Small Cap Value Report (Mon 9 Aug 2021) - NGHT, MCLS, ARB, SMRT, HAT

9th Aug '21 by Paul Scott

102 comments 10532 reads

Good morning, it's just Paul here with the SCVR for Monday.

Today's report is now finished.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to cover 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 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) - don't blame us if you buy something that doesn't work out. 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.

Agenda -

Paul's section:

Nightcap (LON:NGHT) - trading update buried in a new site announcement. Trading well. Read-across for other hospitality companies maybe?

Mccoll's Retail (LON:MCLS) - capital raising being considered. The perils of a weak balance sheet, with too much debt (combined with a marginal business).

Argo Blockchain (LON:ARB) - impressive interim results from this blockchain miner. Short sellers launch an attack on the company.

Smartspace Software (LON:SMRT) - trading update from this small software company. A little bit too early stage for me.

H & T (LON:HAT) - solid H1 numbers despite the pandemic. Amazingly strong balance sheet. Positive outlook. Looks good!

Nightcap (LON:NGHT)

21.5p (Friday’s close) - mkt cap £40m

New site

This is a chain of bars run by Sarah Willingham (CEO) of Dragon’s Den TV fame.

A new site in Bristol is to be opened before the end of 2021.

Five other sites are in “legal negotiations” - ambiguous, does that mean they’ve signed heads of terms, or not?

Trading update - is slipped into this RNS, it really should have been included in the title, as it’s so easy to miss otherwise.

The Company's bars have continued to trade well ahead of management's expectations since the relaxation of the UK…

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Bluesky Ventura

9th Aug '21

This comment has been moderated

Paul Scott

Thanks GN100,

As you say, it's really simple. We just give an honest opinion on the days newsflow from the RNS trading updates & results statements, then enjoy an interesting discussion with subscribers.

Nothing more than that.

Other agendas are just fantasy by attention-seekers. Ignore them!

Best wishes, Paul.

TStubbs

I’m thinking of moving my account from Hargreaves Landsdown too as the charges mount up and when I asked them how much I had paid them in charges in the last year they told me I had to download all my statements over all my accounts for each month and work it out myself. I hate that lack of transparency as they must have those figures and it will take me hours to do. I’ve always found them very arrogant and particularly patronising to me as a woman. When I asked about the fees for moving my account they didn’t pitch to keep it and it’s substantially more valuable than their average account. So dam them I thought! My husband will probably take his account elsewhere too.
so where are people moving too? And does anyone them provide real-time pricing and market prices from market open without the first 15 min of being in the dark? I admit to being nervous of moving my account to an online only provider- it must be my age.

Janet1

Anyone know where we can read the Jefferies International Hargreaves Lansdown (LON:HL.) note?

andrewdb

I think one source of that is Chris Dillow in the Investors Chronicle.
He makes some very good points on some simple rules-based investment principles that PIs can follow but Inv Managers cannot.

dodge1664

Whether you call it a recommendation or an opinion, the outcome is the same: SCVR readers will inevitably have a heavy weighting of the shares that get a positive write up.

Perhaps the only difference is who's to blame if it goes wrong.

Momoko Miyamoto

AJBell, Interactive Investor & IG are somewhat cheaper than HL for larger portfolios. I wouldn’t expect the service to be any better though, one gets what one pays for.

Stocks123456

I looked at the airport passenger numbers for June 21 and they still appeared down 90%. Im hoping people are getting more confident now to get on a plane due to the vaccine rollout. July and August passenger numbers will be interesting reading. I hold several travel related stocks.

ridavies

God forbid he does! Well, anytime soon. I will contribute to his gym subscription any day! Plus the 4 weeks in Cyprus in September of course, if my memory serves me right!

abtan

Smartspace Software (LON:SMRT)

Hi Andy and Paul

It's the first time I've looked at Smartspace Software (LON:SMRT) and I'm intrigued enough to add it to my "keep an eye" list.

The thing that stood out was the very high Gross Margins on the main Swiped On product.
See the below extract from the 2020 Annual Report:

Revenues here are rising, which is great, but unfortunately:

it's doesn't seem like it's cashflow positive, and
I can't see is the operating leverage that I was hoping to see.
Note the increased Administrative Expenses between FY20 and FY21 below, which pretty much wipes out all the extra revenue generated.

From some digging it looks like most of the administration expense increase is from an uptick in salaries.

If those administrative costs start to flatten I'll be more likely to get involved, but otherwise I probably wouldn't buy in.

As an aside and for full disclosure I do hold a position in a competitor Essensys (LON:ESYS) so the revenue growth for Swiped On is a promising indicator, if there's any read across of course.

Re Electra Private Equity (LON:ELTA) and Hotter, I seem to remember that there is much excitement about TGIFriday, and less on Hotter - which was virtually dismissed. I sit here wearing my umpteenth pair of Hotter shoes, and several pairs of outdoor slippers in the cupboard. They are made in the UK if I remember correctly, and they are quite the most comfortable shoes I have ever worn. Of course , they cant match the price of Shoe Zone (LON:SHOE) and I have had a few pairs of 'holiday disposables' from them in my time, but Hotter are hot stuff in my book. They deserve to go for a decent price as a component of £ELTA. All IMHO and I do fit into the older age group, but lots of us do and we have quite a lot of money in pursuit of comfort.

Hargreaves Lansdown (LON:HL.)

I must admit to being a bit confused by what seems like consensus grief for Hargreaves Lansdown (LON:HL.)

I've never had a problem with customer service, eg I've asked for information going back several years and received complete answers for what are probably unusual requests. I even once asked for information for a company that my mother-in-law held (which I fully disclosed) and they still helped me out.

The ISA charges are okay. Max is £3.75 a month and, as I rarely trade, the £11.95 and FX charges, whilst scandalous, are something I can live with given the high levels of customer service I've receive so far.

If there was one criticism it would be the high SIPP charges (0.45% per annum, with a max charge per year of £200).

As for the update today, I've only glanced at the comments here and the cash flow statement and decided that it's probably too expensive for me, but longevity of the business looks secure (check out the demographics of those new customers) and it's clearly a quality outfit.

And as an added bonus, I'm reassured that HL looks like a secure place to hold my investments.

Cheers

gus 1065

Hi TStubbs.

Re. your question about choice of online broker, I’ve been very happy with the service provided by both Fidelity and Charles Stanley Direct. I have used both of them for a combination of funds and shares for several years and have investment, ISA and SIPP accounts with them. My wife has her ISA and investment account with Charles Stanley. Neither are the cheapest online brokers available but the level of reporting is good, I get live pricing as and when I look to trade (otherwise at a portfolio level I believe there is the standard 15 minutes delay) and the service is good. Queries when they arise are dealt with promptly and efficiently. I would probably pick CSD as the better of the two based on the quality of service although note that the parent company, Charles Stanley (LON:CAY) , is in the process of being acquired by a US wealth manager so there may be some changes forthcoming. This was discussed in the comments on the SCVR report below - the concern being that the new owners might look to focus on higher margin advisory rather than execution only client business and dispose of/change the services offered by CSD.

https://www.stockopedia.com/co...

Gus.

H & T (LON:HAT)

Hi Dahokolomoki

I think you have me confused with Timarr on the "gov support" comment.
I'll gladly take the mix up as a compliment though!

I do hold a reasonably sized position in Ramsdens Holdings (LON:RFX) so I'll be looking at H & T (LON:HAT) when I get a chance, but until then I'm afraid there's not much I can add.

Snowbum

10th Aug '21

I noted some discussion of 'Green Stocks' and would suggest the following for those interested in this area. If looking for exposure to stocks that stand to benefit from government policy wrt to climate change, $AMTX is worth researching if you've not come across it before.

US Federal and Californian State legislation is such that the company will be well supported through the carbon credit system as it continues to grow.

You'll see from the chart that holding US small caps is not for the faint of heart but the potential for this company over the coming decade is significant. Having previously bought around $3 and sold into the massive spike I am and have been re-accumulating at the current price levels ($8-$10). Institutional shareholdings also appear to have increased significantly in 2021 which is likely what caused the price spike you can see on the chart.

A coffee can share imo.

jwebster

Yes, I have a SIPP with Hargreaves Landsdown. They charge 0.45% per year on the value of shares held capped at 200 pounds. But, on funds the fee is uncapped up to 2m and they charge 0.45% on the first 250k of funds which is a hefty 1,125 pounds. They also have a fairly high fx charge for buying US stocks.

So I still use HL to hold some long-term stocks but avoid funds because of the charges.

Would suggest when you choose a platform to examine the charges carefully, as they vary by investment type. Also if you are a trader versus a buy and hold investor makes a difference regarding the transaction costs.

Caper4

Degiro offer superb service and very low costs. No good for ISA or SIPP though but I use AJBell for those

gregatr0n

Here's a few high level examples of industry use cases on the Cardano blockchain: https://cardano.org/enterprise...

12th Aug '21

No, readers engage their brains, and do their own research. That's the whole ethos of this site.

Anticipated Mccoll's Retail (LON:MCLS) fundraising duly pushed out into a seemingly reluctant market at 20p share to raise up to £35 million (£30 million/£5 million under an Open Offer). Up to 175 million shares represents between 52% to 60% dilution for any existing shareholders not taking up their rights in a partial Open Offer. At 20p a share this is a 43% discount to the 35p share price when Paul posted his write up on Monday.

https://www.investegate.co.uk/...

CEO Jonathan Miller has indeed put his hand in his pocket to the tune of £3m/15 million shares. Other directors have added their support too. Significant sticking plaster but I fear this canine still has too many fleas ….

Small Cap Value Report (Mon 9 Aug 2021) - NGHT, MCLS, ARB, SMRT, HAT

Nightcap (LON:NGHT)

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Paul Scott

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