Small Cap Value Report (Mon 7 Jan 2019) - SOS, RBG, TRCS, CHH, UPGS, EYE

Monday, Jan 07 2019 by

Good morning, it's Paul here. I'll be writing all of this week's reports.

Graham posted an excellent end of year portfolio review of 2018 here. It's well worth a read, if you haven't seen it. The format is great - looking at winners & losers, and what he has learned from each.

I might do something similar next week, but am holding fire until then, because my (by far) 2 largest positions are both reporting imminently. Sosandar (LON:SOS) is my main holding, intended for the very long term, and is reporting on peak Q3 (Oct-Dec 2018) trading around Wed-Thu this week. That's the normal reporting schedule, if you look back at its previous updates. We already know that autumn trading has been good, as the company has said so, in recent results meetings & presentations.

Revolution Bars (LON:RBG) is my second largest holding, and its peers (Stonegate, and others) have reported very strong trading in Dec 2018. Particularly in town/city centres, and at the premium end (cocktails, etc), which is right in RBG's sweet spot. So we should hear positive news from them on Monday next week. The wild card is potential for takeover approaches to resurface. A competitor (Stonegate) offered 203p cash for it some time ago, so there's very obvious value now the share price is half that level.

I regard a lot of recent share price plunges as being spurious, and providing some excellent buying opportunities. However, only if accompanied by a positive, recent trading update. Profit warnings also seem to be, very selectively, providing some remarkable buying opportunities - if you can time purchases with skill.

There are some very good rebounds underway from recent disappointing updates too - e.g. ASOS (LON:ASC) and Superdry (LON:SDRY) , both up strongly in percentage times from recent lows, although both still miles below previous highs.

So, interesting times, especially for traders. Less so for buy & hold types like me (I hardly do any trading these days, having decided there's not much point - as gains seemed to net off against losses, thus making it a stressful waste of time!)

Tracsis (LON:TRCS)

CEO stepping down


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Sosandar PLC, formerly Orogen PLC, is a United Kingdom-based company that operates an online women’s wear platform. The Company’s clothing categories include dresses, jackets and coats, knitwear, shirts and blouses, tops, skirts, trousers, jeans, leggings, footwear, leather and suede, occasion wear, work wear, autumn trends, velvet and holiday shop. Its footwear products include Pewter Metallic Chelsea Boot, Red Leather Ankle Boot, Velvet Cylinder Heel Ankle Boot, Black Leather Stud Detail Ankle Boot, Black Suede Closed Toe Mule, Grey Velvet Court Shoe With Jeweled Brooch, Black Suede And Pewter Metallic Court Shoe, Black Leather Front Zip Ankle Boot, Leopard Print Leather Chelsea Boot, Steel Blue Leather Snake Print Ankle Boot And Black Suede Knee Boot. It also offers latest edit of day-to-night dresses, on-trend separates, luxe leather and outfit-topping shoes through its platform. more »

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Revolution Bars Group plc is a United Kingdom-based operator of bars. The Company has a trading portfolio of approximately 60 bars located predominantly in town or city high streets, which operate under the Revolution and Revolucion de Cuba brands. The Company's bars focus on a drinks and food-led offering, and typically trade from late morning, during the day and into late evening. Revolucion de Cuba bars are characterized by their 1940s Cuban-inspired style, with dark woods, traditional bar counters, antique tiles, vintage furniture, Havana-style ceiling fans, and original Cuban artwork and photographs. Its bars are located in various places, such as Cambridge, Ipswich and Norwich in South East; Bath, Plymouth and Southampton in South West; Birmingham, Derby, Leicester, Loughborough and Milton Keynes in Midlands; Cardiff and Swansea in Wales; Blackpool, Chester and Huddersfield in North West; Sheffield, Sunderland and York in North East, and Edinburgh and Glasgow in Scotland. more »

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Tracsis plc is a holding company. The Company is engaged in the business of software development and consultancy for the rail industry. Its segments include Rail Technology and Services, and Traffic & Data Services. The Rail Technology and Services segment includes its Software, Consultancy and Remote Condition Monitoring Technology, and also includes Ontrac Limited and Ontrac Technology Limited (together being Ontrac). The Traffic & Data Services segment includes data capture, analysis and interpretation of traffic and pedestrian data to aid with the planning, investment and ultimate operations of a transport environment and it also includes SEP Limited (SEP). It provides software products, consultancy services and delivers customized projects to solve a range of problems within the transport and traffic sector. It specializes in solving a range of data capture, reporting and resource optimization problems along with the provision of a range of associated professional services. more »

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  Is LON:SOS fundamentally strong or weak? Find out More »

39 Comments on this Article show/hide all

nicobos 7th Jan 20 of 39

In reply to post #433388


FREng - Yes, you could be right although the non-exec Chairman has bought £24k which isn't pocket change (although could be for him!). Seems a lot to commit if you didn't have some confidence in future prospects of the business !?

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paraic84 7th Jan 21 of 39

As well as Revolution Bars (LON:RBG) Superdry (LON:SDRY) and ASOS (LON:ASC) there seem to be a number of other rebounds in shares recently heavily sold. Check out QUIZ (LON:QUIZ) and On The Beach (LON:OTB) too. That sentiment hasn't benefited £G4M today though!

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williamhargrove 7th Jan 22 of 39

Paul - what was the name of the restaurant you invested in? Hopefully not a chicken related one in Brighton.

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purpleski 7th Jan 23 of 39

In reply to post #433183

Hi Zoiberg

RE: Reads

This is a bit of code (JavaScript or similar) that will register a read when someone visits a page for example two leave a suggestion of a company they would like Paul/Graham to comment on.

It doesn’t check whether they have read the words, just whether they have visited. It could also detect how long they stayed on the page, where they visited from, where they went after etc etc.

Best wishes


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Snoo 7th Jan 24 of 39

A rather spectacular £47m loss for Missguided - saved by £27m shareholder loan. Sounds like they got it badly wrong.

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FREng 7th Jan 25 of 39

A lunchtime update from Gresham Technologies (LON:GHT) has sent the shares up 20%

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dscollard 7th Jan 26 of 39

In reply to post #433348

i track the scheduled updates and none listed for Sosandar (LON:SOS) as yet for the coming month: although many AIMers do update the market on their own timescales: I reckon that flexibility helps sometimes to close deals and flatter results


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Nicotine Nelly 7th Jan 27 of 39

"Revolution Bars (LON:RBG) is my second largest holding" Vs. "if you're ever tempted to invest in pubs or restaurants, I've got one word for you: DON'T!!!)." ... So which is it , Paul?

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Paul Scott 7th Jan 28 of 39

In reply to post #433348

Hi Ramridge,

The Sosandar (LON:SOS) Q3 trading update is definitely this week, Weds or Thurs.

I wouldn't have mentioned it unless I was sure of my facts!

Regards, Paul.

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bobsandy12 7th Jan 29 of 39

Thanks Paul. i really appreciate your frankness and can see why you might invest in Revolutuion but not a one off pub or restaurant.....must confess to a little angel investment into Love Lane ahead of their raising some more cash via SEEDRS. I am really backing a friend who has gone in as Exec Chair....he was the light behind Meantime

The comments on Tracis are particularly helpful I have been watching for a while and was concerned at the CEO change. Do you know how much John McArthur has invested in the business and whether he will be leaving his more In?

A request if I may? Can you comment on Accesso Technologies whose share price dropped by 60% and has come back a bit? It seems there were a couple of very negative analyst reports on the way they were calculating growth but, it is unclear whether these also come from close to an entity that wants to/is shorting the stock.


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Blencathra 7th Jan 30 of 39

In reply to post #433363

Thx John - you should be very proud.

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cig 7th Jan 31 of 39

In reply to post #433408

It’s a couple of months worth of his non-exec income (about 100k per annum for 3 part time gigs) which is unlikely to be his sole income...

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cig 7th Jan 32 of 39

In reply to post #433423

You can bring back the cutlery at the next Mello meeting, no problem at all.

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dscollard 7th Jan 33 of 39

In reply to post #433458

@Paul, guessing you must hold enough Sosandar (LON:SOS) to have the inside track then as they haven't released that date nor is it on their published financial calendar: last year was 12 Feb for the TU. I don't hold but used to , guessing there is good news to come then.

Big week for retail reporting : Dunelm (LON:DNLM) did much to cheer today and Greggs (LON:GRG), Joules (LON:JOUL),,Footasylum (LON:FOOT), J Sainsbury (LON:SBRY), Shoe Zone (LON:SHOE), Ted Baker (LON:TED), Majestic Wine (LON:WINE) etc all report this week. Given the amount of shorts in this space there may be a few explosive short squeezes if results exceed beaten down expectations

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Trident 8th Jan 34 of 39

Hi John

Re Tracsis (LON:TRCS)

Disappointed you have decided to step down from Tracsis. At 39 or so, I certainly hope you are not headed for semi retirement! Obviously a change of CEO in a successful company for an investor, is never entirely encouraging as it tends to signal something the CEO has seen 'down the track' that the investor would not have the insight for,

For me my concerns would be that M&A is perhaps looking increasingly expensive, and that of course opens up more risk. Investments in the data mining and video analytics may pay off, or they may not, but at some they may have to be written down.

It may also be that the CEO is less attractive to a pure managerial role rather than the dynamics of a buy and build model, opportunities for which for a young ambitious chap perhaps lie in being on the books of a Private Equity outfit, or similar, where personal rewards can be higher.

Of course you may have found an interest in Zen Buddhism, and have discarded all earthly trappings!

Whatever it is good luck.

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John McArthur 8th Jan 35 of 39

In reply to post #433393

Hi doug2500,

Certainly not semi-retirement! I will be staying on at Tracsis albeit in a reduced role (and non-board) helping out with M&A as there is still loads to go at.

Regarding your question, to be honest I'm not entirely sure. Ever since we started Tracsis in 2004 the mainstream media would have you believe traffic and transport is in 'chaos' - especially rail. This is an easy target for obvious reasons but the truth is more services, far greater safety and a huge rise in people using the network over the past 20 years. With that said there remains myriad problems to solve and this will continue wherever you have a dynamic of rising demand and limited capacity.

Rail franchises (TOCs) are key customers to Tracsis and as you will know we assist them on various fronts and they are far more innovative than you might imagine. Cost cutting really isn't an option given their operations are already creaking so it's typically better processes and technology that help move things forward.

All the best.

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John McArthur 8th Jan 36 of 39

In reply to post #433468

Hi there,

I currently hold 3.4% and am therefore a significant shareholder who appears on the share register on Tracsis' website (Rule 3 - Significant Shareholders). Therefore all trades I make are RNSable.

I have no immediate need or intention to sell stock and have my own view of where the sp should/will be in years to come...


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cic 8th Jan 37 of 39

An article on Investopedia today quotes Goldman Sachs as applying the following criteria in selecting shares in the current turbulent times:

Adjusted forward P/E less than 10% above 10-year historic median
Strong balance sheet
Pays a dividend
Low beta, below the S&P 500 median
Low ownership by hedge funds

I wondered why "Low ownership by hedge funds" would be relevant, and how one might easily identify hedge fund ownership. Has anyone any thoughts on this, please?

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John McArthur 8th Jan 38 of 39

In reply to post #433538


I'm 43 but will happily take 39. No plans for semi-retirement or private equity I assure you.

The reasons for my transition are entirely personal and I suppose slightly selfish. I have a young daughter of 4 who starts school in September and I wish to spend the summer with her unfettered from work commitments and obligations. With that said I would never choose to depart without knowing there was going to be some favourable tail winds for my successor and I'm confident the stars have aligned nicely.

We don't see any change with regards M&A pricing and the potential of a Corbyn government eliminating entrepreneur's relief is a genuine and very material concern to owner managed businesses.

Best regards

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Hannah78 8th Jan 39 of 39

UP Global Sourcing Holdings (LON:UPGS) We are organising a site visit to UP Global Sourcing for private investors on Thursday 7th February 2019. There will be an opportunity to look round their Oldham showroom and speak with Andrew Gossage, Managing Director, and Graham Screawn, Finance Director.
The schedule for the day would be as follows:
11am Arrive at UPGS offices
11.10 tour of the Showroom and offices
12.45 Q&A session
14.00 Visit finishes
If you are interested in joining us, please email

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 Are LON:SOS's fundamentals sound as an investment? Find out More »

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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