It's probably just as well that I never use spread bets (as mentioned in my last blog re:Angle). I was anticipating bid news from the company this week, and a sharp rise in the share price. At the very least I thought that a trading update may materialise today. The AGM is scheduled for 2pm. As yet the company have issued nothing, although the day is young!
I suspect that the company may make a bland "we don't comment on market rumours" statement at the AGM if questioned, but it does seem odd that they haven't made an outright rebuttal since it's a very small company and bid rumours aren't normally a daily occurrence for these small caps. Why not just state outright that "the company is aware of the persistent rumours printed in the Times, but can categorically deny that the company is not currently in bid talks". It's not that difficult surely. This isn't Vodafone where rumours of a sale of Verizon Wireless cropped up quite regularly. Although of course they did prove to be well founded in the end.
It will be interesting to see if the days events do shed any light on either bid interest or further developments re: Parsortix.
I certainly haven't changed my view about the bid rumours though, until I hear a flat denial by the company I continue to believe it may just be a matter of time.
Needless to say, I remain a long term holder, and await further developments.
Thursday, 31 October 2013
Wednesday, 30 October 2013
Servoca - 40% rise today
Servoca Plc describes itself as a leading provider of specialist recruitment solutions to the Education, Healthcare and Criminal Justice sectors. Its Security division offers security services to the public and private sectors.
Today (30th Oct.) it released a trading statement saying, "The Company is pleased to report that results for the year ended 30 September 2013 will be significantly ahead of market expectations and the Board is encouraged by the continued performance of the Group." It goes on to say that, "The September period, which is important for the Group's Education recruitment businesses
, was positive and a marked improvement on the prior year. Trading in the second half and the platform established from our Education activities give the Board confidence on further growth in 2014."
A very positive statement indeed, and as a consequence the shares have risen 40% today in response, valuing the group at £8.2m.
Forecasts for this year came in at 0.3p on revenue of £45m. Looking at performance in 2009 diluted EPS came in at 2.78p. Clearly if they can return to those levels on the back of an improving economy then even after the substantial rise today the shares might look cheap.
The shares have traded as high as 48p/49p, but not for some considerable time. Net assets come in at just over £7m (mostly intangibles). The company has clearly been well under the radar of private investors and needless to say professionals, but it might be an interesting punt for some.
I don't own shares in Servoca, and it doesn't fit my selection criteria, however if economic recovery does take a stronger hold in the next year or two then I'm sure the share price has far farther to climb.
As ever, no advice intended or given.
Today (30th Oct.) it released a trading statement saying, "The Company is pleased to report that results for the year ended 30 September 2013 will be significantly ahead of market expectations and the Board is encouraged by the continued performance of the Group." It goes on to say that, "The September period, which is important for the Group's Education recruitment businesses
, was positive and a marked improvement on the prior year. Trading in the second half and the platform established from our Education activities give the Board confidence on further growth in 2014."A very positive statement indeed, and as a consequence the shares have risen 40% today in response, valuing the group at £8.2m.
Forecasts for this year came in at 0.3p on revenue of £45m. Looking at performance in 2009 diluted EPS came in at 2.78p. Clearly if they can return to those levels on the back of an improving economy then even after the substantial rise today the shares might look cheap.
The shares have traded as high as 48p/49p, but not for some considerable time. Net assets come in at just over £7m (mostly intangibles). The company has clearly been well under the radar of private investors and needless to say professionals, but it might be an interesting punt for some.
I don't own shares in Servoca, and it doesn't fit my selection criteria, however if economic recovery does take a stronger hold in the next year or two then I'm sure the share price has far farther to climb.
As ever, no advice intended or given.
Monday, 28 October 2013
An irrational fear of picking dogs
Over the weekend I wrote an article about the current bull run in the UK stock market and shared my personal thoughts regarding its likely duration. In truth, guessing the direction of stock markets is a bit of a mugs game. Not dissimilar to predicting the weather.
Whilst I am sure much of the UK has suffered from the much hyped storm this morning and last night, where I live it's a nice sunny day with a light breeze. Of course it's possible that the storm is currently making it's way towards us, but I won't hold my breath. Interestingly, although forecasters are rarely able to accurately predict even a few days in advance, it never seems to deter them from predicting the outcome for a year or even further out. It wasn't so long ago that climate change experts were predicting that Britain would soon have a climate akin to the South of France and that mild winters would prevail for years to come. Well this summer wasn't too bad, but if the past three winters have been mild then I'm not looking forward to a severe one.
Anyway, I digress.
In the article I wrote over the weekend, I mentioned again that the Financial crisis and subsequent recession had provided the investing opportunity of a lifetime, a view I expressed at the time.
I noticed today that Pendragon released a trading statement. It's a good statement which says that profitability for this year is materially above expectations, and that they are cautiously optimistic about 2014. The shares are currently around 40p.
Of course during the height of the panic, unbelievably the shares were driven down to 1.5p. A £1000 investment at that point would now be worth around £26,600.
This brings me to a more general point about investment strategies. It appears to me that many investors are too fearful and cautious about individual losses whilst ignoring the possible exponential gains from buying a small basketful of such shares.
Consider buying shares in ten companies that looked like basket cases at the height of the crisis when they were at or close to their nadirs. Let's imagine you bought PDG, JSG, HRG, TCG and AVS(a share I currently hold). A £1000 investment in each when they were at or close to their lows would now be worth £26,600, £11,000, £16,000, £10,000 and £11,000 respectively (please note that I haven't checked the exact lows, but I am quite sure that the figures are pretty accurate from memory). That's a whopping £75,600 from a £10,000 investment. Let's assume that the other five picks went bust and you lost £5,000. In reality, with reasonable stock picking ability and common sense, you are unlikely to pick five companies that go to the wall.
In fact it appears to me that many investors are totally irrational regarding risk.
Put simply, imagine tossing a coin 10 times, and it's £1000 per go, Heads you win £5000 and tails you lose your £1000 stake. You only need to win twice to break even. Nobody in their right minds would offer you such good odds where the chance of winning is 50%. If you have proven yourself to be a reasonably good stock picker then of course your chances are undoubtedly greater than 50%.
Psychologically it's difficult to take a loss, no matter how small, but actually with a small basket of such shares the fear of loss is totally irrational.
Whilst I am sure much of the UK has suffered from the much hyped storm this morning and last night, where I live it's a nice sunny day with a light breeze. Of course it's possible that the storm is currently making it's way towards us, but I won't hold my breath. Interestingly, although forecasters are rarely able to accurately predict even a few days in advance, it never seems to deter them from predicting the outcome for a year or even further out. It wasn't so long ago that climate change experts were predicting that Britain would soon have a climate akin to the South of France and that mild winters would prevail for years to come. Well this summer wasn't too bad, but if the past three winters have been mild then I'm not looking forward to a severe one.
Anyway, I digress.
In the article I wrote over the weekend, I mentioned again that the Financial crisis and subsequent recession had provided the investing opportunity of a lifetime, a view I expressed at the time.
I noticed today that Pendragon released a trading statement. It's a good statement which says that profitability for this year is materially above expectations, and that they are cautiously optimistic about 2014. The shares are currently around 40p.
Of course during the height of the panic, unbelievably the shares were driven down to 1.5p. A £1000 investment at that point would now be worth around £26,600.
This brings me to a more general point about investment strategies. It appears to me that many investors are too fearful and cautious about individual losses whilst ignoring the possible exponential gains from buying a small basketful of such shares.
Consider buying shares in ten companies that looked like basket cases at the height of the crisis when they were at or close to their nadirs. Let's imagine you bought PDG, JSG, HRG, TCG and AVS(a share I currently hold). A £1000 investment in each when they were at or close to their lows would now be worth £26,600, £11,000, £16,000, £10,000 and £11,000 respectively (please note that I haven't checked the exact lows, but I am quite sure that the figures are pretty accurate from memory). That's a whopping £75,600 from a £10,000 investment. Let's assume that the other five picks went bust and you lost £5,000. In reality, with reasonable stock picking ability and common sense, you are unlikely to pick five companies that go to the wall.
In fact it appears to me that many investors are totally irrational regarding risk.
Put simply, imagine tossing a coin 10 times, and it's £1000 per go, Heads you win £5000 and tails you lose your £1000 stake. You only need to win twice to break even. Nobody in their right minds would offer you such good odds where the chance of winning is 50%. If you have proven yourself to be a reasonably good stock picker then of course your chances are undoubtedly greater than 50%.
Psychologically it's difficult to take a loss, no matter how small, but actually with a small basket of such shares the fear of loss is totally irrational.
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