Small Cap Value Report (Thur 29 November 2018) - Markets, RFX/HAT, CCT, MOTR, PAM

Thursday, Nov 29 2018 by

Good morning!

I got home at about 1am last night, after a delayed flight. But am feeling surprisingly chirpy, all the same.

The overall level of the market remains on my mind. I might have underestimated the extent to which the air coming out of US equities could be a headwind for UK shares. And I do think there is a lot of air that needs to be extracted from the US markets.

That being said, President Trump is not going to want a stock market crash to be the backdrop for his 2020 re-election campaign. He regrets hiring Fed Chairman Jerome Powell, who bears the ultimately responsibility for rising interest rates:

"So far, I'm not even a little bit happy with my selection of Jay," Trump told the Post. "Not even a little bit. And I'm not blaming anybody, but I'm just telling you I think that the Fed is way off-base with what they're doing."

If the Fed slows down its rate hikes under pressure from the President, that will certainly be good news for equity prices.

The market has started to price that in: after yesterday's rally, the Dow Jones Industrial Average is only about 6% off its recent all-time high. That still sounds rather optimistic to me!

Like most of you, I continue to spend most of my time looking at individual companies. But it's nice to have a sense of history and of overall valuation levels, to give the context for what we're doing. I remain bullish for UK shares, while acknowledging that the road higher will be a rocky one.

Today we are looking at:

Ramsdens Holdings (LON:RFX)

  • Share price: 163p (unchanged today)
  • No. of shares: 31 million
  • Market cap: £50 million

Interim Results - Six Months ended 30 September 2018

What a crazy range this one had yesterday: a high of 167.5p, a low of 147.5p. Results had been reported in line with expectations.

It ended the day 2p higher than the previous day, at 163p.

Ramsdens is a pawnbroking/financial services chain based in the…

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

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Ramsdens Holdings PLC (Ramsdens) is a financial services provider and retailer. The Company operates through four segments: Foreign Currency Exchange, Pawnbroking, Purchases of precious metals and Jewellery Retail. The Foreign Currency Exchange segment consists of primarily, the sale and purchase of foreign currency notes with prepaid travel cards and international bank to bank payments. The Pawnbroking segment is a form of asset backed lending where an item of value is given to the pawnbroker in exchange for a cash loan. Through its precious metals buying and selling service, Ramsdens offers to buy unwanted jewelry, gold and other precious metals from customers for cash. The Company is engaged in refurbishing items bought from customers and retailing them through its store network. The Company also provides ancillary services, including franchise fees, western union, sale and buy back of electronics, and credit broking. It has a portfolio of over 130 stores. more »

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H&T Group plc is a non-trading holding company. The Company provides a range of simple and accessible financial products tailored for a customer base, which has limited access to, or is excluded from, the traditional banking and finance sector. Its segments include Pawnbroking, which is engaged in providing secured loans against collateral (the pledge); Gold Purchasing, which is involved in buying Jewelry directly from customers through its stores; Retail, which is involved in retail sales of gold and jewelry, and the retail sales are forfeited items from the pawnbroking pledge book or refurbished items from its gold purchasing operations; Pawnbroking Scrap, which comprises various other proceeds from gold scrap sales other than those reported within Gold Purchasing; Personal Loans, which comprises income from its unsecured lending activities, and Other Services, which comprises third party check encashment, buyback, prepaid debit card product and foreign exchange currency services. more »

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The Character Group plc is a toy company. The Company is engaged in the design, development and international distribution of toys, games and gifts. Its geographical segments include other EU, UK and Far East. It designs and manufactures toys based on television, film and digital characters, and distributes these products in the United Kingdom and overseas. It also distributes finished products in the United Kingdom developed by overseas-based toy producers. Its diverse product range includes products for pre-school, boys, activity and girls. The Company's brands include Peppa Pig, Little Live Pets, Teletubbies, Minecraft, Scooby Doo, Mashems, Fireman Sam and Ben & Holly. Its customer list includes the United Kingdom toy retailers, the United Kingdom independent toy stores and a selection of overseas distributors. It operates approximately two distribution warehouses located near Oldham, Greater Manchester. It primarily distributes products sourced from overseas third parties. more »

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

65 Comments on this Article show/hide all

purpleski 29th Nov '18 46 of 65

In reply to post #422723

Hi mmarkkj777

I have accounts with Hargreaves Lansdown (LON:HL.) and II (II use AJ Bell to adminster the SIPP facility and my Somero Enterprises Inc (LON:SOM) divi was credited on 17th October).

I trink that their are issues with all the online stockbrokers. I personally don't like the Hargreaves Lansdown (LON:HL.) web site, app, the adminsitration or the charges (to me they are not transparent) and when I can find time will transfer to II or A N Other.

My other problem with Hargreaves Lansdown (LON:HL.) is that with an Operating Margin of 60.5% and a net margin of 52% they are profiting at the expense of their clients or am I being naive?


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purpleski 29th Nov '18 47 of 65

In reply to post #422973

Hi skinner66

Yes but surely this is a negative rather than a positive? Surely very few PI's should be making 9 trades a month let alone 20!!?

Leon Boros has only made 409 trades in 25 years. See minute 32:05 at

I am ashamed to say that I have made 300 buys and 145 sells in 10 years.  Though my discipline is increasing with 27 buys this year and 13 sells this year.

Kind regards

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gsbmba99 29th Nov '18 48 of 65

I have a holding in Premier Asset Management (LON:PAM) . It is worth noting that PAM are almost exclusively retail via IFAs. Their net revenue margin is about 73bps. Comparing mcap/aum needs to account for the differing rates between institutional fund managers (about half the rate) and retail or a blend.

PAM as an investment is anchored in the attractions of the multi-asset category which has been very popular. The other day I looked at Investment Association monthly net flows data. Number of months of negative net retail sales since Jul-16 (through Sep-18): Property (11), Equity (10), Fixed Income (6), Money Market (5), Other (3), Mixed Asset (0). My spreadsheet also says that the multi-asset category at PAM grew 21.6% in the year to Sept despite Aug and Sept being very weak. There's a Liberum note on Research Tree where they have the monthly AuM by fund. All of this is despite the fact that the vast majority of their retail fundholders hold income class shares. This is part of the reason why their AuM growth over the last several years comes almost exclusively from net inflows.

I think they could have an interesting future as managers of annuity replacement products.

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peterthegreat 29th Nov '18 49 of 65

In reply to post #422983

Hello Andrew L. You make a good point in questioning how financially sound ii is as, being a private company, it is more difficult to monitor their financial state and they have been making acquisitions at a rapid rate. I only use brokers/platforms which are quoted as it is easier to tell if something significant is going wrong with their finances.

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peterg 29th Nov '18 50 of 65

In reply to post #422903

However, you are right about the situation with Somero Enterprises Inc (LON:SOM) as I have queried the delay and received much the same response. Apparently it is a combination of it being a $ cheque and the banks having a a significant backlog at the moment (probably down to retail investors getting out of the market before disaster really strikes!).

I think this is a nonsense explanation. Selftrade managed to credit my dividend within 2-3 days of the payment date, and I know from discussions elsewhere that many other brokers have managed it too. I have not heard of any other broker taking anything like so long. They are being grossly inefficient and using maximum clearance times for non sterling cheques, which just about anyone can beat by a large margin, as an excuse.

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Andrew L 29th Nov '18 51 of 65

In reply to post #423033

As I understand Interactive are loss making. You can look at the accounts at Companies House. Just do a search for them. AJ Bell publish their accounts on their website and have been robustly profitable for ages. Selftrade is owned by Equiniti which is profitable but has some debt.

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mmarkkj777 29th Nov '18 52 of 65

In reply to post #423013

Hi Purpleski

I take your point about the slightly higher costs, but I find them very transparent, with a PDF Transaction Note giving the dealing fee and any FX fee. I topped up on Amazon in my pension and for £2.5K in shares, it only cost me 30 odd quid including the FX and spread, which I think is reasonable (and I'm gradually reinvesting after pulling out in October with about 20% in the US).

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rrobinson 29th Nov '18 53 of 65

I am with Barclays Smart investor and have never been happy since the move from Barclays Stockbrokers
I was just about to move to A J Bell when an unconnected smaller broker went bust and the administrator used clients funds to sort it out so I have stayed with Barclays
I appreciate A J Bell is much larger and may be shortly floated on the stock market but It is still much smaller than Barclays
If anything happens to A J Bell could my assets be used by an Administrator

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Michael Billingham 29th Nov '18 54 of 65

In reply to post #423043

it may be of concern to some that cash and assets held by II are covered, in the event of a claim against them, to no more than the cover provided by the Financial Services Compensation Scheme which is £50,000 per individual. II do not accept responsibility for any additional amounts over and above the cover provided by the FSCS.

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Golspie 29th Nov '18 55 of 65

Mention of Ramsdens characteristics makes me think of Paypoint - results out today - Stocko 80. High divi has been ongoing for a number of years. Can you comment on PAY?

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ACounsell 29th Nov '18 56 of 65

In reply to post #422668

Looks OK to purchase on my AJ Bell platform - maybe sorted by today?

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gus 1065 30th Nov '18 57 of 65

In reply to post #422933

On the subject of broker platforms, I’ve used Charles Stanley, Charles Stanley (LON:CAY) , for several years and have been happy with the service although recognise there are cheaper deals out there. Pretty good on dividend payments handling (I hold Somero Enterprises Inc (LON:SOM) in an ISA and payments appear to go through pretty efficiently), corporate actions promptly dealt with and any other problems/issues readily tackled either by phone or a secure email message link. They also did quite a large “bed and ISA” transfer last year for me at negligible cost and with little fuss. Interested in other people’s experiences.


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millen 30th Nov '18 58 of 65

+1 for Charles Stanley. Not the cheapest but runs smoothly for me, including prompt Somero dividends, and ability to buy uncommon stocks (eg Doric Nimrod series) by phone as not available online. I sense they don't get the keenest dealing prices which, say, Barclays achieve and this typically makes more difference than whether the commission is £6 or £12. There were wobbles a couple of years ago when a Charles Stanley strategic review suggested they were looking to dispose of Charles Stanley Direct but they seem to have decided to keep and grow it now, even though it's not a big proportion of their business.

My Charles Stanley account is the dealing end of a James Hay SIPP. I don't have many dealings with James Hay but don't understand the negativity to them in a recent post. Is it just charges or something more? I'm considering consolidating several pension funds into JH soon but ought to look at the main competitors first.

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mmarkkj777 30th Nov '18 59 of 65

In reply to post #423233

for xfers, HL are offering cash back (to £500). Certainly not the main consideration, I know, but would cover an awful lot of dealing costs, or maybe a small extra fund, as I did.

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hawkipa 30th Nov '18 60 of 65

In reply to post #422873

Re Somero Enterprises Inc (LON:SOM)
I would guess that the cheque line is just a fob off. The reason being, if the holding is dematerialised then the payment usually comes through Crest. The unusual factor here is the US element, which might make it real. However, if other brokers are processing it quickly then it suggests that it is a fob off. Working it through, the company will make the payment to the regristrar in advance of payment date. The registrar will then make the payment so that it arrives by whatever means on payment date. Most of the large registrars no longer deal with cheques as it is a total hassle for them too. Assuming a cheque is paid to AJ Bell it will be in GBP as there is an adjustment factor for GBP on the payment details.
This prompts another thought, if AJ Bell charge an FX fee that is incorrect as it will almost certainly be received in GBP.
I have asked AJ Bell for details of the registrar. Some registrars are helpful and will tell you that the cheque line is true/false but others will pull the can't talk to you as you're not the holder line. I'm going to do some digging and see what I can find out. I intend to email the company too as this is an issue that they need to know about if recurring.
Whilst I saw someone had a complaint with them, this really is the best way forward as if we are all complaining and the FCA sees it then they will be all over them on the issue.



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jonesj 30th Nov '18 61 of 65

In reply to post #423033

My ii accounts were run by TD Waterhouse until they sold the operation off to ii.

So despite careful planning, the ownership of your broker can change very quickly.

What I would like to see is:
1 Direct electronic ownership of shares, just like in Singapore, where the system operates at very low cost. Nominee shareholdings are highly unsatisfactory, as ring fencing can be respected for years, then disregarded once the company is going under.
2 The FCA should take action to ensure stocks can be moved in specie within ~24 hours. Then competition can become effective.    This should be a priority for them.

Several years ago I was only using Halifax (ISA & trading), but then decided to spread my risk by using TD Direct (now ii) for new ISA contributions and AJ Bell for a SIPP. I've also opened an account in Singapore.

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simoan 30th Nov '18 62 of 65

In reply to post #423273

I would guess that the cheque line is just a fob off. The reason being, if the holding is dematerialised then the payment usually comes through Crest. The unusual factor here is the US element, which might make it real.

No, I don't believe it is a fob off. I had a problem several years ago with a euro dividend from Charter International that had a long delay between the payment date and the money reaching my account. Again it was paid by cheque and related to my AJ Bell SIPP (or Sippdeal as it was then). I rang the registrar Computershare  to discuss why the dividend was being paid by a euro cheque and IIRC it turned out the reason was because AJ Bell had not taken up the option to have it transferred electronically. When I questioned AJ Bell about it the response was basically (if you removed all the BS) that they couldn't be bothered. I would imagine it is the same case with receiving the US dollar cheque for the Somero Enterprises Inc (LON:SOM) dividend. 

So the bottom line is that AJ Bell can't be arsed to pre-credit dividends in accounts on receipt of a foreign currency cheque like other brokers, and what's more, and possibly worse, they also can't be arsed to take simple steps with the registrar to expedite the payments electronically. 

I think at the end of the day it just shows that beneath the fancy website and nice clean dealing interface, the back office function is a total mess and great customer service is not their primary concern. As my other half would say AJ Bell are "fur coat and no knickers"!

All the best, Si

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simoan 30th Nov '18 63 of 65

In reply to post #423333


Sorry to reply to my own post but I have been in contact with AJ Bell this morning by secure message and told them to respond in writing to my complaint. This is a necessary first step before referring the matter to the Financial Ombudsman Service. If any other AJ Bell customers feel like minded about the 8 week delay in paying their Somero Enterprises Inc (LON:SOM) dividend, they might want to do the same. The more weight we have behind this, the more likely we will be able to get something done about it for all AJ Bell customers going forwards.

All  the best, Si

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simoan 3rd Dec '18 64 of 65

In reply to post #423383

OK. My last word on this.

I have now spoken with Computershare (the registrar for Somero). It seems the root cause of the delay is actually Somero themselves who only send Bank of America US Dollar cheques to UK brokers - there is no electronic transfer option. Other brokers pre-credit dividends to accounts but AJ Bell do not (probably to avoid currency risk), so any problems processing the cheque will cause additional delays to payment. I have heard from AJ Bell that the problem is specifically with delays at Bank of America and have no reason to doubt this.

Therefore, I'm taking no further action other than contacting Somero Enterprises Inc (LON:SOM) to suggest they maybe use electronic transfers in future to prevent these delays. Hopefully, anyone else similarly effected will do likewise.

All the best, SI

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rhomboid1 3rd Dec '18 65 of 65

Thanks for the update Simoan

Much appreciated & squares with what I was told too...i’ll raise with Somero too

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 Are LON:RFX'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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