Small Cap Value Report (Thur 19 July 2018) - RDL, JIM, GOAL, SPE, SIS, DOTD, NICL

Thursday, Jul 19 2018 by

Good morning!

Many stocks I'm interested in have reported today.

1.15pm: Scholium (LON:SCHO) is too small while the AO World (LON:AO.) update is in line with expectations and with an unchanged share price, so I have taken them off the list. Everyman Media (LON:EMAN) also issued an "in line with expectations" update today.

Ranger Direct Lending Fund (LON:RDL) (in which I hold a long position) produced its monthly update yesterday afternoon, showing NAV virtually unchanged at c. $183 million (872p at latest exchange rates, I think), with the assumption of a complete write-down of its bankrupt US investment.

It's a little disappointing to see NAV unchanged, naturally, but it's only one month and it was a turbulent period for the fund. 33 basis points of performance was spent on its management review process, and 17 basis points on legal expenses related to the bankruptcy case in the US.

I'm now looking forward to seeing how much value the new directors can realise. Only one of the original Board members is left.

Jarvis Securities (LON:JIM)

  • Share price: 447.5p (-5%)
  • No. of shares: 11 million
  • Market cap: £49 million

Interim Results

This is a company I know something about, as I have been a client for several years. I also briefly (and unsuccessfully) held the shares. It offers retail stockbroking and outsourced back office services for commercial institutions.

I often refer to it as the Ryanair Holdings (LON:RYA) of the stockbroking world. It's a no-frills experience, but it does work. I've never had any problems with customer service. And you'll struggle to find a cheaper service out there, with no management charges.

It's an exceptionally efficient operation, achieving mammoth returns on capital every year for shareholders,…

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All my own views. I am not regulated by the FSA. No advice.

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RDL Realisation PLC, formerly Ranger Direct Lending Fund Plc, is a United Kingdom-based company focused on realization strategy and a managed wind-down. The Company’s investment objective is to seek to effect a managed wind-down with a view to realize all of its investment. It seeks to sell its investments either to co-investors in the relevant investment or to third parties. more »

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Jarvis Securities plc is a United Kingdom-based holding company. The Company is engaged in the provision of stock broking services and all revenue is derived in the United Kingdom. It provides retail execution-only stockbroking, Individual Savings Account (ISA) and Self Invested Personal Pension (SIPP) investment wrappers, savings schemes, and financial administration, settlement and custody services in all these areas to other stockbrokers and investment firms, as well as individuals. It offers Dial-n-Deal - for clients wanting to open an account over the telephone and sell shares in certificated form. Its is a share sale postal service. It also offers outsourced services to investment professionals and other financial intermediaries. Its subsidiary, Jarvis Investment Management Ltd, is an outsourced investment administration and Model B settlement services provider. more »

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Goals Soccer Centres plc is a United Kingdom-based company engaged in the operation of outdoor soccer centers. The Company operates in the United Kingdom and United States, and operates in the operation of soccer centers segment. The Company offers 5-a-side soccer centers across approximately 50 centers in the United Kingdom and one in Los Angeles, the United States. The Company's centers are in locations, including Aberdeen, Beckenham North, Beckenham South, Chingford , Coventry, Sheffield, Norwich, Sunderland, Teeside, Bexleyheath, Birmingham (Perry Barr), Birmingham (Star City), Black Country (Wolverhampton), Kingston (Tolworth), Bradford, Bristol North, Bristol South, Glasgow South, Wimbledon, Plymouth and Heathrow, among others. The Company's subsidiary includes Goals Soccer Centres Inc, which is engaged in the trading business. more »

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  Is LON:RDL fundamentally strong or weak? Find out More »

38 Comments on this Article show/hide all

grishas 19th Jul '18 19 of 38

Graham, thank you very much for the update on SPE (I am lucky holder).

I have a follow up question which relates to high flyers more generally. When do you hold a high flyer, how do you decide at what point to sell it and cash in the profits before it runs out of steam? I have made this mistake with RMG, which has performed very well up to March, but lost most of its gains since then (at least it pays a generous dividend which softens the blow).

| Link | Share | 3 replies
Graham Neary 19th Jul '18 20 of 38

In reply to post #383379

Hi Jon, re: Jarvis Securities (LON:JIM), that's done. Cheers. G

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JohnEustace 19th Jul '18 21 of 38

In reply to post #383349

Isn’t this the American Express takeover completing at Hogg Robinson?

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JohnEustace 19th Jul '18 22 of 38

In reply to post #383414

The rights holders will be taking a bite of the Jurassic World sales as well - I have no idea how much.

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bobo 19th Jul '18 23 of 38

I think you catch the magic of Jarvis very well. It operates a low cost model and appears to be doing that very well. I use it as a share portal as well and while an upgrade is possible I still find the no frills version very attractive. Recent pricefall seems a bit over egged

| Link | Share | 1 reply
maxwright 19th Jul '18 24 of 38

In reply to post #383484

A good question which I too would pose. I have been a holder in SPE for some time and in good profits, but sadly sold yesterday!! Oh how I am kicking myself today, but had assumed following the recent drops that the results would not meet expectations!
Back to the Crystal Ball, methinks!

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JohnEustace 19th Jul '18 25 of 38

In reply to post #383484

My answer based on making many errors is that the least bad thing to do is to wait for the actual results and make buy / hold / sell decisions on the facts, ignoring the market noise as much as possible.
I’m not a great believer in the mystic power of markets, but I do use manually set tracking stop losses. You can always buy back in. One of my bigger behavioural errors in the past was to think that having sold once I was somehow barred from buying back in.

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murrb 19th Jul '18 26 of 38

Graham, I think today's rise is because the share price had fallen 30% recently on no news over worries about the impact of GDPR on its earnings. It's projection for EPR growth in 2019 is also impressive. Today, the share price is still almost 20% off its highs.

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John Gibson 19th Jul '18 27 of 38

Thank you for the report, always fantastic.

I know its late in the day for a request, but AXS, accsys technologies, is one that i'm sure many readers hold/follow.
Its not a trading update, but a notifiable interest caused a big move and I'd be interested if you had any comments to make.
All the best,

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Ian field 19th Jul '18 28 of 38

I noticed yesterday that my local 5 a side Goals had invested in all new chairs for the bar area. Strange investment if they are really struggling?

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grishas 19th Jul '18 29 of 38

In reply to post #383529

Thanks, John. So you would basically just hold a high flyer until one day you get a profit warning and it drops? You would never try to pre-empt that by looking at some fundamentals and deciding its become too expensive?

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Graham Neary 19th Jul '18 30 of 38

In reply to post #383484

Hi grishas, personally I am very resistant to selling stocks, and I only sell my successful companies if there is something else I really want to invest in and need the funds for. Or if it ends up being 25% of my portfolio or something like that, I will take some off the table. You may find that a different strategy works for you. G

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cidunn 19th Jul '18 31 of 38

Harvey Nash (LON:HVN) – I wonder has anyone else been stopped out of Harvey Nash (LON:HVN) today, seems to be a flash 9% drop in the middle of the day today that sadly hit my stop *only just mind you* rather annoyed as its just about regained most of those losses by the close.
This is becoming to be regularly thing for me being stopped out on these flash drops in general, I wondering if this is the nature to stocks that I buy. None the less I’m still miffed as I cannot find any news to warrant this drop today and chances I’ll be buying back in as I still hold strong convictions for stock. Anyone know of a reason?
All the best, CID

| Link | Share | 2 replies
Graham Neary 19th Jul '18 32 of 38

In reply to post #383554

Hi John, glad you like the report. I haven't got any current insight into Accsys Technologies (LON:AXS), I'm afraid. That's a very big move today though - I see what you mean! G

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JohnEustace 19th Jul '18 33 of 38

In reply to post #383604

Hi Grishas,
I think Graham makes the important point that we need methods that work for our individual personalities, circumstances, and objectives. Knowing when to sell is harder than buying.
One of my weaknesses is impatience and I’ve missed out in the past by not letting winners run. So yes these days I tend to hold until they disappoint rather than second guess.

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paraic84 19th Jul '18 34 of 38

Colleagues I sit next to at work who use dotmailer dotDigital (LON:DOTD) say it is far superior to anything else available on the market. In particular it has a really clean interface, allows detailed data about user click-throughs and open-rates, and integrates with their email address database. I am not sure mailchimp does that last bit.

They also said to me that they would have thought dotDigital (LON:DOTD) revenue would go up in the short-term with GDPR given the number of emails that had to go out about GDPR! So perhaps any negative effect of that legislation (of fewer emails therefore lower revenues) might not be felt until later in the year.

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john652 19th Jul '18 35 of 38

In reply to post #383619

hi cidunn,

out of interest, what platform are you using for your positions, is it the actual equity holding or a spreadbet?

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john652 19th Jul '18 36 of 38

In reply to post #383514

Hi Bobo,

Are Jarvis at risk from clients moving to the larger providers such as HL, after the beaufort securities situation where if a small broker goes bust the rip off KPMG types will take fees out of client money. Client may not be moving but the market may be pricing this in?

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wildshot 20th Jul '18 37 of 38

In reply to post #383619

cidunn I think it is just a little bit of a risk of holding shares. On my previous platform (TD Direct) I used automated stops for years. I was then very frustrated when lots of them were hit unexpectedly and to then recover, like you've seen. Through these automated stop losses my holdings in such as Avon Rubber, Diploma and more were closed out only for me to see the shares then go on and mutli-bag.

Thankfully when it happened with 4imprint I went back in a week or so later and thankfully I did since this is the share I have the best % return on, 700%+ and counting.

Now I don't use automated stops. I assess the fundamentals of shares, try to understand why the price is going down and if I think the negatives are temporary or long term. All my trades are manual now. Yes this requires discipline but my returns are better than ever and I have less trading activity.

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Lion Tamer 20th Jul '18 38 of 38

In reply to post #383664

re Jarvis Securities (LON:JIM) and impact of the Beaufort Securities scandal

Hi John652

I also fear the impact of events such as the Beaufort Securities scandal. But I like the XO (Jarvis) interface, and low costs.

My solution is to split my portfolio across three brokers and two accounts at each (mine and my wife). This has the impact of a) spreading the risk, b) reducing exposure to potential losses such that hopefully my "share" of any loss might be below the FCA £50K compensation limit.

I suspect I am not alone in this type of strategy, and those investors who are aware of the Beaufort Securities scandal are the type of investor who are most likely to mitigate risks in this way. If so then Jarvis may benefit from more accounts (as people double up on accounts held) but have lower balances in each account, so maybe netting about the same.

Also Jarvis offer a white label service to other brokers, which might dilute the impact.

(long on Jarvis Securities (LON:JIM) albeit a modest amount and a customer)

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 Are LON:RDL's fundamentals sound as an investment? Find out More »

About Graham Neary

Graham Neary

Full-time investor and independent analyst. Prior to this, I spent seven years in the financial markets as an analyst and institutional fund manager. I'm CFA-qualified, also holding the Investment Management Certificate and the STA Diploma in Technical Analysis.Away from finance, my main interests are recreational poker and everything to do with China, especially Mandarin Chinese. more »


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