Hi, this is Paul,

Thanks for your requests - I've got enough to be going on with now.

Please try to limit requests to small caps (under c.£400m market cap, and above c.£10m), and only in sectors that I cover (so no resources, property, financials, or pharmas/biotech). Also, please limit requests to companies which are reporting trading updates or results, as that's what drives these reports. Thanks!

Yesterday's report was extended to cover 2 more companies, so here's the link for that.

On to today's news




Connect (LON:CNCT)

Share price: 66.5p (up 2% today, at 09:29)

No. shares: 247.66m
Market cap: £164.7m

(at the time of writing, I hold a long position in this share)

Disposal of books division - This has been a rather strange turn of events. The buyer backed out, and it looked like a legal battle would ensue. We're informed today that the deal has now been done, at a reduced price - £6m cash received, instead of the previously agreed £10.6m plus £1m deferred. I can't shake off a feeling that we've perhaps not been told the full picture? Maybe the buyer found something during due diligence that they didn't like?

I'm not really sure if this is good, or bad news? Anyway, it's a done deal now, and not material to the market cap of £161m. The disposal is useful in reducing debt a bit, so on balance it's probably a good thing to have jettisoned a small division which might have been a distraction for management.

I've recently topped up my holding here a little, as I think the market possibly over-reacted to the recent profit warning. It wasn't a big miss, yet the share price almost halved. The forecast dividend yield is 15%, which is the market clearly telling us that the divis are likely to be cut, or passed altogether.

Maybe I made a mistake, recently averaging down on this one? I might go through the figures again over the weekend, to decide whether to ditch them, or buy more. It's not a big holding for me, as I don't usually like to put too much money into wobbly situations.

Graham sounded unimpressed when he reviewed the profit warning here on 22 Jan 2018. So this looks a polarised situation, where some…

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