Small Cap Value Report (Mon 24 Dec 2018) - Bear markets, GAMF, GRC

Monday, Dec 24 2018 by

Good morning folks,

Shares are likely to be low on the list of priorities today for most, and the exchange closes early. For whatever it’s worth, we’ll be keeping an eye out for interesting company announcements.

All the best 


The NASDAQ is in a long-overdue bear market after falling 3% on Friday. I've been saying for some time that this is the most overvalued major index.

Its median ratios, as measured by Stockopedia, are as follows:


This suggests to me that there is (selectively) some value to be had within this large index.

Note there is a big discrepancy between the above table and the corresponding table for the NASDAQ-100, which is restricted to the top 100 non-financial companies.

The NASDAQ-100 has a higher valuation, lower growth and a lower dividend yield. People are paying a big premium for big tech companies:


I would expect the other major US indices to follow suit and to become technical bear markets, too (20% down).

Bear markets typically last a little over a year. However, after one of the longest bull markets in history, perhaps we can expect the subsequent bear market to be longer than usual?

Gamfook Jewellery Plc (GAMF)

  • Share price: 15.5p
  • No. of shares: 100 million
  • Market cap: £15.5 million

Admission on NEX

Curious to see that a Chinese company has listed on the NEX Exchange. It sells bespoke jewellery online and in Shenzhen and Fujian.

After all the failed ventures on AIM, are Chinese companies finding that NEX is a more suitable home for them now?

Some things I've noticed:

  • The corporate advisor is Daniel Stewart, who brought us the fraud Naibu (NBU).
  • Coincidentally, the Executive Chairman and Head of Sales at Gamfook both have the same surname as the Naibu Chairman. Both also have connections to Fujian province, which is where Naibu was founded.
  • Scrolling through the Director biographies, I see that the token Westerner on the Board currently lives in London and does not speak any form of Chinese. He owns no shares in the business.
  • There is one other NED who speaks Chinese and English, but none of the Executive Directors speak English.
  • The company is registered in Jersey, with one Hong Kong subsidiary and three Chinese subsidiaries. As the Admission Document says, "The…

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

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GRC International Group PLC is a United Kingdom-based holding company. The Company provides information technology governance, risk management and compliance solutions. The Company provides a range of services and products in three divisions: training, consultancy, and publishing and software. The Company sells classroom-based training courses related to data protection, cyber security, international organization for standardization (ISO) 27001 certification and related topics. Its consultancy services include GRC (governance, risk management and compliance) consultancy and technical services. Its technical services provide a range of services and products, including penetration testing, payment card industry data security standard (PCI DSS) assessments and cyber essentials scheme. The Company sells books, documentation templates and software through its Websites. It also creates and sells software solutions through its subsidiary, Vigilant Software Limited. more »

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30 Comments on this Article show/hide all

mmarkkj777 24th Dec '18 11 of 30

Graham and Paul.

Thanks for all your reports on the SCVR. Its been great to read since I joined and it is now part of my daily routine.

All the best for Xmas and have a great NY.


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andrea34l 24th Dec '18 12 of 30

Happy Christmas Graham (and Paul), thanks for all the hard work providing these reports.


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oaktree 24th Dec '18 13 of 30

In reply to post #430053

Morning Laughton,

Excellent article and thanks for posting. My only worry is we havent gone down far enough. But the good news is this down trend I believe will play its self out in first half of 2019. So not long to wait. One strategy is to start using half your cash to pick up stocks and then you still have some funds if it goes lower.

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oaktree 24th Dec '18 14 of 30

Merry Christmas Graham, Paul and all at Stockopedia , big thanks for all your efforts this last year. Feet up now and rest!

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Beginner 24th Dec '18 15 of 30

All the very best for Christmas and the New Year to Graham, Paul, and all the very valuable contributors here. Thank you to everyone, and best wishes to you and yours.

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Graham Neary 24th Dec '18 16 of 30

In reply to post #430033

Hi jonno, Happy Christmas to you too and thanks for the comment.

There are too many moving parts at Scisys (LON:SSY) for me to understand so I have no opinion on the company, sorry! G

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Graham Neary 24th Dec '18 17 of 30

In reply to post #430078

Thanks Andrea! I'm sure we both appreciate your regular comments & feedback. G

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dahokolomoki 24th Dec '18 18 of 30

In reply to post #430018

Tip of the iceberg?
I wonder how many other jurisdictions are looking at gambling revenues as a tempting source of new taxes to fill public sector coffers.

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Graham Neary 24th Dec '18 19 of 30

In reply to post #430063

Thanks Jason, appreciate it. G

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Beginner 24th Dec '18 20 of 30

In reply to post #430128

Along with fags and booze, it is the old perennial treasury milk cow. However it now has a 7% yield, covered x2, even with the cut in profits.

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Julianh 24th Dec '18 21 of 30

Good afternoon Graham
I loved the incisive analysis of Gamfook. I wonder if the name is an intentional pisstake? And a Gamfxxk to you too:
* all fraudsters out there conning unsuspecting investors with fake accounts
* those advisors, regulators, auditors, Nomads, etc. (clearly not all of them) who shut their eyes, pocket the money and in so doing allow fraud to happen
Lots of thanks to you and Paul for the superb service you provide to us private investors. Enjoy your rest, get well soon. Looking forward to lots more gems in the new year

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denisthamenis 24th Dec '18 22 of 30

Just wanted to say "Muchas Gracias" to both Paul and Graham for all their hard work this year alongside the numerous regular fellow private investors who are regular contributors to this board. I have been a full time private investor for more than three years now and so visit this forum on a daily basis; an invaluable resource and very much appreciated. Merry Christmas all from a warm sunny Mallorca!

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purpleski 24th Dec '18 23 of 30

Hi Graham

Thank you for this report and all the others. Sorry to hear about the viral infection. I hope you get some rest over the festive period.

My Christmas present to myself this year is going to be a subscription to and maybe your seminar if the future dates fit

Merry Christmas


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Zoiberg 24th Dec '18 24 of 30

As I write it's just after 10am in New York on Christmas Eve and the S&P is down nearly 1.5%. If this does turn into a major correction it will of course affect the UK . Under these circumstances I would be very interested to read a bargain hunting survey of the UK small caps.

Thanks for all your excellent analysis Graham and do take the time to recover fully. And have a Happy Christmas!
(I wonder if they'll call it the Christmas Crash or possibly the Trump Slump)

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Julianh 24th Dec '18 25 of 30

In reply to post #430163

Oh but it can't be a Trump Slump. Trump is solely responsible for all the good things that happen. Any problems - he'll find someone else to blame.

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Zoiberg 24th Dec '18 26 of 30

In reply to post #430168

I know, that's why he's on top of my Christmas tree.

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Gromley 24th Dec '18 27 of 30

I've been seriously distracted from the markets again for the last couple of weeks so haven't been able to add much constructive.

But I would like to add my heartfelt thanks to both Paul (who has been enriching my experience for many years now) and Graham (who I only encountered much more recently) for a great year of reviews and comment.

Also thanks to Ed and the wider team, both for enabling this blog and for providing truly excellent resources here on Stockopedia.

Wishing everyone seasons greetings and a prosperous new year.



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FREng 25th Dec '18 28 of 30

The Nikkei is down over 5% as I type this around 1pm, Christmas day.
Hussman always has a credible, detailed view of the past and its lessons for the future:

Best wishes for the New Year everyone.

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Bonitabeach 25th Dec '18 29 of 30

In reply to post #430243

Hussman always has a credible, detailed view of the past and its lessons for the future:

Below is the performance data for the "Hussman Strategic Growth Fund"

Average annual total returns for periods ended 30 September 2018
1 Year -5.46%
3 Year -11.71%
5 Year -9.47%
10 Year -7.60%
Since Inception (07/24/00) 0.25%

18 years and he is delivering annually 0.25%; over the past 10 boom years an annualised -7.60% (yes that is a negative). Hussman is currently charging 1.13% annualy (nearly 5 times the performance he has delivered over 18 years) for his efforts.

Buyer beware.

Merry Christmas everybody and lots more fun and games in 2019.


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bbd 26th Dec '18 30 of 30

Hi Graham, many thanks for all the hard work you and Paul put in, very much appreciated.
Just looking at the FTSE there is a case that we've been in a bear market for 6 months already as the drop started in mid summer. Who knows where the bottom may be, as ever we will only know after the event.
Seasons greetings to you and yours

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About Graham Neary

Graham Neary

Full-time investor and independent analyst. Prior to this, I spent seven years in the financial markets as an analyst and institutional fund manager. I'm CFA-qualified, also holding the Investment Management Certificate and the STA Diploma in Technical Analysis.Away from finance, my main interests are recreational poker and everything to do with China, especially Mandarin Chinese. more »


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