MOUNTVIEW ESTATES: Estimated NAV Still Surpasses £200 Per Share After Remarkable H2 Shows Welcome 1.55x Sales Premium And 12.5% Final Dividend Lift

15 July 2021
By Maynard Paton

Results summary for Mountview Estates (MTVW):

  • A respectable performance supported by a remarkable H2 comeback, with full-year profit up 5% after declining 18% during a pandemic-disrupted H1.
  • Property sales realising a welcome 1.55x premium to their 2014 valuation alongside the first dividend lift for three years suggest favourable near-term trading. 
  • A small text change to AGM-related statements imply some unhappy shareholders have started to engage with management. 
  • Debt of £22m stands at a 21-year low and represents just 5% of the £398m property estate.
  • Book value inched to a record £101 per share, although my calculations still point to a balance sheet inherently worth beyond £200 per share. I continue to hold.

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[SharePad] Small-Cap Spotlight Report: CALNEX SOLUTIONS

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15 July 2021
By Maynard Paton

Warren Buffett admitted the other year that he had not bought shares at an IPO since 1955.

They’re picking the time to sell to you; I like it when I am picking the time to buy“, the investing master warned when asked about flotations.

Mind you, every great share went public at some point… and who would not want to have bought, say, Microsoft, at its IPO? (a 3,717-bagger since).

SharePad shows 47 companies joined the UK market during 2020:

(Source: SharePad)

I suspect Mr Buffett’s warning would apply to the majority of those 47 names. But maybe not to small-cap Calnex Solutions, which at first glance appears to be one of the more appealing new issues of last year.

Immediate highlights include:

  • A track record of profitable expansion;
  • Prospects of future double-digit growth;
  • A founder chief executive with a significant shareholding;
  • A competitive position based on in-house technical research, and;
  • Accounts that display high margins and net cash.

Could Calnex become a long-term IPO winner?

Read my full Calnex Solutions article for SharePad.

Maynard Paton

Q2 2021: 2 Top-Ups And 5 Lessons From Owning 5 Shares For 10 Years

01 July 2021
By Maynard Paton

Happy Thursday! I trust your shares are thriving and that you still find my blog useful.

A summary of my portfolio’s progress:

  • Q2 change: +7:4%*
  • Q2 trades: System1 and M Winkworth
  • YTD change: +13.2%*
  • YTD winners/losers: 9 winners vs 2 losers

(*Performance calculated using quoted bid prices and includes all dealing costs, withholding taxes, broker-account fees and paid dividends)

I am pleased the portfolio gains recorded during Q1 were extended during Q2. Recent RNSs from my portfolio have been mostly encouraging, and I anticipate boardrooms will remain optimistic as the pandemic subsides and social restrictions ease.

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[Podcast] RAMP Investing With Maynard Paton

24 June 2021
By Maynard Paton

I recently spoke to Jon Kingston on his Capital Employed podcast. I talked about:

  • My investing background and approach (more details here);
  • The types of companies I invest in;
  • Two recent purchases: System1 and M Winkworth, and;
  • What I learned from Jim Slater.

You can listen to the podcast here:

Alternatively you can listen through Youtube…

…or through the links below:

I mention these links at the end of the podcast:

Happy listening! 

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: IMPAX ASSET MANAGEMENT

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14 June 2021
By Maynard Paton

Everybody loves shares that keep going up.

SharePad lists 167 names that have consistently delivered 15% or more annualised returns during the last five years:

(Source: SharePad)

The shares of fund manager Impax Asset Management have certainly kept going up; they have almost tripled during the last twelve months and have 20-bagged since 2016.

The winning combination appears to have been:

  • Impressive profit growth driven by favourable long-term trends;
  • A ‘scalable’ business that could service extra customers without a commensurate increase to the workforce;
  • A shareholder register dominated by company insiders and a key client, and;
  • A modest valuation that gave scope for a significant P/E re-rating.

Let’s take a closer look.

Read my full Impax Asset Management article for SharePad.

Maynard Paton

ANDREWS SYKES: FY 2020 Small-Print Suggests ‘Comparable’ Performance For FY 2021 After H2 Profit Drops 37%

25 May 2021
By Maynard Paton

Results summary for Andrews Sykes (ASY):

  • H2 revenue down 20% and H2 profit down 37% disappointingly confirmed a lower level of pandemic resilience than H1. 
  • However, the main UK equipment-hire subsidiary apparently delivered a FY 2020 profit only “marginally below” that of FY 2019.  
  • Commendable ‘going concern’ text revealed a “cautiously realistic” assumption of a “comparable” performance for FY 2021.
  • The books remain healthy with robust margins, effective working-capital management and sizeable net cash, although the pension scheme is absorbing extra contributions. 
  • A possible P/E of 16-17 and yield of 4% do not appear completely outrageous given the appealing financials and potential for further European expansion. I continue to hold.

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[SharePad] Small-Cap Spotlight Report: WANDISCO

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21 May 2021
By Maynard Paton

The market is home to many companies with ground-breaking products that boast credible growth stories told by persuasive management…

…but which also need a bit more money from shareholders to see them through to profitability.

Sometimes they get the money they need and things work out.

And sometimes they get the money they need and, well, keep coming back for more.

WANdisco is one of those companies that keeps coming back for more.

Investors have handed $217 million to this software specialist since 2012…

…and yet customers, sales and profits remain extremely elusive.

But could WANdisco finally come good during 2021 after signing milestone deals with Microsoft and Amazon?

The directors are naturally optimistic, although they appear reluctant to help fund the company themselves.

Read my full WANdisco article for SharePad.

Maynard Paton

TASTY: Awful FY 2020 Performance Reveals Improved H2 Cash Flow As Barclays Loan, Imminent Indoor Dining And 16p Options Target Support Pandemic Recovery Hopes

07 May 2021
By Maynard Paton

Results summary for Tasty (TAST):

  • A predictably awful performance, with total sales down 46% and sales at operating restaurants down by approximately 30%.
  • H2 was not as bad as H1, witnessing improved cash flow and much lower write-offs.
  • A loan from Barclays may indicate TAST’s future is “assured“, but effective net cash of £0.25m is not a huge safety buffer.
  • Indoor dining should resume within two weeks, which ought to enhance cash flow and alleviate overdue obligations. 
  • A new option scheme that pays out in full if the shares reach 16p gives some indication of the possible recovery upside from the recent 7p. I continue to hold.

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M WINKWORTH: Record Quarterly Dividend Supports Potential 5% Income After FY 2020 Figures Imply 38% Returns On New Investments

30 April 2021
By Maynard Paton

Results summary for M Winkworth (WINK):

  • A revitalised property market led to a much stronger H2, with management optimism underlined by a record dividend for Q1 2021.
  • Impressive market-share gains continue to be won from London rival Foxtons.
  • Early contributions from in-house branches are encouraging, with implied returns on investment of 38%.
  • The accounts remain in good order with net cash, respectable margins, positive cash flow and satisfactory returns on equity.
  • A possible P/E of 11-14 and a potential 5% income may offer upside should buoyant trading convert into much higher earnings. I continue to hold.

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

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23 April 2021
By Maynard Paton

I like companies that boast significant net cash. My reasons include:

  • Limited risk of funding difficulties should trouble strike;
  • Management might be sensible by holding ‘rainy day’ money;
  • The cash position may have resulted from superb profit generation, and;
  • The share price could be less volatile (especially if the cash position represents a large part of the market cap).

I therefore applied the following filter criteria within SharePad to identify some reasonable cash-flush businesses:

  • Trailing twelve-month net borrowings of no more than zero (i.e. a net cash position);
  • A market cap of at least £50 million;
  • Net cash of at least 10% of the market cap, and;
  • A trailing twelve-month operating margin of at least 1% (to include only profitable companies).

I found 38 matches, and Venture Life attracted my attention because the company:

  • Carried a significant 28% of its market cap as net cash;
  • Operated within the generally favourable healthcare sector, and;
  • Published impressive results last month.

Read my full Venture Life article for SharePad.

Maynard Paton

S & U: £24 Shares May Already Reflect Pandemic Recovery After New Loan Quality Remains At 5-Year High And Management Comments Of Property Profit Quintupling

22 April 2021
By Maynard Paton

Results summary for S & U (SUS):

  • A predictably Covid-blighted statement that confirmed extra write-offs of £19.5m, full-year profit diving almost 50% and the first annual dividend cut since at least 1987.
  • Various calculations indicate credit quality at SUS’s motor-finance division declined by approximately 10%, due mostly to payment holidays.
  • Management’s webinar comments claimed property-loan profit could quintuple to £5m within the next three years.
  • Reduced net debt, interest charges at 3% plus fresh borrowing facilities suggest no obvious funding concerns.  
  • The £24 shares may already reflect improved collection rates, recovering loan transactions, new loan quality at a five-year high and the generally upbeat directors. I continue to hold.

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BIOVENTIX: H1 Revenue Up Just 1% To Outpace Wider IVD Market As R&D Efforts Narrow Focus And P/E Stays An Elevated 32x

09 April 2021
By Maynard Paton

Results summary for Bioventix (BVXP):

  • Acceptable interim figures that showed revenue up 1% and profit down an underlying 2% after the pandemic reduced demand for routine blood tests.
  • The performance appeared to have outpaced the wider in vitro diagnostics (IVD) market, with a 20% dividend lift underpinning management’s confidence. 
  • Progress from the important vitamin D and troponin antibodies was positive, while R&D efforts seem now to focus on just three projects.  
  • The accounts remain healthy with a super 76% margin, light demands on cash flow, a £5m-plus cash buffer and a potentially understated investment.
  • Predictable income and a competitive ‘moat’ presently offset the effective dependence on just two products to keep the P/E at an elevated 32x. I continue to hold.

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Q1 2021: My ABC Of Investing

01 April 2021
By Maynard Paton

Happy Thursday! I trust your shares have enjoyed a positive start to the year.

A summary of my portfolio’s first quarter:

  • Q1 gain: +5.4%* (FTSE 100**: +5.0%).
  • Q1 trades: None.
  • Q1 winners/losers: 6 winners vs 3 losers (and 2 non-movers).

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MINCON: Direct Selling And Construction Projects Help Lift FY 2020 Profit By 28% But Margin Comparison Raises Further ‘Moat’ Questions

30 March 2021
By Maynard Paton

Results summary for Mincon (MCON):

  • Acceptable pandemic progress, with underlying revenue up 6% and profit up 28% due almost entirely to margin improvements.
  • Strategic efforts to sell drills direct and supply the construction market seem to have borne fruit and underpinned the higher earnings.
  • A margin comparison with larger rivals raises questions as to whether MCON’s products enjoy an indisputable competitive ‘moat’.  
  • Rising costs and enormous stock levels raise further questions about the group’s underlying economics. 
  • New products expected to “transform” drilling plus a desire to “innovate and disrupt the market” might justify the 19x-plus P/E. I continue to hold.

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[SharePad] Small-Cap Spotlight Report: NORCROS

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24 March 2021
By Maynard Paton

Let me start by confessing this article covers pension deficits.

What follows may not be that thrilling and does require you to concentrate. But please stick with me, especially if you have ever fallen victim to a ‘value trap’.

A burdensome pension scheme is a common reason why companies trade on permanently low ratings. The market essentially believes too much of their future profits will have to plug a retirement ‘black hole’ instead of being paid out as dividends.

A good example is Norcros, a £214 million manufacturer of bathroom showers, taps and tiles.

This share has stubbornly traded on a single-digit P/E for years…

Source: SharePad

… and studying the group’s pension situation goes some way to explain why.

Read my full Norcros article for SharePad.

Maynard Paton