Small Cap Value Report (Mon 4 July 2022) - AO., HAT, AUGM, PRV

4th Jul '22 by Paul Scott

43 comments 7405 reads

Good morning from Paul & Graham!

Small Caps Podcast with Paul Scott- I've resuscitated the idea of a weekly recap podcast, and am quite pleased with the first edition, which I recorded on Saturday morning. It recaps on the week's SCVRs, and talks about market conditions. If people like them, I'll keep doing them, so please do give me your feedback.

Agenda -

Paul's Section:

AO World (LON:AO.)- An article in yesterday's Sunday Times flags up the risk of trade credit insurance being reduced/withdrawn. This is a very useful reminder that many businesses are not only funded by banks, but also by their suppliers. I'm steering clear of AO.

Porvair (LON:PRV) - interim results show profit growth. Outlook comments sound positive, and I think with broker targets set low, there's little risk of a profit warning here. It's still on quite a punchy rating though, so I don't see value here. A poor track record of divis also reduces its appeal in a higher inflationary world.

Graham's Section:

H & T (LON:HAT) (£128m) - A good trading update from this pawnbroking group, and an acquisition announcement. Broker forecasts haven't changed formally yet but are likely to be too low. The company is enjoying strong demand for pawnbroking loans, retail is performing well, the gold price is helping profits from its gold purchasing activities, and international travel is boosting FX services. It will soon own a watch repair business, bringing lots of relevant expertise in-house. I continue to rate this one very highly.

Augmentum Fintech (LON:AUGM) (£201m) - Results from this fintech investor show NAV per share up 19%, and there’s an interesting discount in its share price versus the reported NAV. The company believes that it is undervalued and is buying back its own shares, to potentially be reissued at a later date. The investee companies may be familiar to you, and Augmentum argues that it is navigating the overpriced fintech landscape in a disciplined way.

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…

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Tortoise investor

4th Jul '22

It looks like there is a trading update on Saga (LON:SAGA) tomorrow

Sammybates

Please keep up the podcast, very interesting to hear you talk over your writing here and it allows me to absorb your wisdom whilst doing my exercise!!

Epitychia

Thanks, i wont buy now. This is useful.

BnB

I received new terms for my wife's car insurance at the end of last week. Her premium last year was £285 and her premium this year, after compliance by Saga with the new regulations, will be £173.

Interesting. I was offered a renewal for my car by eSure at a 40% increase! I checked on GoCompare and the competing offers were similarly unfavourable. I was told the key variables could potentially be a spate of car thefts in the local area (rural Yorkshire - unconfirmed) or a huge uplift in the car's second hand value. I then checked Parker's Guide to find my 6yr-old, admittedly premium, estate was priced at £20k. I should have bought 10 of them instead of UK small caps!

GloucesterBob

Could this not be a positive? Will they not attract more customers if their offerings are cheaper?

I've never had Saga (LON:SAGA) insurance as their quotes were never competitive, but if they can now drag me in, inertia may keep me for a few years.

FREng

Excellent podcast, Paul. Thanks!

Graham Neary

Hi Brookeda, H & T (LON:HAT) is in the report now. Thanks for the comment and good luck! G

Gostevie

Very good podcast Paul. 30 minutes or so is just about right.

Bristolian

Paul, I really enjoyed the podcast. Please keep them going. I know they require a lot of work but to make them sustainable perhaps just focus on few key stocks rather than try to cover everything in the previous week. I'd rather have a more regular podcast with fewer stocks than something more detailed that isn't sustainable. Anyway, only an idea! All the best, Bristol.

mabie41

Any one know the cause of the price fall of Hargreaves Services HSP share price

West65

Excellent podcast

Barry Addison

Like many others, Paul I enjoyed the Podcast and thank you for spending the time to do it for us. I echo a couple of commentators in that it might be better to limit the amount of stocks you cover (perhaps the best and worst 2/3 in the week) and/or simply concentrate on topics and the markets in general. After all many of us will have read the daily SCVRs so will know what you and Graham think. But it is your insights, opinions and stories that fascinate and give us all a break and some light relief from the mayhem going on around us. But many thanks Paul and very much appreciated.

Howard Adams

Hi Graham

Very pleased to see you covering £AUGM I have invested in them previously but am watching to see the share price halt its steady decline before re-investing.

My research over the past several months suggests to me they operate a good investment process and are specialising in an attractive sector. Both the UK and especially Europe really do need secular changes to their respective financial sectors. I believe Augmentum Fintech (LON:AUGM) is well placed to participate in this sector transformation.

For any one interested to research Augmentum Fintech (LON:AUGM), This is their own YouTube channel https://www.youtube.com/channe... I have found these useful for my own research and helping me follow their progress over the past three years.

In the channel you will find, in addition to various CEO presentations of results etc, 7 vids of seven different funding pitches made to Augmentum Fintech (LON:AUGM) (see the vids from 1 year ago, focusing on Female Founders).

I found watching these gave me a useful insight into what interested Augmentum Fintech (LON:AUGM) and what was evolving in the world of FinTech and/or DeFi (Decentralised Finance). Sectors and innovation I was, at that time, a bit clueless about really.

Regards

Howard

Funderstruck

Paul, thanks for your Podcast; Extremely useful reviews that flesh out the daily reports. I'm another one that would wish you to continue.

rmillaree

Saga (LON:SAGA)

Lets hope their boats arent as leaky as the company seems to be if its "bad news tomorrow"

Harry Hindsight

Who replaces AO World (LON:AO.) Looked at Currys (LON:CURY) (perhaps not the best moniker for electrical goods retailer) and Stocko comparators brings up Halfords, Revolution Beauty etc (I like off-the-wall, but something have pointed out to them before). Another source gives Pets at Home (LON:PETS), £DLM, Vivo Energy (LON:VVO), Wickes (LON:WIX) - which is not a lot better.

So maybe one day Currys (LON:CURY) will make hay when the 'real' competition has died away. Sad AO World (LON:AO.) was ok IMO.

And cross-selling, think about the demographic and huge potential - but just seem to treat as vegetables similar to all these platforms plugging trusts. Well hopefully I survive longer than they do. Due renewal soon so will put up against eSure and let's see.

TheFloatingInvestor

Garry, Maybe Marks Electrical (LON:MRK) ?

Recent float, small company ATM, price has come down a bit. Don't know to much about them, I don't hold or follow.

5th Jul '22

I appreciate the excellent comment, Howard, thank you! It will be great to check up on their YouTube channel, next time I'm researching this one. All the best. G

scarletblue

just listened to the podcast Paul. Excellent, please keep doing them.

Small Cap Value Report (Mon 4 July 2022) - AO., HAT, AUGM, PRV

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Paul Scott

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