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Some Sunday positivity for you all. Here's a quick roundup of all the Begbies administrations/insolvencies/sales etc. that have made it into easily-searchable news in August. These are just those that 1) mention Begbies by name and 2) are big enough companies to make it into the news. I've been doing this regularly for the past year and don't think I've ever seen this many hit the news in a single month.
https://www.hortweek.com/distractingly-lovely-garden-centre-closes-due-coronavirus-crisis/retail/article/1693041
https://www.insidermedia.com/news/north-west/domestic-kitchen-supplier-enters-liquidation
https://motortransport.co.uk/blog/2020/08/27/collapsed-car-transport
https://international-adviser.com/unnamed-firm-buys-yorkshire-financial-planning-business/
https://crowboroughlife.com/local-building-firm-goes-liquidation/
https://www.hertfordshiremercury.co.uk/news/hertfordshire-news/people-who-lost-471000-nightmare-4322289
https://international-adviser.com/uk-financial-advice-firm-fails/
https://www.harrogate-news.co.uk/2020/08/04/gambaru-fitness-goes-into-voluntary-liquidation/
https://www.finextra.com/newsarticle/36334/covid-19-claims-techhub/
https://www.cateringinsight.com/breaking-news-yce-seeks-buyer-to-secure-business-future/
Respect both of your decisions to sell.
Personally will continue to hold. The SP now is below where it was pre-Covid. Just think about that. The share price is BELOW what it was before the economy collapsed. My previous posts about why I think that is still stand. I'm very optimistic about the September update. We already know there was an increased order book. We already know administrations are up 20% YoY nationally. We already know that we're in a recession. We already know the property market is booming. We already know about the increase in CIF funding.
The only outstanding issue is insolvencies - how quickly are courts progressing the backlog, and how much does that matter for us?
The thing is, brokers/tipsters were targeting 120p+ BEFORE Covid. I know tipsters and brokers are often wrong, but it's worth considering that Begbies were in a very good position even before the ****storm crippled a lot of small businesses.
I bought some more yesterday down at 86p. Huge (probably too big) portion of my portfolio now, but I really do feel like it's a gift down at these levels.
Still not concerned here at all. SP is annoying but there's no reason to panic.
For me, the drop is down to a few things:
1. So many shares are on insane recovery runs at the moment and people are trying to make the most of them. Begbies isn't one of these recovery plays because it recovered early in lockdown so is of less interest to those sorts of PIs.
2. Optimism. As I've said before, most PIs are by their nature optimists - Begbies is a pessimistic share because you're essentially betting against small and medium business. People don't want to do that while it appears the sun is shining.
3. Impatience. We know the next trading update is September - it's unlikely much will happen here until then unless we get a high profile share tip from Midas/IC.
4. A lot of people are assuming the stock market is indicative of the real economy - the average person and small and medium businesses (i.e. they think that, because the stock market is flying, everything is fine). It isn't.
But there are many many reasons to be optimistic here:
1. People seem to forget about the Property Services arm. Everyone I know involved in the property market is absolutely rammed at the moment - the busiest they've ever been. This is true for both residential and commercial. It's an oft-forgotten slice of the Begbies pie that is likely very very fruitful at the moment.
2. Businesses ARE failing, fast. Most of these aren't in the news, but these are the sorts of companies Begbies deals with.
3. Brexit. Remember Brexit? That's still to come.
4. Performance in previous recessions.
5. The true p/e ratio (backward looking) is about 15 rather than the 100+ that Google/LSE shows. We've been as high as 25 before so there's miles of room for SP growth even against the last financial year's results.
6. Institutions don't appear to be selling at the moment and brokers remain very positive.
I could go on. I firmly believe that in 12-18 months, the share price will be 140+. It's just going to take people a little while to realise how the stock market isn't actually indicative of the economy at the moment.
Something funky going on here. MMs have dropped this 10% today for pretty much no reason - trades don't even begin to justify it. Expect a quick correction tomorrow morning but I'll be buying more if I can get some below 90p. A gift IMO.
For the people who are concerned about low institutional interest, remember this is too small to even be considered by the majority of funds. You just have to look at what happened to the SP during the last major recession to have an idea of what could happen when people realise how bad the economy is going to get. Remember that 99% of investors are naturally optimistic people.
Results solid as expected. I expect many people are still waiting in the wings until the September trading update to see what the first furlough decrease in August does for us. If it's even remotely significant, then I think we'll fly because people will know things will only get worse (better for us) as it decreases further. We're also going to be getting a lot of press mentions as this Wigan Athletic ****storm unravels which could prompt some retail punters to take a look.
Also, currently on a forward P/E of around 16.5. We hit around 25 during the financial crisis so still plenty of room by historic standards. I'll add more if funds become available but happy to sit and wait for now. Will be interesting to see if Robbie Burns adds more in his update next Thursday.
I don't know, but I know the industry well (I work in it) and it's one where there's no shortage of cash and consolidation is rife. With Evolution announcing their takeover bid for NetEnt last week, I think we'll start to see a lot of movement from other players looking to shore up their position in the market.
The acquisition of Red Tiger last year by NetEnt was at a p/e of around 11. Leap is obviously nowhere near as big as RTG so there's no point looking at the £value, but once we have an idea of Leap's profitability we'll be able to take a decent stab at what it's worth. Until we know that, there's no point pretending to even have an educated guess. Anyone trying to attach a value to our Leap holding other than what's in the latest NAV report should be ignored entirely.
Added about 50% to my holding today. I don't see anything inherently wrong with the RNS on Friday personally. We invest in this company because we trust management to invest our money in stuff. Flexibility is going to be key to capitalise on the cheap assets that are going to come out of this crisis. Worth the dilution IMO, but time will tell.
As for the portfolio:
No interest in Vemo/DBC/Yooma. Don't see them returning any value in the forseeable future. Market probably values them in the same way.
Emmac - loads of potential. We saw what happened with Nuuvera. Market's even bigger now and with more retail investors than ever, can see it absolutely flying on the inevitable IPO/buyout. Just a case of waiting on this.
LEAP - Can see a buyout soon, especially if there's another lockdown and sports get cancelled again. Their slots are good too. Much better than some of the incumbents in terms of overall quality. Valuation is anyone's guess really.
Portage - Would have preferred for us to hang on to Intensity but it looks like there's some other good stuff (and some trash, mind) in Portage's portfolio so we'll have to see. Will only really take one of them to succeed and we'll be laughing.
Juve - Just a shame we don't have a bigger slice of this. Only requires a £1.5bn valuation for this to be worth more than the current NAV. Not impossible.
Who knows what will happen with Factom. Market was always sceptical about it (and rightly IMO). Expect someone will swoop in and buy the tech for dirt cheap which is fine by me. Any penny we get out of Factom is a penny not currently factored into the SP.
Keeping a close eye on this. P.e. is insane and balance sheet is very healthy. Going to email the company and see if they'll impart how badly inventory has been affected by corona. Seems like crazy value down at these levels.
It is quiet here, yeah. SP is frustrating but nothing more - still very confident in the long-term here. Communications from the company has been pretty poor, here's some recent news on holdings, some of which should probably have been RNS'd:
Zopa partnership with Starling:
https://www.altfi.com/article/6199_exclusive-starling-bank-building-loanbook-with-zopa-deal
130% YoY growth for Onfido:
https://finance.yahoo.com/news/onfido-announces-130-over-growth-120000989.html
Farewill being picked for Tech Nation:
https://www.altfi.com/article/6142_farewill-tyk-plum-and-amplyfi-among-30-scaleups-selected-for-tech-nations-growth-programme
Monese expected to value at over £1bn this half (only valued at around £200m in AUGM latest accounts so could be worth 40m(!!!) to our NAV):
https://www.ft.com/content/273f655c-3c73-11ea-a01a-bae547046735
Monese expected to hire ex. Direct Line, Aldermore, Old Mutual board member as chair:
https://news.sky.com/story/fast-growing-monese-to-name-city-veteran-gray-as-chair-11931684
Seedrs 48% uplift in investments YoY:
https://www.finextra.com/pressarticle/81036/seedrs-reports-record-breaking-year
So now we have to wait and see how much of a hit our Zopa investment is going to take from this fundraising. We also have to wait and see if we're taking part in the fundraise to help soften that blow.
Hopefully nothing drastic, but either way the bank licence is worth the slight NAV hit in the long term. Ideally some of our other holdings (esp. Tide) will absorb the impact and then some.
So, while it doesn't say it explicitly, this Tide news pushes us up to 113.2p NAV.
Also, received an email today about pre-registering for a new Seedrs funding round. Doesn't say the valuation yet but fingers crossed for an uplift.
https://www.crowdfundinsider.com/2019/08/150715-chatter-seedrs-closes-on-4-5-million-funding-round-led-by-big-investors/
Rumours of a funding round for Seedrs, which we'll be in involved it. Our current holding is worth £1.9m so hopefully we'll see a decent uplift.