Small Cap Value Report (Wed 15 August 2018) - MUBL, BOX, LOOK, MMX, FTSE

15th Aug '18 by Graham Neary

27 comments 10722 reads

Good morning!

MBL (LON:MUBL)

Share price: 3.7p (-18%)
No. of shares: 17 million
Market cap: £640k

Cancellation of Admission & Notice of GM

I mention this out of morbid curiosity rather than any interest in investing in it

The directors have taken the opportunity to write up a more complete explanation around why they seek to delist.

It is very carefully worded. There have clearly been a lot of tensions between various parties associated with the company, and this has been going on for a long time.

The bottom line financially is as follows: MBL had cash of £800k at the end of July, and expects to receive another £375k from a disposal. Out of these funds, it needs to pay the £75k fine to the FCA and running costs until it liquidates.

We also have this grenade of a sentence:

Shortly before issuing this Circular, the Company received notice of a claim in relation to a historic matter which is potentially material. The Company is taking legal advice about the merits of the claim and will update Shareholders, as appropriate, in due course.

The saga of disagreements and disputes rolls on and on.

The directors have had enough:

The Company has little opportunity to make a return to Shareholders should it continue to face the costs such as those arising from further requests for investigations, litigious behaviour and the associated additional costs involved in investigating and defending these claims whilst maintaining its public company status

MBL is heading for an ignominious end to public life. It turns out that the market wasn't unduly bearish on it for all these years. If anything, it wasn't bearish enough!

Boxhill Technologies (LON:BOX) (suspended)

Update on Annual Report and Accounts - another share I'm mentioning so that we can file it in the "what can go wrong" or "this is how shares die" category.

This has been unable to publish accounts for the year ending January 2018.

Apparently the year-end bank balances of a former subsidiary can't be accessed, because a director of that company was dismissed and (s)he was the sole authorised signatory. The process to fix this is estimated to take around 3 months.

It's the sort of thing you might expect from…

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Mark Simpson

15th Aug '18

In many ways Indigovision (LON:IND) is a classic Gyllenhammar investment trading at a discount to NWC. The positive market reaction to his holding presupposes that he can add value. I can't see what he could do though apart from force a trade sale (and he will need significantly more that 3% and someone willing to pay £2+ to make this happen IMO.) The company has already changed management and trying to move to a more sales focused strategy and it will be the success or failure of this that will determine the long-term returns to shareholders. That said you don't need much success to deliver positive returns buying something at a discount to NWC.

One positive is that Gyllenhammer is unlikely to be happy with owning just £220k worth of shares so if others want to sell they can do so with a phone call rather than dripping into an illiquid market and killing the price. This should put a floor in place around the £1 level at least in the short term.

DGBell

There’s an interesting article in today’s Times about the difficulties of investing in the AIM market.

Trident

It has also recently been suggested Deltic is looking to stage an IPO. If so, any possible further tilt at Revolution Bars (LON:RBG) may be after it gets it that away, otherwise it might significantly slow down the process.

SundayTrader

Presumably part of the attraction of Revolution Bars (LON:RBG) was the quote - there may be less atttraction if Deltic have gone public. OTH a straight merger between two public companies might be more palatable to Revolution Bars (LON:RBG) shareholders.

Tortoise investor

Stonegate also likely not to revisit Revolution Bars (LON:RBG): https://www.thecaterer.com/articles/533607/stonegate-to-acquire-be-at-one

Aislabie

Anyone got any clue why Falanx (LON:FLX) has been hammered so badly?
It is true that yesterday’s RNS was a bit disappointing but the share reaction seems to have been extreme for a company which appears to be moving into break even or profit,
The CEIO and CFO have both bought today which is sometimes a desperate throw but I think my just be buying cheap.
Is there other news I have misse?

danielbird193

Interesting that the Arena Events (LON:ARE) placing came only a few days after Simon Thompson wrote a positive review of the company in the Investors Chronicle. I'm sure there will be a few new holders disappointed with the 5% drop today after buying on the back of the tip - albeit the acquisitions are said to be earnings enhancing from year one, and appear to be at undemanding EBITDA multiples.

Graham Neary

Thanks for posting that, FREng. A nice little snippet. G

Paraic, you asked me about general market levels - comment provided! G

TamzinPiworld

An interview we (piworld) have done with Judith MacKenzie, Downing LLP. (Relevant for today because it's just been published.)

https://www.piworld.co.uk/2018/08/15/tamzin-talks-to-judith-mackenzie-downing-llp/

Judith talks about investing style, fund management including managing other people's money. Plus Judith's comment on Ramsdens Holdings (LON:RFX) management sells.

Quite an entertaining 20 minutes.

LeoInvestorUK

Graham,

In the past I too have sold FTSE puts with a strike price around where I would be wanting to buy the index. Either the FTSE then falls to below that level in which case my loss is the same as if I'd bought at that level, or it does not. Either way I collect the premium as a kind of income. In the case where it falls I have the choice of either buying the index, rolling over at a lower level, or both.

I have found this works best after significant falls where the premium is higher due to higher implied volatility (and usually skew) and valuations are reasonably close to where I would wish to increase exposure. Therefore I have not been doing it recently but perhaps an opportunity is about to present itself.

I made a lot of money over a sustained period doing this after the financial crisis. Of course I limited my upside compared to just buying the index, but I'd argue that this is was at a lower risk as I did not have to judge when the market would start consistently rising.

Thanks for the message, Leo. Puts have become a lot richer today - selling opportunities are already looking much juicier, for those who dare. All the best, G

fwyburd

Hi Graham
I'd be interested to know which platform you are using to sell your put options. I used to work in the derivatives world in the late 80's but haven't traded on my own account since but am interested to do so. I recall the broker commissions were incredibly high then but times have moved on - who are best value providers today?
cheers
Francis

Vsihv

You can take a look at idelaing. They have single stock and index options (basically listed options across a bunch of European exchanges).
I don't have an account - not a fan of leveraged products not to mention employer restrictions.
If I was that way inclined, agree with the general view presented that selling puts (or selling non-naked calls - clothed calls (trademark pending)) is effective for both risk management and yield enhancement.
They are fun things though - wish I had the time, risk tolerance and capital!

Hi Francis, I haven't shopped around widely (haven't got the size of business yet to fret over commissions - hopefully in future). If I was doing big size I would probably check Interactive Brokers as my first port of call. G

cig

Dividends as a stable index metric is debatable:
- When tax rules change companies change the mix of methods used to send funds back to shareholders (eg US raw yields look lower than they really are due to this)
- Dividend levels are subject to fashion and companies will respond to fads.
- Dividends indirectly include the risk free rate.

AnonymousUser252054

I think she got the wrong end of the stick when you asked her for her thoughts on the psychology of investing.

Reaction to Ramsdens Holdings (LON:RFX) director sales was quite forthright : )

Lordyjordy

16th Aug '18

Graham

I find your comments regarding selling puts interesting. I have sold puts on American shares for around three years (im a member of motley fool options). I only do this on shares I would like to own and keep my exposure very low. I've found your able to sell a put for example on US shares and each put represents 100 shares. I would like to follow a similar strategy for uk shares but have been unable to find a platform that allows me to deal in small quantities. Can you advise if this is possible? Many thanks

tightfist

18th Aug '18

Hi Graham, Lordy;

For the last three months I have been hedging my (weakly FTSE correlated) portfolio with some Buys of the SocGen Infinite-Turbo MF70 FTSE100 "Put" product. It is geared at about 7.8x, with a Knock-Out level (Stop Loss) currently set at 8447 but gradually falling.

These have a spread of about 0.8% and seem pretty liquid tradeable in small/medium sizes. They are NOT ISA'able, however - they are said to be OK in SIPP's.

[FWIW I was Knocked-Out of the earlier very highly geared MF69 at the spike in FTSE in early May].

Any other alternative ideas? tightfist

21st Aug '18

Hi tightfist,

Thanks for the reply. I'm not familiar with the products you mention but will give them a look. On face value this seems to me to be more risk than I would be willing to take on. What I do at the moment and using PayPal as an example. Paypals current share price is $85 dollars. I want to buy the shares as part of my long term portfolio but feel they are a little expensive. I sell to open a 1 put at a strike of $78 at Sept 18th. I then look for income of around 1% per month. This keeps my exposure limited and I get paid to wait for a share that I want to buy anyway. I have found an options strategy in conjunction with shares i have/would like in my portfolio works well. My problem is I haven't come across a way I can do this for uk shares. Again I only do this for large/liquid companies.....

Small Cap Value Report (Wed 15 August 2018) - MUBL, BOX, LOOK, MMX, FTSE

MBL (LON:MUBL)

Boxhill Technologies (LON:BOX) (suspended)

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Graham Neary

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