Well that was tense. With talk this morning of held back investment, transactions and trade deals I have taken a look at which asset classes have performed worse than their 10 year average in the last 12 months.  Only the FTSE Small cap (for those where a 10 year history exists).

Gateley – Acquisition

Share Price 174p

Mkt Cap £197m

Conflict Disclosure: I Hold

  • Acquisition The human capital consultancy T-three is acquired for £3.4m complementing the July acquisition of Kiddy & Partners. With revenues of £4.2m and EBITDA of £0.7m the valuation is 0.8X revenue and 4.9X EBITDA. Consideration is 50% cash/shares.
  • Estimates With a forecast of £19.1m PBT this add perhaps 3%.
  • Valuation PER 12.5X, yield 4.5% to April 2020. 1.8X revenues.
  • Conclusion This looks to be a conservatively run lawyer, being the first to come to market. Sensibly using the arbitrage between private company and public company valuations in the space.

Tungsten Corp – H1 Results  

Share Price 38p

Mkt Cap £48m

Conflict Disclosure: No Holding

  • Results A 4% underlying revenue increase looks dull. Adjusted EBITDA margin of 10% at £1.8m suggests the company is past the eye of the needle while the reduction in cash from £2.8m to £1m appears a concern.
  • Estimates With a new CEO forecasts were reduced from £4m to £2.7m for April 2020 and from £5.6m to £5.1m in the year to April 2021. The company reports a 300% increase in the pipeline but slower conversion rates. In H2 the company expects to close £4m revenues which will be credited to revenue in 2021. With a 12 month sales cycle the company sounds confident in these sales.
  • Valuation With 84% recurring revenues if we believe this incremental £4m of revenue in April 2021 the company is trading at 9.4X EBITDA.   
  • Conclusion I can’t help but feel that over the next 12 months if the company can deliver the £5.1m EBITDA which is forecast to rise to £7.1m the following year with 94% recurring revenues the shares could have 50%-100% upside.



  • AJ Bell directors sold £26m shares yesterday at 400p/share yesterday. PE 44X but very close to the 405p screen price.
  • Merian Chrysalis invests in Wefox to bring the fund to 75% invested.
  • IG Group New chairman Mike McTighe appointed. Ex Cable & Wireless, Phillips & Motorola.
  • Saga appoints Euan Sutherland CEO. Ex CEO Superdry and Co-op.
  • Ratesetter changes terms & conditions allowing it to suspend access to funds to manage liquidity.

DWF Group – H1 Results  & Acquisition

Share Price 120p

Mkt Cap £361m

Conflict Disclosure: No Holding

  • Results.Revenues were up 10% to £146.8m while the gross margin tempered to 50.2% gicing an 8% increase in gross profit. EBITDA was up 4% to £15.5m but adjusted EBITDA was up 19% to £20.1m. The largest adjusting item here is share based payments of £4.4m which is questionable. Insurance services revenues were up10%, Connected Services revenues up 18%, International up 28%, and Commercial was flat. Net debt was £49.5m. H2 is expected to be stronger following H1 investments and the company has a strong pipeline of M&A targets.
  • Acquisition Spanish law firm RCD is acquired for £42.5m of which £6.2m is payable in cash up front. That is 1.3X revenue or 6.25X adjusted EBITDA.
  • Estimates. H1 revenues were 47% of the full year so underlying trading looks in line with expectations.
  • Valuation.  The company trades at a PER of 11.3X and yields 6%.  7.4X EBITDA adjusted and 1.2X revenue. The acquisition looks earnings neutral or possibly modestly enhancing but not materially due to the relatively small amount of cash consideration.
  • Conclusion. It all appears to be doing what it says on the tin. There is one partner with 5m shares being released from IPO lock ups due to personal circumstances. Probably good for another year or two but with debt increasing and a strong M&A pipeline it wouldn’t surprise to see a placing in the next 6 months.



In case we are all a little weary of politics this chart gave me some hope. People are buying equities again !


  • Morgan Stanley to cut 1,500 jobs (confirmation we are in December)
  • MJ Hudson to IPO on election day
  • Litigation Capital Management hosts Capital Markets Day and confirms in advanced discussion to manage a USD 150m fund. With the markets risk averse nature there are good returns to be had from companies evolving from investors to fund managers. Other candidates include First Property, Mercia Asset Management and Arrow Global.
  • Orchard Funding Chairman to step down. Mark Sismey-Durrant to become Chairman who is an ex director of Heritable Bank and ex CEO of Hampshire Bank while the new NED Steven Hicks is Chair of the Risk Committee at State Bank of India (UK). Steps towards a banking license. Historic PE 10X, Yield 4%.

Begbies Traynor – H1 Results  

Share Price 88p

Mkt Cap £112m

Conflict Disclosure: No Holding

  • Update H1 revenue up 20.7% to £33.8m and PBT up 33% to £4m. EPS up 24% to 2.6p (adjusted). Interim dividend up 13% at 0.9p.  Organic revenue growth is disclosed as 10%. Net debt reduced over the period from £6m to £2.3m helped by the £7.8m placing in July. Outlook is confident “at least” in line with expectations.
  • Estimates 3 businesses were acquired towards the end of H1 which make £5.9m revenue and £1.8m PBT annualised.  If we take the H1 revenue and add the acquisitions we get a full year revenue number of £70.5m which compares to consensus revenue of £69m. Undemanding.
  • Valuation PER 15.2X and yield of 3.2%. Adjusted ROE for the current year is c 11%.  
  • Conclusion The shares have been strong performers rising from 60p since July. But the company has an acquisition strategy that is investing earnings (and more) at accretive returns. This could continue for a while helped by the insolvency market. Further to go.

S&U – Trading Update

Share Price 2100p

Mkt Cap £254m

Conflict Disclosure: No Holding

  • Update Against a motor loans market that increased 2% Advantage’s new loans are up 11% with receivables growing 3.2% since July to £280m. Year on year receivables are up 5%. Net receivables in the property bridging loans are £28m against £18m a year ago in a slow market. Headroom is £132m. The outlook statement reminds us that S&U is more stable than politics.
  • Estimates Trading is in line which is PBT of £36.3m for the year to July 2020, EPS of 245p and a 123p dividend.
  • Valuation PER 8.6X Yield 5.9%.ROE is 17% and the shares trade at 1.5X book value.
  • Conclusion The shares are good value and the lending has proved to be cautious. Once there is some clarity on the economy the shares could rally.  Electric vehicles is perhaps not a threat but driverless vehicles could be when it eventually happens. Looks tempting on a 12 month view.



  • Tatton Asset Management establishes an EBT which will be making market purchases of shares. The shares are up 30% in the last 2 months.
  • Secure Trust CFO is resigning to become CFO of Provident Financial.
  • Property Questor’s comments that investors are “crazy” to have money in open ended property funds won’t help the redemptions from Aberdeen’s property fund that saw heavy redemptions last week post the closure of the M&G fund. I find myself wondering if we are heading for a new liquidity crunch heralding the end of risk investing, delivering opportunities for the brave. Tchenguiz has built a 2% stake in Woodford Patient Capital Trust.

Frenkel Topping – Trading Update  

Share Price 33p

Mkt Cap £25m

Conflict Disclosure: No Holding

  • Update The company has grown its AUM and trading is therefore in line with expectations.
  • Estimates PBT of £2.1m is expected from £8.6m revenues, a 24.4% PBT margin.
  • Valuation PER 12.8X and yield of 4.2%.  
  • Conclusion Looks tempting if this small company can get grow its profits materially.

Amigo Holdings – Board Changes

Share Price 60p

Mkt Cap £288m

Conflict Disclosure: No Holding

  • Changes James Bennamore exercises his right to appoint non executive directors. He appoints himself and Kelly Black, who was a member of Amigo’s founding team. Kelly Black will be appointed once an additional independent NED has been appointed. Strangely the chairman now deems it more appropriate for a new Chairman to be appointed. Hamish Paton, the CEO has also tendered his resignation subject to a 12 month notice period. Having previously been Chief Commercial Officer he was appointed CEO in July this year.
  • Estimates There is no mention of current trading, but results on 28 November confirmed trading was in line with expectations.
  • Valuation PER 3.8X Yield 15.8%.
  • Conclusion With the FCA not making any public statements it is hard to know to what extent these changes are driven by regulators and how much is simply driven by the concerns of the 60% shareholder. I am told the FCA has been “crawling all over” the business, but its not often we have a valuation of 3.8X and a 15% yield with trading in line with expectations. This could be time to take those portfolio enhancing bravery pills. The Chairman’s comments that it has been a “fascinating” experience tell us a lot.



  • Just Group – significant votes against the reappointment of the Chairman and the authority to allot shares. The company reassures it has no intention to raise new equity capital and for board diversity.
  • Amigo – confirms free float is now 28%.

IG Group – Pre Close Trading Update

Share Price 689p

Mkt Cap £2,546m

Conflict Disclosure: I Hold

  • Update  H1 revenue is expected to be £250m which is flat on the prior year though the statement reminds us the prior year had 2 months trading included prior to the ESMA proposals coming into effect implying a like for like improvement in the other 4 months. Core market revenues £210m is 6% down, but the company suggests Q2 has been strong. Revenue from “significant opportunities was £40m, up £12m in the 6 months.
  • Estimates FY forecasts assume £497m revenues which implies no growth H2 on H1. Potential for upgrades here. At the strategy day the expectation for core markets for 2019 was guided to £415m, of which more than half has been delivered in H1. And “significant opportunities was guided to £60m of which £40m has been delivered in H1.
  • Valuation PER 17.4X Yield 6.3% from a dividend which is a 110% pay-out ratio.
  • Conclusion Significant Opportunities 2022 revenue target was guided to £160m in May and 3-5% growth in core markets revenue was guided implying £466m revenue from core markets in 2022. That is £626m revenue in 2022. Forecasts are for £574m revenue in 2022.  There should be a series of upgrades to come so while the shares are now not cheap having risen 45% since May there may be more to come as upgrades are delivered. Only Canaccord remain grumpy on this one.

AJ Bell – FY Results

Share Price 408p

Mkt Cap £1,667m

Conflict Disclosure: No Holding

  • Results Revenue up 17% to £104.9m and PBT up 33% to £37.7m, driven by AUA up 13% to £52.3bn. EPS up 33% to 7.5p and DPS up 31% to 4.83p. Outlook confident. Advised net inflows were 6% ansdD2C were 16% with advised AUA now accounting for 65% of the AUA. Revenue margin increased from 21bps to 21.9bps due to the higher growth of D2C while transactional revenue fell 1%. No segmental split is provided between D2C and Investcentre. Operating margin is now 35.9%, up from 31.6%. The company launches a bid for the CSR money launching a share option plan to give £10m to charity dependent on 100% EPS growth in 3 years and 150% in 5 years. It is underwritten personally by Andy Bell.
  • Estimates PBT is in line with forecasts and going forward forecasts look for 20% PBT growth in 2020 followed by 15% in 2021.  Clearly Andy Bell believes 30% is achievable and he has placed a £10m bet on it.
  • Valuation 2020 PER is 44X and yield 1.4%. HL trades on 31X and yields 2.5%.
  • Conclusion Hard to fault. The CSR initiative is going to make Hargreaves Lansdown look big and bad while 9 analysts have a negative recommendation, 4 are Holders and 4 are positive. Always a positive sign.