Good morning, it's Paul here.

I'm up early today, to finish yesterday's report, so let's start with that.


Firstly, this section was sent in by Graham

Northamber (LON:NAR)

Share price: 46p (-10%)
No. of shares: 27.3 million
Market cap: £12.5 million

Sale of Warehouse Facility for £16.4 million

Graham writes - This is a share that I feel obliged to keep an eye on, as it was once a major holding for me. Aware of the "deep value" in its balance sheet, I attended the AGMs for a few years and, with one or two other shareholders, tried to impress upon the Chairman the logic in releasing that value.

I first invested in it in 2013 when NAV per share was around 81p. NAV had declined every year since 2007, after profitability evaporated. Tech hardware distribution became obsolete, and there was no economic reason to continue these activities. Northamber has been loss-making for almost a decade and has not made a meaningful profit for many years.

Unfortunately, the Chairman (also the majority shareholder) disagreed with our analysis, and ploughed on with the distribution activities.

After three years, I gave up and sold my shares for a tiny profit.

If I had held on to them until today, I would currently be sitting on a >50% gain from my entry price. But I would have had to wait six years for this outcome. The annualised return would have been ok, but nothing to write home about.

This is the problem with deep value investing - you need a catalyst to unlock value, and the catalyst can be totally unpredictable. How could it be predicted that the Chairman would choose to sell the company's warehouse in 2019, rather than 2021 or 2025? There is a massive opportunity cost in leaving your funds locked up for an unknown length of time in a dead business, waiting for payday, rather than simply buying shares in a good business which you can predict will continuously generate profits and shareholder value.

Indeed, even the sale of this warehouse doesn't guarantee that shareholders are destined for a big payday. NAR shares initially jumped much higher from their prior level of 29p, but that excitement has subsided today.

The reason is that the Chairman appears as determined than ever to carry on with distribution activities. Instead of…

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