Good morning, it's Paul here!

Please see above the companies which have caught my eye this morning.

Market conditions for small caps still feel very depressed. The UK small caps space seemed to have a nice bounce in January, but a lot have slid back again. Bad, even only slightly bad, news continues to be punished severely. I think that's mainly because there's a buyer's strike, until we know what's happening with Brexit. So some prices are falling too far, below what makes sense.

Selectively, I see some obvious & compelling value. Today's buyer's strike could well be tomorrow's buying stampede. It's market conditions like we have currently, which lay the groundwork for some big future profits, in my experience. I could trot out that Buffett quote about fear & greed, but everybody already knows it, I'm sure.

It all depends though, on where we are in the economic cycle? This recovery from 2008 looks very long in the tooth now. Is a global recession coming? The recent major recovery in the US stock market suggests otherwise.

We've had 10 years of ultra low interest rates, which has supported equities. What's to stop us having another 10 years of low rates? Will they ever normalise? It's really difficult to know where things are heading, which in turn makes it difficult to value shares.

EDIT: a friend has emailed me several articles, showing that housing enquiries in London are up, and that there is very positive data on construction of high rise buildings planned, especially in London. This is strengthening my growing conviction that we could, perhaps, be on the cusp of a post-Brexit boom. Even if it's a complete muddle (looking very likely), the removal of uncertainty could unleash a backlog of investment. Hence I'm back in buying mode, in terms of my small caps portfolio.




Headlam (LON:HEAD)

Share price: 420p (up 0.5% today, at 09:43)
No. shares: 84.6m
Market cap: £355.3m

Final results

Headlam Group plc (LSE: HEAD), Europe's leading distributor of floorcoverings, is pleased to announce its final results for the year ended 31 December 2018.

This looks a mature business (i.e. little growth in profit), and is priced accordingly, so it's a value share. It has grown historically by making lots of acquisitions, funded from cashflow - quite a nice business model.

Underlying…

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