Author Archives: Maynard Paton

[SharePad] A Special SharePad Investigation: Patisserie Valerie

11 December 2018
By Maynard Paton

Perhaps the most spectacular share collapse of the year has been that of Patisserie Holdings, the owner of the Patisserie Valerie chain of cake shops.

I am sure you already know the grim story.

To recap, during October the firm confessed to “significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the Company’s accounts.

The shares — which had traded at 429p and supported a £440m market cap — have been suspended ever since.

An emergency £15m was then raised by shareholders at 50p a share, while a further £10m was loaned to Patisserie by group boss Luke Johnson.

Before the fraud came to light, Patisserie said its net cash was £28m. Now the group estimates net debt might be £10m.

So, the obvious question:

Could we have spotted Patisserie’s fraud using SharePad?

Simply click here to read my Patisserie Holdings article for SharePad.

Maynard Paton

Daejan: 203-Word H1 Statement Reveals £116 Per Share NAV High And Leaves £58 Share Price At A Favourable 50% Discount

07 December 2018
By Maynard Paton

Update on Daejan (DJAN).

Event: Interim results for the six months to 30 September 2018 published 28 November 2018.

Summary: The commercial property group once again delivered record first-half revenue and net asset value (NAV) figures — despite the chairman’s persistent economic and political worries. The 203-word statement gave little else away, which has allowed the share price to continue to drift and the discount to NAV widen to 50%. Such a valuation has typically rewarded patient investors of this low-profile share, and I have recently bought more.

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Mountview Estates: NAV Creeps To New £92 Per Share High Despite Weakest H1 For 5 Years

07 December 2018
By Maynard Paton

Update on Mountview Estates (MTVW).

Event: Interim results for the six months to 30 September 2018 published 22 November 2018.

Summary: The property-trading specialist revealed its weakest first-half performance since 2013 after selling eleven fewer houses than this time last year. Furthermore, the 133% investment return achieved from those disposals was below MTVW’s ten-year average. Nonetheless, net asset value (NAV) still managed to creep to a fresh £92 per share high. Meanwhile, dissident shareholders continue to vote against MTVW’s directors and may be growing in number. The £100 shares do not appear expensive on an NAV and yield basis, and I have recently bought more.

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[SharePad] Screening For My Next Long-Term Winner: Mattioli Woods

07 December 2018
By Maynard Paton

Many years ago, one of my favourite sources for investment ideas was the Financial Times.

However, the FT’s articles did not interest me, and nor did the Lex column.

Instead, I studied a small table that was tucked away on those pages that listed every share price.

You see, this table named the shares that traded at a 52-week low — and I wanted to learn more about the companies that the market disliked.

Indeed, I hoped a decent business would occasionally fall out of favour, join that table and become worthy of investigation.

These days, SharePad can do all of this 52-week-low screening — and much more besides — in an instant.

Let me now explain how I employ SharePad to scan for shares hitting fresh lows. I will then provide a case study using Mattioli Woods outlining what I then check.

Simply click here to read my Mattioli Woods article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: Warpaint London

23 November 2018
By Maynard Paton

One of my favourite ways of assessing companies is by calculating their turnover per employee.

The theory is simple: companies that produce high sales from few people are often simpler to manage and grow than businesses that produce low sales from many people.

In fact, if you can find a business that can expand significantly without needing to take on huge numbers of extra staff, then perhaps you have found a business with a product that actually sells itself.

Suffice to say, companies blessed with products that sell themselves are generally good for us investors!

Let’s now use SharePad to investigate Warpaint London — a cosmetics business with high sales per employee.

Simply click here to read my Warpaint London article for SharePad.

Maynard Paton

Castings: H1 Results Reveal Machining Turnaround Delayed By 2 Years While Depreciation Review Inflates Group Profit By 10%

15 November 2018
By Maynard Paton

Update on Castings (CGS).

Event: Interim results for the six months to 30 September 2018 published 13 November 2018.

Summary: CGS’s results were acceptable but contained several irritating drawbacks. In particular, a recovery at the engineer’s troubled machining division has been seemingly postponed for two years. Furthermore, management has now downgraded customer demand from “strong” to “steady”. Oh, and a depreciation review inflated group profit by 10%. CGS does have strengths — not least its cash pile and dividend history — but I suspect the firm’s stalled earnings will keep the shares marooned for now. I continue to hold.

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[Event] Join Me At The ShareSoc Masterclass: 27 November, London

10 November 2018
By Maynard Paton

I just thought I would let you know about my participation in an upcoming investor event.

The ShareSoc Masterclass will be hosted at the Clayton Hotel, Chiswick, London on Tuesday, 27 November, and will run from 5:00pm to 7:30pm.

The event is a panel session, and the panellists are:

* Leon Boros (ISA millionaire and acquisition consultant);
* Professor Glen Arnold (Investment author and  Deep Value Shares newsletter editor);
* Graham Neary (Cube.Investments founder and Stockopedia writer), and;
* Me

Glen and Graham will each spend 20 minutes presenting an insightful investing topic. The rest of the evening will be dedicated to the panel answering investment questions from the audience. I am looking forward to taking part and I am sure the occasion will be very educational and entertaining.

ShareSoc is a not-for-profit organisation that is dedicated to the support of individual investors. Event tickets are currently on sale and are apparently selling fast.

Just click here to read full details of the event and to secure your ticket.

I hope to see you there.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: Zytronic

10 November 2018
By Maynard Paton

You might recall from the other week that I decided to unearth the market’s most reliable dividend payers.

My theory was simple — companies with illustrious payout records should provide much more reliable returns during market setbacks than a collection of more speculative shares.

I therefore employed SharePad to identify companies that had lifted their dividend every year for at least the last ten years… and by a compound average of 5% or more.

I also limited the search to companies that offered a forecast payout yield of 4%-plus.

My initial screening pinpointed PayPoint — although my SharePad trawling did reveal another interesting name: Zytronic.

You see, this particular small-cap also boasted an extended history of rising dividends…

…but in addition, offered a 5.7% forecast yield and net cash that represented a substantial 22% of its market cap.

Simply click here to read my Zytronic article for SharePad.

Maynard Paton

Oleeo: The 4:28pm Results Revealed A Further Earnings Slump As Anonymous Tip-Off Corrects My HMRC Mistake

07 November 2018
By Maynard Paton

Update on Oleeo (OLEE).

Event: Preliminary results for the twelve months to 31 July 2018 published 02 November 2018.

Summary: Publishing results at 4:28pm on a Friday is never a good sign. And sure enough, the recruitment software outfit warned of yet another profit slump. Still, at least revenue inched to a new record as the firm enjoyed greater subscription income. Meanwhile, an anonymous tip-off has set me straight about OLEE’s contract with HMRC — the deal appears not to have been lost after all. All I can do now with this illiquid share is hope for an earnings rebound. I continue to hold.

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System1: H1 Results Could Mean The P/E Is Just 9… Assuming The Ad Ratings Service Eventually Becomes A Money-Spinner (I’m Not Sure)

06 November 2018
By Maynard Paton

Update on System1 (SYS1).

Event: Interim results for the six months to 30 September 2018 published 02 November 2018.

Summary: A couple of earlier updates had already signalled this lacklustre first-half performance. Indeed, several references to competitive pricing and re-designed products implied the advertising research specialist may no longer be the ‘pioneering’ force it once was. Furthermore, the new Ad Ratings service could be hard pushed to become a real money-spinner and return the group to growth. That said, margins remain good, there is cash in the bank and the P/E might be 9… if you believe some significant development expenditure will eventually pay off. I continue to hold.

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Tristel: 2018 Profit Advances 14% (Before Hefty Share-Based Payments) As Bizarre Management Decision Delays FDA Application Once Again

26 October 2018
By Maynard Paton

Update on Tristel (TSTL).

Event: Final results for the twelve months to 30 June 2018 published 17 October 2018 and shareholder presentation hosted 18 October 2018.

Summary: I was broadly satisfied with these full-year figures, which set new records for revenue, profit and the dividend. However, the statement and City presentation provided numerous little niggles — not least a bizarre management decision that has delayed product approval within the United States for a further six months. Still, TSTL’s collection of medical disinfectants continue to produce attractive accounts and perhaps their biocidal qualities have been underlined by recent deals with the NHS and Parker Laboratories. I continue to hold.

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[SharePad] Screening For My Next Long-Term Winner: PayPoint

26 October 2018
By Maynard Paton

I don’t know about your shares, but my portfolio was thumped during this month’s market sell-off.

The drubbing prompted me to consider whether I should remain invested in my racy growth stocks and contrarian recovery plays — or seek out some alternative opportunities instead.

My latest SharePad trawling has therefore centred on dividends — which for many of us are the gold standard of investing dependability.

I mean, employ the right directors at the right business, and shareholders can sit back, relax and enjoy consistent payout advances…

…regardless of what happens to the stock market, the economy and just about everything else!

Simply click here to read my PayPoint article for SharePad.

Maynard Paton

Bioventix: 2018 Results Suggest 20% Underlying Growth But Disappointing Troponin Sales Leave Lofty P/E Open To Debate

12 October 2018
By Maynard Paton

Update on Bioventix (BVXP).

Event: Preliminary results for the year to 30 June 2018 published 08 October 2018.

Summary: The antibody specialist delivered yet another set of record results, with my number-crunching indicating underlying growth of 20%.  However, I was disappointed to discover early sales of the important new troponin product had been below expectations — and may have left the lofty P/E valuation open to debate (at least for now). Still, the business continues to exhibit magnificent accounts while a special dividend for the third consecutive year underpins the board’s confidence. I continue to hold.

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[SharePad] Screening For My Next Long-Term Winner: Character

08 October 2018
By Maynard Paton

I have written another article for SharePad.

This time my screening has short-listed Character (CCT) as a possible longer-term investment.

The attraction here is a quite extraordinary story about buybacks.

You see, since 2006, this small-cap has bought back shares every year to reduce its overall share count by a huge 60%.

What’s more, the purchases have been an exemplary use of surplus cash. The average price paid was 143p, and the shares currently trade above 500p.

Needless to say, I now ask myself whether further significant buybacks at Character should prompt us to invest, too.

Simply click here to read my Character article for SharePad.

Maynard Paton

Getech: H1 Revenue Hits A 7-Year Low And For Now My Hopes Rest On A Stronger Oil Price

08 October 2018
By Maynard Paton

Update on Getech (GTC).

Event: Interim results for the six months to 30 June 2018 published 28 September 2018.

Summary: These figures were not as good as I had hoped. The lowest first-half sales for seven years created a not-insignificant operating loss and left cash flow dependent on tax refunds. Still, the geoscience software specialist talked of a stronger second half and I remain hopeful the accounts will eventually showcase the high margins and expanding revenue the directors continue to predict. For the time being, I just have to trust a stronger oil price can one day tempt GTC’s customers to increase their spending. I continue to hold.

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Q3 2018: 1 Top-Up And My SharePad Side-Income

03 October 2018
By Maynard Paton

Happy Wednesday! I hope you continue to find my Blog useful… and that your shares served you well during the summer.

Unfortunately, my portfolio has not exactly sizzled during the last three months.

In particular, notable price advances from Andrews Sykes and Mincon were offset by further declines at System1 and Tasty. Elsewhere, highly rated holdings FW Thorpe and Tristel have come off the boil, while stagnant positions Mountview Estates and Oleeo remain, well, stagnant.

It has all meant that, nine months into the year, I am up 4.4% versus a 1.0% total return produced by the FTSE 100*. No doubt about it, my gains this year have been far from stellar. But following two years of lagging the index, I will happily take my current outperformance for 2018.

Recent RNSs from my shares have been broadly positive. Once again there was a mix of satisfactory to lacklustre statements, and I am glad no major horror stories emerged.

And I did venture to one AGM, which helped prompt my portfolio’s only Q3 trading.

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Andrews Sykes: I Had Expected H1 Sales To Grow By More Than 7% Following The Heavy Snow And Extended Heatwave

01 October 2018
By Maynard Paton

Update on Andrews Sykes (ASY).

Event: Interim results for the six months to 30 June 2018 published 28 September 2018.

Summary: Widespread snow followed by a glorious heatwave were always going to prompt demand for ASY’s heating products and air conditioners during this first half. However, I did expect the equipment hire firm to have recorded sales growth in excess of the 7% actually reported. Still, operating profit gained 14% while the accounts continue to showcase high margins and surplus cash. Plus, the second-half ought to show bumper figures and help deliver the firm’s best-ever annual performance. I continue to hold.

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S & U: H1 Figures Show Write-Offs Soaring 32% But I Am Happy To Collect A 4.4% Income After The Dividend Was Lifted 14%

28 September 2018
By Maynard Paton

Update on S & U (SUS).

Event: Interim results and presentation for the six months to 31 July 2018 published 25 September 2018.

Summary: SUS reported satisfactory first-half progress, with the group’s main car-loan division now set to deliver its 19th consecutive year of growth. The performance was accompanied by the usual drawbacks — tighter underwriting leading to fewer new customers, and debt write-offs continuing to soar (this time by 32%). The group’s boss reckons we’re at a “relatively late stage of the economic cycle”, too. Still, I remain happy to collect the 4.4% yield and back the veteran directors who carefully steward their £134m family shareholding. I continue to hold.

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Tasty: Hapless Restaurant Chain Reveals Dismal H1 Loss Although Some Outlets Are Apparently ‘Outperforming Expectations’

25 September 2018
By Maynard Paton

Update on Tasty (TAST).

Event: Interim results for the 26 weeks to 1 July 2018 published 21 September 2018.

Summary: The hapless restaurant chain delivered a rather dismal — but not completely disastrous — set of first-half figures. “Unfavourable” weather was partly blamed for underlying sales falling approximately 4%, which in turn led to an operating loss. The numbers also carried a further substantial write-down while net debt jumped following adverse cash movements. But recovery hopes still remain — costs have been cut, menus have been re-jigged and some sites are even “outperforming expectations”. I continue to hold.

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FW Thorpe: ‘Excellent’ 2018 Results Show Underlying 2% Profit Advance And Claim Sales Of High-Tech Systems Have ‘Rocketed’

21 September 2018
By Maynard Paton

Update on FW Thorpe (TFW).

Event: Preliminary results for the twelve months to 30 June 2018 published 20 September 2018.

Summary: The specialist lighting manufacturer delivered its fifth consecutive year of record results, although describing an underlying 2% profit advance as “excellent” overplayed the performance somewhat. Still, the figures were a touch better than I had expected and showcased all the usual financial attractions — decent margins, vast surplus cash and robust reinvestment returns. Sales of some new high-tech products apparently “rocketed”, too. That said, TFW suffered mixed divisional performances while the share-price rating remains rich. I continue to hold.

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M Winkworth: Revenue Jumps 10% To New H1 Record As Online Rivals Now Described As ‘Digital Experiments’

13 September 2018
By Maynard Paton

Update on M Winkworth (WINK).

Event: Interim results for the six months to 30 June 2018 published 12 September 2018.

Summary: These results were quite satisfactory and actually revealed record first-half revenue — despite the estate-agency group remaining dependent on London’s difficult property market. In fact, the confident management narrative said sales commission rates had increased and also described online rivals as “digital experiments”. Meanwhile, the accounts seem in decent shape, the outlook appears relatively encouraging and the valuation is hardly extended. I continue to hold.

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[SharePad] Screening For My Next Long-Term Winner: CMC Markets

11 September 2018
By Maynard Paton

Good news — SharePad wanted a second article!

This time I have looked at CMC Markets (CMCX), a high-margin, cash-rich and owner-run spread-betting firm. Let me explain how I pinpointed the share, and what I discovered through SharePad.

Simply click here to read my CMC Markets article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: Ramsdens

31 August 2018
By Maynard Paton

I have started writing articles for SharePad!

My decision to join SharePad was not difficult. I have used the investment software since 2015 and consider it to be an exceptional service for private investors. I also rate the educational and analytical articles that SharePad has become renowned for.

My SharePad articles will cover my stock-screening efforts — tracking down respectable companies that offer attractive financials, capable managers, reasonable prospects and modest valuations. I hope you find what I write useful.

The articles will probably replace my Watch List reviews, which I admit have been somewhat infrequent of late. I would like to think a return to proper schedules and deadlines will increase my content output…

…and in doing so help me find decent buying opportunities and improve my investment returns!

I will post a link on this Blog to every SharePad article that I write. I kick off with a review of pawnbroker Ramsdens (RFX)Simply click here to read my debut piece for SharePad.

Maynard Paton

Mincon: Satisfactory H1 Results Showcase 12% Underlying Sales Growth And Operating Margin Reaching 19%

23 August 2018
By Maynard Paton

Update on Mincon (MCON).

Event: Interim results for the six months ending 30 June 2018 published 13 August 2018.

Summary: MCON extended its bumper 2017 progress with some very satisfactory first-half figures. The specialist drill manufacturer claimed greater orders from the mining sector had supported 12% organic sales growth, while my sums suggested a robust 19% operating margin was reached during the second quarter. In addition, current trading appears healthy and a recent acquisition may have performed much better than expected. However, a P/E in excess of 20 probably reflects all of the positives, especially given cash conversion remains below par. I continue to hold.

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City Of London Investment: Fees Cut, Forecasts Reduced, Funds Underperform… But Lifted Dividend Offers 6.8% Income

01 August 2018
By Maynard Paton

Update on City of London Investment (CLIG).

Event: Trading update and shareholder presentation/summary results for the year ending 30 June 2018 published 17 July 2018.

Summary: Bumper first-half figures and subsequent monthly updates had already ensured the fund manager’s summary annual results would be positive. However, the second half did witness funds under management decline and the group’s own projections for the coming year have now been reduced. In addition, client fees have been cut once again while the main emerging-market strategy continues to underperform. I still hope that, one day, this cash-rich, high-margin business can attract meaningful new mandates to spark a share-price re-rating.  Until then, a 6.8% income remains available. I continue to hold.

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Daejan: NAV Hits New £111 Per Share Peak As £64 Share Price Offers Theoretical 14% Earnings Yield

27 July 2018
By Maynard Paton

Update on Daejan (DJAN).

Event: Preliminary results for the year to 31 March 2018 published 17 July 2018

Summary: The commercial property group once again left its numbers to do most of the talking, as new all-time highs for revenue, net asset value and the dividend were accompanied by only two paragraphs of management commentary. A bonus this year was US tax changes adding £40m to the balance sheet, which now stands at £111 per share and continues to dwarf the £64 share price. Conservative borrowing levels, veteran family management and an illustrious track record remain the foundations of this investment, and, in theory at least, a 14% earnings yield is available, too. I continue to hold.

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Tristel: ‘Core’ 2018 Revenue May Have Advanced 18% As The Chairman Looks To Sell His (Now) 15% Shareholding In An ‘Orderly Manner’

20 July 2018
By Maynard Paton

Update on Tristel (TSTL).

Events: Trading update for the year ending 30 June 2018 published 13 July 2018, director share sales published 16 July 2018 and shareholder open-day presentation hosted 17 July 2018.

Summary: Earlier this week I attended TSTL’s third annual open day, and this year the event was accompanied by news of hefty director selling as well as confirmation of record revenue and profit. The chairman has reduced his shareholding from 19% to 15%, and confirmed he is looking to sell more during the next few years. The marquee presentation did not provide any great revelations, but one slide did show a useful sales comparison between the UK and overseas, while another slide suggested full-year sales of the group’s ‘core’ disinfectants had just advanced an impressive 18%. I continue to hold.

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Q2 2018: 1 Sell And Some Thoughts On Pension Deficits

30 June 2018
By Maynard Paton

Happy Saturday! I hope you continue to enjoy my Blog… and that your shares have been sizzling higher during the recent hot weather!

My portfolio has been simmering nicely throughout the last three months. In particular, positive second-quarter contributions from Bioventix and Getech have now added to the decent first-quarter efforts of M Winkworth, Mincon and Tristel. However, System1 has sadly joined Tasty as a notable 2018 loser.

It has all meant that, half way through the year, I am up 6.7% versus the FTSE 100 returning 1.7%. I am glad to be in positive territory following a tricky Q1, and I trust I can maintain a gap to the market during the second half.

Recent RNSs from my shares have been broadly positive. Once again there was a mix of statements, ranging from very satisfactory to rather lacklustre, and I am very happy that no major horror stories emerged!

There was one underwhelming update, though, which prompted a disposal and my portfolio’s only Q2 activity. Let me explain what has happened.

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Mountview Estates: 2018 Dividend Lifted 33% As Boss Admits Company Has A ‘Finite Life’

19 June 2018
By Maynard Paton

Update on Mountview Estates (MTVW).

Event: Preliminary results for the twelve months to 31 March 2018 published 14 June 2018

Summary: This RNS was more interesting for the management comments — all 626 words — than the actual 2018 financials. Indeed, MTVW’s chief exec is probably the first-ever boss to tell shareholders their business has a “finite life” and had essentially operated in an ex-growth market for 30 years. Hardly inspirational stuff… until you realise the dividend was lifted 33% and has now grown 47-fold during the last three decades. Mind you, this property-trading specialist will at some point have to call it a day — and dissolve an estate that could be worth almost double the current share price. I continue to hold.   

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Castings: The 25-Year Dividend Record Now Shows 23 Increases, 2 Holds And No Cuts

15 June 2018
By Maynard Paton

Update on Castings (CGS).

Event: Final results for the twelve months to 31 March 2018 published 13 June 2018

Summary: These results came in below the engineer’s earlier expectations — but the performance did not appear too bad in the circumstances. Although CGS’s smaller machining division continues to lose money, its problems now look to be contained. Meanwhile, the larger foundry operation seems to be progressing well following a decent second half. A hefty cash position and the illustrious dividend remain key attractions, but the P/E of 13 does not suggest an immediate bargain. I continue to hold.

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