure) and sometimes its hard to accept the negative pushback. But often it gestates and surfaces down the road.

Share investing is a funny game where people do take disagreement with their stocks at a very personal level sometimes.

MiserableJacktPotato

GloucesterBob

Thanks for posting, footnote made old Ernie laugh

It makes sense if you know the history and who runs the company. It is my opinion to stay away (as far as possible) from UJO plc.

TEIN

Quite significant relatively speaking in that:

1) In a previous Supreme (LON:SUP) results presentation she (Suzanne Smith, CFO) answered a question about her nil holding by saying she didn't have funds

2) Very soon after she was awarded options but it's good to see her now committing in this way and from zero not long ago this can probably be seen as a decent commitment.

Thanks for highlighting JohnDoe.

[I hold]

16th May '23

Thanks Wolf and Bouden. Looking more closely the daily news NAV values are wrongly attributed and updated on Stockopedia - have reported it.

Small Cap Value Report (Mon 15 May 2023) - RST, WG., CURY, FRP, CER

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Paul Scott

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