Small Cap Value Report (Tue 3 Nov 2020) - ACRL, VCP, TCM, UPGS, WHR, OMG

3rd Nov '20 by Paul Scott

79 comments 15368 reads

Good morning! It's Paul here with the SCVR for Tuesday. Jack's busy with other stuff, so it'll probably just be me today.

I added more sections to yesterday's SCVR, finishing in the early evening, so here is the link for the full report.

PIWorld interview with Richard Crow ("CockneyRebel"). I've long admired Richard Crow, who's a brilliant investor, and an engaging, down-to-earth chap. His life story is interesting, and this video is chock full of straightforward investment common sense. I enjoyed it very much over the weekend, so I hope you enjoy it too. Highly recommended. I only ever provide links here to the best content that I've particularly enjoyed.

Agenda - this is what has caught my eye this morning -

Accrol Group (LON:ACRL) - significant acquisition, and placing

Victoria (LON:VCP) - 2nd lockdown comments & trading update

Telit Communications (LON:TCM) - 2 possible bidders

Up Global Sourcing Holdings (LON:UPGS) - Full year results

Warehouse Reit (LON:WHR) - Half year results

Oxford Metrics (LON:OMG) - Trading statement
.

Timings - TBC - I've started early, so there should be plenty up by 1pm official finish time. Then a few more hours to finish off everything else later this afternoon.
Update at 12:46 - I'm taking a break for lunch now, and a haircut, as I'm starting to look like a yeti, and with lockdown 2.0 starting on Thursday, this is becoming an emergency! So I'll be back about 2pm to finish off the last 4 sections above. Hence likely overall finish time about 5pm hopefully. I like to dig into the detail properly, which takes time, so thank you for your indulgences.
Update at 17:24 - today's report is now finished.

Accrol Group (LON:ACRL)

Share price: 45.0p (up 1% at 08:33)
No. shares: 195.2m + 87.5m placing + ?19.3m option shares? + up to 9.3m open offer = max 311.3m
Market cap: £140.1m (subject to change, depending on outcome of open offer)

I reported in yesterday’s SCVR about this company’s trading update. However, there has been a flurry of subsequent announcements, concerning quite a large (relative to ACRL’s market cap) acquisition, and a placing/open offer to finance it.

Acquisition & launch of ABB (accelerated book…

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gaustin

3rd Nov '20

Andrea

I found the PI world interview with Richard very interesting.

Whilst Richard may suggest stock, I agree with Paul that it would be unwise to follow anyone blindly. Before buying anything, best to do some research of your own.

Personally I have invested in a few things Richard drew attention to - a few I have lost on, but overall excellent returns, most notably via taking a stake in FUTR that has gone from £3.50 to just shy of £20.

Bluesky Ventura

Yes, totally agree with you DYOR, and don't trust or blame the bloggers, vlogger, and twitterer's.

BSV

LeeLPM1985

Be great if you can slot in Senior (LON:SNR) at some point @Paul. I have a small holding and am very interested in your expert analysis of them. Trying to decide whether to keep them for the long haul or cut my losses and take the £ into another in my portfolio. I was in around the 69p mark but its been in the 50's for a while now given the pandemic.

andrea34

Paul,

It's completely incorrect to say I've "obviously fallen out" with CR. I made a single reply to ONE of his Tweets accusing him of ramping on a day when he had repeatedly Tweeted price movements on a stock and when I pressed him after his suggestion that I unfollow him he blocked me.

Where have I "actually" suggested that he invests in small as apposed to mid cap companies? The ones I have mentioned are simply those that I (and others) have seen him plug in recent months. Additionally, never does he say in any Tweet whether he holds... though I got him to admit (before I was blocked) that I should "assume that anything he Tweets about price movement he holds" - by deduction, if he is repetitively Tweeting on only his own stocks then he's ramping. This is in particular surely true when he has such a big following. As you are no longer on Twitter then you would not see this.

In my post I also said "from a general point of view" people should not follow others but do their own research, so I don't know why you have tried to manipulate my comments as though they are purely directed at R Crow or only high profile investors.

It is extremely important that people know there is such manipulation and dishonesty on social media. As such, I think you should be a bit less aggressively defensive.

My comments in no way detract from the quality of Tamzin's interviewing, which is always very high (as I indicated).

jonesj

Warren Buffett says something like "Praise by name, criticize by category". That's the safe option, but if the evidence is clear, ignoring Mr Buffett's advice & using names seems fair.

On Twitter and other outlets, investors are usually bullish about what they own. To a large extent, this is to be expected, as if someone isn't bullish on a stock, they shouldn't own it.
In other cases, Twitter comments go beyond that.

Then there are a small number of Twitter experts who made all the right trades a few months ago, but only ever post these long after the stock has gone up.

Fortunately, we are all adults and should be capable of filtering what is written. The occasional reminder, as in the post by Andrea also does no harm.

Northender

Andrea does raise an extremely valid point, not just specifically about one person, but FinTwit in general.

I can't say that I know too much about CR but there is some blatant and very aggressive ramping going on with regard to some specific shares, most notably the Covid stocks. Novacyt SA (LON:NCYT) would be a prominent example, where a certain well-respected PI has been subject to some extremely unpleasant tweets. Any dissenting voices are instantly shot down, I don't think they've ever heard of "confirmation bias".

I used to check Twitter, just to look for any counter-arguments when thinking of buying a share, but I now stick to following a few people I know and trust and am using mute a lot more now I've found it.

On the other hand, the interviews from piworld are a fantastic resource for the private investor and I've appreciated them all.

smythw

Personally I'm glad we have professional investors who are willing to shed light either on the stocks they buy/sell or how they think, even if you do consider it 'ramping'.

If it weren't for Paul (repeatedly) providing the bull case on BOO a few years ago, I'd have missed out on a 10-bagger. Similarly I've made a lot of money from other well known investors, including Richard, highlighting stocks I'd have otherwise overlooked.

I've also lost money on highlighted stocks which went south, but I'm the only one in charge of the buy & sell button and the only one responsible for that loss.

People who talk about the stocks they own have no responsibility to provide updates on when they sell, when their opinion might change or anything else. I'm not sure where that sense of entitlement comes from. You're not paying them for advice, are you?

The investing community is a mixed bag. Some day trade, some are LTBH, and some use a mix of styles. It's our own responsibility to read the information provided and understand why we are buying and have our own exit strategy, rather than assume that your own strategy is the same as theirs.

Finally, I suspect people like Paul are paid to talk about stocks in general terms, including ones they own and ones they don't, but that doesn't apply to most investors, who are far more likely to only discuss the ones they hold. I'd find it odd if that were not the case.

pobby

Well said Andrea.

I like Tamsin's honest broker style so no criticism there but then am amazed that no one has mentioned Cockney Rebel's inability to recall any investment failures. Mine are etched into my mind!!!

There's just a sheer invincibility about it all; selling their own book - no failures/sells ... For every "Future" being plugged as a success through that "network" there is a potential "Altitude" stock which is conveniently ignored!

Richard Leonard was exactly the same in his interview. He talked quite correctly about never "falling in love with a share" - and then he talked about some of his holds with potential for "google taking them over", "molins talking them over, "GSK taking them over" etc.

DYOR!

Snowbum

Good addition to the SCVR! Wondered if you’d be able to post this up early morning in the comments to compliment the posts from Dan HollandSmith & Mr Contrarian?

GreenBull1

The CEO of Prologis, NYSE:PRD declared on a podcast that they are aiming to buy outskirt shopping malls to convert into fast moving consumer supply chain warehouses. With locations closer to bigger cities it helps reduce the delivery miles whilst encouraging the use of more electric delivery vans.

Wilbraham

Well said! And thanks to Andrea for broaching this topic. I don't do twitter (life's too short) but I do look at advfn for many of my UK holdings (the beauty of that site being there's a separate board(s) for each stock, unlike Stockopedia where it's hard work to sift out comments on multiple historic threads). It's a similar story there. 'Pedestrian' steady/staple stocks (eg the housebuilders) may get one comment every week or two (except at announcement time) while the rampy/spivvy 'hot' stocks are now essentially a waste of space with 200-300 meaningless posts each day. They're actually quick to read because 99% of the posters are filtered - it's just a pity they appear at all! Most of my large losses have been in such stocks. There's a common pattern - a cheerleader spouts on about fantasy numbers and his (invariably a 'he') acolytes join in the ramping ('can't wait for tomorrow's RNS' and similar wishful thinking). Anyone who posts a remotely cautionary view is immediately denounced as a 'shorter' (aka traitor!).

The whole thing is quite laughable but I understand that advfn hasn't the resources to moderate. For large caps it has no effect (amusingly the Boohoo (LON:BOO) thread which our very own Paulipilot originally set up is now the worst example!). But for small caps I suspect there can be enough money involved to influence the share price - used to be called pump and dumpers. That's why I went short-term negative on Novacyt Sa (LON:NCYT) a couple of weeks ago - everyone and their dog was talking about it which meant it was almost guaranteed to fall sharply at some point, as short-term punters were disappointed and stampeded en masse to the next hot covid stock.

I've also seen talk of a ramping/de-ramping 'ring' on advfn where posters act in concert, possibly with multiple id's. JacKnife was one name I was warned about; I've forgotten the others. Sometimes a poster will try to impersonate someone else, using a name just one letter or digit different - childish in the extreme.

As ever, caveat emptor! Don't follow the lead of anyone you don't know personally or have observed over several years.

Anyway, back to RC. I was intrigued by the interview. Largely because I knew his late brother, Bob, in a professional capacity. Bob was on several fronts my favorite client - hugely unconventional, very sharp, marmite-like, intensely focused when it suited him (but at other times had the attention span of a gnat), loyal to his friends and allies, but a contradiction in many respects. He always had a live stockmarket news feed running in his office, which seemed incongruous. We were given to understand that his brother (RC) 'was a stockbroker'. So when I watched the interview, and saw the family and vocal resemblance, the penny suddenly dropped! So RC is indeed a successful PI, who's learned from the school of hard knocks, but is no way a fund manager or 'investment professional' in the sense of having formal training and qualifications or FCA accreditation. (Actually I do think Tasmin should stress this point at the start of her interviews; perhaps she does.) Sorry for this long rambling, but a funny old world, isn't it!

Interesting and fair points.

In fact I used to pretty much ignore ADVFN boards but I actually realised that the filter tool is extremely valuable and now those boards are my primary initial tool to identify opportunities (quiet unloved boards in particular). If I miss out on something, so be it as that is all part of doing it yourself. Additionally I do view twitter but purely to see whether companies are hot or not, especially promoted by the obvious blowhards/sites.

I only wish you had opportunity to filter on this site as there is so much noise (short-termist especially) on here now (covid anybody? and, for me though I recognise that others will disagree -charting/trading mechanisms sometimes promoted with a "product" in mind) complicated by the open nature of each conversation (and maybe this message contributes to that so apologies if so)....

mark1308

4th Nov '20

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RebelChatRoom

I'd say watch the PIWorld interview at 18m timeline. I don't know many punters that give a warning like that when they mention shares they like and if that isn't clear enough for you you are hard to please

Shrubby

i appreciate you are not keen on Telit and given the history that is not a surprise. How do you square this view with the very high stock ranking ratings Stockopedia gives it ? this would be educational for me in understanding how much weight to give the quality, value, momentum, Stockrank ratings .

Paul Scott

6th Nov '20

What's ironic about it? I experimented with setting up a thread on advfn years ago, and quickly realised it was a waste of time & energy to police a nest of vipers, so abandoned it.

Sure, how does £1,000 per day sound for a private research fee?

Well , you work for Stockopedia, i pay a fee. Isn't this the commercial arrangement ?

So how do you square very high Stockopedia ratings with your dislike ? Seems a straightforward question to me as a beginner and a customer (although perhaps not for long at this rate) and didn't warrant a waspy sarcastic reply

mojomogoz

7th Nov '20

I'm a bit late with some results geeking on Up Global Sourcing Holdings (LON:UPGS) but for anyone tuned in here's some additional longer term focused data that supports my post on results day that underlying momentum is strong:

Cumulative revenue growth CAGRs by category (reporting year first broken out in data) + [2020 %age of total revenue]:

Total 14.0% (2014) [100%]

UK 9.2% (2015) [64.0%]

Europe 30.9% (2015) [35.2%]

Germany 99.1% (2016) [9.5%]

Europe ex Germany 15.7% (2016) [25.7%]

Supermarkets 51.7% (2016) [24.3%]

Discount retailers 3.7% (2016) [38.6%]

Online 56.3% (2016) [14.4%] (& note that in H2 2020 was 18.8%, expected c.20% H1 2021)

Premier brands 27.6% (2014) [69.9%]

Other key brands 8.6% (2014) [14.3%]

Other (lesser) brands and own label -4.5% (2014) [15.7% -> from 45.5%]

Its interesting to note that the only categories to report positive absolute YoY growth in every year (so including poor 2018) are Supermarkets, online and Germany. Obviously, there's a base effect in that these three categories came from lower levels.

As UPGS do not have forward sales agreements with customers there can be year to year volatility but the cumulative total sales is good with some very strong underlying areas that have now become significant parts of their business -> ie supermarkets 24.3%, online approx 20% post pandemic and Europe 35.2% (note there is some overlap between supermarkets and Europe).

The reduction is other brands and own label is a representation of the move up in quality by the business. The high percentage of total sales back in 2014 of 45.5% represents a time when UPGS was more vanilla important business and opportunistic acquirer and trader of clearance stock. The reduction in significance of discounters also illustrates the improved quality of business.

I don't think its sensible to extrapolate any of the above numbers and there is always a danger that a category goes bad (eg they have some big discount clients).

UPGS is a super organic growth story. To date the figures support a view that management are really on it. With areas like Europe, Online and Supermarkets now so significant in overall revenue mix its possible that overall growth accelerates a bit from here. If it moves to 20% from 6 year cagr of 14% that would be very impactful.

Small Cap Value Report (Tue 3 Nov 2020) - ACRL, VCP, TCM, UPGS, WHR, OMG

Accrol Group (LON:ACRL)

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