Small Cap Value Report (Thu 15 Mar 2018) - Bitcoin, PMP, TFW
Hi, it's Paul here with a shorter & earlier than usual report.
NB. No reader requests today please, because I won't have time to do them - I have to attend a conference in London all afternoon & evening, so this will be a shorter & earlier report than usual.
However, please feel free to leave your own comments on results & trading updates from companies that you find interesting, explaining why you think they look interesting. It's a team effort!
I completed yesterday's report in the evening, as the whole day was taken up with Conviviality (LON:CVR) . Additional sections on Somero Enterprises Inc (LON:SOM) and Empresaria (LON:EMR) were added. So here's the link for yesterday's full report, to get you started today.
Bitcoin
I see that is falling again. It's down to $7900. The recent peak was $20,000.
Recent developments have been that Google has apparently banned all advertising for fantasy currencies, following on from a similar ban by Facebook. Christine Lagarde of the IMF made extremely negative comments about fantasy currencies, saying they may need to be banned.
All this is inevitable because there is no way that governments will allow criminals and fantasists to undermine or replace the existing financial system, it just won't happen. Any such threats will ultimately be banned, although authorities tend to be very slow to react.
So I reiterate my previous firm conviction that fantasy currencies are doomed to failure. The fact that they have zero value is also rather important. You only have to go on to social media to see the type of people who are bullish on this stuff – these are not financially sophisticated people by and large. I don't know any serious investors who would go near crypto-currencies, because they can see it for what it is – a giant financial speculative bubble.
I've done quite a lot of research on block chain technology, and I feel that some form of adaptation of this could become very successful and of widespread use. However the speculative mania over completely artificial valuations put on the so-called coins, seems to be nearing the inevitable end-game – of total collapse.
Anyway, I am watching from the sidelines these days, having learned the hard way that the volatility of bitcoin is such that it's incredibly difficult to make any worthwhile amount of money betting either long or short, because stop losses get taken out on short-term spikes up and down. Therefore to make any meaningful profit, you have to take big risks. Well done to anyone who gambled on this and made a fortune, but the key question is will they still have that fortune when this financial mania has ended?
Portmeirion (LON:PMP)
Share price: 1,045p (up 0.7% today, at 09:08)
No. shares: 10.85m
Market cap: £113.4m
(at the time of writing, I hold a long position in this share)
This is the UK-based decorative pottery & candles group, announcing its preliminary results for the year ended 31st of December 2017.
- Revenue up 10.6% to £84.8 million
- Pre-tax profit up 13% to £8.8 million - I like it when profit rises faster than revenue
- Basic earnings per share up 9.2% to 65.07p – I will have to check whether this adjusts out goodwill amortisation or not. Checking the balance sheet, goodwill is unchanged at £7.229 million, so it looks as if goodwill is not amortised, which I think is a new accounting standard, as I've seen that treatment elsewhere. Other intangible assets have dropped from £6.6 million to £6.1 million, implying an amortisation charge of about £0.5 million
- Net debt – it's pleasing to see that the group has moved back into a net cash position of £1.6 million. This compares with net debt of £2.3 million a year earlier.
Stockopedia shows broker consensus of 66.7p earnings per share. I'll have to check whether that is comparable to the 65.07p actual figure reported today. That gives a PER of 16.1 calculated on 1045p share price, and 65.07p basic EPS for 2017. Given the positive outlook comments, I think we can expect EPS to rise again in 2018, so the PER should drop.
Normally analysts work on adjusted earnings per share, whereas Portmeirion only report basic earnings per share, so I need to investigate whether the two numbers are comparable to determine whether this is an earnings beat, meet, or shortfall. The numbers are in the same ballpark, so it's probably no great shakes either way. I've just called the company, but the FD is busy currently, so I've left a message to ask for a callback to clarify this point. Will update this later, probably tomorrow, once I have the answer.
I've noticed a trend in recent weeks, for nervous investors to bank profits, even if results are satisfactory. Note also that Portmeirion shares have had a good run recently. It's a surprisingly illiquid share, and can be quite difficult to buy and sell, so clearly the shares are fairly tightly held.
Balance sheet – looks very strong.
Current assets of £39 million (including cash of £8.5 million) dwarfs current liabilities of £13 million. That is a current ratio of 3.0 – extremely healthy. Why does this matter? It means the company has firepower for more acquisitions, without needing to issue more equity. My estimate is that the company could comfortably afford another acquisition up to about £15 million, using existing cash and fresh bank borrowings, if it wanted to.
Note that the pension deficit has dropped considerably from £7.1 million to £1.67 million. This is an interesting area, because some companies with pension deficits might be worth investing in, now that interest rates are starting to rise, because that should help reduce pension deficits. Although each case has to be examined individually.
Outlook -
Trading in the first two months of the current year is nearly 20% ahead of the comparative period in 2017. However, given the Group's second half weighting, the sales in these first two months of the year are low in comparison to the balance of the year.
"We are delighted to be reporting a ninth consecutive year of record revenue and a record profit before taxation.
Our core values of innovation, targeted product development and operational excellence remain unchanged, and we are pleased to report on the successful integration of the Wax Lyrical home fragrance business into the Group.
Trading in the first two months of the current year is ahead of the comparative period in 2017. The outlook for 2018 is positive and we remain confident for the future."
Dividends – total dividends for the year at 7.5% to 34.66p. This gives dividend yield of 3.3%, which is not particularly amazing, however there in mind the track record of annual increases in dividends. In that context, I'm happy with the well covered and growing dividend.
My opinion - I'm happy to continue holding. This company is a long-standing favourite of mine, and I think it makes a decent core, long-term holding, for e.g. a SIPP. It seems to me a likely candidate for a takeover bid, at some point, due to its iconic brands, and decent track record of growth. Management seem safe pairs of hands.
Followers of Mark Minervini, note that this looks like his ideal chart formation - namely a long period forming a base, then a stage 2 breakout, crossing above 50 & 200 day moving averages. I wouldn't have thought PMP is likely to be a multi-bagger, but I'd say it's quite likely that the share price could be maybe 20% higher in a year's time?
FW Thorpe (LON:TFW)
Share price: 330p (down 2.9% today, at 10:19)
No. shares: 115.88m
Market cap: £382.4m
Interim results - for the 6 months to 31 Dec 2017.
a group of companies that design, manufacture and supply professional lighting systems
The headlines figures look rather lacklustre for a company which is on a pretty punchy rating - profit & EPS basically flat against H1 last year.
There don't seem to be any broker forecasts available. Therefore, I really do think the company should start doing commissioned research - otherwise investors are in the dark. It's fine for the family shareholders, as they're in the know. But what about outside shareholders?
If full year results are also the same as last year, then EPS would be 12.54p, making a PER of 26.3 - prima facie very expensive for a group with flat earnings.
Balance sheet - is groaning with surplus capital, so this needs to be taken into account in valuation.
Outlook - I really like the tell it how it is honesty of the Chairman, Mike Allcock;
It remains a challenge to maintain last year's result, in spite of the interim performance. Revenue and profits should be bolstered by the addition of Famostar in the second half of the year; however, whilst the Group will endeavour to reach record levels, it seems unlikely.
Within the Group we will, of course, continue to work on and invest in projects that support our vision of stable long-term growth into the future.
Perhaps there might be an element of under-promise, and over-deliver, in the above. Even so, I just cannot see why this share should be priced on a PER of more than, say 15-17?
Therefore it looks significantly over-priced to me. Nice group of companies, and well managed. Just considerably too expensive for me.
I have to leave it there for today, and there's nothing much else of interest in today's announcements.
Having had a think about it, my plan of action in future is to focus on the stocks that look most interesting to me each day. I'll have a look at the reader comments, but I'd rather you just discuss other companies amongst yourselves in the reader comments, and leave me to focus on the most interesting results/trading updates. That way I don't get bogged down & demotivated by having to write about things that don't interest me.
Although sometimes readers do flag up interesting companies, e.g. Headlam (LON:HEAD) the other day. I ended up liking it, after going through the numbers after a reader request.
Also, thanks to Damian, who suggested that the best cure for my RSI was to swap the mouse over to my left hand. That combined with using Dragon voice recognition software (which worked a treat this morning, I wrote most of the report using it, with very few errors - except "Christine Lagarde" was interpreted by Dragon as "Chrtistine the guard"!! LOL. Voice recog is great value for some hilarious mistakes, as with teletext. The RSI is already improving, after just 1 day of remedial measures.
Have a good day!
Best wishes, Paul.
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68 comments
I don't know how you can say it's only 'probably' a bubble when, by definition really, any currency with zero inherent value and no central bank backing has only speculative value
That's not quite true. In addition to speculation bitcoin et al have value (albeit hard to quantify) to those who want to exchange value in ways that cannot be tracked - i.e. those being paid for illegal activities, those who want to launder money and some of those who want to evade tax.
The problem is that those things that create "value" for cryptos are also exactly the sort of things that states, central banks etc are not likely to look positively upon. There may always be scope for some cryptos to survive in the twilight, but once serious action is taken to control them, as must happen, the speculators, at least are going to feel the pinch.
Peter
technically FIAT currency has no any inherent value either......Zimbabwe, Venezuela?
They are only as good as the credibility / credit worthiness of the backer and we've seen that go spectacularly wrong. Even something with technically intrinsic value like Gold only has its place because it is finite and coveted. It has the obvious benefit of being thought about that way for thousands of years yet even that still provokes debate amongst economists.........
Venezuela were the first country to have launched their own digital ccy backed by oil - backed by central bank because FIAT ccy is so weak.....
Coinbase today got a bank account with Barclays and an FCA license to roll out faster payments!
Don't get me wrong, I am no massive bull/advocate of digital ccy and I can see the pitfalls and bear case associated with it, but am fascinated at the psychology of how the idea seems to provoke very strong feelings of worth or otherwise across the world. Interesting topic
Re crypto-currencies: I didn't say they have no value and no utility, Peter. Unlike FIAT currencies (the major ones at least), which as is often pointed out, usually have no inherent value either, cryptos have no credible, dependable backing. That means that - I would argue, in stark contrast to the major FIAT currencies - the cryptos' value is 100% speculative (even if some of that speculative value is born of genuine utility) since they have no reliable backing in a crisis, meaning they have no floor under them and nothing to rescue them when there is a run on the currency - nothing to stop their spot prices falling to zero in such circumstances and therefore no reason to think they won't fall to zero under such circumstances when they suffer loss of confidence. (Nor do they appear to have endurable and sustainable value if only due to their voracious energy and computing-power demands that I mentioned in other comments.)
I would like to hear anyone else holding or following Stilo International (LON:STL).
It's a tiddler software company at £4.8m market cap, but with the following
- £1.6m cash
- not fly by night (listed many years, revenue generating)
- PBT £300k and cash flow generative
- developing a new software (AuthorBridge)
- PE ratio to FY2017 just ended of about 15x
- future profit warning flagged with two big clients not ordering this coming year who ordered last year
Any thoughts would be welcome!
Paul's comment about Portmeirion (LON:PMP) looking like a Minervini stock made me wonder if Cloudcall (LON:CALL) looks similar? Today it broke above its 50MA and the 50, 100 and 200MA's are neatly stacked below it in order, as per Minervini's book.
I'm long but wondering if I should top up now before their results next week or wait.
If anyone has a view on both the chart and whether one should sell before the results or add before, I'd love to hear their views.
Cheers
Francis
Francis,
The Cloudcall (LON:CALL) momentum is super, but looking at the StockReport;
They lose money
They pass two short selling screens
The Altman Z2 score is showing as -25.9. I dont remember an arrow so far left in the distress zone before
So I'd want to reassure myself that Stocko has the wrong numbers before buying myself.
Hi Francis,
I agree that Cloudcall (LON:CALL) is looking like a Minervini stock. Appears to be a nice base forming at the moment, bouncing off the 150 MA.
I don't like that it's loss making. Paul covered it in January and he mentioned "CALL has clearly now gone past a tipping point where it will reach profitability, this year or next year. ". I see results are due on the 20th, next Tuesday. Are they expected to report a maiden profit?
Thanks for flagging it. It's going on my watchlist.
Thanks Ricky65. As a relative newcomer (to Minervini), I'm still getting used to applying his principles in practice so that's good to know.
I met the CEO recently at an event and particularly liked his market strategy. He said they were concentrating entirely on the Recruitment market and whilst there were other markets he felt were appropriate (financial services for instance) they were in no rush to try breaking into them in the short term.
That's what I recommend in my tech consulting work and gave me assurance about their ability to focus on winning in one market at a time.
In terms of results, I find it hard to predict what next Tuesday holds, thus the question in my previous post about selling or buying more before then.
That's interesting. The strategy of concentrating on the Recruitment market appears to be working. Last Trading Update mentioned Total Revenue up 41% which I think is impressive.
I'm going to wait for results on Tuesday, and if they're well received, then I'll probably take a position.
Bitcoin, and all the rest, I would not disagree on pricing being a bubble, or speculative or dangerous to your wealth but it does perform the essentials of a currency, it is a store of value (if volatile) & and it is a transfer mechanism of value. It might not be backed by a government but as long as there are buyers and sellers it has a market and therefore price discovery, and if you can transfer that price into an existing currency, well, it’s part of the system. Having worked for clearing houses & us/eu/uk exchanges for 15 years I know they are all looking at how they can list the cryto currencies and more importantly, clear them. The first will capture the liquidity and that’s the big prize, it can then also be regulated. But they are all struggling to get their heads round it, not least you regulate it, legitimise it, but then how do you stop all the illegal use of bitcoin etc when the coin can be moved anywhere, above the banking and technical reach of the regulators. Almost making the situation worse. Still not investable though, you know it’s a bubble when you see ‘trade bitcoin’ stickers on the lamposts on the school run!
You’d struggle not to call them sophisticated investors, which is my point.
Re: Paul's comments on unsophisticated investors getting involved in bitcoin.
I have personal experience of a professional footballer (playing in the Championship) putting alot of money into cryptocurrencies and also marketing them to his friends both within and outside football. It would not surprise me if a significant amount of money earned by wealthy professional sports people ends up in cryptocurrencies as I think it may appeal to their desire for excitement.
oh Paul, Paul, Paul !!!
Bitcoin : " I don't know any serious investors who would go near crypto-currencies........."
Try Alan Howard, of Brevan Howard and some of his fellow cohorts as a starter for ten (see Bloomberg article yesterday), and there are actually plenty more.
Brevan Howard team are probably some of the most serious and sophisticated investors out there.
"All this is inevitable because there is no way that governments will allow criminals and fantasists to undermine or replace the existing financial system, it just won't happen."
But you only have to look at the likes of Singapore and Japan who are actively embracing Crypto to see that this statement is also seriously flawed, even throwaway. Even if others ban it (and personally I doubt it) there is nothing stopping FIAT money from those countries migrating to those that do embrace it and purchasing there. In todays world that type of capital migration is easy (outside of exchange control countries).
Is it a bubble? probably!
Is it going to zero? I doubt it, but no-one really knows.
Should you buy some? probably not if you don't really understand it.
Brevan Howard is a a bunch of individual traders each running their own P&L with their own capital at risk. The firm will punt individuals/units money if they think they're hot and take it back if not. The traders will do whatever it takes to make money and get allocation. There is very little room for belief in this world...and if they ever talk publicly that they like something then it probably means they are looking to sell it to you :) Its not investing, even if historically it has been successful for them.
David - Re Bitcoin: Good luck to you if you have made/are making money on Bitcoin or other crypto-currency, but I don't know how you can say it's only 'probably' a bubble when, by definition really, any currency with zero inherent value and no central bank backing has only speculative value. Yes, you can still make money trading it, but only before the bubble bursts.
(I have no position in crypto-currencies, and personally the whole area wreaks of tulip bulbs & Dot-Com mania: very similar feel to it as to anything tech or Dot-Com in 1998 & 1999, however loss-making - One knew there was a great shift happening that would bring about new and much larger value streams (- Dot-Coms rather than tulip bulbs) - but no way of knowing at the time which few would be the real winners and what form they would take. Most of the others in these early days were a total loss to any mug punters. And where did all the buyers disappear to when it was time to sell in desperation?)
Hi Ed - my "probably" was of course a bit tongue in cheek though you can never say that with certainty when it comes to the majors such as Bitcoin, Ethereum, BTC etc.
Certainly there are very many cryptos that are absolute rubbish (and in some cases outright fraud). This also reminds me very much of the Dot-com era. I don't participate in them and I don't agree that anyone should buy them on credit or leverage. Personally I am all for regulation in this space.
Crypto's though are like marmite; they tend to elicit very polar opinions. You only have to look at the red thumbs on my previous post to see that.
I know a good number of very serious investors and financially sophisticated folk that take either side of the arguement so I thought that was worth pointing out. I also thought it worth highlighting that some countries are actually quietly embracing cryptos whilst others cry foul. I just don't think things are quite as black and white as general commentary on the subject seems to make out.
My own opinion is that digital currency is here to stay, though very much like the dot com era I wouldn't like to say which ones will win out or what their ultimate value will be. I also think regulation, especially on ICOs, will come soon and that's a good thing since these are fundamentally just IPOs with zero basic investor protections and less actual ownership. That should put an end to most of the rubbish hopefully.
I have very small (relative) long positions in ETH & BTC but that's all and largely on the thesis that I think digital currency is becoming a minor asset class of a digital data driven age, but am also comfortable to accept that I may well be proved wrong in that thesis ultimately.
Re crypto-currencies: I don't doubt for a moment there are some very sophisticated traders involved, David, among many more mug punters who will lose all their money. All other practical disadvantages aside, blockchain technologies, relying on broadly-distributed ledgers for transaction verification appear to have a fatal flaw in the huge energy (and computing) demand, even for transactions of very low value. Hence actual use of crypto-currencies appears not to be scalable in any really serious way. Perhaps there are alternative systems that aren't so greedy in energy and computing power and, in the hands of stable governments which can supply the required backing and guarantees, will become everyday currency for us all.
blockchain technologies, relying on broadly-distributed ledgers for transaction verification appear to have a fatal flaw in the huge energy (and computing) demand
No, that's just proof of work, which underlies the consensus mechanism for the Bitcoin blockchain and it does indeed require lots of energy. However, it's just one consensus mechanism, there's a whole industry out there looking at low energy alternatives.
Beyond that proof of work and alternatives are a way of validating and clearing transactions without requiring to trust counterparties, but these themselves are just one class of crypto-currency. For example, it's entirely possible to have a crypto-currency based on trusting a third-party such as a central bank or a payment scheme to ensure that transactions are properly validated.
In purely technical terms blockchain based currencies have some underlying efficiencies as payment methods regardless of how consensus is achieved, assuming you can gain sufficient volume of acceptance - basically a currency is only of real use if people can exchange it for goods or services. Without that they're really just instruments for speculation - but let's face it, some people will gamble on anything.
timarr
Re crypto-currencies & blockchain technologies: Glad to hear from you, timarr, as someone working in the field, and thanks for the clarification. When there are low-energy crypto-currencies backed by major governments, then I would be prepared to hold crypto-currency over-night (and use other similarly robustly-supported blockchain technologies - at the right price, I might invest in those supplying the infrastructure or services too since I agree that the right systems have enormous utility and potential).
Some will argue that this isn't the right place for discussions on cryptos & blockchain. I would point out that - in addition to Paul Scott introducing the topic here for discussion - the benefit to discussion here is that new investors not acquainted with speculative bubbles can read the concerns of those who are and who have lost money in previous manias. Whereas dedicated threads can be dominated by advocates and not always address the risks and downsides fully (though some are good at covering the subject from all angles).
Yes, what I like about this board is that it is generally full of people with different well thought out viewpoints, that irrespective of whether you agree or not helps add colour to ones own natural bias. There is seldom a single right answer and it is nice to get a balanced debate.
Elegant Hotels
Bad press for Barbados in the Telegraph this morning.
"Stench of economic decay is overwhelming Barbados JULIA BRADSHAW
Barbados stinks. It really does. A foul effluvium bubbles up from the manhole covers and rainwater drains in the streets, pours into the roads and pavements, and out on to the island’s pristine beaches 24 hours a day. Red flags along the white sands tell us it is unsafe to swim. The smell of human excrement is sometimes unbearable.
This sewage problem is blighting the entire south coast of the island I used to call home, and is a symptom of the incompetence and perceived corruption of the current administration, which Barbadians have dubbed the “do-little government”.
The article goes on in this vein. It could hit Elegant Hotels' business. I sold some this morning, but the rest are frozen in Beaufort Securities!
Richard
I agree with Paul that Portmeirion (LON:PMP) is a Minervini stock as it meets his Trend Template.
Conviviality (LON:CVR) - It occurs to me that they almost certainly have duty / VAT unpaid alcohol in bonded warehouses. If a bill for duty / VAT on goods withdrawn from the warehouse is unpaid then HMRC are unlikely to let them withdraw anything else. This would result in problems stocking / supplying alcohol quite independently of any issue with suppliers' credit insurance.
CVR supply Stonegate and Wetherspoons, who will doubtless have started making contingency plans already. Wetherspoons will be particularly sensitive to supplier problems having suffered from Russell Hume's meat hygiene / labelling issues. Perhaps some of these companies have been squeezing their supply chain too hard - see also KFC not willing to pay enough to get competent logistics until business disruption forced their hand.
Re Portmeirion (LON:PMP) Solid results driven by "Sales to the rest of the world showed the most significant growth during the year, increasing by 54.4% to £24.2 million (2016: £15.7 million)." with another £6.6Mn in Korea, making the group nicely balanced with roughly 1/3 in UK, 1/3 US and 1/3 other. ROW has potential for significant further growth in my view. With online up +13% in H2, group up 20% in first 2months vs LY, and no debt, much to like.
I added more this morning and expect to hold for long term
I'm happy to help with your RSI problem Paul. I think that it's going to be a real problem in society in the future as we spend increasing amounts of time in front of the computer. Still by taking action now hopefully it'll resolve itself.
NB another trick is to learn the keyboard shortcuts for things that you do with the mouse - this is often quicker and means less time spent grappling with the mouse making fine motor movements.
Damian
Hi Paul,
I really appreciate your commentary on the SCVR and your writing has been very useful, educational and profitable for me.
However why do you report so extensively on bitcoin and cryptocurrency, it doesn't seem to fit into anything really to do with small caps in particular or the small cap investment environment in general, how does it help people invest in small caps?
I ask the question in good spirit and to improve my understanding!
Hi sbotting,
I've only mentioned Bitcoin 3 times in these reports, which hardly qualifies as "report so extensively", does it?
Bitcoin is one of the biggest speculative bubbles that the world has ever seen, and people often ask for my views on it. It's therefore very topical. I find it interesting to think about & discuss topical subject matter like that, and the bosses at Stockopedia like me commenting on anything interesting & topical.
Also, given that I have a very strong conviction that Bitcoin is likely to be a financial graveyard for punters, then I feel it's my duty to at least alert readers to the risks, and then it's up to them whether they want to punt on it or not.
It only took me about 10 minutes to write the above section on Bitcoin, and the section is clearly identified with a title - the purpose of which is that people can just skip over any sections which don't interest you.
Regards, Paul.
Hi Paul,
I have the greatest respect for you views, this bitcoin thing though, I'm not sure you've read it right. I welcome the banning of adverts on facebook and google, seems to me that just sucks in suckers. I remember at $100 thinking it was ridiculous and I had missed the boat. I do agree that the crypto market is doomed, and nearly every crypto currency will fall to the price that is irrelevant.
I've just got this feeling about bitcoin, that it might be like amazon in the .com crash, of course it will fall but will it be the one that people go back to after the decks are cleared ?
I only have a small investment, less than half a bitcoin, and to be fair the volitility has put me off investing any more. The treats as I see them is more from established players creating their own. Why haven't google or amazon created their own crypto currencies ? Why haven't governments ? Seems that starting from here, you could take the best of all of them, create something better suited to a currency rather than a speculative asset, and make a fortune or at least get the jump on your competitors,
The more I think of it, the more risks I can think of, so maybe you're right !!!
K
kenobi - Re Bitcoin: Maybe you'll be right in your hunch, but since you agree that's just a hunch, I am sure you'll be happy to admit that's speculation. I think you'll likely be wrong in your hunch, but that's my hunch or speculation. Putting aside for a moment the lack of central bank backing, the challenge to governments' control of the financial system and use for laundering dirty money, and that, mostly, they aren't much being used now as currency, but rather as commodities for speculation, I don't see how the use of broadly-distributed ledgers for verification of transactions by blockchain systems is sustainable in view of the vast energy expense, even when transacting tiny amounts.
Agreed, sbotting (mainly as I find it then takes over the discussion). Written by someone who has learnt a great deal and highly values the SCVR.
Since it's a quiet day (seemingly), can I see if others agree that we finally get rid of these vote ups and down for individual comments; by all means keep it for a thread in general. It really does just strike me as petty (see the downvotes above for certain users) and takes away from what is an otherwise excellent forum. It also polarizes those with contrarian views; offensive comments can just be removed by admin. Happy to now be hit with a wave of down votes :) ...
Although I have not used a down vote today I notice that the ones that are there are on two posts which totally ignore Paul's opening "No reader requests today please". Paul politely replied to the first (2 down votes) reiterating his request but the second post ignored that as well and got 5 down votes which I regard as fair comment and not petty.
Personally though I feel that they serve useful purposes :
A thumbs up generally indicates a post that might be more worth reading than others, very useful if you're skim reading (personally I try to read everything, but if I'm trying to find a post I remember from an old thread, chances are that it's one with lots of green thumbs and I can find it more easily,
A thumb down generally indicates the poster may have strayed outside of the boards purpose (not to the extent of needing banning) and gives that poster a nudge without lots of repetitive admonitions clogging up the board.
Alternatively as in the case of your post it can just be a simple "I hear what you say, but disagree" again without clogging up the board. If your post went without any response at all, the Stocko team might conclude that there are no objections and thus implement it.
There are rarely "arguments" here (not sure whether that's good moderation or the fact that we are all lovely people) so you don't suffer the confusion as to whether the thumbs are a measure of quality or simply an expression of "whose side" you are on.
So for me they are a useful feature and I guess the thumbs on your post so far suggest yours is a minority view.
Years ago on iii they used to have the same system as here, that is thumbs up and thumbs down.
I can remember that lead to some pretty nasty situations from some of their posters,
They seem to have resolved the problem by removing the thumbs down option.
What's left is simply the thumbs up option for posts more worthwhile than others,
That seems to work perfectly well and it removes the temptation to vent spite or exact revenge
(we are all humans, after all!) and to people feeling wronged and perhaps leaving the board.
After all, no thumbs up, okay, no problem, they didn't like the post, no problem.
Red thumbs down, received as aggression, just naturally grate and create a need to respond.
Then, the vicious cycle starts..................and goes on...................and goes on!
Social voting feeds our basic brain chemistry. A thumbs up gives us a hit of the feel good molecule dopamine (actually the anticipation of a thumbs up). Checking your possibly genuinely mistaken comment and seeing a number thumbs down can create feelings of rejection. Of course picking blue (the colour of a clear sky) for thumbs up and red (stop, danger) for thumbs down doesn't help.
Keep thumbs up to allow skim readers to just select the most appreciated comments. Get rid of thumbs down so people don't feel bad when trying to contribute to the discsussion. It may even encourage people to comment who otherwise may be nervous of being voted down infront of all the Stockopedia group.
If someone is being a genuine idiot, reply to their message or report them. I believe using real names would make social media a better place. I know its difficult to check, but for subscription sites like Stocko they have our card details ;-)
@sbotting
Clearly I'm not Paul and wouldn't presume to speak for him, but my answer would be:
Paul does comment from time to time on general market conditions because the small cap universe does not exist in a vacuum - events elsewhere affect sentiment here.
Crptocurrencies attract money that isn't being invested in stocks. If people are borrowing to fund their cryptocurrency purchases and that goes wrong they may have to sell real assets in a hurry to meet their debts.
I also suspect Paul feels some responsibility to his readers to warn us of the dangers of getting involved given his previous experience of things going badly wrong on him.
For one thing, if people don't speculate on crypto-currencies they might instead use the money more productively investing in decent small-caps.
PZ Cussons (LON:PZC) not a small but issued a profit warning, were down over 20% but have recovered a bit. Could be a read across to other companies in that section. Seems to be challenging at the moment with consumer spending down. "The UK washing and bathing division has continued to experience lower levels of purchases reflecting consumer caution across all retail channels caused by economic uncertainty and inflation out-stripping wage growth,"
I'm surprised that such products have been hit though, are people really not washing and bathing anymore or are they buying other products?
I thought the same - surely PZ Cussons (LON:PZC) must be losing out to the UK competition in the supermarket and discounter own brands. They also have their own particular challenges in their Nigerian business.
The Stocko label as a falling star seems appropriate here unfortunately.
I used to hold PZ Cussons (LON:PZC) back in the day but now a little of my money is on the contrarian Creightons (LON:CRL) bet.
Yes I thought it was a weak excuse. I believe this is one of Lord Lee's core holdings, think he said he will never sell it. I agree people are buying from other producers. This also could be going out of fashion. I that sector I would probably go for Swallowfield (LON:SWL), not currently a holder though.
PZ Cussons (LON:PZC) - from trading update:
"The UK washing and bathing division has continued to experience lower levels of purchases reflecting consumer caution across all retail channels caused by economic uncertainty and inflation out-stripping wage growth. Whilst new product launches have been well received, they have not had the desired uplift in sales to compensate for the wider volume and margin shortfall."
That is quite a strategic headwind...Brits are becoming less personal hygiene focused and just going a bit dirty.
Re PZ Cussons (LON:PZC) "...Brits are becoming less personal hygiene focused and just going a bit dirty."
- Paul, non-branded alternatives are available; no-one has to go dirty!
Hee hee...cheeky... I didn't mean my personal hygiene...I was just following the logic of management statement which implies the average Brit is getting a bit smellier...
Re PZ Cussons (LON:PZC) neither did I - I am sure your personal hygiene and grooming are impeccable! Sometimes it's difficult to read sarcasm in plain text, so point taken: as you imply here, easier for management to blame the great unwashed rather than admit they are suffering due to customers buying cheaper alternatives.
PZ Cussons (LON:PZC) are hit by the same issue in both UK/Europe and Africa. In both places they are caught in the squishy middle between cost focused competitors and big multi-nationals brands and have been for years.
Nigeria/Africa profit has been steadily dropping on stagnant scales as MNC come and occupy the high ground eg Morning Fresh slowly surrendering ground to Fairy/Sunlight whilst really cheap locals are getting better all the time - helped by Chinese/Indian expertise and often cash
In UK/Europe, they led the market with Carex liquid soap, then quickly converted Imperial Leather to a liquid brand but since then not much innovation to offset lack of scale in negotiations. First against the wall when the buyer needs extra margin....(as occurred with Morning Fresh effective demise in UK..
Need to recover their entrepreneurial mojo or else face steady decline
Disclosure - former senior employee (>5 yrs ago) but still close watcher. Definitely not a shareholder!
Re PZ Cussons (LON:PZC), IMHO in the UK, Imperial Leather is an old fashioned brand. Nothing wrong with that, except that demand from old fashioned users has to hold up. My view is that it isn't doing. Also in pricing, it seems that it has become much more of a commodity product. Brand values? A bit of sticky paper on the top? I don't see it going anywhere but slowly and gradually down. Innovation? Seems the brighter people left to build more innovative companies.
Anyway, your insight from inside, although a few years ago, is interesting.
Re PZ Cussons (LON:PZC), Most of value in Imperial Leather is probably now in the liquid soap not the hard soap but your point still holds true; was a great brand but now, not so much. (Same is true in Nigeria except liquid soap category which is premium is far less advanced).
The corporate DNA comes from the (Greek) trading history. At its best it is entrepreneurial and risk taking (start liquid soap, entering new markets) .....but better at seizing discontinuous opportunities (ie doing deals, enterng new product sectors) than in brand building which requires spending on brand development. Now start in an uneasy position as a mid sized company with tier 2 brands; never seems to known whether it should commit to the brand (as it says it does) or trade it for cash
I've found your inside views on PZ Cussons (LON:PZC) valuable, thanks. - Unless PZC is willing to invest in marketing and innovating its brands, especially Imperial Leather, holders of its shares might do well to trade them for cash.
(No position.)
Some of the problems I think with xl media, XLMedia (LON:XLM) which I hold, is a lack of understanding of what it does, it’s deep into the plumbing of social advertising and client acquisition. It performed a strategic review a couple of years ago and that seemed to be a conclusion I heard then too, hence the ceo doing more webcasts and roadshows. I’ve topped up based on latest report, so bound to fall now, but if they can replicate the gambling model against finance there are huge affiliate revenues on offer. Regulation is a risk but less so than 2 years ago. Does anyone have other negatives on this stock as I try and persuade myself not to buy?
Portmeirion (LON:PMP) - very positive outlook statement today, suggests 2018 could be a good year for the business.
Trading in the first two months of the current year is nearly 20% ahead of the comparative period in 2017. However, given the Group's second half weighting, the sales in these first two months of the year are low in comparison to the balance of the year.
My morning smallcap tweet:
PV Crystalox Solar (LON:PVCS), LMS Capital (LON:LMS), 1Spatial (LON:SPA), Redhall (LON:RHL)
PV Crystalox Solar (PVCS) FY pretax €12m (€1.7m). Op C/F -€1.2m (+€18.0m). Net cash €26.9m (€28.8m). Will "seek a buyer who would be willing to develop the silicon wafering operation. In parallel consultations will take place with the workers council in Germany to explore the merits of significantly restructuring the operation to focus on the cutting of non-silicon materials such as glass and quartz together with a continued focus on research and development activities...."Following receipt of the funds from the arbitration award mentioned above, the Group is expected to have a substantial net cash position. In the light of this the board intends to explore options for the future of the Company in order to maximise shareholder value. These may include a cash return to shareholders, the acquisition of an existing business or a combination of these alternatives...The Group expects soon to reach an understanding with the customer regarding the arbitration award." An understanding? Accept less? I hold.
LMS Capital (LMS) NAV 80p/sh (end Q3: 74p). LMS now focused on implementing the new investment policy and growing net asset value for shareholders.
1Spatial (SPA) Guides FY in line. "With the disposal of Enables IT* there is now laser focus on the Group's core Geospatial business." So they weren't operating it optimally before? Hate these tired cliches. * 1spatial PAYS £150k to get shot of Enables IT business even though adj EBITDA was £0.5m. "This Disposal represents an important step forward."
Redhall Group (RHL) warns on FY due to delayed delivery dates on Hinkley Point C contracts just signed. "These are our first significant orders on what is a critical infrastructure project for the UK. We believe these contracts will be the first of many on the Hinkley Point C project and in the nuclear sector as a whole in the coming years."
Couple of eye catching releases from the portfolio this morning, Curtis Banks (LON:CBP) and Portmeirion (LON:PMP) as well as special situation PV Crystalox Solar (LON:PVCS) that has been commented on by Paul previously. Links and comments to follow.
Curtis Banks (LON:CBP): Specialist SIPP provider. Year end results. 50% increase in revenues, operating profit and eps and substantial rise in AUM and healthy increase in dividend.
https://www.investegate.co.uk/curtis-banks-grp-plc--cbp-/rns/final-results/201803150700057732H/
Portmeirion (LON:PMP): Quality small cap. Continued long running trend of steady double digit growth in revenues and profit.
https://www.investegate.co.uk/portmeirion-group--pmp-/rns/final-results/201803150700037662H/
PV Crystalox Solar (LON:PVCS): Seems to be heading towards the end game as various operations and holdings are liquidated pending a likely distribution to shareholders. (Slight concern management might go off on a frolic and spend the cash to buy something for them to run but always a risk in this type of situation). Trying to work through the figures to derive a sensible distribution per share number.
https://www.investegate.co.uk/pv-crystalox-solar--pvcs-/rns/preliminary-results/201803150700047711H/
Gus.
Hi Paul any chance of circling back on XLMedia (LON:XLM) many on here hold results were just off what was expected but they still hold significant net cash and have been diversifying away from there main business a few years ago to try and de-risk the customer base.
Thanks
Hi clarea,
I'm afraid not. As mentioned in the placeholder article, I can't do any reader requests today, because I have to travel into London for a conference, so time is short. Sorry about that.
By all means post your own comments & views on any share of interest, explaining why you think it looks good/bad, and then readers can discuss in this comments area.
Regards, Paul.
Sorry Paul was a late night with lack of sleep missed the obvious.
I'd be interested in XLMedia (LON:XLM) too please Paul. Clarea indicates "results were just off what was expected", but comparing the percentage increases in profit, revenue, and eps, they seem incredible value with respect to the share price (i.e. current, never mind future, PER way below growth)... albeit that they are a partial gambling company.
Sorry I so easily annoyed so many people with your cruel thumbs down, I didn't take in Paul's "no reader requests" comment :-(
Thanks john652 for your post on XLMedia (LON:XLM). As per my original comment, I think they are great value, especially in what is a frothy market. Gambling is an obvious scare (or moral dissuasion for some) to invest, but I feel the increasing diversion into finance should help to offset that. Considering that they managed a successful placing at 198p, then I would have thought some support of the price is likely at this level. The only other worry is the chart, where the price is caught between the 50 and 200 day moving averages; I don't know what this is is a sign of....
Andrea341, you've been told!
Just kidding. Echoing what Will Hampson said (post #14), if we're going to give other posters a thumbs down, it's probably more useful to them (and to yourself) to also reply to the person to explain why they've so annoyed you, or what they've missed. If you don't feel strongly enough to reply, then there's probably no need to give a thumbs down. It can be surprisingly demotivating.
Will Hampson - Sorry, I couldn't help but give you a thumbs down, but it was done purely in jest!
Thanks
Chris
Yes, Chris, many thumbs down is demotivating indeed, and I agree that a comment is more appropriate. It is not like I said something offensive or insulting. I can't help it if I'm occasionally a bit dim. In a similar way, when Paul IS available, I do notice that sometimes LOADS of people all ask for the same company to be covered... and I could argue that that is a waste of posts, clogging up the page when there could be more interesting or informative posts to try and pick out. But do I down-vote them? No, I just ignore them, I'm not vindictive, I don't like to make people bad, and when I can I try and help people on here too. That's the thanks one gets, I guess.... :-(
Note all, it is possible to undo a thumbs down by doing a thumbs up on the same post... if you really wanted to be nice, and figured your previous action was unnecessary :-)
While I'm on here, I'll ask for some useful opinion... what does anyone think of Symphony Environmental Technologies (LON:SYM) after the latest results? IMHO they seem less jam-tomorrow, as they are now in profit and debt-free. I only wish the outlook sounded more concrete and positive - it's not negative, just a bit wishy-washy with comments about strategy and general world environmental attitude.
"Note all, it is possible to undo a thumbs down by doing a thumbs up on the same post... if you really wanted to be nice, and figured your previous action was unnecessary :-)"
I just tested this on your post, and it did not work.
No, it's not possible, if you do it you may just be updating what someone has done recently so it may look as if you have undone it. Thumbs up and down don't work on ipads.
I am on a good old-fashioned windows laptop (and andriod phone) so undoing a vote works for me; maybe the site needs an "I've changed my mind" icon... a happy face...?
Hi Herbie.
Re. Thumbs and iPads, if you have the urge to up or down thumb on an iPad, for reasons I don’t understand, it does work if you make your mark on the right hand side icons on the main discussion board. I just gave you a second thumb up from an iPad.
Gus.
Sorry I don't understand where you mean.
Herbie.
If you go to the main Discussion page and identify the comment that you want to append with a thumb sign then go to the right hand column with the title “Likes/dislikes” you should be able to mark a thumb up or down from your iPad.
Gus.
OK if I go into new posts I can do it, thanks.
Symphony Environmental Technologies (LON:SYM)
they tend to only give outlook guidance in their trading updates - last one was 27th October where they announced trading was 'significantly ahead of market expectations'. Estimate from Edison at the time was for 10p FY17 EPS, this increased to a 20p estimate from Edison following the trading update.
The results came out at 28p, thats a 40% beat on guidance. Will be interesting to see if Edison revise their forecasts for 2018 as 30p seems a bit low.
Based on history, would expect the AGM (usually contains guidance) around May/June and possibly a further trading statement around June/July.
Paul :
Absolutely respecting Paul's view here, but, could I suggest that readers still continue to flag any items of interest through the day, because :
(1) I have over the last few months found some very interesting nuggets amongst reader suggestions that either Paul or Graham have not had time to review.
(2) Even if Paul cannot comment, we have an excellent cadre of other investors prepared to comment on items of interest so even if we don't get Paul's particular insight, there is every chance of getting some "better than market analysis".
As Paul / Graham have said this is a " team sport" - so just because the master is away let's not let this significant resource whither.
Whether my personal input is valued or not, I *should* have more time available tomorrow, so would be happy to expand on any interesting themes raised.
Hi Gromley,
Absolutely, that's pretty much what I said in the placeholder article! Did you miss this bit?
"Please feel free to leave your own comments on results & trading updates from companies that you find interesting, explaining why you think they look interesting. It's a team effort!"
Best wishes, Paul.