Small Cap Value Report (Thu 23 Feb 2023) - MACF, TTG, TRCS, SYS1

23rd Feb '23 by Paul Scott

65 comments 8160 reads

Good morning from Paul & Graham!

Here's the link for my latest discussion (recorded on Tuesday this week) with Paul Hill of Vox Markets - a highly accomplished small caps investor (far better performance than me!) who I always enjoy chatting to, about my latest small cap ideas, and wider investing themes too.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review 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 are analysing the company fundamentals, not trying to predict market sentiment.

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), and make your own investment decisions. 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.

Paul’s Section:

Macfarlane (LON:MACF)

106p (pre market open)

Market cap £168m

Macfarlane Group PLC has been listed on the Premium segment of the Main Market of the London Stock Exchange (LSE: MACF) since 1973 with over 70 years' experience in the UK packaging industry. Through its two divisions Macfarlane Group services a broad range of business customers, supplying them high quality protective packaging which help customers reduce supply chain costs, improve their operational efficiencies and enhance their brand presentation.

Results for FY 12/2022 are published promptly today, key numbers (continuing operations only, which excludes a disposal in 2021 (see note 6) -

Revenue up 10% to £290m

Profit before tax (PBT) up 7% to £19.9m

Diluted EPS 9.84p (2021: 8.62p) - up 14% (helped by a lower tax % charge in 2022)

Two acquisitions helped the 2022 numbers.

Inflationary pressures largely passed on to customers - only a slight drop in gross margin from 32.4% in 2021, to 32.1% in 2022 -…

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Rusty2

23rd Feb '23

Just noticed Jarvis Securities (LON:JIM) are down 14% today, on news apart from it is ex dividend (3p) today, any ideas?

JohnDoe2378

iEnergizer (LON:IBPO) 50% drop since excellent interims in November, can't really fathom why? I have committed a cardinal sin of allowing a decent gain to turn in to a loss. Forward PE of just 9 times.

Roger Baron

Everyone who is telling JAZFS that 20% of his portfolio in one company is far too much and far too risky might consider the fact that he describes that portfolio as "modest". If you are investing your life savings at retirement then maybe I can agree, but if you have only a small portfolio, a long time frame and can afford to lose it, be as speculative as you want.

I don't understand that either, I have a small holding in iEnergizer (LON:IBPO), there has been some strange share price movements on no news.

My guess is someone is selling down looking at the trades. Blocks of 1,3 and 5k being sold

Paul Scott

I'm getting the backlog cleared on my SCVR summary spreadsheet this evening, nearly finished it now. I've definitely created a monster here, with it taking a lot of time to update, but I think it's worth it.

The main summary page is here.

Don't think I'll be able to keep updating the other tabs, it's too much additional work.

EDIT: good that's up-to-date now. It's a neat summary of lots of SCVRs all on one page, so I'll keep it going.

Caduceus

It's a great reference tool. We appreciate you :D

TEIN

You need a PA Paul, perhaps one who's not colourblind.

Butch5amue1

24th Feb '23

I am new to Stockopaedia (first post) and have no financial qualifications (warning) but really find the stock analyses and discussions very informative. JASVFS, I was in an almost similar position with Liontrust Asset Management (LON:LIO) this week. Decided to safeguard some profits by applying a 5% trailing stop loss to 90% of my holding as I was uncomfortable with the level of risk. Regrettably I got shaken out as the stock went down before going up. At least I made a 15% profit overall. Review of that decision raised an interesting question.. Please can anyone advise on how best to select an appropriate % stop loss taking into account gaps between chart bases. This seems pertinent as a larger stop loss would seem to be required for more volatile stocks.

I remember looking at iEnergizer (LON:IBPO) last year, and the stand-out feature is the major shareholder owning 83% of the company.

Positive and negative. May want to delist? Wouldn't make sense to me, there were formal sale process talks last year where 550-600p may have been possible? So why not sell then.

5% trailing stop loss, you will get taken out all the time, better IMO, to sell at a peak. Ed Croft did cover setting stop losses, think he said on speculative stocks such as Liontrust Asset Management (LON:LIO) need to set around 20%, but that is not trailing. You should look the normal share price trading range and then set it below that, however in low trading times shares can dip down, then your stop loss will get triggered and some market maker will bet your shares cheap. I gave up on auto stop losses on the London markets. I do use alerts on Stockopedia. My platforms don't have trailing stop losses either. You can read Stan Weinstein on stop losses, he uses the 30 week moving average.

Thanks Rusty 2 much sound advice except for the bit of sell at the peak as I can only ever identify that with hindsight. I will look up the Stan Weinstein guidance on stop losses but do not use them as routine. Used it on this occasion as I was over exposed on one stock and added the % trailing to guarantee a certain level of profit and the possibility of more if the stock moved in my favour which it didn't. Your implied warning against routine use of stop losses is appreciated.

26th Feb '23

Welcome to Stockopedia. You might like to read 'Excellent Investing' by Mark Simpson, it contains much practical advice on stop losses, portfolio weighting and more.

Do you have a link to the article?

DavidMcCabe

Hi Caduceus

'Excellent Investing' by Mark Simpson is a book - I read it recently and thought it was good.

David

Gotcha, cheers for getting back to me. Have a great week!

tic_tac_toe

perhaps a few trusted volunteers here could do that work for you Paul, and delegate permisisons out?

12th Mar '23

Could anyone share their thoughts on why the strngth after Spectris (LON:SXS) earnings on 23 Feb 23? Even with an earning suprise of -45%?

The Boon Fund

10th Apr '23

On System1 (LON:SYS1) I wanted to flag something alarming that I found when digging into the numbers...

Test Your Ad is trumpted as the growth engine. Subscription based product, high margins. Big growth in new clients onboarded. However....

In the FY Mar22 results, they said they had 465 customers (in FY22), of which 209 were new.
In the HY Sep22 results, they said they had a total of 240 customers, of which 85 were new, 155 were repeating.

So it looks like there has been high churn? As I think the TYA service is an ongoing subscription?
A possible explanation is that some of the customers might be on free “trials” and they sneakily included it in the 465 number for FY22? But then that's a really bad trial-to-paying conversion rate.

Small Cap Value Report (Thu 23 Feb 2023) - MACF, TTG, TRCS, SYS1

Paul’s Section:

Macfarlane (LON:MACF)

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Paul Scott

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