Small Cap Value Report (Wed 27 June 2018) - FJET, CRAW, XAR, TAM, LIO, ULS, OPM

Wednesday, Jun 27 2018 by

Greetings - we have a bunch of exciting updates today, making the World Cup Group F games at 3pm pale into insignificance!

Stocks of interest today are:

Stories are presented below in order of the headline to this article!

Fastjet (LON:FJET)

  • Share price: 4.95p (-68%)
  • No. of shares: 522.4 million
  • Market cap: £26 million

Funding Update

Mentioning this first as it is the simplest story today. A bad business in a bad sector, listed in London but based in Africa, is running out of money again.

This had many hallmarks of a stock to avoid. The most obvious and important one being that it repeatedly ran out of money.

And it was remarkable that a few City fund managers kept putting fresh funds into it. I only wish I could have been a fly on the wall to hear their conversations and rationale in advance of each placing.

Perhaps they are about to throw in the towel at last:

The Company is currently in active discussions with its major shareholders regarding a potential equity fundraising, in the absence of which the Group is at risk of not being able to continue trading as a going concern.

Fastjet would never have existed if stock market investors had not been found to throw money at it. I continue to believe that it is worth close to zero.

The algorithms appropriately identify it as a Sucker Stock.

Crawshaw (LON:CRAW)

  • Share price: 5.25p (-25%)
  • No. of shares: 113 million
  • Market cap: £6 million

Trading and Strategic Update

Today's trading update from this chain of butchers strikes familiar themes: high street shops doing poorly, factory shops doing well. The macro environment is blamed (lower footfall on the High Street)…

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All my own views. I am not regulated by the FSA. No advice.

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fastjet Plc is the holding company of airlines, such as fastjet Airlines Limited (fastjet Tanzania) and fastjet Zimbabwe. The Company is engaged in providing airline services. Its segments include Tanzania, Zimbabwe, Central and Angola. It operates approximately 10 routes to over 10 destinations in approximately six countries in Africa. Within Tanzania, the Company operates routes connecting Dar es Salaam to Mwanza, Kilimanjaro, Mbeya and Zanzibar, while in Zimbabwe it operates between Harare and Victoria Falls. It operates international routes from Tanzania to Kenya (Nairobi), South African (Johannesburg), Zimbabwe (Harare), Uganda (Entebbe) and Zambia (Lusaka). Its tickets are sold through travel agents, trade, Website bookings (desktop and mobile) and general sales agents, and in Tanzania, the Company runs its own sales offices. Its subsidiaries include Fastjet Aviation Limited, Fastjet Leasing PCC Limited, Fastjet Air TZ (BVI) Limited and Fastjet Leasing UK Limited, among others. more »

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Crawshaw Group Plc is a United Kingdom-based company, which operates a chain of meat-focused retail food stores. The Company has approximately 40 stores, which are located across Yorkshire, Lincolnshire Nottinghamshire, Derbyshire and the North West. The Company's product range is categorized into approximately two distinct areas, such as Traditional raw meat, and Hot and cold cooked food. Under the Traditional raw meat category, it offers various products sold either loose in a serve over counter for the traditional experience or as multi buy packs on supermarket style multi deck counters, which have all been cut and packaged in store. Under the Hot and cold cooked food category, it offers freshly prepared roast chickens, gammon and pork joints, hot roast sandwiches, shop cooked curries and casseroles, chicken and chips, as well as other traditional deli products. Its stores include Arndale Centre in Arndale; The Arcades in Ashton Under Lyne, and Fresh Meat Factory Shop in Astley. more »

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Xaar plc is engaged in the development of digital inkjet technology and manufacture of piezoelectric drop-on-demand industrial inkjet printheads. The Company's segments are product sales, commissions and fees, and royalties. It offers a range of industrial inkjet printheads and printhead systems, which are designed and produced to meet the customer-driven requirements of a range of manufacturing applications. Its primary markets include wide-format graphics, ceramic tiles, labels, packaging, coding and marking, three-dimensional (3D) printing, advanced manufacturing and decorative laminates. The Company sells its technology in component form (the printhead) to original equipment manufacturers (OEMs) producing and selling the complete digital printing solution to the end market. It partners and co-develops with fluid suppliers, hardware and software integrators, and substrate suppliers to deliver a total solution to the end user. more »

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

34 Comments on this Article show/hide all

bobo 27th Jun '18 20 of 34

Xaar has always had a fundemental flaw, it is an innovator but sells into the Chinese market where its competitors steal all its ideas. It has some very good people but battling that sort of problem is beyond it.

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Nick Ray 27th Jun '18 21 of 34

In reply to post #378239

Regarding Xaar (LON:XAR) 's Momentum rank, it gets boosted by the values for % 1m EPS Upgrade FY2 % 3m EPS Upgrade FY1 and EPS Surprise %, Last Interim.

Arguably this is a mixing up of two different factors into a single number. But for what it is worth this is the explanation for how it gets a Momentum Rank of 51 even though the "Price Momentum" figures are all low.

Xaar MomentumRank™ Components

Price Momentum Factors
% vs. 52w High-46.1
% 50dMA / 200dMA89.2
RS 6m-24.9
RS 1y-25.3
Earnings Estimate Upgrade Factors
% 1m EPS Upgrade FY24.19
% 3m EPS Upgrade FY12.25
Scaled Earnings Surprise20.8
EPS Surprise %, Last Interim114.7
Change in Cons. Rec. 1m-

MomentumRank™ Composite: 51/100

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xcity 27th Jun '18 22 of 34

Yes, ST is the IC's famous Associate Editor.
I think that his problem is only partly the amount of space he has to fill (which inevitably means weak due diligence) but also that one of his strategies is to purvey from tips from people who have nudged him. If it looks OK on the surface he passes it on. Some of them are good and others aren't. I think he was one of those taken in by Globo. From PI point of view, I think it's just a question of doing deep due diligence yourself, (knowing that he hasn't) realising that the original story may have come from a convincing someone with an agenda and accepting that a recommendation from ST will inevitably have puffed the market price short term. btw, afaics he didn't recommend Crawshaw (LON:CRAW), though the IC's John Rosier seems to have done.

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kevfle 27th Jun '18 23 of 34

In reply to post #378284

ST has given some good advice in the past but the problem now in my view is that he is trying to tip too many shares. Inevitably some of these will be successful and others will not. He tends to write follow up articles on the successful ones - less so though on the duds.

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Piledriver42 27th Jun '18 4 of 34

In reply to post #378234

That'll probably be Simon Thompson of the Investors Chronicle

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Bonitabeach 27th Jun '18 2 of 34

In reply to post #378289

ST has given some good advice in the past but the problem now in my view is that he is trying to tip too many shares. Inevitably some of these will be successful and others will not.

Even God allowed his prophets to be wrong sometimes - if only to keep them humble!

Simon Thompson is a journalist not a soothsayer. The Investors Chronicle has been around for decades - if it could make everybody rich it would have suceeded by now.

I regret to say we are the ones responsible for our own (mis)fortunes.


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ken mitchell 27th Jun '18 24 of 34

A bit surprised at (the sometimes vague) negative comment about Simon Thompson, who used to be Companies Editor at Investors Chronicle and is now Associate Editor, with an excellent regular column along with frequent online updates. As with Paul and Graham here, the quality and depth of his comment is mind boggling and how they do it day after day beats me!

Of course Simon Thompson tips the odd dud, and makes other mistake including real howlers like tipping Chinese frauds Naibu (or whatever it was called) and Camkids. If he had read quality bb comment on sites like Motley Fool he would have realised the risk that they were complete frauds. Also suspect he doesn't subscribe to this site and he would be better still if he did. He is very balance sheet focused.

One big success is his annual bargain shares portfolio. I couldn't access his successful 2017 portfolio before writing this, but his 2016 portfolio of 10 bargain shares is currently up 47% overall and there is only one losing share (Walker Cripps down 16%) in it. The best in that 2016 list are Bioquell +144%. Volvere + 117% and Bowleven + 86%.

His latest 2018 portfolio is also doing very well with all 10 shares in profit. Average gain so far this year is 27%.
Here are the 10 shares:-

Parkmead +65%
PCF + 45%
Shore Capital +34%
MPAC + 32%
U and I + 24%
Titon + 24%
Sylvana Platinum + 17%
Conygar + 7%
Record +5.8%
Crystal Amber + 5/8%

My own investment record has improved substantially since subscribing to Stockopedia nearly 3 years ago, and even more so thanks to Paul Scott and more recently Graham too. They are so good at highlighting shares well worth checking as well as ones not worth a second look! Add their skills to the wealth of information on this site and it's a compelling package. BUT I also look for quality information elsewhere and Simon Thompson is certainly very high quality.

That does not apply to all tipping shares on Investors Chronicle. A lot of their tips are semi anonymous with just initial of first and surname hidden away, and a quick check sometimes shows the writer only just out of University or first job. Hence the very embarrassing Conviviality "tip of the week" just a day or so before it went bust. Many contributors to the comments threads here are likely to be much better informed than some of their writers. And presumably the same applies to newspaper tipsters who are journalists first. Sometimes their investment ignorance is very clear to see. . But lump Simon Thompson in that dud category? Never!

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xcity 27th Jun '18 25 of 34

I wouldn't want my mention of ST in my Crawshaw comment to be seen as a negative comment on him (and I wasn't following his tips with my duds). It is more a comment on the climate of positivity around some of those companies. ST has a lot of PI followers, so he is a prime target for someone with a story (justified or not) and shares he recommends will be more often bought by PIs than would have been the case without his support.

With Paul, we know what has happened - he comments on results that came out earlier in the day, and if he speaks to anyone (usually not) he mentions it; and his views can be positive, neutral or negative. And he still bought Conviviality and was taken in by the previous RBG management (but still likes the business). I doubt that anything appears in ST's column without phone calls having been made (part of his diligence) and there is a pressure to recommend buys (all his readers are interested in buys, only holders are interested in sells). And we don't know the journey his ideas have followed before they appear - could be 'information' from a contact, a recommendation by someone he knows, or something he found sniffing around the markets for his Bargain Share portfolio - and we don't know who he has spoken to. The important thing for PIs to understand is what he will have done (some diligence by phone, some surface analysis of the figures) and what he may (or may not) have done - deeper digging for things that might be wrong with the story or the figures.

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xcity 27th Jun '18 26 of 34

PS There is always a problem with looking at % changes on ST recommendations. The price a PI will be able to buy at is usually quite a bit higher than the price that appears in print. He even advises waiting with his Bargain Shares because prices often fall back a bit after the initial rise.

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gsbmba99 27th Jun '18 27 of 34

A couple of observations on Liontrust Asset Management (LON:LIO) which I hold. They have done a good job of systematically diversifying away from a previous over reliance on Anthony Cross and team (though he still manages a very large proportion). While they are still overwhelmingly retail focused, they have and continue to make hires to beef up institutional. If they can attract institutional funds to their Sustainable Future funds then there could be a significant rise in AuM.

Last year the growth "story" was centred around the Sustainable Future funds which brought an additional pillar to the platform. This year it's the launch of Fixed Income with the hire (announced last August) of Roberts and Milburn from Kames. They launched 3 funds in early April (NB after the end of the financial year) that have gathered £214m. For context, Graham points out that total net inflows for 17/18 were a bit over £1bn and, of this, about £500m was Sustainable Future off a base of £2.5bn. So, if, after a few weeks, the three new fixed income funds alone have attracted 20% of last year's full year total maybe there's quite nice potential. When Liontrust announced they were joining, I checked Trustnet for which funds they managed at Kames. Alas, they had already been removed but, helpfully, Trustnet tells you how long a manager has been in place. The funds that changed a manager the day before Liontrust announced the hiring of Roberts and Milburn were Kames Strategic Global Bond ($638 AuM at the time according to Trustnet), Kames Strategic Bond (£320m), Kames High Yield Bond (£908m) and Kames Sterling Corporate Bond (£604m).

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purpleski 27th Jun '18 28 of 34

In reply to post #378244


i thought ST was Sunday Times but now realise that it is Simon Thompson.

As to the \\378204. This will be the record value of this post in the Stockopedia relation database. So in table “SCVR Comments” or “All comments” depending on how they have set it up, the first field will be the index value of the entry and will be unique in that table and enables other tables/records to be linked to it. I think normally the value \\378204 is translated to another value being the post number for posts that day (so that it is easy to find/makes sense) but something must have gone wrong with the coding. I am sure Stockopedia will correct it soon.

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Camtab 27th Jun '18 29 of 34

Just in case anyone missed it I wanted to point out the fall in Ramsdens today following bulky sales by Management. I like the company but not sure what to think.

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hawkipa 27th Jun '18 30 of 34

In reply to post #378319

I know David Roberts and Phil Milburn, as they used to be clients of mine. They are both good solid corporate bond guys who come with a good pedigree and are both long enough in the tooth and smart enough to know how to both perform and attract AuM. The problem they may face is one of timing. If rates do accelerate higher then selling bond funds, especially ones without a track record regardless of how good they are will be an uphill task.
However, if you look at the biggest retail fund out there run by Richard Woolnough at M&G, if they can attract even a fraction of that kind of inflows they will do extremely well. Twenty Four asset management funds are perhaps a good benchmark for what can be achieved from a standing start. I would suspect their focus will largely be higher yielding sterling credits to attract the yield hungry IFA driven flows. This brings another issue that I have no idea on, in that the need to be market it across the land will be substantial and could impact on their day to day portfolio management. Cheers.

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Edward Croft 27th Jun '18 2 of 34

In reply to post #378199

test-please ignore

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Edward Croft 27th Jun '18 3 of 34

In reply to post #378189

test please ignore

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Edward Croft 27th Jun '18 4 of 34

In reply to post #378189

test - please ignore

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Edward Croft 27th Jun '18 This post has been moderated
gsbmba99 27th Jun '18 32 of 34

In reply to post #378334

Very interesting comments on the new arrivals at Liontrust Asset Management (LON:LIO) thanks.

I think I'd be pretty happy with somewhere north of £500m after a year or so in aggregate across the funds which doesn't seem out of the question given where they are at the moment and Twenty Four Corporate Bond.

Would Kames also be classed as retail or largely retail? The equivalent Kames funds have (in aggregate) lost some AuM since the Liontrust launch. I was hoping there might be a partially loyal institutional customer base that would follow them from Kames and be married with new Liontrust retail customers. But that may be wishful thinking.

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Graham Ford 27th Jun '18 33 of 34

In reply to post #378324

“ I think normally the value \\378204 is translated to another value being the post number for posts that day (so that it is easy to find/makes sense) but something must have gone wrong with the coding. I am sure Stockopedia will correct it soon.”

Yes. This only seemed to go wrong recently. It is very frustrating not to be able to work out who a poster is replying to in a long thread.

Looking forward to it being sorted out soon hopefully.

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timarr 27th Jun '18 34 of 34

In reply to post #378394

Yes. This only seemed to go wrong recently. It is very frustrating not to be able to work out who a poster is replying to in a long thread.

Click on the link in the "in reply to post #" and it shows you the original message. It's a bit annoying, but hardly the end of the world. Stocko obviously have a few issues with a recent upgrade, but such is the nature of Agile development.

Back in my day we'd have specified it to death and got it right first (err, well, fifth) time. On the other hand, we'd have only upgraded once a year, and we'd still have a website that looked like AOL in 1998 ...


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

About Graham Neary

Graham Neary

Full-time investor and independent analyst. Prior to this, I spent seven years in the financial markets as an analyst and institutional fund manager. I'm CFA-qualified, also holding the Investment Management Certificate and the STA Diploma in Technical Analysis.Away from finance, my main interests are recreational poker and everything to do with China, especially Mandarin Chinese. more »


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