Small Cap Value Report (Tue 15 Feb 2022) - SMRT, LOOP, RM.

15th Feb '22 by Paul Scott

58 comments 9439 reads

Good morning, it's Paul & Jack here with Tuesday's SCVR.

Agenda -

Paul's Section:

Smartspace Software (LON:SMRT) - trading update for FY 1/2022 is slightly ahead of expectations, but remember expectations were greatly lowered after profit warnings last year. Still loss-making, and I think it needs to demonstrate stronger growth to become interesting. Worth keeping an eye on it though, as office staff returning is helping boost the sales pipeline.

Loopup (LON:LOOP) - a very poor track record here. The original business hasn't worked, so now they're trying something else (cloud telephony for Teams). Difficult to say if it's likely to work or not. Conserving cash, but has £2.5m net debt. I wouldn't be surprised if it needs another fundraising.

Jack's section:

Rm (LON:RM.) - mixed preliminary results with adjusted progress but a statutory drop in profits. The company has struggled to grow in the past, in my view. The new CEO and strategic plan could rectify this, there has been good progress in the pension scheme valuation, and the valuation remains modest. The shares could rerate at some point, but I’m holding off for more concrete signs of operational momentum.

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:

Smartspace Software (LON:SMRT)

66p (pre market open) - mkt cap £19m

Trading Update

SmartSpace Software plc, (AIM:SMRT) the leading provider of 'Integrated Space Management Software' for smart buildings and commercial spaces, is pleased…

Unlock with Email

Unlock with Google

Already have an account?
Login here

Simon Rowan

15th Feb '22

Re. (LON:CNIC) Director talk interview with Zeus analyst Bob Liao this morning is worth a listen https://www.directorstalkinter...

Revs8

Hi Mark

Reading the CEO's commentary, I also wonder if there is an element of kitchen-sinking i.e. downplaying things at the start of his term in office. That might be wishful thinking on my part- who knows!

This also crossed my mind (as you say wishful thinking). If I remember correctly he is on a 3 year bonus package based on TSR when the share price was well over 200p. Therefore it might be wise to get the bad Covid years out of the way and try to build momentum over the next couple of years.

Its also wise to build a business model that works and let the share price take care of itself rather than over promise to boost a share price now possibly at the expense of longer term gains.

Albertos

Thanks for that Simon.

Interesting.

I think the point about non-reliance on cookies is what some are missing here.

Hi BE70

I have found that looking for bargains can be an exercise in buying companies that are in decline. Momentum works in both directions and bad news comes in waves.

Totally agree that waiting for a clear breakout before committing significantly. I like to buy small when I think there is a turnaround and add when a breakout becomes clearer.

If its any consolation I've made similar mistakes. I now prefer to look for buying opportunities in companies that are in a positive channel but always worry that I am buying at a top!

If there were no risk there would be no returns.

Dojosan

Sounds like you are a bargain hunter like me - a bottom fisher. One strategy is as a bottom fisher, if it breaks the support line, Get Out Quick! - try not to hang around unless you have complete conviction.

Epsilon

"If there were no risk there would be no returns."

Is that really true?

If riskier investments reliably produced higher returns, would they actually be risky?

krtpforever

Time in the Market is better than time out of the market goes the adage.

Andy Astbury

Apologies if duplicating - did we get to the bottom of where the Green support blob went and how we get hold of support in its absence?

Rusty2

Did you try signing off and then logging back on again?

My green button never went away and I did not sign off/on, so not sure whats going on.

This is the email: support@stockopedia.com

lightningtiger

Problems currently with Hargreaves site with US shares not showing correct prices. Anybody else having problems?

I was not given a timeframe when it should be fixed.

thank you will try that and thx for the email address.

Lochinver

Apologies for going off topic.
I’ve been doing some more detailed digging into Tandem (TND) following recent favourable analysis on here.

Their year end was 31 December 2021 and I noticed that one of the senior Directors notified the company that he had sold £182,000 of shares on 24 January 2022. Further, on 31 January the company provided a trading update.

Could someone please set me right ? My understanding was that a close period preventing director share transactions was in place from the date of the year end to the date of the publishing of the year end accounts, which I believe is due to take place on 28 March. I am sure that the company will have followed the appropriate rules in this case so could someone let me know if I have misunderstood close period workings ? Many thanks .

12barblues

I think it used to be 60 days before the announcement of interim or full year results (or from the period end to the announcement date if that was less than 60 days). It changed with the EU Market Abuse Regulation 2016, which has been carried over to UK law post Brexit, to 30 days prior to a results announcement.

Disclaimer: I am not a lawyer!

AnonymousUser1782684

Catching a falling knife comes to mind

cmpeckham

Riskier investments don't reliably produce higher returns, they only do so on average, over time (that's the theory anyway and it's mostly true in practice).

And to be pedantic, the correct statement is: "if there were no risk, there would be no returns above the risk free rate".

Patrickmylnetrade

Has any one any thoughts on why the big drop in Serica energy £SQZ. dropped 12% on no apparent news

okay just seen institution sale from 5.05 to 4.95% Seems a big drop for that % of the company

Bullygig

I assumed profit taking given the recent run, nearly took some myself yesterday, should’ve done!

Oil and gas prices were down considerably today.

16th Feb '22

"if there were no risk, there would be no returns above the risk free rate".

The mention of the risk free rate suggests you are applying the CAPM and taking beta/volatility as a measure of risk.

In which case an obvious challenge is the outperformance of low volatility stocks?

https://en.wikipedia.org/wiki/...

Small Cap Value Report (Tue 15 Feb 2022) - SMRT, LOOP, RM.

Paul’s Section:

Smartspace Software (LON:SMRT)

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

58 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...