The Lemon Fool

WickedLester wrote:

My own preferred good news this morning was the trading update from Somero: https://www.investegate.co.uk/somero-en ... 00067955F/ which is one of my largest holdings. I think it's a cracking little company with fantastic profitability metrics (ROCE+ margins) and free cashflow that generates reams of dividends. Totally undervalued.

FWIW simoan I took a look at Somero and decided to buy some today. Obviously I could have got a much keener price before the trading update but I feel they are still not expensive at £3 and cashflow is excellent.

I see you're not into Technical Analysis then? I'm sure a TA bod would have told you to wait until the price breaks through resistance at the 300p level. Of course, I'm only joking and have no interest in TA myself! I like the company which is why it's such a large holding for me, in particular it has very sound management with great customer relationships and a rock solid balance sheet. The generous dividend stream is just a nice by-product of the excellent profitability the company enjoys. Downside would be a major recession in the US which accounts for the vast majority of revenue and profit. Personally, I don't see that happening currently with such low interest rates, but a US construction slowdown is something to keep an eye out for.

All the best, Si

There's been some more news on a couple of the stocks I bought recently.

Firstly MSI reported interims. They were not great, showing a loss of just over £1m on turnover a fair way down but the outlook statement seems reasonably positive and they have been able to maintain the interim dividend due to the strong balance sheet.

https://www.investegate.co.uk/ms-intern ... 00037615I/

Secondly there was a trading update from Sanderson Design Group (previously Walker Greenbank) and fortunately it's good news.

https://www.investegate.co.uk/sanderson ... 00072532J/

The improvement in sales during October and November 2020 was also reflected in profitability, which has also benefited from the programme of cost reduction measures implemented by management in the current and last financial years.

As a result, it is now expected that profit before tax for the year ending 31 January 2021 will be substantially ahead of management's previous expectations.

I have sold all of the shares I bought recently for a tidy profit and now just retain a small holding at a low average price.

There's been a few trading updates on some of the companies mentioned here today.

Firstly Headlam. The trading update is not too bad and turnover recovered strongly in the second half. The company expects to report profit at the top of the restated range and should reinstate a dividend. On the outlook for this year sales are down 5% from last year so far so once again not too bad.

https://www.investegate.co.uk/headlam-g ... 00033816M/

Secondly Somero reported very strong trading and expects to report adjusted EBITDA of $26m as well as a big net cash position. On the outlook they say that costs will increase substantially this year as they invest in sales and marketing but they still expect to report growth.

https://www.investegate.co.uk/somero-en ... 00033893M/

Thirdly Robinson also posted that their earnings would be above market expectations and are paying a bumper 8.5p dividend this year.

https://www.investegate.co.uk/robinson- ... 00033894M/

Finally Sanderson Design Group also posted a strong update and expects to report a profit before tax of at least £6.3m for the year.

https://www.investegate.co.uk/sanderson ... 00044350M/

In all cases the price has responded positively and after today the only one of these I am still holding is Headlam.

Zytronic have announced a proposed tender offer this morning to return £10m at 145p a share. At that price I could get out at a profit but it seems a bit low to me so at this time I am inclined to hang on to my shares for recovery.

The danger of course is that they don't recover and current trading is certainly poor but in better times the company has traded significantly higher than 145p a share and if the tender offer is a success then future earnings could be significantly boosted.

https://www.investegate.co.uk/zytronic- ... 00094601N/

WickedLester wrote:Zytronic have announced a proposed tender offer this morning to return £10m at 145p a share. At that price I could get out at a profit but it seems a bit low to me so at this time I am inclined to hang on to my shares for recovery.

The danger of course is that they don't recover and current trading is certainly poor but in better times the company has traded significantly higher than 145p a share and if the tender offer is a success then future earnings could be significantly boosted.

https://www.investegate.co.uk/zytronic- ... 00094601N/

I'm not tempted to tender my shares at that price.

dealtn wrote:

WickedLester wrote:Zytronic have announced a proposed tender offer this morning to return £10m at 145p a share. At that price I could get out at a profit but it seems a bit low to me so at this time I am inclined to hang on to my shares for recovery.

The danger of course is that they don't recover and current trading is certainly poor but in better times the company has traded significantly higher than 145p a share and if the tender offer is a success then future earnings could be significantly boosted.

https://www.investegate.co.uk/zytronic- ... 00094601N/

I'm not tempted to tender my shares at that price.

I never thought of Zytronic management as particularly shrewd or pro-active and they have sat on way more cash than the company needed operationally for far too long. However, this is quite a smart move because it will likely clear any overhang if there is a constant seller in the background depressing the price - it is after all pretty illiquid. If I held, I'd not tender my shares @145p either.

All the best, Si

simoan wrote:

dealtn wrote:

WickedLester wrote:Zytronic have announced a proposed tender offer this morning to return £10m at 145p a share. At that price I could get out at a profit but it seems a bit low to me so at this time I am inclined to hang on to my shares for recovery.

The danger of course is that they don't recover and current trading is certainly poor but in better times the company has traded significantly higher than 145p a share and if the tender offer is a success then future earnings could be significantly boosted.

https://www.investegate.co.uk/zytronic- ... 00094601N/

I'm not tempted to tender my shares at that price.

I never thought of Zytronic management as particularly shrewd or pro-active and they have sat on way more cash than the company needed operationally for far too long. However, this is quite a smart move because it will likely clear any overhang if there is a constant seller in the background depressing the price - it is after all pretty illiquid. If I held, I'd not tender my shares @145p either.

All the best, Si

Of course, what I forgot to mention is that this will not help liquidity. A £10m tender offer might not sound much for a larger company but for Zytronic it will reduce the free float from 14.8m to 7.9m shares.

All the best, Si

simoan wrote:

jackdaww wrote:

jackdaww wrote:
===============================

i have followed suit , having held them in the past .

SP down a bit today at 22p

=========

topped up today at 32p , statement seems positive ..

Yes, the interims were good under the circumstances and recent trading positive, including new registrations last month. However, how long that lasts we'll have to wait and see. NTAV was reported as 46.5 pps, so PTBV still at a significant discount. I'll continue to hold for now.

All the best, Si

A positive (and above market expectations) Trading Update today.

https://www.investegate.co.uk/vertu-mot ... 00039387N/

Shares now around 34p.

dealtn wrote:

simoan wrote:

jackdaww wrote:
=========

topped up today at 32p , statement seems positive ..

Yes, the interims were good under the circumstances and recent trading positive, including new registrations last month. However, how long that lasts we'll have to wait and see. NTAV was reported as 46.5 pps, so PTBV still at a significant discount. I'll continue to hold for now.

All the best, Si

A positive (and above market expectations) Trading Update today.

https://www.investegate.co.uk/vertu-mot ... 00039387N/

Shares now around 34p.

Yes a decent update although it will be interesting to see how much the business rates holiday on the showrooms has boosted profit. I'd assume that will be a one-time benefit not necessarily to be repeated in future financial years.

All the best, Si

simoan wrote:

dealtn wrote:

simoan wrote:Yes, the interims were good under the circumstances and recent trading positive, including new registrations last month. However, how long that lasts we'll have to wait and see. NTAV was reported as 46.5 pps, so PTBV still at a significant discount. I'll continue to hold for now.

All the best, Si

A positive (and above market expectations) Trading Update today.

https://www.investegate.co.uk/vertu-mot ... 00039387N/

Shares now around 34p.

Yes a decent update although it will be interesting to see how much the business rates holiday on the showrooms has boosted profit. I'd assume that will be a one-time benefit not necessarily to be repeated in future financial years.

All the best, Si

Employee Benefit Trust bought 4.6 million shares yesterday at about 37.5p (significant volume and no notice of the seller). Price up above 39p as presumably little stock available and market makers adjusting accordingly.

dealtn wrote:

simoan wrote:

dealtn wrote:
A positive (and above market expectations) Trading Update today.

https://www.investegate.co.uk/vertu-mot ... 00039387N/

Shares now around 34p.

Yes a decent update although it will be interesting to see how much the business rates holiday on the showrooms has boosted profit. I'd assume that will be a one-time benefit not necessarily to be repeated in future financial years.

All the best, Si

Employee Benefit Trust bought 4.6 million shares yesterday at about 37.5p (significant volume and no notice of the seller). Price up above 39p as presumably little stock available and market makers adjusting accordingly.

And, of course, it's not on the IG list of untradeable small caps for their spreadbet customers

All the best, Si

simoan wrote:

dealtn wrote:

simoan wrote:Yes, the interims were good under the circumstances and recent trading positive, including new registrations last month. However, how long that lasts we'll have to wait and see. NTAV was reported as 46.5 pps, so PTBV still at a significant discount. I'll continue to hold for now.

All the best, Si

A positive (and above market expectations) Trading Update today.

https://www.investegate.co.uk/vertu-mot ... 00039387N/

Shares now around 34p.

Yes a decent update although it will be interesting to see how much the business rates holiday on the showrooms has boosted profit. I'd assume that will be a one-time benefit not necessarily to be repeated in future financial years.

All the best, Si

========================

ive top sliced today at 40 .

quite a nice profit , holding some in case it makes it up to 45.

The results of the Zytronic tender offer are out today.

https://www.investegate.co.uk/zytronic- ... 55383776Q/

Around 2/3 of the total was tendered and the company will make market purchases for the rest. I didn't tender my shares as I felt that the price was too low and in a recovery the shares should be worth a lot more. I could sell today for more than the tender price so so far it has proven a wise decision.

WickedLester wrote:The results of the Zytronic tender offer are out today.

https://www.investegate.co.uk/zytronic- ... 55383776Q/

Around 2/3 of the total was tendered and the company will make market purchases for the rest. I didn't tender my shares as I felt that the price was too low and in a recovery the shares should be worth a lot more. I could sell today for more than the tender price so so far it has proven a wise decision.

Those that tendered must feel gutted because the bid price is above 160p right now. Good call not to tender!

All the best, Si

Brand Architekts published their interims yesterday and I was pleasantly surprised.

https://www.investegate.co.uk/brand-arc ... 00065584R/

Turnover was down 10% on the prior year at £9m but they have returned to profit. Net cash is up to £19m but there is still no dividend.

They have ambitions to increase turnover to £50m in five years time and are transitioning to a multi channel distribution model.

The price responded positively yesterday but they still trade at a relatively small premium to net cash. The pension fund deficit is a bit large but it looks manageable.

All in all i'm pleased and will continue to hold.

Somero announced FY results today and everything is in-line with the Jan trading update. PBT tax was down 9% but they ended the year with a record cash balance of $35.4m of which $0.31 (equivalent to ~22p) per share is being returned as a final+special dividend. That's equivalent to 6.2% at the current price. If only those HYPers were allowed to hold small companies that are highly profitable cash generating machines that can knock out huge dividends and still have plenty left to invest for the future

Results are here: https://www.investegate.co.uk/somero-en ... 00067118R/

All the best, Si

simoan wrote:Somero announced FY results today and everything is in-line with the Jan trading update. PBT tax was down 9% but they ended the year with a record cash balance of $35.4m of which $0.31 (equivalent to ~22p) per share is being returned as a final+special dividend. That's equivalent to 6.2% at the current price. If only those HYPers were allowed to hold small companies that are highly profitable cash generating machines that can knock out huge dividends and still have plenty left to invest for the future

Results are here: https://www.investegate.co.uk/somero-en ... 00067118R/

All the best, Si

Somero appears to have an interesting story. Its primary listing is on AIM but it is incorporated in the US. Looks like there used to be an over-the-counter US listing on the pink sheets, but that is delisted as far as I can tell.

Might have a flutter on this as a reopen trade. 15% tax withholding presumably?

Re your earlier post about Zytronic, I declined the tender offer as well. Looking like a good move so far . .

Lootman wrote:Somero ...15% tax withholding presumably?

See standard blurb here:

https://investors.somero.com/~/media/Files/S/Somero-IR/documents/withholding-tax-statement-2020.pdf

Lootman wrote:

simoan wrote:Somero announced FY results today and everything is in-line with the Jan trading update. PBT tax was down 9% but they ended the year with a record cash balance of $35.4m of which $0.31 (equivalent to ~22p) per share is being returned as a final+special dividend. That's equivalent to 6.2% at the current price. If only those HYPers were allowed to hold small companies that are highly profitable cash generating machines that can knock out huge dividends and still have plenty left to invest for the future

Results are here: https://www.investegate.co.uk/somero-en ... 00067118R/

All the best, Si

Somero appears to have an interesting story. Its primary listing is on AIM but it is incorporated in the US. Looks like there used to be an over-the-counter US listing on the pink sheets, but that is delisted as far as I can tell.

Might have a flutter on this as a reopen trade. 15% tax withholding presumably?

Re your earlier post about Zytronic, I declined the tender offer as well. Looking like a good move so far . .

My recollection is that Somero is listed on AIM (despite being a US company) because it was previously owned by a UK private equity company. If you hold in a SIPP there is no WHT. Outside of a SIPP there is 15% WHT with a valid W8BEN. One of the main reasons I hold is the excellence and shareholder friendliness of management, plus the high quality ratios - ROCE, Op Margin, and free cash conversion that yields chunky dividends and share buybacks.

If you're thinking of investing you should really watch the FY20 results presentation provided by the most excellent folks at piworld.

https://www.piworld.co.uk/2021/03/23/so ... sentation/

All the best, Si

WickedLester wrote:There's been a few trading updates on some of the companies mentioned here today. (21st Jan)

....
Thirdly Robinson also posted that their earnings would be above market expectations and are paying a bumper 8.5p dividend this year.

https://www.investegate.co.uk/robinson- ... 00033894M/

Jan trading statement says “we’ll do 37m revenue this year”. Yesterday, the full year results are out: revenue = 37.2m. SP falls 10%. ???