The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
I read through all the details. Here are my thoughts:
1) HY results are way too vague and do not break down the balance sheet components.
2) HY vs HY flat for the year.
3) Interest expense is painful.
4) Sale of Petrel likely forced on them, in order to renew invoice discount facility. (Read the going concern).
5) Wont the exceptional profit incur tax? which will be really unhelpful. We only left with 1.1M cash from sale already.
6) Investor relations non existent.
7) No director buying from either Kevin.
8) I wanted them to sell Petrel, instead of keep coming back to the market for money. But 'that's it now'. There is nothing left to sell.
Cavendish released a new broker note yesterday - which was totally pointless IMO. It contains only snippets from the RNS, and the FY24 earnings are now under review. I didn't expect these HY results to move the share price. I had hoped they would be more impressive than they were. It would be nice if / when Cavendish release next broker note, they could break down the liabilities better, post sale and we could see what we are left to deal with. These guys seem to be very adept at hiding debt, for example the Dilapidation liability on the sale is a liability that wouldn't be listed as a liability because it wasn't due. The HMRC liability could be more transparent. This level of reporting is really unhelpful to get an idea of progress. I can only assume (since either Kevin wont buy) that we are no where near out of the woods yet. Maybe one more raise this year? Wouldn't surprise me. We need a big order here, and I'm concerned that they are talking about investing further in both facilities, like it is needed to get a decent order.
With no PR, or in depth accounts and 30% discount placings I am feeling frustrated with the treatment investors are getting. I still think this will eventually end well, but I think that is far off for now, and those wanting a happy ending will need to continue the journey, at further expense.
Barclays analysts cut price target on comparison website to 295p from 305p; maintain 'overweight' rating. Analysts at Barclays expect Q1 rev to be strongest qtr of year at +9% and then slow down, exiting year at low single-digit growth.
I will continue to hold, it s a quality company with a 4% yield. May get an offer one day.
That looks way too organised and methodical. I think you have found a video of an I3 investor there, happy that something so simple takes 9 minutes and presumably $1000s , which normally takes a matter of Nano seconds and can be bought for around $1. "I have made something totally point less., but I like it".
SNX now up 8% this morning after being tipped in the Mail on Sunday. I Refuse to open the link but take City wires word for it. SNX is the largest holding of DSM, should bode well for tomorrows NAV declaration. All other holdings no major moves.
Also this is good news:
Shares in British comparison website Money Supermarket
MONY rose 3.5% to a nine-day high on Thursday after Amazon.com
AMZN said it was planning to shut its UK comparison site Amazon Insurance Store.
I should have said, the Kelso group is publicly traded:
https://www.lse.co.uk/SharePrice.html?shareprice=KLSO&share=Kelso-Grp-Hldg
From the daily mail.
“There was some love shown towards The Works after Kelso Group, which invests in small and mid-cap British companies such as THG (down 2.1 per cent, or 1.42p, to 67.28p) and Angling Direct (flat at 39p), bought shares in the arts and crafts firm on Valentine's Day.
Might be worth checking them out. Maybe another video lol.
TheWorks.co.uk PLC - Birmingham, England-based retailer of books, arts and crafts, stationery, toys and games - Kelso Group Holdings PLC buys 345,000 shares in The Works at an average price of 24.03 pence, worth GBP82,904, on Wednesday. Kelso, an activist investor, now has 3.7 million shares in The Works, a 6.0% stake, up from 5.1% previously. The share purchase was made on the same day that The Works and Kelso announced that Kelso Chief Executive Officer John Goold and Chief Financial Officer Mark Kirkland had joined the board of The Works as non-independent non-executive directors.
This is good news on 2 levels. One, they should be able to help with the recovery - these are the guys who voted down the dividend payment. Two, if they are stake building, DSM may be able to off load this directly to them. The Kelso group first announced a stake in September (share price was 30p) then upped it in October (share price was 40p). So they must think there is considerable upside here. The last Kelso purchase was quite small, so I doubt there is much stock available at these prices. I guess DSM are quite a bit under water on this, but as I keep saying. Any one who buys today this does not matter. Any uplift will be NAV accretive.
I took some WRKS stock this week, though missed the 20p entry and got 25p. I reckon I can make 50% easily on this in a few months. Its just a trade, still not a fan of the shops.
I have a modest holding, 3% of pf. Been in here about a year. Was determined not to trade this, and really thought it would break £3. But ended up back under water, and now flat. I think its a quality business and not something Im going to worry about. Not sure its going to smash earnings though. A recent article in City wire from a few days ago shows that shore capital are still bullish.
Shore Capital is positive on Moneysupermarket (MONY) ahead of full-year results thanks to the comparison site’s competitive edge and ‘multiple verticals’. Analyst Roddy Davidson retained his ‘buy’ recommendation and ‘fair value’ target price of 345p on the Citywire Elite Companies AA-rated stock, which ticked 0.3% higher to 245p on Monday morning, but is down 10% this year. ‘At the heart of our positive view on Moneysupermarket is its proven ability and long-track record of saving consumers money,’ Davidson said. ‘This reflects several positive factors, including the depth of its inventory, the strength of its relationships with product providers, and the fact that it enjoys leading positions across multiple verticals.’ Davidson also noted the ‘competitive advantage’ the group receives from the strength of its Moneysupermarket and MoneySavingExpert brands. ‘We do not believe that these positive dynamics, or our expectations of attractive earnings per share growth, a useful dividend per share progression, and strong cash generation are reflected in its current stock valuation,’ he said.
We saw a low of 106 on the 18th Jan. Still looking weak but suspect it has found support.
The works - WRKS is up 20% in 2 days. Hopefully making a small contribution to NAV announcement tomorrow.
I made a video of the portfolio holdings here. No advice, just a review of which stocks are in the portfolio.
https://www.youtube.com/watch?v=TO0gwhwfPmk&ab_channel=DartronTrading
Hopefully the tip has helped clear out any sellers. I spent an evening pouring over the results, I guess the top line numbers are impressive, but I didn't like seeing that the 2 smaller groups were loss making. Having looked at the REAT website I felt that these guys don't really have much of a moat - maybe too many offerings, however they do have some specially trained staff etc. I was also a little concerned that these guys will attempt another acquisition and there may be possible dilution. The last placing was at a 30% discount, and Iv had one of those already this year. The Vox interview tempered this acquisition concern (they say small acquisitions this year). I thought the finance director came across well in the interview. He also covered my concerns about the moat aspect of the business and the growth prospects. React are aiming at consolidating a very large fragmented market, and currently have about 2 or 3% of the market. The tougher economic conditions may even play to their advantage if smaller operators can not offer the economies of scale. I cant link to the VM interview, as it will just get starred out, but go find it..
The other bull point for me, is that all of the deferred considerations and previous acquisition costs will be paid this FY, so if they keep their word (no large acquisitions), then they should be more profitable in future years.
I bought some more today, as I already had a bad entry up at 1.65p. Its got it down to 1.5p which will have to do. Its not a large position of mine, and I may even sell if I can get out at a small profit, iv yet to be convinced of the share price growth here. Though fortunately can wait it out if need be.
As an aside, I wonder if Franchised Brands could take this and run with it..? They could take this in to Europe.
SAVE has been suspended since June 2023. On the bright side, at least this cant go down any further.
On the double Brightside, If there was a short - as I suspect there might have been, then it has gone very wrong for them!
Looking back to the placing, I think JSE is very leaky. It sold off exactly to the placing price before it was announced, so I wonder if the recent weakness of last few days was those in the know selling. Terrible stock for leaking, no pun intended.
5h, Nothing will change to your ISA. If new shares were issued, they would presumable be given to the asset seller. It would be no different from a placing where more shares are issued. You still own your shares, just the total share count increases. If anything happened like a new ticker, or a share swap, all this would be transparent to you and your ISA. I am not saying there will be more shares issued, just answering a question about shares in a ISA.
I am already up 5% here, before any return of equity. While the NAV discount has narrowed a little, the NAV has also increased and ticked up in to the 66p range. HSP and SNX doing well last week. Downing have reduced on 2nd Feb, HSP to from 4.97 to 3.89%. SPEC also recovering (as expected). This is probably what has helped the NAV over last week. JNEO results were good, it dropped on release. However, it looks like we were exiting in the build up to results, so a positive there too. VLX looks set to break out. No major downers over last week, though obviously there are a few laggards in the pf. This is why a managed winddown is in our best interests. Personally, I may take positions in a few of these portfolio companies over the next coming months. Even though I don't like the Works, it is looking VERY cheap now.
Here is a share price chart of DSM from trading view with a few averages (green 50 day, white 100, purple 200, dotted very long term).
https://www.tradingview.com/x/Z3klTkzz/
Some weakness over forward energy prices from what I hear, though analysts expect the NAV discount to decrease this year. I am happy holding though my decent profit is now gone. Probably would consider buying Bluefield as well, has a slightly better broker rating.
Here is the recent interview from NESF
https://www.youtube.com/watch?v=S6K8vg88Rnk&ab_channel=QuotedData
I sold my Knights shares before and after the results, after a fantastic 30% rise over Christmas.
https://x.com/DartronTrading/status/1745407668406173818?s=20
I just felt that there wasn't anything left in the tank from a rally perspective. I bought another small cap, which is in the position that Knights was around a year ago. Well under half of its fair value, still recovering from a few recent issues. I think that is what attracted me to Knights, being able to buy as low as the 70's. with a 50% upside.
I note there was a lot more discussion on this board back at that time, have most sold out as well? I was prompted to post here today as I found this rating from Shore capital, which has a target price of 115p - and yes it was published after the latest results. TBH, I would like to buy these back, but Im not interested in paying above 115 for them after ExD. The Investors Chronical also rates these as a hold and has them on a PE of 11, which disagrees somewhat with Shore's PE of 5 even taking in to account the rise in SP. The shore article is a little contradictory expecting the shares to re rate, but the price is already above their fair value target. I can see the 115 target on the research portal of IC, so its not a typo. The median target here is 160. I have shares that have dropped on weak earnings with higher % targets than this after they have been down graded - AFM today for example, "Analyst Calum Battersby retained his ‘buy’ recommendation and target price of 420p on the consultancy group" that is a 25% upside target after a downgrade. All makes me thinks Knights is around fair value, and not much of an income play. (AFM is not my new small cap, im stuck in there over a year).
Shore Capital makes a strong case for resilient Knights Group Legal services company Knights Group (KGH) is trading on an ‘undemanding’ valuation and has scope to rerate, says Shore Capital. Analyst Jamie Murray retained his ‘buy’ recommendation and ‘fair value’ target price of 115p on the stock, which was trading at 121p on Friday. It reported ‘resilient’ first half 2024 results, which ‘highlighted that management is executing its renewed strategy to focus on organic growth’, Murray said. ‘The outlook is positive with non-cyclical legal activity showing resilience and recruitment initiatives increasing fee earner headcount,’ he explained. Although Knights is a ‘well-regarded law firm with as strong presence outside of London which enables it to win market share’, Murray said the shares trade on an ‘undemanding price/earnings target of 5x’. ‘We expect this to increase following these resilient results,’ he said. ‘If management continue to execute its new strategy focused on organic growth, we think it can rerate to a multiple more in-line with the sector.’
Investment Manager, is currently estimating that the Managed Wind-Down could be completed within 2 years. Further, the Board believes, in consultation with the Investment Manager, that within the first six months of 2024 up to, or exceeding, 50 per cent. of the Company’s NAV could be returned to Shareholders in cash (assuming current bids for certain of the Company’s investments complete by then) with more value remaining in the NAV of the residual portfolio to be realised through the process of complete wind-down.
on or around the end of the first quarter in 2024, 25 per cent. of Shareholders’ capital at NAV which, given the Company’s discount as at 31 January 2024 of 11.9 per cent., would be a 13.5 per cent. premium to the Current Share Price; a further 25 per cent. of Shareholders’ capital at above NAV by 30 June 2024, which on current discounts and NAV would represent a greater than 13.5 per cent. premium to the Current Share Price; and beyond 30 June 2024, a mid case scenario for the current market suggests a return above the current NAV and hence a significantly better than 13.5 per cent. premium to the Current Share Price. In order to keep up a timely rate of returns, the Board has constructed an incentive scheme for the Investment Manager
So basically DSM keep invested and hope things improve, which I suspect they will. I think the second return - when they say " Shareholders’ capital at above NAV by 30 June 2024" they must mean 25% of todays NAV? So the same payment as payment 1? This leaves them 50% of todays NAV to hopefully make some returns and get those manager incentives.
So assume about 15p payment twice within 6 months. Any thoughts?