Mincon: Acceptable 2018 Results Show 10% Organic Growth And Outline ‘Disruptive’ New Drilling Product

20 March 2019
By Maynard Paton

Results verdict on Mincon (MCON):

  • Acceptable double-digit growth supported by encouraging organic sales and the purchase of Driconeq.
  • New ‘Greenhammer’ product appears to offer attractive possibilities through “disruptive technology”.
  • Year ahead to focus on consolidating operations after bumper orders created production constraints during 2017 and 2018. Recent trading not buoyant.
  • Accounts offer scope for improvement as hefty stock build-up unwinds, capital expenditure falls and cost savings are found.
  • The underlying P/E of 19 is not an obvious bargain. I continue to hold.
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[SharePad] Screening For My Next Long-Term Winner: Accesso Technology

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15 March 2019
By Maynard Paton

I found Accesso Technology after screening for companies that offered an attractive growth history as well as respectable future prospects.

To narrow the field down further, I looked for share prices that had fallen since the start of the year and balance sheets that carried net cash.

The exact SharePad criteria I used were:

1) A negative share-price performance since 31 December 2018;
2) An average 5-year earnings growth rate of 10% or more;
3) A forecast 1-year earnings growth rate of at least 0%, and;
4) Net borrowing of zero or less (i.e. a net cash position).

I noted Accesso’s share price had fallen a hefty 43%, while the forecast P/E of 15 did not look too demanding given the group’s past and expected earnings growth.

Read my full Accesso Technology article for SharePad.

Maynard Paton

Tristel: Record H1 Results Deliver Wonderful 28% Dividend Lift But Further FDA-Project Mishaps Dash Any Hope Of Early US Sales

28 February 2019
By Maynard Paton

Results verdict on Tristel (TSTL):

  • Very satisfactory double-digit growth supported by encouraging progress both within the UK and abroad.
  • A new product and a recent acquisition offer attractive medium-term potential.
  • Continued bungling of the US regulatory project raises awkward questions about the associated consultants and decision-makers.
  • Accounts remain in good shape with high margins, net cash and conservative reporting of ‘one off’ costs.
  • Valuation remains understandably rich with an underlying P/E of 26. I continue to hold.
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[SharePad] Screening For My Next Long-Term Winner: Hargreaves Lansdown

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28 February 2019
By Maynard Paton

For this SharePad search I screened for companies that exhibited an extended history of high margins and high returns on equity (ROE).

To narrow the field down further, I required my shortlisted companies to possess cash-positive balance sheets.

The exact criteria I used were:

  1. An average 10-year EBIT margin of 20% or more;
  2. An average 10-year ROE of 20% or more, and;
  3. Net borrowing of zero or less (i.e. a net cash position).

I selected Hargreaves Lansdown from the 24 matches because this company:

  • was the largest on the shortlist;
  • offers services used by many private investors, and;
  • prompts different opinions from quality investors Terry Smith and Nick Train.

Read my full Hargreaves Lansdown article for SharePad.

Maynard Paton

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

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11 February 2019
By Maynard Paton

Being able to analyse international shares — at no extra cost! — is a wonderful feature of SharePad. You can take your pick from several US and European indices.

One overseas share attracting my attention of late is Apple. The US company has appeared on my radar because:

  • I know billionaire investor Warren Buffett owns the shares;
  • I see the Apple P/E on SharePad is a reasonable 13.7, and;
  • I own three Apple devices.

When the world’s richest investor buys a share, finding out why can often pay off.

At the end of September 2018, Mr Buffett’s Berkshire Hathaway investment vehicle owned 255 million Apple shares with a then value of $58bn. At the time the investment represented 8% of Berkshire’s assets.

During the first nine months of 2018, Mr Buffett acquired Apple shares at prices I estimate to average $170 — a level similar to that seen today.

Should we now join Mr Buffett as Apple shareholders?

Read my full Apple article for SharePad.

Maynard Paton

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

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31 January 2019
By Maynard Paton

For this SharePad search I demanded companies that offered a history of fantastic earnings growth alongside a relatively reasonable valuation.

To narrow the field down further, I wanted only cash-rich companies that paid a dividend.

The exact criteria I used were:

  • Annualised earnings per share growth of at least 25% during the last five years;
  • A forecast P/E of no more than 20;
  • Net borrowing of zero or less (i.e. a net cash position), and;
  • A dividend yield greater than zero.

I added a fifth criteria to exclude house builders:

  • Not a member of the Home Construction sub-sector.

I don’t really class house builders as super-growth businesses, and no doubt they will crop up in future screens anyway. (Eight house builders were excluded from this search.)

Games Workshop stood out among the 23 matches.

I chose this company because:

  • I bought the shares at £8, and;
  • I have visited the company’s HQ and spoken at length with the executive management.

Read my full Games Workshop article for SharePad.

Maynard Paton

City Of London Investment: Dividend Yield Now 7.5% As H1 Profit Drops 21% And Tough Markets Extend Wait For Significant New Clients

18 January 2019
By Maynard Paton

Results verdict on City of London Investment (CLIG):

  • Monthly updates had already braced shareholders for lower funds under management — which in turn reduced first-half profit by 21%.
  • Tough markets have again prompted the fund manager to cut its projections, as fee rates are trimmed and costs creep higher.
  • As before, significant new clients are required to bolster earnings and support a decisive share-price re-rating.
  • I am hopeful the replacement chief executive might one day re-energise the group’s marketing.
  • The accounts remain cash-rich and high-margin, and the shares yield 7.5%. I continue to hold.
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[SharePad] Screening For My Next Long-Term Winner: Plus500

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17 January 2019
By Maynard Paton

I have been trawling SharePad again with another back-to-basics search.

For this screen I demanded:

  • A forecast P/E of no more than 12;
  • An operating margin of 15% or more;
  • Net borrowing of zero or less (i.e. a net cash position);
  • A yield of 4% or more, and;
  • A market cap of £150m or more.

One share that stood out within the 16 matches was Plus500.

I remembered this company had issued a positive trading statement just after Christmas:

Accordingly, with the year ended 31 December 2018 almost complete, the Board anticipates the financial performance will be ahead of current market expectations.

If Plus500’s recent progress has been better than expected, why then is the forecast P/E just 6.1?

Simply click here to read my Plus500 article for SharePad.

Maynard Paton

How To Evaluate Company Management

Note: This Blog post has been extracted from my Q2 2017 Portfolio Update and my Q3 2017 Portfolio Update. The studies were performed during 2017 and, although the basis of my analysis has not changed, my verdicts have not been updated for subsequent events.)

14 January 2019
By Maynard Paton

This Blog post outlines how I evaluate company management and uses my share portfolio for examples.

As I have stated in How I Invest (my bold):

I want my investments to be led by loyal and capable bosses that have served in the top job for several years. I want to see improvements to profits and the dividend throughout their leadership. Better still is the founder/entrepreneur boss, who set up the firm in the first place, has led it ever since and has therefore shown even more commitment to building the business.”

For the first part of the study I assess management loyalty and commitment (through a sizeable ordinary shareholding). I then look at management capability and track records.

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

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03 January 2019
By Maynard Paton

I am going back to basics with this SharePad trawl. I simply want to identify a quality company trading at a modest valuation that I can hold for the long term.

Given recent market conditions, I am hopeful SharePad will unearth a few likely contenders!

For this screen I demanded:

  • A forecast P/E of no more than 12;
  • An operating margin of 15% or more;
  • Net borrowing of zero or less (i.e. a net cash position);
  • A yield of 4% or more, and;
  • A market cap of £150m or more.

SharePad immediately found 20 shares that matched my criteria.

The name that stood out was Somero Enterprises. I was vaguely aware of this business having some prominence within its particular field — the glamorous world of concrete floors.

Simply click here to read my Somero Enterprises article for SharePad.

Maynard Paton

How To Evaluate Pension Deficits

(Note: This Blog post has been extracted from my Q3 2018 Portfolio Update)

03 January 2019
By Maynard Paton

Today I am continuing to evaluate my shares with some thoughts on company pension deficits. As I have stated in How I Invest:

c. Low/no pension issues: I view final-salary schemes as potential timebombs. Nobody really knows the exact level of future contributions they require and I prefer to back companies without any ‘employee benefit liabilities’ whatsoever.”

Let me start by saying this Blog post is not a definitive analysis of company pensions. Whole books can be written on what is a complex subject, and sadly I am not a company-pension expert.

Nonetheless, judging pension schemes should be important to investors — not least because the schemes can suddenly start absorbing extra cash that might otherwise be paid to shareholders as dividends.

I get the impression many companies trade on lowly ratings because investors worry about the associated pension schemes becoming financial ‘black holes’. You could say these shares are potential ‘value traps’.

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Q4 2018: 2 Top-Ups And Down 6.6% For 2018

01 January 2019
By Maynard Paton

Happy 2019! I hope you coped well with last year’s rough market and that you continue to find my Blog useful.

The major development for me during 2018 was starting to write articles for SharePad. No longer can I call myself a full-time investor who has no other income than capital gains and dividends!

Nevertheless, I do continue to depend upon my dividends — so I am still a full-time-ish investor.

For the time being at least, I do not have to think too much about capital gains… which is just as well given the recent market downturn. 

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Year In Review 2018

01 January 2019
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now raring to do battle with the market for another twelve months!

This first Blog post of 2019 provides a ‘year in review’ of my current portfolio holdings. I recap how each of the underlying businesses performed during 2018, as well as provide a few remarks about valuation.

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[SharePad] A Special SharePad Investigation: Patisserie Valerie

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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

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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

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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

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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

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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

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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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