Small Cap Value Report (Wed 10 Jan 2018) - QUIZ, SDRY, MOSB, SHOE, TUNE, COG, ZTF

Tuesday, Jan 09 2018 by
93

Good morning, it's Paul here.

Please see the article header above, which shows the companies I intend reporting on today - quite a lot to cover, so it would be helpful if we could keep reader requests to a minimum.


FCA review of CFDs

This is an interesting RNS. It's the FCA's findings from its review of CFD/Spread Bet companies. The prices of spread bet company shares have dipped this morning in response to this report, which is critical of the sector, although it doesn't name the worst offenders.

What puzzled me is that, at the start of this RNS from the FCA it says;

We recently carried out a review of the CFD market. It looked at where firms offer these complex, high-risk instruments to retail customers on either an advisory or discretionary (including limited power of attorney) portfolio management basis.


As far as I'm aware, the vast majority of CFD/Spread Bet accounts are execution-only, hence would not fall within the scope of this review. Therefore, maybe it's a storm in a teacup, and could be a buying opportunity? There are some nice dividend yields available, e.g. with IG Group (LON:IGG) it yields just over 4.5%, and CMC Markets (LON:CMCX) (in which I have a very small long position) yields about 5.0% currently. These companies have very strong balance sheets too.

The FCA is very critical of the processes, but short of any draconian penalties, it's difficult to see how this will actually harm earnings at these companies.


Crypto-currencies (again!)

Spread bet companies must be coining it in (geddit?!!) with crypto-currencies. I know personally that I've handed wads of money to IG on a plate, punting unsuccessfully on Bitcoin (no current position). I've now given that up as a bad job.

The trouble with these ridiculous crypto-currencies, is that they're so volatile that you just constantly get stopped out, if you punt on them via spread bets. So they're ideal (i.e. highly profitable) instruments for the spread bet companies to offer to clients, as the provider is usually the big winner, scooping profits from people who are long or short, as prices violently spike up & down. Both long & short punters tend to have very strong opinions on the value (or not) of crypto-currencies,…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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QUIZ plc is United Kingdom-based global women's wear brand company. The Company is focused on providing occasion wear and dressy casual wear primarily for 16 to 35 year olds and offers clothing, footwear and accessories. The Company’s occasion wear provides maxi and mini dresses, matching tops and bottoms, and footwear, bags and other accessories that are designed to complement a particular outfit. The Company’s dressy casual is designed to provide the latest on-trend clothes, shoes, bags and accessories that have a glamorous edge. In addition, the Company’s products includes denim, playsuits, shirts, tops and skirts. The Company also provides a range of outerwear such as faux fur jackets, parkas and biker jackets. Footwear offers dune River Island, missguided and ASOS. The Company’s brand operates in 19 countries through 65 international franchise stores, concessions and wholesale partners. more »

LSE Price
34.6p
Change
0.4%
Mkt Cap (£m)
42.8
P/E (fwd)
6.5
Yield (fwd)
4.6

Superdry PLC, formerly SuperGroup PLC, designs, produces and sells clothing and accessories under the Superdry brand in approximately 670 points of sale across the world, as well as online. The Company offers a range of products for men and women. The Company operates through three segments: Retail, Wholesale and Central costs. The Retail segment's principal activities consist of the operation of the United Kingdom, Republic of Ireland, European and the United States stores, concessions and all Internet sites. The Retail segment is involved in the sale to individual consumers of its brand and third party clothing, footwear and accessories. The Wholesale segment's principal activities consist of the ownership of brands, wholesale distribution of its brand products (clothing, footwear and accessories) across the world and trade sales. It offers a range of products, including t-shirts, polo shirts, hoods and sweats, joggers, tops, dresses, jackets, shirts, footwear, bags and accessories. more »

LSE Price
377.99p
Change
6.4%
Mkt Cap (£m)
291.1
P/E (fwd)
4.1
Yield (fwd)
9.0

Moss Bros Group PLC is engaged in retailing and hiring formal wear for men. The Company operates through Moss Bros branded mainstream stores. The Company's segments include Retail and Hire. The Company offers various types of suits, skirts, jackets, trousers, coats, casualwear, ties, shoes and accessories. The Company offers clothing and accessories for various occasions, including weddings, prom, race day suit, tuxedo and black tie, interview attire and graduation. The Company also trades through Savoy Taylors Guild fascia. It has approximately 100 Moss Bros and Savoy Taylors Guild branded stores and over 20 Moss Bros outlet stores, which trade Moss Bros own brands and selected third-party brands, including Hugo Boss, Canali, Ted Baker, DKNY and French Connection. The Company has approximately 120 Moss Bros Hire outlets, which are contained within Moss Bros Retail and Savoy Taylors Guild Stores. The Company's sub brands consist of Moss London, Moss 1851 and Moss Esq. more »

LSE Price
31.1p
Change
-1.3%
Mkt Cap (£m)
31.8
P/E (fwd)
23.5
Yield (fwd)
12.7



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


59 Comments on this Article show/hide all

robin66 10th Jan 20 of 59

In reply to post #295793

Seadoc,
To be fair to Dialight (LON:DIA) the RNS was released at 7.00 am. I am wondering whether their current manufacturing problems will enable Luceco (LON:LUCE) to increase their share of the LED market at Dialight's expense?

I hold Luceco (LON:LUCE)

Robin

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bsharman 10th Jan 21 of 59
2

Hi,

Apologies if someone has already flagged up this crazy story!

An iced tea company in the states (Long Island Iced Tea Corp) changed its name to “LONG BLOCKCHAIN” and its shares spiked by as much as 500%

www.vanityfair.com/news/2017/12/iced-tea-company-changes-name-to-long-blockchain-stock-immediately-skyrockets

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vik2001 10th Jan 22 of 59
4

could a crash in crypto, result in a wider stock market crash bringing down equities with it? whats peoples opinion: would the 2 be related or not have much of a effect on equities.

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herbie47 10th Jan 23 of 59

In reply to post #295818

Online Blockchain (LON:OBC) did the same shares went up 10x, crazy or what.

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clouds 10th Jan 24 of 59
4

Good spot Paul on this point regarding the FCA CFD review "on either an advisory or discretionary (including limited power of attorney) portfolio management basis", I hadn't realised this when I quickly reviewed it earlier.

Note IG Group (LON:IGG) have commented (part of longer statement): "IG welcomes the FCA's review on the provision and distribution of CFD products to clients on an advisory or discretionary basis. IG does not offer advisory or discretionary services for CFD products and has terminated its very small number of relationships with distributors who offer our CFD product on a discretionary or advisory basis to retail clients within the UK and EU. IG believes that it complies with the applicable rules and FCA guidance and that this review has no new financial implications for IG's business."

Disclosure: Long £PLUS

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seadoc 10th Jan 25 of 59

In reply to post #295813

Robin,

Thanks. At the risk of incurring the "Wrath of Ed" I also subscribe to Sharescope, does a brilliant job of plotting my losses. About 6 months ago they changed the news from a daily download to a searchable database (bit more like Stocko). I set up a screen for RNS "out of hours". RNS 2021B was flagged up as issued at 08.24 but just checked and though titled "Directorate change, Trading update and outlook" it does contain in print so small I missed it the introduction:

"The headline for the Dialight plc announcement released on 8 January 2018 at 7:00am under RNS No 1643B should read Directorate change, Trading update and Outlook.

The announcement text is unchanged and is reproduced in full below."

My mistake and thanks for pointing it out, So much for my cunning plan of searching for late RNSs.

As to your question about Luceco (LON:LUCE) I leave that to others, better qualified, to answer.

Seadoc

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john652 10th Jan 26 of 59
5

This site sums up the hight of crypto madness, Useless Ethereum Token Project, and it raised and unbelievable $419252.
Now the real value has to be in the customer list, or the idiot list as it should be known.

https://uetoken.com/#token-details


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ISAallowance 10th Jan 27 of 59
4

In reply to post #295833

Kodak £KODK the latest crazy crypto rise, up 100% today after announcing the KodakCoin!

http://www.bbc.co.uk/news/technology-42630136

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Trident 10th Jan 28 of 59
1

I don't have sufficient knowledge of the technicalities of blockchain. But in the cybercrime or cyber war world, surely there is every incentive to corrupt the blockchain process, and undermine it or profit from the ensuing havoc any corruption causes in the perceived chain of information?

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Banzii 10th Jan 29 of 59
3

In reply to post #295863

Hi Trident,

I believe blockchain works by lots of participants having a copy of it so you would need to have 51% of the computing power involved in the whole blockchain to overrule a change with your own corrupt change. I also believe that if you tried to modify an old blockchain transaction you would need to rework all subsequent transactions. That would take a lot of computing power. I'm sure certain governments have the resources to do it but it wouldn't go unnoticed.

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Edinburgh Investor 10th Jan 30 of 59
1

Hi Paul

Curious to understand what your rationale was regarding the punt on bitcoin, short or long (or both)?

Cheers

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DJCP 10th Jan 31 of 59

Re the CryptoCurrencies (CC) & Blockchain. Apologies for non-stock related message.

I've been looking at both these from a learning aspect. Using a demo IG acct, and succesfully getting a £4k profit from £10k in a day by trading Bitcoin - Pure skill (I mean LUCK!). If it's that easy for a novice to make that amount, it's more likely/probable to make a much, much larger loss when getting too cocky.

The crypto exchanges are struggling with the increased traffic, and the continual attempted DDOS (hacking) attacks, with many going off-line and reverting to 'manual' operation, whilst trying to cope or recover. Even they didn't foresee this huge increase in speculators (gamblers?). Actually buying, selling, swapping between CC's is a nightmare, with a multitude of exchanges, wallets, websites, identity checks (wasn't it supposed to be anonymous?). Anyone doing this must be very optomistic about the future, and patient to set it all up.

I also read an article about the feasibility of Tesla offering 'coins'. For example, 10,000,000 TeslaCoins (TC) at $1,000 each to raise funds. Who'd buy these instead of the underlying stock ? No idea, but they'd have to offer an incentive - maybe increasing discount against the purchase of a vehicle? One TC = 1% of $100k Tesla car, then increases by 10% p.a. compound. Would this need to be regulated ? Would this be cheaper than a Rights Issue, Bonds or other normal fundraise ? Could one exchange offer all of these as a funding alternative - TeslaCoins, KodakCoins, StockopediaCoins, PPCoins ;^) etc.) ?

As Paul mentioned, the Blockchain technology could/should be the beneficial result from all this, and there are numerous application/industry ideas - some maybe useful, some maybe a sledgehammer-to-crack-a-nut. There are also companies looking at extremely low transaction charges. e.g. Stockopedia could be 'free', but each user paid based upon what they actually used/read - Historic articles automatically getting cheaper etc.

Definitely seems to be a Marmite situation with the CC's at present, but with the Blockchain technology being the outstanding aspect once everything else has died/settled-down.

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JohnEustace 10th Jan 32 of 59

In reply to post #295863

For a shady individual using crypto currencies to move their money somewhere safe, it would seem sensible to employ a talented individual to cyber attack the currency exchange afterwards to bring it down with the objective of erasing all record of the transactions.
There might be some collateral damage caused to innocent bystanders, but hey, that's life.

Or is my imagination running away with me?

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PhilH 10th Jan 33 of 59

For me the blockchain technology will eventually mean that individuals such as oligarchs/corrupt government officials cannot misappropriate public funds/property.

Furthermore, we won't need to trust dodgy auditors to rubber stamp transactions as the integrity of them can be checked through software. Think EU budget concerns!

It's inconceivable to me that we'll be using paper and receipts for transactions of any sort in 50 years time.

I know energy consumption is one concern, although I note that Ethereum is working on a proof-of-stake model which requires less computation.

Professional Services: Sunflower Counselling
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Reacher 10th Jan 34 of 59

In reply to post #295838

I haven’t read the FCA report yet, but have read an article in the Times today summarising the findings of the FCA’s 12 month supervisory review. The FCA state there is a “high risk that firms across the sector are not meeting our rules and expectations when providing and distributing CFDs. As a result consumers may be at serious risk of harm from poor practices in this sector”.

It goes on to say there are weaknesses in managing conflicts of interest and highlights a case where the chief executive is also head of compliance at a firm and in another instance flags remuneration concerns of how employees are paid.

Whilst it’s not clear what the FCA will do and when, I think undertaking any investment on the share price weakness will require extra due diligence around governance.

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HHR 10th Jan 35 of 59

In reply to post #295798

Hello Trigger, The trading periods covered for the updates are different but I agree with you that it's an interesting contrast. I could only think of two points that possibly explain the different market reaction. Although teds retail growth is lower at 10.5% compared to sdry's 12.8%, teds growth was achieved on a 5.9% increase in sq ft vs sdry's 15.4%. I don't read much into this due to the numerous unknowns underlying these figures, nevertheless on the face of it ted's growth seems to be better from a return on capex viewpoint looking at these figures in isolation. Second the e-commerce bits of the announcements are interesting. Ted grew e-commerce by 36.4% to a total of 30.1% of retail revenue. This compares favourably with sdry's figures of 31.6% and 25.2% respectively.

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andyfwwrench 10th Jan 36 of 59
3

I would say its been relatively easy to short BTC and Ripple; even Ether when it was correlating with BTC. Simply look for over bought on the 1 minute and 1 hour charts; on the one minute will probably be multiple excursions. Also will show as statistically extended using your Bollinger band parameters of choice. Once the top has come off, and a retrace has failed then waterfall like sales start. These continue until some sort of reversal candle, oversold. The difficulty is once the trade is on one needs to monitor for a couple of hours to be ready to take profits at a moments notice. The swings do not last that long though. Don't use stops, don't keep the trade open, and don't trade at all unless the starting conditions have been met. Note also that BTC is most volatile during the Japanese day and that most volume is Yen denominated. Daily trends and candles are important as support often steps in at the usual levels.
At the moments it looks like every call option bought will expire worthless on the 17th and I anticipate more losses after that as the buyers didn't expect to lose money. The more new participants experience losses the less likely they are to come back, and the less attracted fresh meat becomes.

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mikemorris 10th Jan 37 of 59
21

I feel I just want to thank Paul and Graham for the efforts they continue to make to serve small private investors. Can I wish you both a very happy new year. I am indebted for you sharing your knowledge and experience with us, and may it long continue. Thank you. Mike.

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cig 10th Jan 38 of 59
2

In reply to post #295828

Surely you'd expect equities to go up if people who were considering "investing" in crypto change their mind and go back to regular investing. It also means (slightly) cheaper programmers, cheaper electricity and cheaper capacity in semiconductor fabs if misdirected resources come back to the normal economy, so a small positive for the broader economy.

It may mean more volatility though as currently the crypto markets are mopping up the supply of gamblers.

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daveinthelakes 10th Jan 39 of 59
8

If anyone is going to the Wey Education (LON:WEY) investor presentation tonight it would be good if they could report their impressions threon.

I hold a middling size position.

Thanks, Dave

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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