Small Cap Value Report (Wed 18 Oct 2017) - RBG, FLYB, FOXT

Tuesday, Oct 17 2017 by

Good morning!

At the suggestion of a reader, we're trying out a new system. Either me or Graham will put up a "placeholder" article in the evening, for the next day's news - trading updates & results statements, as usual.

The idea is that there's then a place for readers to post your comments on interesting RNSs from 7am onwards. In particular, if you would like me (Tue-Thu) or Graham (Mon & Fri) to cover a particular stock, then you can put in a request early on in the comments section, and if other people could click on thumbs up, then we'll focus on the requests which have the most thumbs ups. Ideally let's try to focus on the most interesting RNSs, not just humdrum results that are in line with expectations, as they're so boring for me & Graham to write-up. We like profit warnings, or excellent results where there could be good money to be made.

Also, it would be great for readers to post your own thoughts on particular results & trading updates. Especially if you know the company well, and can draw out points which the rest of us might miss.

So let's give this a try. If it works, and people like it, then we'll continue. But for now, this is a trial.

Regards, Paul.

P.S. I think Graham will be starting off the main sections tomorrow morning, as I have to prepare my legal defence for some neighbours who are suing me over a ridiculous matter (replacing skylights in my flat). So I have to prepare my legal defence, and it's taking me ages this evening, so Graham has kindly agreed to do some SCVR work in the morning, to give me more time to finish off my legal defence.

For anyone who missed it, I published a review of results for y/e 30 Jun 2017 from dotDigital (LON:DOTD) in yesterday's report. So here is the link to that. In a nutshell - lovely figures, but as with so many things in this roaring bull market, the valuation of DOTD is looking rather toppy!

Revolution Bars (LON:RBG)

Share price: 178.6p (up 0.6% today)
No. shares: 50.0m
Market cap: £89.3m

(at the time of writing, I hold a…

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dotdigital Group Plc is a United Kingdom-based company, which is engaged in providing software as a service (SaaS) and managed services to digital marketing professionals. The Company offers dotmailer, which provides e-mail and multi-channel marketing automation platform with various tools that enable marketers to create, manage, execute and evaluate various campaigns. In addition to its automation technologies, the Company also provides multi-channel marketing consultancy and services for businesses seeking to manage customer acquisition, conversion and retention. The Company also has pre-built integrations with e-commerce platforms and customer relationship management (CRM) products, such as Magento and Salesforce. dotmailer helps in using contact data to design, test and send automated campaigns. The Company's subsidiaries include dotmailer Limited, dotsearch Europe Limited and dotmailer Inc. Through its subsidiaries, it is engaged in providing Web- and e-mail-based marketing. more »

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Revolution Bars Group plc is a United Kingdom-based operator of bars. The Company has a trading portfolio of approximately 60 bars located predominantly in town or city high streets, which operate under the Revolution and Revolucion de Cuba brands. The Company's bars focus on a drinks and food-led offering, and typically trade from late morning, during the day and into late evening. Revolucion de Cuba bars are characterized by their 1940s Cuban-inspired style, with dark woods, traditional bar counters, antique tiles, vintage furniture, Havana-style ceiling fans, and original Cuban artwork and photographs. Its bars are located in various places, such as Cambridge, Ipswich and Norwich in South East; Bath, Plymouth and Southampton in South West; Birmingham, Derby, Leicester, Loughborough and Milton Keynes in Midlands; Cardiff and Swansea in Wales; Blackpool, Chester and Huddersfield in North West; Sheffield, Sunderland and York in North East, and Edinburgh and Glasgow in Scotland. more »

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Flybe Group PLC is a United Kingdom-based company. The Company is a shell company.

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

45 Comments on this Article show/hide all

bobo 18th Oct '17 26 of 45

ITM just completed a major funding round, thoughts?

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Paul Scott 18th Oct '17 27 of 45


Unfortunately, Graham got snowed under with meetings & wasn't able to do any sections today. So I've taken the controls now & will update this article throughout this afternoon.

Looking at the reader requests so far, they're all way above the normal market cap size that I cover!
RWS is £1.24bn mkt cap, Softcat is £868m. There's loads of broker & press coverage for those type of shares, so I don't feel I can really add anything.

So I'll rummage around and see what I can find to report on in the small caps space!

Regards, Paul.

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clissold345 18th Oct '17 28 of 45

You could look at Chamberlin (though market cap too low for you now?). They need a couple of good years (to pay off a chunk of their debt)?

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andrea34l 18th Oct '17 29 of 45

In reply to post #230138

Looking at the reader requests so far, they're all way above the normal market cap size that I cover! RWS is £1.24bn mkt cap, Softcat is £868m. There's loads of broker & press coverage for those type of shares, so I don't feel I can really add anything.

The only thing I'd say is that some of us don't have, or know how to, access the broker/press coverage... apart from the likes of Investors Chronicle

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RichardK 18th Oct '17 30 of 45

In reply to post #230078

Like Andrea I bought on the recent favourable trading update, and topped up today. I do feel a bit cheated though that the placing was done at such a big discount, and no opportunity for private investor claw back. The vehicle used seems to have been designed to raise funds rapidly in a competitive auction.


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andrea34l 18th Oct '17 31 of 45

In reply to post #230158

I see they stated the placing price as 425p... yeah, big discount, but as this is 19% of the overall shares in issue I don't understand why the price has been slashed from 535p yesterday to 445 currently.

CALL have a placing to raise money at 143.5, and the price has risen today to 167.5p currently.

I'm confused!


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Richard Vasey 18th Oct '17 32 of 45

In reply to post #230148

In accepting Paul's comments about market cap level coverage, Andrea341 makes a fair point. A helpful pointer or two towards the broker/press coverage referred to would be appreciated.

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simoan 18th Oct '17 33 of 45

In reply to post #230138

So I'll rummage around and see what I can find to report on in the small caps space!

Well good luck with that, Paul! Can't remember the last time I spent so little time reading the 7am RNS'es -  a real roll over and go back to sleep day! Perhaps you'd care to comment on the RNS from Sprue Aegis (LON:SPRP) :) Why do they bother RNS'ing rubbish like that? What a total waste of time.

As for Revolution Bars (LON:RBG) I would not rule out Stonegate coming back in 6 months time (or whatever the lockout period is) with a higher offer because now they know their strong arm tactics are not going to work. However, the world may be a very different place by then, so we have to assume that no new offers will materialise and the company carries on as normal, albeit hopefully with more competent management in place.

All the best, Si

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TheArb 18th Oct '17 34 of 45

In reply to post #230218

The real travesty with Revolution Bars (LON:RBG) is that only 60% of the share capital was voted in both meetings, although this is not unusual in schemes of arrangement, it demonstrates their weakness. It's different with a general takeover where even small shareholders have an opportunity to tender their shares under an established timetable. The deal could easily have got over the line if the participation rate had been higher. How many holders on here voted, let alone were asked if they wished to vote by their broker/custodian?

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daveinthelakes 18th Oct '17 35 of 45

In reply to post #230148


Edison's research is free and if you register with them at they will send you a daily email detailing their latest research.

Yesterday Edison produced an excellent report on the gaming (gambling) sector including coverage of the political issues and stock specific info on around a dozen companies.

Hardman and co is also free but this appears to be mainly paid for by clients, still interesting to have a look at.


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CliveBorg 18th Oct '17 36 of 45

In reply to post #230223

Re: RBG vote: No, I wasn't asked if I wanted to vote, but with help from contributors to this board, I managed to vote against the proposal. Two reasons for voting against: 1. bought at higher than 2.03, 2. believe this share could climb to 2.5-3.0.

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Richard Vasey 18th Oct '17 37 of 45

In reply to post #230238

Although your comments are addressed to Andrea, I found them useful. Thanks.

Still the only updated brokers/press coverage I have found for the RWS Holdings (LON:RWS) acquisition is from IC - "we are reviewing our BUY recommendation."


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HornBlower 18th Oct '17 38 of 45


FOXT. The DT liability relates to the brand value. on balance sheet at £99m. liability only if brand sold so not really an issue. Disclosure been short for ages. At 78p you are paying a lot for a distant recovery. Not going bust but better ways to play London property market - Telford Homes (long)


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danlee007 18th Oct '17 39 of 45

In reply to post #230223

I was asked if I wanted to vote and it was made very simple by doing it online. FYI I invest with HL, they've been good when it comes to voluntary corporate actions. I also voted no, as I'm happy to hold for another 12 months + and recent events have made this a very interesting share with good potential upside, even from here

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clarea 18th Oct '17 40 of 45

Any chance of a bit on Softcat Paul above your normal max size but its popular with punters and has come up trumps again today.

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sharw 18th Oct '17 41 of 45

With regard to Foxtons (LON:FOXT) (or Purplebricks (LON:PURP) come to that) the thing is that there are no barriers to entry. Take a look at this:

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tony mchale 18th Oct '17 42 of 45

With reference to RBG I voted against the deal with Stonegate. I use HL and as always they were on the ball and excellent. Best large Company I have ever dealt with.
Cannot for the life of me understand why RBG Board thought the Shareholders would vote for a Takeover at 203p when they floated the Company at 200p.Gentlemen get real!!
A malfunction by the little grey cells?

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andrea34l 19th Oct '17 43 of 45

In reply to post #230238

Thanks Dave

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MattM 19th Oct '17 44 of 45

In reply to post #230223

I'm with BestInvest, no contact from them. Missed the vote, but would've voted against, bought just above 203p

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TheArb 22nd Oct '17 45 of 45

In reply to post #230428

I need to change my broker, thanks for the info.

I don't see a direct connection between the listing price and the price of a takeover offer at some later date. Circumstances change and we have to make a decision to accept or not in the context of the present not the past. Valuations change, perceptions change.That was then, this is now.

In the same way I have seen many investors lose money holding on forlornly just to get back to the price they happened to have paid so they don't incur a loss. It's a mental thing, you have to be dispassionate. It's a fact of investing that there will be losses and disappointments.

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 Are LON:DOTD's fundamentals sound as an investment? Find out More »

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 on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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