Small Cap Value Report (Thu 16 July 2020) - EYE, LOOP, XAR, LGRS, PURP, BOO

16th Jul '20 by Paul Scott

105 comments 11567 reads

Good morning, it's Paul here with the placeholder for Thursday's SCVR - designed to provide a place for your early morning 7am RNS comments. In particular for MrContrarian's brilliant early morning summaries - I think we should do a whip round for him at Christmas actually, for the sterling service he selflessly provides to the investing community.

Estimated timings - TBC (let me look at the RNS and then I'll publish a totally unrealistic deadline, fall asleep after lunch, and miss it by miles!)

Today's report is now finished.

To get you started today - I added a few more sections to yesterday's SCVR throughout the afternoon, so it now covers 6 companies, including 3 reader requests. Several of which look potentially interesting actually, so thanks for flagging, and do please take a look & let me know your views.

Pubs

It's been a while since I've talked about pubs, but have been doing a bit more research this week about pub re-openings in London. My local, the Lord Clyde, has been open for a little while, so I went there on Tuesday night, and was surprised to find that it only had cider and Guinness on tap - it's quite understandable that breweries are having trouble scaling up production, and in any case I love Guinness, so had a few pints of that. This is an easy, quick fix, so doesn't matter.

It was table service, which is fantastic, this must become the new norm. I normally sit outside anyway, in the fenced-off pavement area, so I can watch all the traffic near-misses, and expletive-laden arguments between motorists. But social distancing makes it all the more sensible to sit outside, if you want to avoid covid. I'm in two minds. If antibodies only last 3 months, then surely I should be exposing myself to covid again, in order to refresh my immunity? I have felt a bit peaky this week actually, so have been wondering if the disgusting old man in a local cafe on Monday, with the runny nose, might have temporarily re-infected me?

Also, it's quite fun to see the local care in the community lady, called May, who shuffles down the road, getting free food and drink from all the local shopkeepers (either very smart, or genuine, I can't decide). She's a cheerful soul, typically booming out at all the men,, "Hello!…

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Gromley

16th Jul '20

Thank you Laughton, I confess I hadn't read the small print!

There might be other clauses, but that one doesn't explicitly running a different promotion including a bonus gift rather than a discount - could be a desert up to the value of £5, could be a £5 off voucher for return visit, more questionably could be a five pound note.

Whilst it is gaming it still delivers all of the benefits the scheme is designed to (in fact the voucher for a return visit probably doubly so).

There is definitely an opportunity for some creative pricing and promotions here; but on reflection taking your clarification in mind then for most, this probably IS a reason no to bother with DISH during August.

Rusty2

Not sure where you get your figures from but I make it 760 average per day, there has been 5318 deaths in the last 7 days, this does not include today as the figures are not all in yet. Many states are only counting hospital deaths.

PDiddy

Same here Nick sold when it peaked at something like +10% for the day. Tidy profit made.

cmpeckham

We know that testing was initially focused on highly symptomatic cases and that large numbers of people who only had a sub-set of symptoms were turned away from testing e.g. see here:

https://www.technologyreview.com/2020/03/25/950320/what-the-hell-is-going-on-with-coronavirus-testing-in-the-us/

and the CDC prioritised testing for hospitalised patients. As capacity has increased, they have gradually included a wider cross section of society.

So, all else being equal, we should expect the infection rate of those tested to decrease as more people are tested. Did anyone attempt to give a reasonable explanation for their claim that "the extra people being tested were more likely to be infected"? I would start on the basis that extraordinary claims require extraordinary proof.

mojomogoz

Dear Pecks...may I say pomposity of response does not equate to veracity...

Pot, kettle, etc obvs...but hey...

No one has a flaming clue on covid inc the experts. Data is a smorgasbord. Anomalous outcomes abound globally....and yet we are certain of our perspective.

I take comfort in the anomalies....they tell us our hysteria is, well, hysterical. I'm waiting for stoicism and coping to arise. It may be truly formative in a sociopolitical sense when it does. Exciting.

Goodnight

Terry Dickens

"I just don't worry about the short term share price of DISH. It goes all over the place."

So with that statement, you presumably don't use stops

Is that not very dangerous, on a low-value shares like DISH., surly you could easily lose all your money or am I missing something here?

Sorry to worry you, but I would love to hear your logic on this subject

Harry Hindsight

I'm more worried about Biden than Covid when it comes to the US. Read look at Germany before the US money floods over there. Will miss our poor little no tech stockmarket.

Nick Ray

Regarding using stops on a stock like BigDish (LON:DISH)

BigDish (LON:DISH) has a volatility of 169 according to Stocko. With volatility that high you really can't meaningfully use stops. Personally, I find anything with a volatility over about 40% difficult to work with.

A volatility of 169 means that the stock will likely swing by +169% or its reciprocal -62% in a year. In a week it will likely swing by +/- 25% ( = 169/sqrt(50)). This is not a stock that moves sedately along!

LOL (literally). Why jump in like that on a conversation that didn't involve you? I guess that means the unnamed person making the extraordinary claim was you then mojomogoz! Now there's a surprise!

If there is any reasonable justification for your claim then I seriously would like to hear it. It might tell me something I don't know, or it might give me another laugh!

Laughton

Sorry to be pedantic Gromley but how are any of your suggestions not covered by "special offers" or "vouchers"? For them not to be "special" presumably they would have to be offered on every day of the week.

There are much simpler ways (but none of them involve DISH)

Sorry to be pedantic Gromley but how are any of your suggestions not covered by "special offers" or "vouchers"?

Valid question, and indeed maybe I really have spent too much time with payplaned sales people, so therefore I would say that they do not impact the price actually charged to the customer. Whether that would fly or not I don't know.

There are much simpler ways (but none of them involve DISH)

That's a much more interesting point having now thought of it. I hadn't really researched the DISH offer in detail, but following your logic - any eatery owner can offer 20% off between 2pm & 4pm Monday to Wednesday for example.

I guess the edge that DISH offers is that if Tuesday becomes busy you automatically withdraw the discount - a bit like the Easyjet pricing model. Clever no doubt, but actually I think you've convinced me (not that I think was necessarily what you were arguing) that this might be to much hassle for too little gain for most eatery operators. ISDN

Dojosan

Sorry, tried to find the 169 volatility figure on the Bigdish page - where is it? TQVM

Zipmanpeter

17th Jul '20

Gromley - I too worked with a lot of Sales people prone to creative accounting to maximise personal benefit (in fact I always remember being advised to only recruit/retain Salespeople with enough creativity and ruthlessness to do it to a certain extent!). However, the COVID response measures are going to result in millions (billions?) of pounds of fraud.

I understand why the 'helicopter approach' of just letting fraud occur for the greater good has an appeal but feel the govt needs to at least show concern and bluff (hire more accountants to track fraud - should be many cheap and available ones!). Otherwise, risk is that the fraudsters & spivs do well at the expense of the broader society and 'we are all this together' social cohesion and trust in authority drops even further.

rmillaree

I guess that means the unnamed person making the extraordinary claim was you then mojomogoz!

To set the record straight the comments were not mojomogoz but by me.

The comments have been taken slightly out of context as i was just providing a possible alternative explanation to highlight the fact the figures being quoted at that time really didn't prove anything and may have been misleading to a greater or lesser degree.

My idle speculation was that it is entirely possible the original population of people being tested may include a high % of key workers or at risk people who are being tested as part of prevantitive or precautionary measures. It was known at the time many who were reasonably known to be positive weren't being flagged up and were also being missed from the sample.

If those same original sample still exist and the new additional tests relate to individuals that are more likley to be positive (previously excluded from the test) - it seems posisble that the % positives would go up.

Nothing more than a idle speculation - but without decent robust methodology anything really is idel speculation in that regard either side of the fence - note it is a known fact that the reported cases in the uk were rising quickly when the actual numbers were on the decline - so to me a spike in numbers being tested positive doesnt necessarily mean the actual numbers are going up. using stats that may be statistically flawed to back it up desont really cut the mustard with me.

Note i did kind of get the reponse i wanted to my speculation as timarr linked to the reported hospital admissions in florida. Thats probabbly a more reliable measure - not without its problems also. These numbers do show an increase - material but not as high as the other stats possibly. My one slight worry with american hospitals is that if they have a spare bed and the bill is picked up by the taxpayer will they be more than happy to sit someone in that bed to be on the safe side when if normal rules apply that may not be the case - that deffo is idel speculation on my part.

https://covidtracking.com/data/state/florida#historical

Ref the coming of the winter of discontent and whether its reasonably certain there will be a material big spike over the winter here . I am completely on the fence here - being frank no one knows and the probability range is probably in the middle area that we will just have to wait and see. I think robust measures to mitigate should be able to help to a greater or lesser degree - we had zlich measures in place ref the first spike and that will not be the case second time round - although the fisrt spike wasnt fully in the winter months - I am cautiously hopeful that it will not be so bad that hospitals cant cope with the burden but its dangerous to underestimate covid to any degree.

Maddox

Agreed LOOP is in a market with some absolutely huge competitors - but the market isn't uniform. As I posted at 8:13 "Great as ZOOM and others' self-service broadband offerings are they leave niches for differentiated players with superior service and technology to also prosper."

LOOP's offering is high quality online conferencing specifically catering to the professional services market. This is attractive to firms that are hosting online meetings and conferences involving external clients where the sound quality, in particular, is all important. This niche is valued at about $7bn revenue per annum - so not small. It's this differentiated offering that explains why LOOP has delivered great results against such awesome competitors such as ZOOM, Microsoft, CISCO, Amazon and others.

Don't think it is on the Stock report page anywhere. You need to add it to a portfolio (or have it as a result of a screen) and then customise the table by adding the "Volatility" column.

Thanks guys

Thanks for the post rmillaree. There is nothing wrong with a bit of idle speculation, but actually we know what the testing approach was in the US because the CDC publicised it. There was no preventitive or precautionary testing.

The CDC document has been updated since that time, but there are still news reports summarising it available online, for example here:

https://www.aappublications.org/news/2020/03/26/coronavirus032620

In summary, what that says is that there are 4 groups: priority 1 down to priority 4. Non symptomatic healthcare workers were in priority 3.

At the time, they didn't even have the ability to test everyone in priority 1. Now, in places, they have the ability to test down to priority 4 (non symptomatic members of the general public).

It should be said that it's possible that individual testers ignored the CDC and did their own thing. But unless this was true on a systematic basis, and there is no reason to believe it was, then there is no reason to believe that the test results did not reflect the national strategy.

So, all else being equal we should expect to see a lower infection rate in the current testing cohort than in the early testing cohorts due to the way that these populations were sampled.

On the future, I agree we don't know if there will be another spike, but I can't see any convincing evidence to say that a spike can be avoided without as you say robust mitigation. Let's hope decision makers everywhere can get somewhere close to the right balance between risk and reward and lets hope double for quick effective treatments and vaccines.

18th Jul '20

cmpeckham
There is nothing wrong with a bit of idle speculation, but actually we know what the testing approach was in the US because the CDC publicised it. There was no preventitive or precautionary testing.

I am not convinced that link proves anything cmpecksm - Infact priority one group included hospitalised patients - it specifically does not mention that they need to be symptomatic in that link.

Being honest as I don’t know I don’t really want to Labour the point - all I would say is that it’s generally
Up to someone who is trying to prove an argument is true to produce the evidence - statistical Figures need proper data to relied upon if you don’t fully know your sample group any assumptions made could be wrong if you are comparing two different sample groups which we clearly were here.

My final comments on the subject will go directly back to the original numbers posted - the earlier testing was coming back 95% negative so I still stick with my original assumption that that group of people being tested will probably have included a subset that did not have symptoms due to that low positive % rate being returned.

Wimbledonsprinter

Paul - thanks for your interestingcomments.

Small Cap Value Report (Thu 16 July 2020) - EYE, LOOP, XAR, LGRS, PURP, BOO

Pubs

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Paul Scott

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