Tue 15 May 2018 - CNKS, SPRP, G4M, ZYT, CAKE, ACRL, LOOK

Monday, May 14 2018 by

Good afternoon/evening/morning, it's Paul here.

What a beautiful surge in temperature this week, which I have enjoyed very much, and hope you have too!

Hopefully I shall be able to report back to you shortly on a private matter, which has caused me immense anxiety. It concerns a guarantee I gave (foolishly) to a friend's pubs. I never imagined that the PG would actually kick in. It has.  Hopefully it should get sorted out at some point.

Here in Bournemouth there was a terrible accident, some time ago, when a Red Arrows pilot tragically lost his life, in a display crash. Local children were invited to design a memorial. A local artist then took it further.

I spent 10 minutes today, just taking some time to ponder what a beautiful memorial it was to the Red Arrows pilot, called Jon Egging. Here it is - isn't this magnificient?

You can't see it in this picture, but there are coloured glass bubbles in the exhaust trails of each plane.


It's incredibly moving, when you see the memorial, with the light shining brightly through the coloured glass bubbles in the exhaust trails, on a vividly sunny day such as today.

There was another plaque nearby, which commemorated a Spitfire pilot, who also lost his life, when his plane crashed in the vicinity during the Battle of Britain.

Anyway, I think we have a busy day on the horizon - it's results from Gear4Music (in which I have a long position) - a costly growth stock, which institutions seem to want to buy.

Also, I think results from Zytronic (LON:ZYT) are out in the morning.

I'll be taking my time to amble through things. Graham has got a heavy cold, so you'll have to put up with me for the rest of the week! I'll do my best, we'll see what happens lol.

Book recommendation

I start lots of books, but rarely finish them. This is why I rarely trouble you with book recommendations.

Occasionally, maybe once per year, I'm gripped - and enjoy a book so much, that I don't want to put it down.

For me, such a book, the book of 2018, has been "Return To Go", written by Jim Slater, in 1977 - this…

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Gear4music (Holdings) plc is engaged in the online retailing of musical instruments and equipment. The Company sells its own-brand musical instruments and music equipment alongside with other brands. The Company offers over 1,500 products, which are sold under approximately eight brands, including Gear4music; Archer, which offers string instruments, such as violins, cellos, violas and double bass; Redsub, which offers bass guitar amplifiers and pedals; SubZero, which offers guitars, amplifiers, mixers, speakers and audio electronics; Minster, which offers digital pianos; Rosedale, which offers woodwind instruments, such as clarinets, flutes, oboes and piccolos, and Brass Instruments, which offers trumpets, trombones, tubas and French horns. The Company has developed its own e-commerce platform, with multilingual, multicurrency and responsive design Websites covering approximately 19 countries. more »

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Zytronic plc is involved in developing and manufacturing of touch sensor products. The Company is also engaged in the development and manufacture of customized optical filters. Its geographical segments include Americas (excluding USA), USA, EMEA (excluding UK and Hungary), Hungary, UK, APAC (excluding South Korea) and South Korea. Its products incorporate an embedded array of metallic micro-sensing electrodes. Its technologies include projected capacitive technology (PCT) and multi-touch mutual projected capacitive technology (MPCT). PCT touch sensors can be constructed from one, two or three layers of laminated, toughened glass. Its sensing products offer touchscreen solution for applications, such as leisure, digital signage, retail, surfaces, banking and industrial applications. Its touch sensors are used in video jukeboxes and slot machines. The PCT touch sensors are used in a range of workplace applications, from medical diagnostic equipment to oil field machinery controls. more »

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Cenkos Securities plc (Cenkos) is a United Kingdom-based independent institutional securities company. The Company's principal activity is institutional stockbroking. Cenkos provides corporate finance, corporate broking, research and execution securities services to small and mid-cap growth companies, and other companies, across a range of industry sectors, as well as investment funds. The Company offers its clients access to equity finance at various stages of their development. The Company's activities also include institutional equities and market making. It provides technical advice on all forms of corporate transactions, including initial public offerings (IPOs), fundraisings, mergers and acquisitions, disposals, restructurings and tender offers. The Company's subsidiaries include Cenkos Nominee UK Limited, Cenkos Securities (Trustees) Limited and Cenkos Securities Asia Pte Limited. more »

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  Is LON:G4M fundamentally strong or weak? Find out More »

58 Comments on this Article show/hide all

Johns54 15th May '18 This post has been moderated
pastysupper 15th May '18 40 of 58

In reply to post #364091

Ahh dear John. You realise this is a free report to read outside of subscription? So if you don't like it... well you know what you can do.

Prepare yourself for a barrage of deserved red arrows (and not the interesting type mention above in Paul's blog).

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martin576 15th May '18 41 of 58

In reply to post #364091

Just done a word count on todays report - almost 4000 words of analysis on financial reports that is perceptive, informative and entertaining. You take as long as you need Paul - we're not day traders here but investors.
Johns54; with just 5 short negative comments in 5 years of membership - you've got some catching up to do...

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BahrainChris 15th May '18 42 of 58

I've been reading Paul’s stuff for getting on for twenty years. I found Stockopedia because of him.

I read it for the educational value. I rarely (never?) buy the things Paul does. We don't share the same risk profile.

His stuff is never time sensitive. Back when I used to read what he wrote on The Motley Fool website I was living in Saudi Arabia. For some reason the Saudi’s blocked TMF for a short period; I honestly don't remember now exactly how long, a few weeks certainly, it might even have been longer. When they finally unblocked it again I went back and read all the ”old” stuff. It was just as valuable to me as if I’d read it in real time.

I'm not sure if I've ever made money from reading what Paul writes. I am, however, positive that I've been prevented from losing a fortune because of what I've learnt.

Go sit on the beach Paul, drink beer, listen to Shaka Khan, and then entertain us with your drunken tweets. If you want to raise a glass then raise one to me; a guy who lives in comfort in large part due to everything I've learnt from you.

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runthejoules 15th May '18 43 of 58

I'd like to hear some of Paul's thoughts on Thomann and why they can't simply copy what has made G4M so successful - excellent customer service, wide range - with their existing scale. I got out at 800p+ and looking back on it that seems reasonably lucky.

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sharmvr 15th May '18 44 of 58

In reply to post #364075

Thanks Tristan, Doug - will definitely take a look.
Re full time, think aspiration is the word. Long way to go here too!

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sharw 15th May '18 45 of 58

In reply to post #364123

Here's another for your list - my favourite is The Zurich Axioms by Max Gunther and it is easy to read - you can do a section at a time and there is no magic formula to master - it is more philosophical.

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Gromley 16th May '18 46 of 58

I have read quite a number of investment books and pretty much all of them have given me some additional insight.

But if I could only read one?

It would have to be, my own personal log book in which I have [NOT] recorded all of my trades, the rational for entry and how they performed. This would be the true teacher.

Whether we are trying to emulate another trader or cut our own farrow, the biggest learning point IMHO is to understand the mistakes we each make entirely off our own back.

Human nature being what it is someone could give us all the perfect, infallible investment system (and perhaps someone on this site has) and we'd still conspire to screw it up by applying our own prejudices in an attempt to "improve it".

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wildshot 16th May '18 47 of 58

As far as investment books go I've maybe read a dozen plus, including The Naked Trader and Benjamin Graham.

For me personally, the one I liked best and will read again is Peter Lynch's One Up On Wall Street. It is very down to earth, helps you evaluate smaller cap stocks and develop patience to stick with a good share for multi-bag returns. I found the book very informative and motivational. Peter Lynch was a star fund manager so he has clearly delivered amazing results. Nothing better than learning from someone who has done the hard yards.

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Asagi 16th May '18 48 of 58

Dear Paul and board,

Regarding Zytronic (LON:ZYT), you wrote:

The Achilles Heel for this company is its reliance on lumpy, rather unpredictable customer orders, from a handful of key clients. So it's rather difficult to value.

and on Cenkos Securities (LON:CNKS)

Earnings are erratic, but the company pays out hefty dividends in the good years.

According to Stockopedia, the last six years' reported sales at Zytronic are:

£20.4m, £17.3m, £18.9m, £21.3m, £21.1m and £22.9m

that's a standard deviation of just £2m.

Cenkos' last six years reported sales are:

£43.2m,  £51.4m, £88.5m, £76.5m, £43.7m, £59.5m

these figures have a standard deviation of £18.5m.

I'm not arguing with either comment but I think that the problem here might be that Zytronic (LON:ZYT) is simply being too 'honest'. While orders do have a history of variance, the company as a whole has successfully delivered respectably steady growth. Many companies (I note that Zytronic (LON:ZYT) does not retain a financial PR firm) would be glossing over the 'downs' of the business and only mentioning the 'ups' rather than give the impression of a lack of earnings quality. In conclusion, I think we may both be wrong and that Zytronic is a better company than the market is being told, deserving a significantly higher rating. A trade sale would so obviously be at a substantial premium, though we could say that for so many companies on the market.

Asagi (no position)

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smatthews1 16th May '18 49 of 58

In reply to post #364019

Happy to avoid this, certainly if they don't have the visibility for the next 12 months. Conviviality directors spend around £600k I think before it went under. I hope it works out for those that hold, but for me It just doesn't have strong enough margins to endure tough trading conditions ahead.

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sharmvr 16th May '18 50 of 58

In reply to post #364163

Good to know since that is in my laptop bag. 12 years ago you read that on the tube, people talked to you. Now they give you dirties!
Still on intro!

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sharmvr 16th May '18 51 of 58

In reply to post #364155

Not the most disciplined in the regard, but I have a sheet of screw ups, and how I got it wrong. Great shout - perhaps I should be more disciplined re maintenance and also track profit lessons. Pretty sure some of those profits were lucky as opposed to my brilliance!

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sharmvr 16th May '18 52 of 58

In reply to post #364151

Thanks shawrw - that wasn't on the radar or Amazon's for that matter. Will definitely take a look

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jfh4 16th May '18 53 of 58


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purpleski 16th May '18 54 of 58

In reply to post #364087

@Johns54. What an unpleasant comment. What inspired you to write it?

You had I assume finished your insightful blog on half a dozen companies with news today by 08:00 this morning and had done this for the past five years or so pretty much five days a week and was just wanting to compare your comments with Paul’s?

Paul could publish a week late and the blog would still be the one thing I would read everyday. It is a must read for PI and even proI’s IMO and the time of publication is irrelevant.

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purpleski 16th May '18 55 of 58

In reply to post #364107

Yes exactly, hopefully Ed has closed Johns54’s account down.

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tony akram 16th May '18 56 of 58

In reply to post #364087


Poor form and not in keeping with the spirit of Stockopedia I fully appreciate Paul reports whenever they come in , we would all be worse off if he stopped doing them and comments like your dont help so behave !!

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jonesj 16th May '18 57 of 58

In reply to post #364549

That would be the correct response.

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RMundy 17th May '18 58 of 58

In reply to post #364544

here here purpleski... The fact that these negative comments are such a rare occurrence says it all really.

Thanks for the daily dose of insight and entertainment Paul!

Website: Research Tree
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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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