Small Cap Value Report (Weds 28 July 2021) - OTMP, STAF, MARS, TRCS, APTD

28th Jul '21 by Paul Scott

53 comments 9518 reads

Good morning, it's Paul and Jack here, with the SCVR for Wednesday.

Timing - TBC

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to cover trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research) - don't blame us if you buy something that doesn't work out. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

Agenda -

Paul's Section:

Onthemarket (LON:OTMP) (I hold) from yesterday - my comments on the AGM trading update. Nothing earth-shattering, but this residential property portal seems to have carved out a niche, despite dominant competition from Rightmove and Zoopla.

Marston's (LON:MARS) - trading update, showing a recovery in trading as restrictions ease, but still down on pre-pandemic levels. I can't get excited about this.

Tracsis (LON:TRCS) - a big contract win, which feeds through into a significant increase in broker forecasts.

Jack's Section:

Staffline (LON:STAF) - significant recent dilution here limits the upside but goes some way to fixing the balance sheet. It's a favourable environment in which to execute a turnaround right now for recruiters so things look much more positive these days.

Aptitude Software (LON:APTD) - solid growth and scope for future margin expansion. Its addressable market is expanding. There are plenty of positives here and Aptitude looks like a quality SaaS company, but valuation is a concern.

Onthemarket (LON:OTMP)

(I hold)

95p (up 5% yesterday) - mkt cap £71m

Preamble - For background, there’s a useful recording of an InvestorMeetCompany results webinar here, published on 17 June 2021. The newish CEO looks very young, which I put down to clean living (probably) and favourable…

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gwilli68

28th Jul '21

Hi Joeydisco - Paul discussed these yesterday. If you look up their stockreport, then click on the "discussions" tab, you can find when they were last discussed. Hope that helps.

OldSchool05

Oakley Capital Investments (LON:OCI) is a big holding for me, on the basis of a rationale outlined below in an Investment Trust thread:

https://www.stockopedia.com/co...

I think today's update is good.

By my reckoning they are currently on a 25% discount to NAV (excluding cash). Cash is 90 pence per share at present. So it's a big discount to NAV.

nanotrader

anyone suffering from FOMO from Reach (LON:RCH) ??

retireby56

Was feeling that too last month so I bought in. Valuation still low IMO

Snog Jones

£BIG Big Technologies IPO today. They make tags for prisoner tracking and also use their technology to help older people stay in their homes longer by alerting relatives for help if they fall etc.

I mention it as IPO started at £2 (577m MKT cap) so would have qualified for SCVR but is now up 50% already today (£800m or so)

Management looks v experienced and proven track record. CEO Sara Murray founded and sold confused.com and I note the old CFO of Volex (many holders here have mentioned him as v competent) Daren Morris has also turned up here (he’s not retiring after all?!).

Paul is not usually too keen on tech stocks due to valuation but this seems to be a tech company that actually is profitable so looks worth a look. Probably worth looking at competition and how sticky it’s customers are. Market like it so far.

davidjhill

I think this is just re-rating as investors start to understand both what's going on in current trading and the future potential. Much as discussed on results day here. Helps that they are now publishing their results call on PI World as more people get to see it. Historically they only did it live so if you missed it you missed it. Current approach is much better.

Michael Tee

@rmillaree Epwin (LON:EPWN)

Thanks for your effort and replies.

Hoping they will continue to get busier and can take advantage and increase prices, reduce debt....

cig

The GBX price on the London listing seems to basically reflect that $16-$17 pricing, so short term boils down to whether you think the US listing will pop, which looks a bit far fetched given these difficulties, unless retail traders go bananas ;-). Reinforces the long term case though to me (undervalued unfashionable sector). I hold.

Bouden54

It depends how you define value. For me value is not just low PE or P/B stocks, but anything less than its intrinsic value based on future cashflow - that could include both low and high PE stocks. So a growth stock can also represent good value.

ridavies

Thanks for that on Angle (LON:AGL) JimMcLad. Angle (LON:AGL) needs to keep making progress in alternative directions like this until the anticipated/hoped for (delete as inapplicable in your mind!) FDA approval later this year for breast cancer (the statement by the company some time back was 'second half of calendar 2021').

That should be the first of many applications to the FDA in the coming periods since the Parsortix system has multiple research centres of the highest renown reporting its value for numerous cancer
conditions.

Not everyone has the confidence you and I have since the price till today had fallen from 135p at the last fundraising to around 106p or thereabouts, a big fall given that little or nothing had changed.

That's the market I guess, though if you have a large holding, it can have a big effect on your portfolio's overall paper profitability! Angle (LON:AGL) keep the supportive announcements coming until the FDA big day.

International cruises allowed in England again - should be good news for Saga (LON:SAGA) (I hold). Here's a link (behind paywall) https://www.thetimes.co.uk/art...

JohnEustace

Could be worth taking a look at National World (LON:NWOR) for a company that listed in May that looks to be following a similar strategy with the old Johnstone Press titles such as The Scotsman, Yorkshire Post, Sheffield Star and others.

It's run by David Montgomery who sold his Local World business to Reach in 2015.

Johnnycomelately

Hi Paul

Have you managed to take a look at Revolution Beauty?

Is it a coffee can share?

Many thanks

Donna1

Well I missed the Creightons (LON:CRL) webinar today so hope pi world can post it up. Vote up if you would like to access the webinar. Tks

Reacher

Thanks for flagging. There have been a number of IPOs in recent months - it's hard to keep track of.

I note existing shareholders are selling 92m shares at £2 a pop. Not bad going! £BIG is only raising £14.7m (net of fees) from the IPO, although it has not been floated with a ton of debt. The cash will be used to bolster the Balance Sheet and also to make selective acquisitions which seems reasonable.

One area to watch is the incentive schemes that are in operation and will be created as a result of the float. IPO document talks about this in Part V section 4. There will be a new LTIP scheme. In addition, senior management were awarded "A Shares" on 21 July 2021 in Buddi Ltd (wholly owned subsidiary) which will convert in a maximum of 32.9m BIG shares if the share price is more than £4.45.

Interesting to note Liontrust Investment Partners LLP are a cornerstone investor and subscribed for £60m in shares at the Placing Price of 200p which provide some assurance.

rmillaree

Blast from the past in that Touchstone Group accounts are now - previously Touchstone Group PLC.

This company delisted back in 2009 - offering sharholders an exit route via tender at 23p - shareprice was in the high 20 somethings at time of delisting i think judging by other place graph.

This company has been something of a success since delisting - they now have over £18 mill cash in the bank - sharecount is right down after various tender offers over the the years - the last one was for an exit price of 130p
and year end acounts just uploaded to their investor area confirmed that dividend payouts for the year will total 26p.
So for anyone holding shares in a profitable company that does delist there is hope that hanging on in their is not always the worst thing to do. Now if the company could just buy back another 7.94 mill shares at 1.50 per share from current cash resources - that would leave me owning half of the company - i can but dream.

MichaelFBS

As Charlie Munger said “All intelligent investing is value investing.”

Like to think we are all intelligent investors here :-).

yes I like National World (LON:NWOR) too. Bought some at 30p but kicking myself slightly as I was going to get in at 22p a couple of months back but let the trade slide. David Montgomery is very experienced and knows how to run a newspaper house. Also seem to be a lot of sensible small cap investors starting to follow this story.

Boon

Mood must be bullish at Saga (LON:SAGA)

Their International cruises starting end Aug are likely to sell out, already almost 80-90% occupancy?

And then they've just loaded a huge bunch of UK only cruises for early-mid Aug. They must think there is so much pent up demand that they can sell so much capacity in less than a month. For UK only cruising!

Paul Scott

29th Jul '21

sharw, yes I saw that, and did adjust the "explanatory notes" section today accordingly.

Small Cap Value Report (Weds 28 July 2021) - OTMP, STAF, MARS, TRCS, APTD

Onthemarket (LON:OTMP)

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Paul Scott

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