Small Cap Value Report (Thu 22 July 2021) - SOS, KETL, MGP, AUG, BOOM, RST, GOOD

21st Jul '21 by Paul Scott

100 comments 12004 reads

Good morning, it's Paul & Roland here with the SCVR for Thursday. Thank you to Roland for helping out in a really busy week, very much appreciated.

Timing - TBC. We did our best with yesterday's deluge, focusing on what we thought was most interesting. Let's see what happens today.

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.

Agenda -

Paul's Section:

Sosandar (LON:SOS) (I hold) - here are my unstructured notes from yesterday's webinar. Typed up in the glorious sunshine, whilst fending off aggressive herring gulls (pluses and minuses of living in a penthouse in Bournemouth)

Takeover situations - I review 4 companies in bid situations with news out today.

Roland's Section:

Strix (LON:KETL) - this manufacturer of kettle safety controls has some attractive characteristics in my view, but I’m unsure about the quality of growth here.

Medica (LON:MGP) - demand for routine elective scans in hospitals is back to 75% of pre-Covid levels in NHS hospitals. Company says it is “well placed to continue our ambitious growth trajectory”.

Paul's Section

Here’s something I prepared earlier -

Sosandar (LON:SOS)

(I hold)

28p (up 10% yesterday) - mkt cap £62m

My notes from Sosandar webinar yesterday - as usual, these are just my personal notes, not a comprehensive account of the webinar.

Fastest sell-through ever of new products in Q1 (Apr-Jun 2021)

Year-on-year % growth will be highest in Q1 due to soft prior year comps

3rd party sales (J Lewis, Next, MKS) “going from strength to strength”

Q1…

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slord54

22nd Jul '21

just to add to this, I imagine having a huge data set to train AI on is a valuable asset in itself!

Paul Scott

Do you think you will get chance to look at Dotdigital (LON:DOTD) tomorrow Paul?

Sorry will, I got sidetracked onto Supreme (LON:SUP) webinar -which looks more interesting - see tomorrow's SCVR. Apologies! Today was a day when I just got overwhelmed with newsflow. I can't cope with it sometimes, and need to have a lie down.

Best wishes, Paul.

Very clever for Hotel Chocolat (LON:HOTC) to raise a load of money at a peak valuation! Smart move! This one looks to me a bit like Naked Wines (LON:WINE) - not sure if they're good companies, or promotional BS. Time will tell.

23rd Jul '21

This comment has been moderated

Hi Investor_AD,

I've got a standard-sized long term personal holding in Begbies Traynor (LON:BEG) but haven't yet got round to looking at the recent results. It's probably alright, or the price would have moved. I really like mgt there - Ric Traynor is a class act, see my .

So no opinion at the moment. I love it when readers give ur views - esp when I'm busy - what do you think?

Hi drobs, I agree with this to a certain extent. you say -

I just feel the current valuation is a tad high for where the company is at and there still needs to be flawless execution. I like the management too. So am torn. Good luck to you and all holders!

Spreadex allow me to put £100k underlying on anything I like, up to about 40% margin. So SOS is up to about that. Beyond that, it's 75% if I want to exceed that size. A good discipline.

Am scrabbling around to find margin to buy more SOS and QUIZ at the moment on 75% margin? No. Make up your own mind. 75% margin is fine - it drops, and your cash supports it, so whats the problem?

Recent gyrations show that we should keep speculative things on 75% margain. No issues with drawdowns.

Regards, Paul.

InvestorJohn

Not the most measured comment you have made here Paul... Community spirit and all that...

Tonysaparito

Hello Paul…I think it’s unfair that the moderator blanked out your comments..I want to read whatever you write.

We live in an age of PC and I have lived in an age of BBBS( Bullxxxx Baffles Brain Syndrome..I used to work in banking and have met countless directors of small private businesses making millions. I have invested in companies who make diddly squat ,but as we are in the silly season, it amazes me how the regulars here have the time to write about all subjects covered here..

But my point is , whatever Paul has written we should be allowed to read it as many of the companies I have shares in or considering investing in have directors who are overloaded or medically diagnosed with BBBS…and surely Our Paul does not yet suffer with BBBS…?

gus 1065

Paraphrasing Paul‘s blanked comment, he was suggesting via slightly opaque beer goggles that Strix (LON:KETL) wasn’t necessarily the best ever investment with the suggestion that it might go the same way as some of the other fraudulent Chinese companies that listed on AIM such as Camkids . (See posts from 2015).

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

Not sure whether he stands by this opinion in the cold light of day.

Gus.

p.s. just read Paul‘s original commentary on Camkids in the link above. I don’t think he needs beer goggles to express a strong opinion very well ….

Rusty2

Having seen the comments, I think they are best deleted, I think even Paul may agree on that.

Some words should never be used on here, IMO.

Bluesky Ventura

Yes best deleted.

BSV

wildshot

As one of the number of people who was targeted by Paul's now deleted comment I agree the comment should be deleted. After reading it this morning and seeing the time of the comment I put two and two together which has since been confirmed in Paul's SCVR report today.

What I like about Stockopedia is that discussions and differences of opinion can be shared in a civil manner. Leave the name calling to ADVFN and other boards, it is not welcome here.

25th Aug '21

Augean (LON:AUG) competitor bid to the Morgan Stanley backed 280p plus 20p contingent announced at 325p this morning. I’ll add to today’s SCVR when it’s published in due course.

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

Another financial buyer consortium with 54% irrevocables in their pocket so a done deal unless a higher offer comes in. Over to you Morgan Stanley …..

Gus

16th Sep '21

It’s been bubbling along in the background for a while, but Ecotrcity have just increased their unsolicited offer price for Good Energy (LON:GOOD) by 60p to 400p this morning.

dahhad

8th Oct '21

Does it look like the 400p offer isn’t going to succeed. How bizarre!!

Indeed. Offer for Good Energy (LON:GOOD) has officially lapsed:-

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

Presumably the shareholders that rejected the offer and supported the incumbent board will be delighted … at least until the opening bell on Monday when the share price falls back towards the pre bid price. Meanwhile Good Energy (LON:GOOD) gets on with business as before other than it now has an openly hostile and presumably slightly p***sed largest shareholder. Watching with interest. No position.

18th Oct '21

It took a bit of time for the fall back to happen, but it certainly seems to have done so now! Is it a buy for the brave or a sell for the faint hearted! I have a small holding and will probably act as a rabbit and stare at the lights!

Well the CFO of Good Energy (LON:GOOD) seems to think 335p is a good price to sell. Doesn’t inspire confidence in his bean counting if he thinks 335p is a good price when 400p wasn’t. Nowt queer as folk and all that …

Logical David

Hi Gus, if I held Good Energy (LON:GOOD) (which thankfully I don't hold) I would be selling as well when you consider the amount of debt it has. Also, Good Energy (LON:GOOD) supplies gas to around 28,000 homes, not a good time to be suppling gas, in my opinion, unless the company bought in advance and locked in at a low price. I see another energy provider, Goto Energy, went into administration today. I think that makes an unlucky 13 so far this year.

22nd Dec '21

The 400p offer looks even better now!!

Small Cap Value Report (Thu 22 July 2021) - SOS, KETL, MGP, AUG, BOOM, RST, GOOD

Paul's Section

Sosandar (LON:SOS)

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Paul Scott

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