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

john652 15th May 19 of 58

Also Patisserie Holdings (LON:CAKE) please, results look very good to me, steady, and the comments from chairman/ceo have the usual clarity. An aspect I like, and each report seems to show this, is the focus on cost management. So not cheap but executing on strategy. Although slater would be selling, if not shorting, at that PEG of 2.2

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Ben1 15th May 20 of 58

Looking forward to you views on Zytronics and G4M both which look OK on initial view. But I am slightly concerned at the continued high investments being made by G4M. Hope they can manage the big growth they seem to be targeting.

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grumpy5 15th May 21 of 58

Paul, re your first paras, Jon Egging's widow, the very driven Emma, has created a charity in his memory, which does some very good work. See https://www.joneggingtrust.org.uk/

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wildshot 15th May 22 of 58

Sorry to hear about the PG and I hope that things don't work out too badly in the end Paul. Also, thanks for the book recommendation, like you I am a terrible reader and rarely finish books.

I'm looking forward to your report on £:ZYT. I have a small holding. I think due to this being a small cap it is being harshly treated today on lower revenue for the first half results. People who know this company know that revenue can be lumpy and sporadic. Just look at the balance sheet though and the good working capital management. Net assets have risen nicely and I feel this is a well managed company.

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sbotting 15th May 23 of 58

Hi Paul, interested in your thoughts on Elegant Hotels (LON:EHG) if you've got time

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Paul Scott 15th May 24 of 58

Hi everyone,

There are far too many companies reporting today for me to cover them all.
So I'll write about the stuff that looks most interesting, and has caused share price movements. Apologies if this means overlooking some of the reader requests.

Regards, Paul.

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sharmvr 15th May 25 of 58

In reply to post #363935

used available on Amazon for less, but not at the ebay price.

Question re Jim Slater:
Would you buy The Zulu Principle or Beyond the Zulu Principle, if you only intended to read one of these?
Would it be worth reading both?

I am working my way to becoming a full time private investor (when the balance sheet can support such folly) and have a target of reading two books a month (not necessarily investing, but that is the focus), as well as learning from all of you and hopefully my own investing activity.

If you could only read one investment book for the rest of your life, which would you suggest?

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ken mitchell 15th May 26 of 58

Also very sorry to read of your problems Paul and the more so because it''s thanks to your generous nature which we all benefit from here too.

Anyway I was very pleased to read your Cenkos update today and also their much more upbeat trading statement.

I've held Numis and Cenkos for the last two years , except for selling Cenkos after their last results and cautious update before having second thoughts and quickly buying them back again. Cenkos revenues and profits are lumpier than Numis but wow.... what a difference in share price performance over the last 2 years!

Numis has gone up 140%, but Cenkos share price has FALLEN from 140p to current 110p (with a 50% dip to just 70p before recovering slowly to current price).

It's well worth reading previous Cenkos updates from Paul and Graham and especially so this one from Graham last September where he explains how shares (and sometimes the big dividends) are a heavy part of  overall staff compensation:-


Also note the very high Stockopedia marks both for quality (89) and value (94) but only 84 overall thanks to just 25 for momentum.

Surely a good chance  that the already big dividend will be increased. I had expected an increase with their last results but thanks to their more cautious optimism then they only held the final.  II'm more optimistic today that at long last Cenkos share price could have a decent run and start to play catch up with Numis..

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willhampson 15th May 27 of 58

In reply to post #363995

Hi sharmvr, having read both - I would go with the original Zulu Principle. I found it more focused and an easier read. No harm in reading both, obviously.

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sharmvr 15th May 28 of 58

In reply to post #364003

Willhampson - appreciate the insight.
Will take your advice and go for the Zulu at first, and maybe use beyond as a refresher at a future date.
Thanks again for the suggestion - much appreciated

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jombaston 15th May 29 of 58

'by far the best book about investing ever written' is The Intelligent Investor by Benjamin Graham. That's according to Warren Buffet. Definitely a good place to start and still relevant after so many years especially if you are a long-term investor rather than a speculator. Don't expect to finish it in a day or a week.

But limiting yourself to one book doesn't seem like a good idea if you want to become a better investor!

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Asagi 15th May 30 of 58

Hi Paul and board,

The annualised impact of weaker sterling is now reversing, and sterling is now somewhat stronger than the prior year comparatives. This is positive because it means inflation should reduce

there is some supportive comment on this in today's Patisserie Holdings (LON:CAKE) results:

We remain proactive in managing our cost base and in some cases we have seen a reduction in some of our core ingredient prices.



Labour inflation now has the biggest impact on profit with National Minimum Wage, National Living Wage and Apprenticeship Levy costing an additional £0.3m in the period. Ongoing labour inflation is built into our budgets and is being absorbed as the group continues to grow


Asagi (long CAKE)

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doublelutz 15th May 31 of 58

Accrol who have been discussed on here in the past have just announced their intention to raise another £8M at 15p per share but cannot guarantee that it will cover working capital requirements for the next 12 months. Directors seem to be investing reasonable amounts so if they can pull in round there could be some profit in the future. I will wait and see.

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sharmvr 15th May 32 of 58

In reply to post #364011

I have read that one, but not security analysis.
I was asking more from the perspective that if there was only one you could read, which would it be.

Thanks jombaston

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matylda 15th May 33 of 58

Hi Paul,

Hope you're not too lobster!

A question - Cenkos Securities (LON:CNKS), I asked the same of Graham the other day re: Volvere (LON:VLE) - I nor he (is that the correct English (I don't care)) could find any broker notes or forecasts, and for Cenkos Securities (LON:CNKS) it seems to be the same.

How are you comfortable investing with no idea of forecasts.

Sorry if it's a can of worms question, quite happy you give it a Chaka Khan body swerve.


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doug2500 15th May 34 of 58

One of the best books I've read is 'The most important thing' by Howard Marks.

Fantastic discussion on risk, in a very straighforward manner, is probably my highlight of the book.

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mammyoko 15th May 35 of 58

US 10 year treasury yield trading at 3.07% - could be volatile over the next few days

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Nuke 15th May 36 of 58

In reply to post #363771

Hi Paul,

Love the trip down memory lane we are similar age it seems like the stone age now days, regular power cuts each winter, snowy black and white tv's where you had to move the aerial around for ten minutes to get a half decent picture, 3 tv channels, ford cortinas, and all those crazy sweets like spangles and space dust.

i love the modern world but they were such simpler times, and i think we are now so used to stuff running smoothly 24/7 all hell breaks loose when are everything instantly existence is halted by snow like earlier this year.

Great stuff from you and Graham daily look forward to your views on Zytronic.


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Tristan_Treacy 15th May 37 of 58

In reply to post #363995

Hi sharmvr. Great question on one investing book. I think for me it would either be "the little book that beats the market" or "the most important thing - illustrated" by Howard Marks. Marks is a distressed debt investor predominately but much of what he says can be applied to equities. He is excellent at understanding different types of risk which can often be overlooked. He also publishes memos on the oaktree website from time to time which are well worth a read. I started a discussion stream today where I outline how I apply some of his principals in my own investing.

Good luck with your goal to become a full time PI - an aspiration I share but am someway off achieving at present!

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Johns54 15th May This post is under review

19.15 and its still WIP????

Are you losing interest Paul this is becoming the norm


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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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