Weekend Rebel Review Sep 14th 2024

St Leger day Special (tho not so special)

This is just some thoughts, it isn't investment advice or incitement to buy in any way, just my views - please do your own thorough research. I’m not an analyst, I’m just a private investor looking after my own money. Nothing I do or say is meant as advice or should be taken as such. Here I publish my ideas and research that I have done and discuss the way I invest.  Anything written here needs to be verified for its accuracy. Assume any stock I write about I likely own, so my views are biased. Inevitably I will get things wrong, everyone is responsible for their own decision making and what they buy and sell. Subscribing and reading this article means you accept the above and you take full responsibility for your own actions and decisions. Small Cap stocks can be illiquid and very hard to sell at times when demand is weak so caution is required.

It's yet another week under the belt and as much as we have had some heavier newsflow.  The UK market doesn’t seem to want to go anywhere in the direction of up while we have the budget ahead.  Having chatted with several brokers and investors who have also made contact with their brokers, investors are still banking pension lump sums and that will go on till the budget at the end of October in my opinion.  Look, if the Labour government are so strapped that they need to hit old grannies for their winter heating allowance, 0.1% of the total government budget, then they must be short of funding ideas/options.  Ultimately, they are going to hammer the public for tax – it’s what Labour do and I warned about them for ages and the dangers if they get in.  A lot of young people who don’t remember a Labour government (not Blair, he was a wet Tory) like Wilson and Callaghan, are now about to get a big lesson imo.  It was 45 years ago that Callahan and Healey were booted out after going cap in hand to the IMF so unless you Are 60 years old or more you probably don’t remember it but it was tax everything till you run out of things to tax, a 98% top rate of tax and galloping inflation, complete economic incompetence. Well people who voted for them, like pensioners, are now feeling it and more are going to. How pensioners forgot what it was like under Callaghan amazes me but they say memories fade and in the end you give a dog that has bitten you a second chance, there won’t be a third tho imo.  I’m avoiding most consumer stocks, because ultimately, if you hit peoples’ wallets there’s less to spend.  Some may do well and probably will, but it’s guessing which ones and will the market sell all of them off in the run up to the budge?  International tech, engineering and manufacturing seem better places to be along with tech. I want stuff not reliant on the UK economy. A £22bn black hole they have conjured up.  Month on month GDP out this week say the growth has stalled and we never grew last month – Reeves is going to grow us out of the bad performance the country has suffered they reckon, don’t hold your breath.

I suspect the market trades pretty sideways to the budget and then we have huge volatility as the market prices it in. Those that have unjustifiably been hit will soar and those that get a surprise punishment will get walloped. The market will have a big readjustment point.  There will likely be some moves ahead of the budget as stuff leaks or punters take a gamble. Growth this month has been flat for the second month and on Wednesday we have the CPI inflation numbers. I don’t see rate cuts coming like many have.  We have seen a tick up in inflation in the US, here the government have dished out big public sector pay rises, while food prices had dipped, energy prices are going up, postage is rising 30p, rail prices are set to rise, if the gov raise taxes on fuel, drink and other places that will push up inflation. There’s the whole landlord thing going on, VAT on school fees, all things that push inflation up rather than down.  The rising unemployment is the only push against inflation I can see.  Higher rates for longer will likely be good for co’s with larger pension deficits tho.

The FTSE250 still has that big bowl but it’s hard work here on the chart:

Fear Greed in the US smack bang neutral, the Vix is back down to 16.

Into another week and at last we are getting a bit more news.  Monday was rather quiet but CAR, FCH and CMCX rallied strongly with MKS for me to hit a new all time high on the portfolio. Restricting the number of shares I hold to concentrate on the crem dela crem of the high potential stocks has paid off even with over half my portfolio in cash.  CMCX has held well above £3 and with a trading update due Oct 10^th I think it will likely firm in advance.  FCH and CAR have hit new recent highs as have MKS.  CAR has risen on extremely high volume for days. 

Dialight should now be into their 10 day court case which will either see them lose $8m or win $200m, or something in between. That should end around September 20^th and the H1 end in September 30^th.  In the last few weeks, new CEO Steve Blair has bought £81k worth.  Might get interesting soon, it rallied on Wednesday 10%+.

Tuesday saw news from MPAC.  I had bought a few late last week but forgot to mention it in the Review but I did put it in a reply to a question about them on last week’s review.  I thought the results were rather good.

Highlights were the doubling in underlying eps, the strong rise in ROCE which a lot of investors put weight on and the fact that H2 eps is always the strongest and they confirm that for this year. The Freyr and Ilika battery lines are in here for free too.

I added a few more on the intraday dip on Tuesday. Whether I hold longer term I don’t know because they are not a one-bagabilty sort of stock and I have others I could add to instead, I think it will depend on whether I decide to raise my holdings and reduce my cash which is a decision I’ll likely make after the budget. There will likely be some potential one baggers show there head in the results over the next quarter, that will be a bearing too imo.

Inspecs SPEC, had their results on Tuesday. I just struggle to get excited here.  Glasses Direct are selling 2 pairs specs including frames and lenses for £15. I know Inspecs are targeting designer glasses but there is a limit to what people will pay in this market, where designer stuff is struggling in many cases (eg Burberry). It seems to be a margin-watching business and they rarely become screaming one-baggers imo.

Luceco, LUCE had results on Thursday – the main headlines:

All pretty decent but no fire starter imo.  Shipping costs have been rising and again, it’s not the performance they were doing when these were having their butt chased off them years ago.

All in all another one that isn’t going to one-bag any time soon so I have given it a miss and look for one baggers elsewhere. I suppose what I’m saying is I’m looking for Alice Cooper and these are too Michael Buble.

Ocado OCDO - UK grocery price inflation resumed its slowdown, while Ocado delivered its quickest rate of growth since May 2021, figures on Tuesday showed. Ocado do the deliveries for M&S and I suspect that is driving Ocado sales growth.  M&S are up 50% from the low in March, pretty impressive and on their way to OBIAY performance still, which I did say I thought was possible but not really likely so they have surprised me. It’s a fantastic chart and having bought back in on that low and having sold out at the 290p level I have regretted selling there.  I did buy back in recently but only holding a small amount compared to what I was holding.  Most interesting is the bowl and curve up on the chart – the co H1 period ends at the end of September so perhaps a strong trading update coming. M&S have a new TV show starting Tuesday, inside their clothing design business and peeps trying to become their next designer.  Some good pre-Christmas publicity.

One share I have been buying is Transense Technology, TRT

I did buy these at the interims in February but really had too many holdings at the time and this holding was rather small, being the stock is quite illiquid and a tiny mkt cap of  £27m. I designed and printed the first colour brochure for TRT back in 2000, when they were developing and producing tyre pressure sensors.  I was never that impressed by the bullshot from the co about these sensors as the Porsche 928 I owned at the time already had tyre pressure sensors built in, so it never seemed to be the ground breaking solution that the then board claimed.  What a duffer of a board it was too. For years they disappointed, regular as clockwork.

Nigel Rogers is the Exec Chairman now and has been at the co for the past 9 years.  TRT were near bust when he came in but since then the co has been run on a shoestring, leveraging the tech they have, limiting costs and running a very ‘lite’ business.

I could go through the business here but they basically have three divisions, iTrack, Translogic and Sawsense, all sensoring and high on royalties. I could go through it Best way to gauge what they do is to listen to the interims presentation on investormeetcompany imo:  https://www.investormeetcompany.com/investor/companies as you have the board spelling everything out. The best thing to come out of covid is webcasts imo, these are the go to to learn about a compasny and sus the board.

They have some pretty good metrics too:

From listening to H1 they had a few delays for the business but they still managed to grow earnings 73% and this is a business where earnings could grow exponential. Just as a taster, sales were up 10% but pbt was up nearly 150%. They are net cash to the tune of £1.3m despite doing lots of share buy backs and they still have £25m of deferred tax losses to offset against future earnings.  With a market cap of £25m and only 15m shares in circulation, less than there were in 2020 you can see how these have the potential to pop north at some point.

Results are on the 23^rd along with a year end co presentation on investormeetcompany.  A warning that it can be tough to buy or sell meaningful volume at times and this is a much smaller co than I normally play about in so much more risk involved, but does have OBIAY capability imo.

Thursday was somewhat dull, no real buzzers there but Gulf Marine Services, GMS, did say that they had won a contract and they will beat forecasts – raising guidance. That one is all about debt reduction imo.

GMS posted a contract win and increased guidance this week.  Debt is coming down fast, the PE is very low and the chart continues to bowl. I have taken holding as the bowl looks rather good for a bottom here after the recent selling imo, and positive news keeps coming.

Friday was another typical Friday with little news of note so that  was  my weekend done.  I noticed Games Workshop,GAW, making a bowly move and firm on Friday, I think a trading update is imminent so one to watch perhaps.

Mello has its 10th anniversary in Derby - Tuesday 19th November & Wednesday 20th November 2024, 9.00am – 7.00pm at the Derby Conference Centre, Derby, DE24 8UX. Any Substack readers can have 50% off with your discount code, Rebel50.

It’s the St Leger tomorrow, “Sell in May an go away, come back on St Leger Day”.

The punters have sort of come back a bit in September anyway. It has been a great fortnight, I am second UK Stockchallenge and up around 12.6% on Friday.  The portfolio has only managed around 8% in that fortnight but I’m well happy with that as I hit a new all time high (1% off that now). I doubt my Stockchallenge performance will last, it rarely does so I’ve prepared myself 😊  Great fun though.

Have a great, sunny weekend.

Rebel