Small Cap Value Report (Mon 24 May 2021) - TED, CALL, ELTA, GLE, GHS
Good morning, it's Paul and Roland here with the SCVR for Monday.
Timing - today's report is now finished.
Agenda -
Paul's Section:
Ted Baker (LON:TED) - delayed audit but confirms results will be in line with expectations. I review the situation, and conclude that risk:reward seems unfavourable, with too much (yet to happen) upside turnaround already priced-in. Also there has been large dilution, limiting the upside on the share price.
Cloudcall (LON:CALL) (I hold) - a reassuring "in line" update today, from this serial under-performing, heavy cash burning IT/telecoms company. Its main sector, recruitment companies, is in a strong V-shaped recovery. I haven't completely lost faith in CALL, so am happy enough to continue holding a small position after today's update.
Electra Private Equity (LON:ELTA) (I hold) - I re-crunched the numbers over the weekend, so a quick update on this very interesting de-merger situation. It looks an attractively cheap way into 2 upcoming IPOs for TGI Fridays, and Hotter Shoes, both of which I think are likely to be successful standalone shares.
Roland's Section:
Mj Gleeson (LON:GLE) - this housebuilder and land specialist is trading ahead of expectations. Gleeson has attracted some savvy institutional shareholders, but is there still value for buyers?
Gresham House Strategic (LON:GHS) - this small cap investment company has put its asset manager on notice and announced plans for a strategic review.
Mello - tonight
The regular online investor evening starts tonight at 18:00
More information here: https://www.stockopedia.com/co...
Ted Baker (LON:TED)
180p - mkt cap £332m
Change to Full Year Results Date
Ted Baker Plc, the global lifestyle brand, announces that its preliminary results for the 53 weeks ended 30 January, will now be published on 10 June 2021 (previously 27 May 2021).
The reason given is disruption caused by covid on the audit process.
Really? Practically everyone else seems to be managing alright.
Which does make me wonder if there might be an issue over the going concern assurances need by the auditors? Although checking back to my notes here on 11 Feb 2021, TED had plenty of liquidity, and undrawn bank facilities at that time. Its last balance sheet looks solid. Hence going concern probably wouldn’t be an issue now.
Most importantly, it confirms today that trading is in line -
The Group confirms that full year results will be in line with consensus expectations.
Hence shareholders probably don’t need to worry about today's delay.
The Group reiterates its FY January 2023 financial targets set with the FY2020 preliminary results and then upgraded at the interim results in December 2020.
Both Ted Baker (LON:TED) and Superdry (LON:SDRY) went into the pandemic with problems, and trading poorly. Both are trying to execute turnarounds, with lots of positive talk, but little to date in terms of hard facts that turnarounds are actually happening. Hence I remain sceptical, but open minded.
Looking back at the interim results (28 weeks to 8 August 2020) they were grim - an underlying loss of £(39.0)m, and a statutory loss of £(86.4)m - for the H1 period that included lockdown 1.
A big cost-cutting drive removed £31.0m annualised from the payroll. Rent reductions are also being achieved. So it could emerge leaner & more efficient. The key areas I'm looking for are to greatly increase online sales, and manage down the store estate rent liabilities.
My opinion - there’s been a big recent spike in lots of retailers share prices, on hopes of successful re-opening. In many cases, I think these surges have run well ahead of reality, and risk:reward therefore looks poor to me.
Personally, I’m not interested in speculating on turnarounds which may or may not be delivered. I’d rather stick to the facts & figures, and hold shares in companies which are actually delivering strong profit growth, performing ahead of market expectations, and getting big broker upgrades. Good examples (which I hold) are Joules (LON:JOUL) and Sanderson Design (LON:SDG) - where big rises in share price are solidly underpinned by the facts, not just guesswork.
There’s no doubt TED is still a really good brand, and the balance sheet looks strong. So the risk of dilution or insolvency does look low. That buys time for management to turn it around, and they seem to have a credible plan.
Hence on balance, this share could be good long-term. Although £332m market cap looks way too high for a business which is heavily loss-making, and where the turnaround is still only work-in-progress.
Liberum is forecasting another hefty loss of £(23.3)m this year FY 01/2022, but then a bounce back to a profit of £28.7m next year. That’s 12.0p per share. If that does happen, then we could maybe value it at a PER of 15-20 times. Which equates to 180p-240p per share price target. Since the current share price is already 180p, how does that represent good risk:reward? The upside is already priced-in. Hence people buying this share now are effectively betting that the company will not only move from losses into profit, but also beat what look like quite aggressive forecast profitability. Plus you have to wait 2 years for that to happen.
Overall risk:reward looks unfavourable to me, but good luck to holders.
The 3-year share price below shows what a disaster this share has been, before covid.
Big dilution - a very important point is that the share count was 55m from 2015-2020, but has since risen greatly to 185m shares in issue. Hence there's no chance of the share price ever getting back to previous highs, because there are so many more shares in issue now. Hence the share price of 180p today, is an equivalent valuation to 605p before dilution (calculated as £1.80 * 185m, divided by 55m).
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As always, the above is just my personal opinion, based on the information currently available. You may have a different view of things, so do please share any views in the comments section, I'm always interested in hearing different views on shares. I've got no idea what any share price is likely to do, that's based on market sentiment, I just try to assess the fundamentals as best I can, and will get some right, and some wrong.
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Cloudcall (LON:CALL)
(I hold)
74p (up 7%, at 11:00) - mkt cap £35m
AGM Trading Update & Investor Meeting
CloudCall (AIM: CALL), the integrated communications company that provides unified communications and contact centre software that integrates with Customer Relationship Management ("CRM") platforms, provides a trading update covering the FY21 year-to-date…
The most important bit -
… the Group confirms that trading for the year so far is in line with the Board's expectations.
Other points -
- Deep V-shaped recovery continued into 2021
- Sales activity continuing to strengthen in all territories
- Core market of recruitment firms enjoying a particularly powerful recovery (we can verify this from positive updates from various recruitment companies we’ve looked at here recently)
- Ner business & upsells running above pre-pandemic levels
- Monthly recurring revenues at record levels, but I would expect that, so not a big deal
- Net renewal rates back above 100% - I’m not keen on this way of reporting the numbers
- Home working is a positive thing for CALL
- New verticals - pleased with real estate - partnership with Propertybase - commercial launch in a few months’ time
Guidance/targets -
Operating costs are tracking in-line with our previous expectations for 2021 at ~11% OPEX growth - adding back the £1.3 million of one-time COVID-19 related savings in 2020. We continue to focus on our core financial objective to drive revenue growth of ~18% to ~£14+ million in 2021.
Furthermore, in 2022 we believe we can achieve revenue growth of ~25% to ~£17.5million, whilst limiting operating costs growth to ~12% and are still targeting EBITDA break-even during 2023. Our ambition remains to achieve a £50 million revenue run-rate during 2026."
Presentation - on InvestorMeetCompany at 13:00 today, and then usually a recording follows later.
My opinion - neutral. I’ve learned the hard way that it doesn’t pay to be enthusiastic about this company, because it always misses forecasts, and always over-spends, leading to repeated fundraises.
That said, the recurring revenue growth is real, it’s just that overheads are high.
Tech businesses are often priced on completely wacky valuations at the moment, especially in the USA, which is now an important market for CALL, so who knows, it might attract attention at some point.
During a 3-year period when many tech shares have gone into the stratosphere, there’s no getting away from the fact that this chart below demonstrates a poor performance.
That said, if the growth accelerates to a level where investors find it exciting, then there’s a lot of potential upside from £35m market cap.
Overall I think today’s update has done enough to motivate me to continue holding the (relatively small) position that remains in my SIPP.
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Electra Private Equity (LON:ELTA)
(I hold)
528p - mkt cap £203m
I did some more work on this over the weekend, and have tweaked my valuation figures, so thought I'd share it with you.
Here's my post from 28 April, explaining the opportunity. Electra is winding itself up, to return funds to shareholders. Last week it announced (very positively I think) that the last 2 investments would be floated on the UK stock market, with Electra shareholders receiving shares in specie in the 2 new companies;
TGI Fridays - casual dining chain, franchise operation in the UK, highly successful and restructured during the pandemic. Expansion plans underway, and launching a 2nd complementary brand shortly. I think this could be a very successful float, due for Q3 on the UK main market.
Hotter Shoes - closed most of its shops in a CVA during the pandemic, now achieving strong growth online. A decent, profitable business.
Here are my latest valuation calculations. I started with using Restaurant (LON:RTN) as a benchmark, as follows;
Restaurant (LON:RTN) - I've done some work on Restaurant Group, and the latest figures seem to be (post recent fundraise at 100p): 765m shares * 122p = £933m mkt cap
Per recent Edison note, net debt now £250m post raise = EV £1,183m
Edison say pre-covid EBITDA was £118m,
Hence EV/EBITDA is 10.
TGI Fridays- using the same multiple of 10* EBITDA, we have £30-40m expected EBITDA (see ELTA announcement last week) = £300-400m, less £62m net debt = £238m-£338m valuation.
Hotter Shoes - I'm guessing this could be valued by the stock market under its own AIM listing at £50-100m
ELTA holding company has cash of £25m, although some may be used for other purposes.
Put that lot together (and ignoring a few other scrappy investments), I get sum of the parts of £313m - 463m
Using the enlarged share capital of 39.0m shares (see RNS today), I get to 803p - 1187p per ELTA share. This is a bit lower than my first stab at valuation where I reckoned 953-1371p. That was probably a bit optimistic, and I didn't properly factor in the debt at TGI, which is greater than I expected, hence my reduced estimates now (these things are subjective, so will chance as the facts change). Be sure to do your own research, and let me know if you diagree with any of my calculations.
Hence the current price of 528p still looks cheap.
I think it's fair to say my 803p lower estimate should be fairly well underpinned, but it's ultimately the free market which will decide the price, when TGI & Hotter are floated separately later this year. My upside cash of 1187p is a bit punchy, but not wildly so.
My opinion - I really like TGI & Hotter, and reckon they could be successful IPOs later this year. ELTA shares look an attractive way in, at a bargain price, hence a thumbs up from me.
Roland's Section
Mj Gleeson (LON:GLE)
848p (pre-market open) - market cap £495m
Housebuilder Mj Gleeson (LON:GLE) has put out a short trading update this morning, reporting trading ahead of expectations for the current year:
MJ Gleeson plc, the low-cost housebuilder and strategic land specialist, announces that the result for the current year (ending 30 June 2021) is expected to be ahead of market expectations.
This business has two distinct divisions, Gleeson Homes and Gleeson Strategic Land. Both appear to be trading well. Indeed, last year’s crash has been little more than a blip for shareholders who sat tight:
Gleeson Homes: This business specialises in affordable homes in the North of England and East Midlands.
Management say “strong demand for new homes has led to higher selling prices”. These have “more than offset” recent increases in material costs.
Gleeson Strategic Land: This business operates in the South of England. It buys up land, secures planning permission, and then resells the land to developers, usually larger housebuilders.
The company says that “demand for high-quality consented land from large and medium-sized housebuilders has returned to pre-Covid levels”.
Updated profit estimates for FY20
Unfortunately, today’s trading update doesn’t include any financial guidance. Nor has Gleeson provided any information about the market expectations it’s referring to.
However, we can glean some information from the group’s H1 results (Gleeson has a June year end) and Stockopedia’s consensus forecasts.
Guidance at the time of the H1 results was for 1,775 homes to be completed during the current year. 951 were completed during H1 (around 53%). However, today’s commentary suggests to me that margins may be slightly ahead of H1.
On that basis, I’d suggest we can double Gleeson Homes’ H1 operating profit to get a full-year figure of £41m.
Guessing at the outturn for the land business is a little more difficult, but we know that four land sales completed in H1, generating an operating profit of £2.6m. A further four sales were underway at the half-year mark, so it seems fair to double this figure too.
Group costs during H1 were £2.3m, so I’ll double this for the full year. That gives me an estimated operating profit of around £42m for the full year. I’d estimate this could give an after-tax profit of just over £33m -- around 10% ahead of the consensus forecasts shown in Stockopedia:
Valuation
It’s interesting to see that Gleeson’s shareholder register is a little different to most housebuilders. In my view, the four largest institutions on the list generally have a reputation for stock picking and long-term investing. In general, I’d be quite happy investing alongside names such as these:
However, I think we can assume that all four of these institutions bought shares in Gleeson at prices well below current levels. Does the stock still offer value?
At first glance, the shares don’t seem cheap. The Stocko valuation graphics are mostly yellow and orange, suggesting fair value at best:
I’m not keen on buying housebuilders at a big premium to their net asset value, although I accept that the exceptional profitability we’ve seen in this sector in recent years has justified such premia.
Gleeson’s operating margin and return on capital were certainly strong until last year:
My view
Personally, I’m not buying housebuilders at the moment.
We’ve had a decade of government subsidy, with super-cheap mortgage finance that’s supported a major bull market in housing. I don’t know at what point the wind will change, but to me, this doesn’t seem like a good time to look for value.
However, I do have a favourable impression of Gleeson’s business. If I already held the shares, I’d continue to do so after today’s news.
Gresham House Strategic (LON:GHS)
1521p (-1.6% at 0852) - market cap £53m
Board changes and announcement of strategic review
Requisition for Extraordinary General Meeting
Paul reported yesterday on the potential opportunity at Electra Private Equity (LON:ELTA), a fund which is being wound up.
Today, small cap investment company Gresham House Strategic (LON:GHS) has put its asset manager on notice and announced plans for a strategic review.
Gresham House Strategic is an investment company that invests mostly in smaller listed companies. Its portfolio contains many names that will be familiar to SCVR readers. Here’s a snapshot of the fund’s top 10 positions at the end of March 2021:
Source: Gresham House Strategic Q1 2021 factsheet
GHS adopted a small-cap mandate in August 2015. Performance since then has been good, in my view. The shares have almost doubled over the last five years, and there have been a few small dividends:
However, GHS shares have traded at a discount to net asset value for much of this period:
Source: Gresham House Strategic Q1 2021 factsheet (discount is shown by pale blue vertical bars)
According to the trust’s management, this discount has made it impossible to raise fresh equity to pursue new investments. Growth potential is thus said to be “limited”. This situation has led to today’s announcements.
Board change and strategic review
The strategic review has been announced alongside the retirement of the fund’s long standing chairman, David Potter.
The Board of GHS announces that David Potter, Chairman, has advised the Board that he will be retiring from the Board and will not be standing for re-election at the forthcoming Annual General Meeting in September 2021. A process to identify a successor has already commenced.
According to the company, Mr Potter was instrumental in the development and execution of the current strategy:
David was the principal driving force to establish GHS after the winding up of Spark Ventures VC portfolio in 2015. During David's period as Chairman, GHS has delivered strong investment returns and has been one of the best performing small company investment funds in the UK pursuing its strategic public equity strategy under the asset management of Gresham House Asset Management ("GHAM").
However, the board is disappointed that despite strong share price and investment performance, “it has not been possible to raise additional equity due to the existence of the discount of the share price to net asset value”.
This is frustrating for GHS’s management:
The future growth of GHS is therefore limited due to the lack of availability of new funds for investment at a time when both several attractive investment opportunities exist and GHS would benefit from taking larger stakes in some of its existing investments.
As a result of this situation, the company has put its asset manager (Gresham House (LON:GHE)) on notice and announced plans for a strategic review. The options under consideration appear to include choosing an alternative asset manager and - potentially - winding up the fund.
The review is expected to be completed by the time of the AGM in September.
EGM request
The situation is further complicated by what appears to be the breakdown of the relationship between David Potter and Gresham House, which is both GHS’s asset manager and its largest shareholder.
Rock Nominees Limited has requisitioned an EGM on behalf of Gresham House.
The EGM request calls for Mr Potter to be removed from the board immediately, and for a representative of Gresham House to be appointed to the board. Following this, the directors of GHS should undertake a strategic review (my bold):
The directors of GHS by 12 July 2021 to undertake a review of the strategy of GHS with a view to determining the best means of maximising value for shareholders including consideration of a realisation of the invested assets of GHS.
My view
Is there an opportunity to buy GHS shares at a discount to NAV, in the hope that the strategic review will cause the discount to close?
In theory, I think the answer must be yes. But I’d be cautious about attempting this in practice.
GHS’s discount has already narrowed from a peak of 30% in 2018 to just under 10% at the end of March 2021. If the company chooses a new asset manager, there’s no guarantee that the shares will immediately re-rate any further.
Similarly, in a liquidation scenario, I’m not sure this discount is big enough to translate into a meaningful profit, once costs have been deducted.
If Gresham House Strategic shares fall lower over the coming weeks, then I might revisit this situation. But for now, I’d say the shares are probably close enough to fair value.
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26 comments
Gresham House Strategic has really performed rather well within its sector as defined on Trustnet - that is small cap IT of which Tnet lists 24 investment trsuts. The current discount, 7.5%, is pretty typical with some on much larger discounts such as Marwyn, Chelverton and Aberdeen. Frankly the investment trust sector is full of such anomalies - it tends to reward bigger names and bigger funds with smaller discounts though of course historic NAV growth is the third and probably most crucial factor (despite the warnings on future performance which are mere lip service). What really matters (I think) is the change in NAV over time which is not so easy to analyse as comparatives typically tend to be on price rather than NAV. But in this case I smell an internal battle between the current board of Gresham and Mr Potter who seems to have done rather a good job but whose motives may not be the same as the Gresham House board.
Sosandar (LON:SOS) placement on offer to retail this evening on PrimaryBid app. No discount, shares being offered at 20p. Don’t hold at the moment but thinking this might be a decent entry point. Details here:-
https://www.stockopedia.com/sh...
Quite a small retail piece (£500,000) so although no discount likely to be oversubscribed IMO.
Gus.
Synairgen (LON:SNG) - a Netherlands lab confirms effectiveness of its inhaled antiviral agains CV19. I though their product was for ashma not CV. Could be an option for those who don't want the Vaccine, the booster or to have it every year in perpetuity. Also if get ill then can treat it at that point. Doesn't help herd immunity however. Stage III trials to start in India soon. Blue sky, pump, small moat, takeover target?
thanks for revisiting Electra Private Equity (LON:ELTA) again. I had done the same comparison with Restaurant (LON:RTN) as I had wondered whether they might be a buyer ultimately (part cash, part Restaurant (LON:RTN) shares). Regardless the margin of safety is significant . It's very hard to value restaurants at the moment given earnings volatility and a separate listing seems like a sensible solution to this conundrum.
Just come off the Cloudcall (LON:CALL) presentation. It could well be that with their record they are reluctant to promise too much again, but they sounded less confident I thought than the last time I saw them present. Plus the news of another fund raising at some point in the future, before they can reach breakeven. Not sure if I still believe this story?
Cloudcall (LON:CALL)
It could well be that with their record they are reluctant to promise too much again, but they sounded less confident I thought than the last time I saw them present.
They are stubbornly sticking with the "it will be allright on the night in 2026 theme""
Per the company today
Furthermore, in 2022 we believe we can achieve revenue growth of ~25% to ~£17.5million, whilst limiting operating costs growth to 12% and are still targeting EBITDA break-even during 2023. Our ambition remains to achieve a £50 million revenue run-rate during 2026.
Ok lets look how that works out then based on 25% pa sales growth
year and revenue
Ok note i reckon if they hit revenue run rate of £50 mill in 2026 it will be one year later when their actual turnover acheives the £50 mill level (does that sound right?) - so alll they need to do is hit the 25% per year each year from 2022 onwards.
Fairly simple metric here where they can be judged from going forward. Hopefully they arent relying on buying in £30 mill of revenues in 2025 by acquiring another company :)
I am 0.000000% tempted to buy back in at present.
The problem I see is bottleneck in distribution channels. They need to develop integration with CRM systems first. Then, in partnership with those CRM platforms, upsell the existing CRM clients to add-on Cloudcall (LON:CALL)
They added a few more CRM partners last year, which should drive growth this year. But after a year or two of each new integration, they would have exhausted the base of customers to sell to, and only have "new" customers coming on board those CRM platforms.
So to support their 25% growth, they need to keep adding new CRM partners every year. Which costs development ££ to create those integrations.
This is not a traditional SaaS play where "if the product is good enough, it will sell itself and fly off the shelves and sustain a double digit growth rate ", as customers come knocking on their door.
I'm happy to be corrected but I think the fact that the CRM platforms are gatekeepers, makes Cloudcall (LON:CALL) growth somewhat out of management hands, and/or they need to spend loads of R&D (which you can see clearly by the huge cash burn in the last few years).
I notice that they last few RNS's for Electra Private Equity (LON:ELTA) dont appear in the News section on Stockopedia. I always rely on Stockopedia for my RNS's - is that an unwise move? Why dont they all appear? Thanks
I recently raised a ticket about Serabi Gold (LON:SRB) not showing up but that didn't progress very far. There's most certainly a bug to be fixed.
TThanks Roland for the excellent update on the weird goings on at Gresham House Strategic (LON:GHS).
Fact is, performance has been good with GHS in the top quarter benchmark quartile AND GHS has outperformed the sector for many years. And the discount has narrowed from 30% to 7%.
That reflects well on the Investment Manager so putting him on notice reflects boardroom antics and not GHS performance. The Manager deserves praise.
A lot of Investment Trusts, including some that outperform their benchmarks, trade at discounts to NAV. The Managers control and make the investment decisions but they cannot control the share price.
One of THE big plus points for investors of Investment Trusts over the much more popular Unit Trusts/Open ended funds, is that sometimes very successful Trusts can be bought at big discounts, This time last year many Trusts could be bought at 20% discounts and some as high as 45%.. Even the now roaring Mining Trusts were at very big discounts.
If there is a winding up vote the discount is far too small for it to be worth buying GHS, I don’t hold but if I did I would sell on the news today.
For an Investment Trust winding down where the returns ARE likely to be very good then consider ELTA and for reasons why start by reading Paul’s recent updates; one was last week and the previous one on May 4th.
The AIC website is very good on all Investment Trusts. This link for finding and comparing Trusts:-
https://www.theaic.co.uk/aic/find-compare-investment-companies?sortid=Name&desc=false
And this one for the home page:-
https://www.theaic.co.uk/.
Two TRUSTS with very good performance records and still on big discounts to NAV are North Atlantic Smaller Companies Investment Trust (LON:NAS) on a 27% discount and Canadian General Investments (LON:CGI) on 30% discount.
Hi Ken.
I’m also a fan of Investment Trusts for the reasons you enumerate. Also, on the odd occasion when the s**t hits the fan they have the added benefit of being closed end so unlike OEICS there is still (usually) a market in the listed shares rather than a mass stampede of investors looking to redeem and thereby requiring the fund to liquidate (usually as a forced seller) its holdings and/or suspend itself.
One of the lessons from the Woodford funds meltdown was the different outcomes for investors in what is now Schroder Uk Public Private Trust (LON:SUPP) (orderly wind down, IT shares continued to trade, still an ongoing IT which may yet come back from intensive care under careful management by Schroders) compared to the Woodford Equity Income fund (mad rush for redemptions, fund suspended leaving holders in limbo pending liquidation of a rump of illiquid assets in a chaotic muddle and hoping for a bit of restitution via some ambulance chasing lawyers). With the equity income fund, holders wanting to pursue an orderly liquidation were unable to do this as those demanding an exit effectively forced a mandatory liquidation.
Big fan of the AIC site. It would be nice to have this sort of data integrated into Stocko. Another interesting big discount IT play is Hansa Investment Hansa Investment (LON:HANA) .
https://documentscdn.financial...
Currently at a discount of about 30% it has 22% of its funds in Ocean Wilsons Holdings (LON:OCN) (which itself is currently trading at a significant discount to its appraised NAV comprising an operating company and a large portfolio of tradeable securities) - it’s kind of a “discount squared” opportunity. Takes a bit of time to follow the threads through and there is some “hair” to be aware of but I think the risk/reward is pretty good. (I hold all the above mentioned).
Gus.
Thanks gus 1065 for your interesting reply.
To follow up on your Woodford example, Investment Trusts are a very good way to invest in Property, whereas Unit Trusts are anything but! They are totally inappropriate for investing in Property for the simple reason that unlike Investment Trusts, Unit Trusts HAVE to sell properties once they run out of cash to pay their investors who want out. As they can’t sell properties at the drop of a hat they then have no option but to lock their investors in for months (or even more) sometimes.
Investment Trust Property investors will want to sell at the same time and for same reasons too. And they always can, and that Trust does not need to sell any of their Properties. All that happens is with heavy selling the discount to NAV widens dramatically. That’s an excellent BUY opportunity for those wanting to take advantage and buy.
So imo Unit Trusts are an inappropriate way to invest in Property and Investment Trusts are a great way to do so!
Have a look at the Investment Trust REITS (Real Estate Investment Trusts) on AIC. (Links in my previous post).
Note that even now some are at big discounts, and still after share prices have recovered strongly, paying big dividends. AEWU one I bought almost at the bottom was paying 13% dividend then and it’s still 9%. At the bottom some of those REITS were at 45% discounts to NAV!! So even if there were no subsequent increase in NAV the share would nearly double just with the discount narrowing in time to near zero.
Edistion Property REIT (I hold) have increased their dividend from this month and they pay it monthly.
Paul (who recently and again today highlighted the excellent ELECTRA Private Equity Trust potential buy opportunity) admits to not being clued up on Investment Trusts. If someone with such exceptional overall investment skills and knowledge isn’t, there’s a fair chance that many other SCVR readers aren’t either. You are perhaps missing out on a great pooled Investment way to invest.
Hi Ken, I'm also a holder of GHS, and agree the discount is too small to make it worth buying. If they do liquidate, they are unlikely to achieve quoted prices for their stakes as the market will see them coming. Reading the above, as well as a liquidation, two other scenarios are that a reconsituted board continues with Gresham, possibly with a rights issue (hopefully not a placing at a discount to market), or there will be a merger with another trust to get some scale.
Good points. I find the Morningstar site good because it is clear whether the nav is updated daily, and shows the Z-score. https://www.morningstar.co.uk/...
Just wondering if anyone has thoughts on the downward movement on Investec (LON:INVP) since last week?
Here are my SCVR heat maps for today (prices as at ~9:20am).
I share these heatmaps with the intention of giving a visual indication of what is going on in the SCVR world: who’s reporting (and it's impact on the share price); and what’s moving more than 'normal'. There are no associated recommendations, implied or otherwise, just information. How, or indeed if, you choose to use that information is up to you. Please feel free to ignore them if you don't find them useful.
Please read my heat map thread for a great deal of explanation of how the heat maps are formed and how I use them to guide me with my research, and for a full key to the contents.
I very much welcome feedback so if you do have any feedback, not already covered in the heat map thread, it would be very helpful if you could post your comment in the heat map thread rather than the SCVR thread. The more specific and constructive the feed back is, the more that likely it is that I will be able to act upon it. Thank you all for the feedback so far.
Small / Micro Caps reporting today:
Big movers today in the SCVR world (moving more than a 20d EMA of the ATR against either yesterdays close, or today's open):
Warm regards, stay safe, and best of luck!
greensiax
Hi Paul - I came out of Ted Baker (LON:TED) some time ago and no intention of returning. Interesting observation just yesterday - when I went for some retail therapy to Freeport Village Braintree. What struck me was the shops with queues to enter - and also those without.
As expected, they were queuing for Nike and Adidas but also for VANS and Armani yet not for Under Armour or ASICS or Polo Ralph Lauren or TED !
Intriguingly, Sports Direct has vacated their shop here to go to the adjacent site alongside Halfords / Next and BandQ etc....
Must be a message here for investors ?
It is hard to extrapolate like that.
I went to the O2 recently for some shopping and Nike were limiting people in the store but did look busy and had a big queue (not sure how much was the store capacity limit) which is expected of Nike. However, Ted Baker and Calvin Klein were not limiting people in the store and it was busy with a fair few buying too. Ted Baker was actually busier than Calvin Klein.
It is all a matter of judgement. I bought Ted at the 75p placing because I really like their clothes. My wife and I have a lot of it because the detail is just better than most normal high street stores.
They don't have the purchasing power of the US majors but they have trimmed inventory way back and focused on being profitable, rather than volume.
Retail does tend to turn around quickly with the right management and Ted do seem to have that now.
I'm not expecting miracles and they have gone up a lot but I do see upside because the business appears to have made some solid subtle changes. E.g. packaging has completely changed to cheaper materials and less inked colours but still looks good, online sales and marketing have improved significantly (online mix up ~30% if my memory serves me right), they have brought out new ranges "Made in Britain" and they have signed new licensing deals to sell in Middle East and China in the past 6 months. Also a deal to sell in Next was signed at some point last year and I have seen a lot of Ted Baker in Next and in their online store - which is a huge customer base of £10bn in sales p.a. to tap into.
I see good progress from what was a low base and I dont see any issues at all with the balance sheet or liquidity. They have long term financing and it seems solid.
People will have their own judgement on what is the right price but it does seem to be making good progress.
Thanks for this update - Had not realized that they are now selling via Next - or indeed that they now have clothes Made in Britain. Agree - at 75p a good punt !
Interesting that you’re sitting out on house builders. I’ve sold down some holdings because I’m concerned about input costs - shame there was no guidance on that from Mj Gleeson (LON:GLE)
Indeed, I think there is potential for some nasty results from housebuilders in the next 6 months due to cost increases, both material and labour.
The bigger builders will be OK - they have long term supply agreements, and can pressure their suppliers to not increase prices. But the smaller ones don't have that sort of purchasing power compared to the big builders, so will be the ones that lose out.
Curious indeed about Rtc (LON:RTC) . Looks like a slightly convoluted way for the CEO and CFO to cash out their vested share options without having to exercise/buy/sell them in the market. Not sure if there’s a tax angle to this or whether it’s just a mechanism to smooth over the creation and sale into the market of about 13% of the company’s shares - almost a targeted preemptive share buy back without incurring the usual discount that would normally be involved in a placement of this order of magnitude (shares are being cancelled at the current mid market price). Notable that the Chairman isn’t participating in the scheme - presumably he’s more confident in the business’s prospects/has less need for the cash than the other two directors. (I don’t hold). Perhaps he took the not unreasonable view that if the entire board sold their vested options the share price would tank?
Gus.
I presume this is the (IMHO normal) precursor to the Rtc (LON:RTC) directors awarding yet more share options to themselves. The operational performance has often been fairly decent here, as have the dividends, but non-director shareholders certainly seem to rank very low on company priorities.
All IMHO again as a jaundiced ex-shareholder who just keeps an eye out for more shenanigans.
Gus, I hold Rtc (LON:RTC) and have done so since my 2016 purchase, I'm underwater there and look forward to exiting in the hopeful near future. I don't know what the future holds for Rtc (LON:RTC) though I think it will be better without the present CEO and CFO. Over the weekend I looked at the situation with Pagegroup (LON:PAGE) and a very close look at the way two directors played the share option system while shareholders were denied dividends caused me to depart while still above water. Taking time out first to have my boiled egg however cost me the most expensive breakfast for quite a while!
Silver
My morning smallcap tweet:
Gresham House Strategic (LON:GHS) Global Ports Holding (LON:GPH) £DI19 Velocity Composites (LON:VEL) Sensyne Health (LON:SENS) Kanabo (LON:KNB) Ocean Wilsons Holdings (LON:OCN) RTC (LON:RTC) Fulcrum Utility Services (LON:FCRM) Cloudcall (LON:CALL)
Gresham House Strategic (GHS) EGM requistioned by Gresham House, a major shareholder and the asset manager of GHS, to take control. [SP=1528.5 Cap=53m]
Global Ports Holding (GPH) refinancing. [SP=129 Cap=81m]
Digital 9 Infrastructure (DI19) £100m placing and offer at 105p, a 7% disc, to acquire further assets. [SP=NA Cap=NA]
Velocity Composites (VEL) guides H1 rev £4.4m and adj EBITDA -£0.5m as sales stabilise. Co "well placed to return to a positive adjusted EBITDA in H2 FY21 and FY22". [SP=21.2 Cap=8m]
Sensyne Health (SENS) agreement in US adds 7.3m patients to dataset. Total now 18.2m. [SP=157.5 Cap=260m]
Kanabo (KNB) £1m placing at 22p, a 10% premium. Also MoU with Hellenic Dynamics, a medical cannabis cultivation company, to evaluate a potential off-take agreement. [SP=19.97 Cap=73m]
Ocean Wilsons (OCN) proposed restructuring whereby Wilson Sons will be merged into its controlled subsidiary, [SP=938 Cap=330m]
RTC (RTC) offers 46.5p per share to all employees who hold vested share options to cancel them in order to reduce dilutes share count. Also may buy up to 2.2m shares in mkt. [SP=47.43 Cap=7m]
Fulcrum Utility Services (FCRM) wins £20m 5 year smart meter exchange and management contract. [SP=34.28 Cap=76m]
In line: Cloudcall (LON:CALL)
Most curious that a month ago, Rtc (LON:RTC) directors were completely unable to say anything meaningful about trading as per
https://www.investegate.co.uk/...
but now they are a 100% happy to cash out their share options at 46.5p using company funds...
https://www.investegate.co.uk/...