Small Cap Value Report (Wed 24 Feb 2021) - VLX, BOTB, TOWN, ANG

24th Feb '21 by Paul Scott

133 comments 13010 reads

Good morning, it’s Paul & Jack with the SCVR for Wednesday.

Agenda -

Volex (LON:VLX) - possible buying opportunity on spike down?

Best Of The Best (LON:BOTB) - another strong trading update. Takeover bids have been ended. Finncap upgrades profit forecast by 79%!

Angling Direct (LON:ANG) - year end trading update, and a mild profit warning for H1 for known reasons. Potentially interesting growth company.

Town Centre Securities (LON:TOWN) - resilient property portfolio trading at a discount to net tangible assets (this section from Jack)

Small Caps - price volatility

We’ve been having some interesting discussions here this week about the impact of IG’s decision to abruptly withdraw from offering about 900 leveraged products, mostly small caps. The reason is that they’re not making enough money offering these products, so are ditching them in order to focus on higher margin things. The problem apparently is that people like me sit on spread bets for small caps for long periods, often years, which ties up IG’s capital, for a paltry return (just a small profit margin on the funding charges).

Fair enough I suppose, it’s up to IG to decide which products they offer.

What I think is terrible, is how they’ve handled it, giving people only a week to stump up 100% margin by this Friday, on affected shares, then closing those positions anyway on Monday. Or you can buy out the share and put them in an IG owned shares account.

It’s terrible customer service, and they seem to think they’re too big and important to bother about what customers want or need.

It seems to be business as usual at Spreadex, who specialise in small caps, and hence I think a lot of people will be moving their business to Spreadex. I've done business with Spreadex for many years, and they've always been very fair, and supportive to me.

NB. I should emphasise that using leverage is extremely dangerous, and only suitable for experienced investors who know what they’re doing, and understand how to keep the gearing under control. Inexperienced punters should avoid spread betting at all costs in my view - it’s pretty much inevitable you’ll lose most, or all of your money. Probably quite quickly. I'm speaking from experience here!

Having a more general chat with my broker yesterday, he told me that market…

Unlock with Email

Unlock with Google

Already have an account?
Login here

Dojosan

24th Feb '21

Hence, my confusion, when after Tuesday was a bloodbath - i take a look at IG's SP and it had gone up 2%. U wot!!!!!!!

davidjhill

Paul

I have a professional account with IG and the email to me says " Please close leveraged positions on affected share markets by 29 March" so might be worth re-checking.

Irritatingly I had to close one of my larger holdings Tremor International (LON:TRMR) and re-open in a share account, which meant that even though I tried to manage it on exchange still got hit with a 7p spread. Basically IG cost me 1.5% of my holding on a whim. I am mightily pi**ed especially as I now have to do this with a couple of other positions too. I can't even get through to customer service to find out whether they could move positions for me into a share account at a reduced spread! It's not as if I have a small account either so not sure why management seem to think alienating long standing profitable customers is a worthy cause!

I shall look at Spreadex on your recommendation now as well I think

cheers

David

samanddee

Volex (I hold) & hopeful on prospects

What are folks views regarding how Governments will actually roll out the EV market. I’m living inner city if we all owned EV’s as we are told we will soon have too how does that translate to the infrastructure on our doorstep. I can hardly imagine space for enough charge stations they’re quite bulky plus space is a premium where you park one day you won’t be able to the next day etc. Once your in that charge spot then you block someone else from using even if the charge is finished.

Then there are what tech future has re solid state battery technology that not only powers longer but also charges fast so less requirement to recharge. That conjures up the picture of supercharge stations the main thing being that you charge when you’d normally be parked up. The weekly trip to the supermarket that sort of thing, large service station on the motorway when you’re ready for break etc.

The other consideration with driverless cars will we have more hourly hire type activity. Car drives to your door, picks you up you do your task and drives away and back eventually to base station. That’s less direct car ownership I for 1 have a second car hardly ever used that would work for me for 1 vehicle replacement but I’d not go to Hertz for the sort of task as that’s far too inconvenient.

Then there’s the folk on longer daily commutes, perhaps less of that post Covid and tech permits more work from home so some random charge points. Folk with their own garage / car space and are lucky enough to be able to have there own charge station - speed of charge less of an issue price of charger more likely to be a big consideration.

Putting all of these together they’ll all need products the likes of which Volex can supply but will it be Volex. A concern I guess would be that the market has such big potential will battery tech IP tighten up how and who can provide the charge? Volex becomes a 3rd party and inferior charge as battery companies determine how best to supply the power to their own product?

The key I guess is how in all of this mix does Volex add value to each aspect / end market. This has a lot of scale in my view but the journey could be bumpy. Possibly as governments set such a fast roll out of EV that’s in Volex’s favour being in the market early days?

Albertos

Volex (LON:VLX)

Yup. Going from memory when I looked at the RNS, NR still had the same amount of shares but his % had been diluted.

(Which means he can buy more without hitting the dreaded 30% - LoL)

timarr

Ig Group (LON:IGG) is re taking action to reduce risk and reduce lower margin business, so it ought to be positive to the bottom line. Hence the share price rationally ought to go up.

Over-reacting to personal experience rather than looking at the bigger picture is a fairly common behavioural bias. Once we get out of the small cap arena what individual investors think mostly doesn't matter.

Antehelion

wish there was a 'love this' button, as well as just a thumbs up.

we all have to start somewhere and today's newbies are tomorrow's pros to be...

Boon

I am definitely feeling this wide spread at the moment. Trying to sell out of some Cloudcall (LON:CALL)

Officially, a decent 100bps spread, 89p to 90p. But even trying to sell at EMS size (1,500 shares, less than £1350) I get quoted at 87p! Well out of the official bid-ask spread.

Put a day limit order on IG for a good few hours, no takers at the 89p supposed "bid". I did see some other trades go through, at 89p and higher, so presume I probably need to pick up the phone and ask IG to push it through...?

Nope. These are tiny retail traders, with £500 in the bank and thinking they can be the next big day trader after watching some Youtube videos and following /wallstreetbets

Reminds me of a post I saw on Reddit. New trader, with £300, on one of those "free" apps - Trading212? Made 32 trades in a day and was so happy he made 12%! Then he looked at his statement carefully, and he had paid out 16%.... in stamp duty..... he didn't realise there was stamp duty on each trade....

simmsc

You're thoughts on volex are the same as mine (also got a decent holding). Drop was due to general tech sell off and Tesla sell off (which doesn't affect volex, as volex is not only exposed to Tesla). I didn't add more on the drop off as I've been buying elsewhere, bit still remain long and strong in volex.

simoan

I'd be very careful putting sell limit orders on small caps using an IG share dealing or ISA account. They use partial fills and so you could get a really bad execution if the limit is hit but there is not enough volume to fill the whole order.

As an example, I tried to sell a rump holding of about 1,000 shares in Zytronic (LON:ZYT) a couple of months ago @150p in my IG sharedealing account using a day limit order as I was going out for the day. When I got home and checked the account they had sold only 5 shares before the price moved down until the order expired. They had the barefaced cheek to charge me £8 commission for the privilege and didn't see anything wrong when I phoned to complain. It's not just their spread betting customers they couldn't give a toss about...

All the best, Si

MGerard

yes how could it be anything other than Tesla related?

TStubbs

25th Feb '21

UK_Investor_8888 I think that you might be surprised how many ‘nobody cranks’ serve the charity sector in some form or other here, and give their time and experience to help others and the wider world. There is more pleasure to be had than just gaming the system for your own gain, which is fine, but restricting of your pleasure outputs. Supporting others, or campaigning for improvements and getting involved in a bigger picture is a legacy. Share the love, that’s where real satisfaction is.

GloucesterBob

I hold Volex (LON:VLX) and my answer to your question is probably not very Volex (LON:VLX) friendly.

I would suspect battery technology will get better and smaller, think mobile phones 1980s. If that is the case, for those who cannot charge from home, you will drive to a battery station and just swap out your battery and be on your way within minutes. Makes the journey from London to Edinburgh less stressful, not having to worry about running out.

Now if only we knew if I was correct and who is going to make these battery stations, we could be onto a winner.

UK_Investor_8888

Re Charity.

You don't know me.

Anecdote

I know a beautiful cathedral-ed historic town. The do-gooders on a Sunday night turn up with some kind of feeding trailer (trough).

Result: historic market town has drug addicts, severe alcoholics, criminals, vagrants, beggars, prostitutes, and the streets and medieval alleyways are taken over by criminals on a Sunday night.

Charity does not sadly mean honourable people like The Rotary Club, British Legion, etc, but unfortunately harbours some very undesirable agendas.

greensiax

Here are my SCVR heat maps for today (prices as at ~9:00am).

Again, there is a lot of going on today so my apologies to those of you who don't like large heatmaps.

Small Caps with RNS news today ("N!!" in bottom row of the heatmap tile means report / update today):

Big movers today in the SCVR world (moving more than a 20d EMA of the ATR against either yesterdays close, or today's open):

Warm regards, and best of luck!

PS: See my main heat map thread for more (non-SCVR specific) heat maps, and keys to the heat maps contents

Yeah Quantumscape exploded late last year with this solid state tech. It charges fast enough that I think you'd keep the same battery rather than switch out and who's going to want to switch it just doesn't add up all the extra manual handling. My take I guess is once that technology is developed is there also technology in how the power must be supplied to the battery to get the optimum out of the charge or possibly I'm over thinking it?

Patrickmylnetrade

Not sure if this idea is a goer... The battery is the most important and expensive part of an EV. Why would you want to swap yours for someone else's which is an unknown quantity. Also I believe everyone will charge from home or at a parking site, so the need for "petrol" stations will diminish considerably, as you will get your 'petrol' at home.

I agree there will be a lot of innovation in the EV market over the next decade thou

Rusty2

How will the Govt. tax EVs? Because they are going to lose a huge amount of tax as people switch from petrol/diesel cars.

Wilbraham

Re Volex future, NIO already offer Battery-as-a-Service https://www.caranddriver.com/n...

In many ways, China is leapfrogging the West. Xpeng don't offer BaaS but claim to have > 400 mile range. I think with hindsight the established autos missed a trick in not collaborating on a standard range of replaceable batteries a decade ago. Eg that would be wheeled out on a smart trolley jack and lifted into the car - but I'm not an engineer. Suspect it's unlikely to happen at this late stage but would have been an opportunity for VAG for example to go-it-alone over their entire range of brands. I think the answer is that different types of EV will evolve as optimum solutions for different territories.

As for Tesla's long-game, I thought TaaS was their objective for cities once autonomous is here. Just summon the closest driverless vehicle when you want a trip. Arguably huge environmental benefits once the vast capital/infrastructure of a vehicle is spread over dozens of users as so many cars spend 90+% of their time depreciating on driveways.

As with so many things, if we were developing transportation systems from scratch we wouldn't start from here!

TangoDoc

I'm not sure I find it easy to distinguish between serious, even professional gamblers and frivolous, amateur "Johnny-come-lately" gamblers, particularly if the newbies have taken the pot by simply playing within the rules. I suppose it must be like losing at poker to someone who doesn't even know they are supposed to be the fish. I'll get me hat.

Small Cap Value Report (Wed 24 Feb 2021) - VLX, BOTB, TOWN, ANG

Small Caps - price volatility

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

133 comments

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

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