In making these judgement calls, I have taken into account the bigger picture, the major factor this year being the rally in European equities driven by the quantitative easing programmes of the European Central Bank, a market move I predicted in mid-December ('Fireworks to set markets alight', 19 December 2014), and one that I also held when I updated my market view the following month (‘Super Mario ignites markets’, 26 January 2015). This massive central bank injection of liquidity into the Eurozone bond markets has undoubtedly improved the risk appetite for equities, as was the case during the US Federal Reserve QE programmes, and for smaller companies which lagged behind both the large and mid-cap indices in 2014.
Although the equity markets have risen significantly, both in Europe and in the UK, there are still selective value plays to exploit in my opinion. For instance, in recent weeks I have spotted a value opportunity in the shares of STM (STM), the Aim-traded financial services company specialising in the administration of assets for international clients in relation to retirement planning; small cap fund manager Miton Group (MGR); healthcare company Bioquell (BQE); and concrete equipment levelling specialist Somero Enterprises (SOM) to name but a few. All of these articles can be accessed from the weblinks at the end of this column if you missed them first time round.
Furthermore, with the benefit of improved sentiment in my small cap hunting ground, several of the companies I initiated coverage on this year have been hitting my target prices sooner than I had anticipated. These include Redde (REDD), a provider of replacement vehicles for drivers involved in accidents that are not their fault and of legal services, and Aim-traded telematics and data provider Trakm8 (TRAK). These are not isolated examples either as I have had to raise my target price on GETECH(GTC), a geoscience company specialising in the provision of data, studies and services to the oil, gas and mining exploration sectors; oil explorer and developer Faroe Petroleum (FPM); and Entu (ENTU), a UK supplier and installer of windows, doors, solar panels and other energy efficient products. Shares in Entu are up 40 per cent since I initiated coverage last autumn ('Yielding to efficiency gains', 10 November 2014), and should have more upside to come ('Riding the new listings gravy train', 15 Apr 2015).
Of course, the favourable market backdrop is playing its part as is the pick-up in M&A activity. From my watchlist of companies, IT security firm Accumuli (ACM) has succumbed to a bid from software group NCC (NCC), vehicle repair group Nationwide Accident Repair Services (NARS) is being taken out by private equity group Carlyle, and energy group Fortune Oil (FTO) was taken over earlier this year too. These have provided decent windfalls.
Repeat buying opportunities
The point I am trying to make is that by maintaining live buy recommendations on upwards of 90 small cap companies, and by regularly updating my previous share recommendations as and when news flow warrants it, while adding new companies to my watch list too - I have initiated coverage on 17 companies in the past 12 weeks - this is providing a constant stream of investment ideas for you to consider and hopefully profit from.
Of course, my investment columns should be seen as the starting point of an investors’ research, rather than the end of it. Admittedly, some may buy my recommendations without carrying out further research for themselves, but buying blind is never something I would ever recommend as you have to be sure that the risk profile of a company meets your own specific criteria. Only by undertaking some independent research of your own will you know whether or not this is truly the case. I believe the vast majority of readers carry out this important exercise.
Moreover, by offering such a comprehensive online service, and one that is pretty unique in the private investor investment arena, I am able to highlight what I perceive as repeat buying opportunities in previous share recommendations. This means that once you have carried out your own investment research, and are comfortable with the investment case, then you will be in a position to exploit these repeat buying opportunities too. They can be just as profitable as the original share recommendations.
For instance, in the first four months of this year I have written 56 columns which include in depth investment analysis on 89 separate companies including the nine FTSE 350-listed housebuilders, each of which I formed a view on as part of my advised sector trade. I have detailed all these articles below for ease of reference in case you missed any of my subsequent updates.
A plan for the future
It’s something I will continue to do because in many cases the subsequent upside from the repeat buy recommendations has been substantial. For instance, shares in Aim-traded tech companies Amino Technologies (AMO), Stadium Group (SDM), and Vislink (VLK) have all surged through the winter months (Small cap tech wonders’, 19 January 2015). The same is true of clothing retailer Moss Bros (MOSB), property fund manager First Property (FPO), uPVC window company Safestyle (SFE), and building materials group Epwin (EPWN) whose share price has surged by 30 per cent in the past three months.
Of course, I have had my share of losers too, in particular resource sector and Chinese-based Aim-traded companies, all of which I have updated on a regular basis as you will note from the articles below, but nonetheless the winners have far outweighed the losers. It’s also worth flagging up that some of the recommendations under water have been rallying strongly. For instance, the battered share price of Aim-traded Pure Wafer (PUR), a provider of wafer reclaims services, is up 30 per cent since my last update (‘Engineering growth’, 5 February 2015).
As I noted at the start of this article, part of the reason for these gains is down to the fact that in the main my articles highlight the investment case of under researched small cap companies which have fallen below the radar of most investors. I realise that the access I have to companies, and contacts with investment analysts, puts me in a very responsible and privileged position, but it’s also one that enables me to offer you my considered opinion on the likely course of a company’s share price and its prospects. Admittedly, that’s all these articles are, the opinions of one person whose simple aim is for at least three quarters of my share recommendations to turn a profit.
And that’s what I will continue to strive to do over the coming months by primarily focusing on anomalously priced small cap investment opportunities which over the course of time should provide ample financial reward, irrespective of which political party is in power at the end of next week. I will not be shy to bank bumper profits either when the time is right as I have done so recently on small cap stock broker Jarvis Securities (JVS), software company Netcall (NET), property company Daejan (DJAN) and all of the FTSE 350 housebuilders.
Finally, having run through all the buy recommendations on my watch list, I have yet to update a very small number this year. These include buy-to-let mortgage lender Paragon (PAG) and cinema operator Cineworld (CINE). Their shares have soared by 22 per cent and 44 per cent respectively since I initiated coverage last autumn and have now smashed through my respective target prices (Cineworld: 'Lights, camera, action', 28 October 2014 and Paragon: Riding the buy-to-let boom', 27 October 2014). I will endeavour to reasses the investment case of both in the near future.
I also plan an update on support services company Renew Holdings (RNWH) once the company has released its financial results on Tuesday, 19 May. The shares are slightly ahead of when I last updated my view ('Small cap trading updates, 26 November 2014), and are up 16 per cent on my recommendation last summer ('A small cap break-out', 14 August 2014). The same is true of small cap property company London & Associated Properties (LAS). Keeping to the property theme I intend revisiting Macau Property Opportunities (MPO), Raven Russia (RUS) and Urban&Civic (UANC) in the coming weeks too. Share prices of all three are are either trading inline or ahead of my last recommended buy in prices, hence the lack of updates this year.
Please note that my next column will appear online on our website at 12pm on Tuesday, 5 May.
MORE FROM SIMON THOMPSON ONLINE....
Since the start of this year, Simon has published the following investment columns on 89 individual listed companies and three macro trading strategies:
■ Inland: Buy at 61.5p, target 70p; Housebuilding sector: Run profits (‘On firm foundations’, 5 January 2015)
■ Tinci: Buy at 18p, accept 20p bid; Dragon Ukranian Properties & Development: Hold at 26p (‘A tinci gain worth taking’, 6 January 2015)
■ Eurozone crisis (‘A Greek tragedy’, 7 January 2015)
■ First Property: Buy at 32p, target 38p to 40p; Cenkos Securities: Hold at 192p; Global Energy Development: Value buy at 45p (‘Buying into an earnings upgrade cycle’, 8 January 2015)
■ Communisis: Buy at 55.5p, target 85p; Nationwide Accident Repair Services: Buy at 79p, target 105p (‘Break-out looming’, 12 January 2015)
■ Charlemagne Capital: Hold at 10.5p (‘Charlemagne hit by emerging market rout’, 13 January 2014)
■ Stadium: Run profits at 123p; Accumuli: Run profits at 32.25p; Amino Technologies: Run profits at 122p; Netcall: Run profits at 71p (‘Small cap tech wonder’, 19 January 2015)
■ Vislink: Buy at 41p, target 60p; First Property: Buy at 34p, target 38p to 40p (‘Punching above its weight’, 27 January 2015)
■ Eurozone economics and market strategy (‘Super Mario ignites markets’, 26 January 2015)
■ Flowtech Fluidpower: Buy at 130p, target 165p; Inland: Buy at 57.5p, target 70p); UK housebuilding sector: Run profits (‘A fluid performance’, 2 February 2015)
■ Globo: Conditional buy at 47p, target 60p; Epwin: Buy at 92p, target 140p; SeaEnergy: Buy at 21p, target 60p (‘Going Global’, 3 February 2015)
■ Fairpoint: Buy at 119p, target 190p; Greenko: Buy at 123.5p, target 225p to 230p; Safestyle: Buy at 165p (‘Valuable points to make’, 4 February 2015)
■ 600 Group: Buy at 15.5p, target 24p; Global Energy Development: Speculative buy at 42p; Pure Wafer: Hold at 42p (‘Engineering growth’, 5 February 2015)
■ Faroe Petroleum: Buy at 75.5p, target 94p (‘A slick operator’, 6 February 2015)
■ 2014 Bargain share portfolio updates:
Barratt Developments: Run profits at 458p; Taylor Wimpey: Run profits at 135p; 1pm: Buy at 67p; Bloomsbury Publishing: Hold at 148p; Camkids: Hold at 21p; Fortune Oil: Sit tight at 10p; Charlemagne Capital: Hold at 11p; Arden Partners: Hold at 47p; PV Crystalox Solar: Hold at 10.5p (‘How the 2014 Bargain share portfolio fared’, 6 February 2015)
■ 2015 Bargain share portfolio buy recommendations:
Mountview Estates, Crystal Amber, H&T, Pittards, Inspired Capital, Record, Netplay TV, Arbuthnot Banking, AB Dynamics and Stanley Gibbons (‘Bargain share portfolio 2015’, 6 February 2015)
■ Oil price (‘Profiting from the oil price slump’, 9 February 2015)
■ GETECH: Buy at 45p, target 67p (‘Exploit a chart break-out’, 10 February 2015)
■ Moss Bros: Buy at 93p, target 120p to 130p; Manx Telecom: Buy at 189p, target 210p; Oakley Capital: Buy at 155p, target 180p (‘A triple play of chart break outs’, 11 February 2015)
■ Walker Crips: Buy at 45p, target 54p (‘Delivering on a plan’, 12 February 2015)
■ Trakm8: Buy at 92p, target 120p (‘Zoning in on a profitable price move’, 16 February 2015)
■ Trifast: Buy at 111p, target 140p; 600 Group: Buy at 16.5p, target 24p; Pittards: Buy at 135p (‘Upgrades to drive re-ratings’, 17 February 2015)
■ GLI Finance: Buy at 62.5p, target 80p; B.P. Marsh & Partners: Buy at 135p, target 170p (‘Income plays with capital upside’, 18 February 2015)
■ Henry Boot: Buy at 205.5p, target 249p (‘A bootiful investment’, 19 February 2015)
■ Jarvis Securities: Take profits at 435p (‘Decision time’, 23 February 2015); Avation: Buy at 142p, target 200p; Inland: Buy at 63p, conservative target 70p (‘Decision time’, 23 February 2015)
■ Globo: Buy at 49.25p, target 60p; Communisis: Buy at 56p, target 85p; SeaEnergy: Buy at 25p, target 60p (‘Catalysts for re-ratings’, 24 February 2015)
■ Netcall: Take profits at 71p; Eurovestech: Hold at 8p, target 10p; GLI Finance: Buy at 62.5p, target 80p (‘Taking profits’, 25 February 2015)
■ Tristel: Buy at 82p, target 100p; 32Red: Buy at 60p, target range 75p to 80p; Amino Technologies: Run profits at 137p, target 150p (‘Riding bumper profits’, 26 February 2015)
■ Non-Standard Finance: Buy at 103p; WH Ireland: Buy at 92p, target 140p ('A non-standard investment', 2 Mar 2015)
■ Software Radio Technology: Buy at 31.25p, target range 40p to 43p ('On the radar', 3 Mar 2015)
■ Vislink: Buy at 48.5p, target 60p; Sanderson: Buy at 68p, target 80p to 85p ('Tapping into e-commerce profits', 4 Mar 2015)
■ Town Centre Securities: Run profits at 292p; Sutton Harbour: Buy at 36.5p ('To bank profits or not?', 5 Mar 2015)
■ Housebuilders: Run profits on Persimmon, Bellway, Barratt Developments, Taylor Wimpey, Berkeley Group. Bank profits on Crest Nicholson, Bovis Homes, Galliford Try and Redrow. Buy Inland at 64p ('Housebuilders: trading gains', 9 Mar 2015)
■ Walker Crips: Buy at 47p; Henry Boot: Buy at 232p; H&T: Buy at 179.5p; Nationwide Accident Repair Services: Buy at 85p; Communisis: Buy at 56p; Global Energy Development: Speculative buy at 44p ('Six-shooter of small-cap buys', 10 Mar 2015)
■ Stadium: Run profits at 123p; Pure Wafer: Hold at 42p ('Electrifying shares', 11 Mar 2015)
■ CareTech: Buy at 230p, target 300p ('Time to take care', 16 Mar 2015)
■ LMS Capital: Buy at 77.5p; Globo: Run profits at 55.5p; Trifast: Buy at 99p, target 140p ('Exploiting currency moves', 17 Mar 2015)
■KBC Advanced Technologies: Buy at 87p, target 165p; K3 Business Technology : Buy at 227p, target 275p; Fairpoint: Buy at 123p, target 190p ('Blow out results', 18 Mar 2015)
■ Charlemagne Capital: Buy at 10.75p; Bloomsbury Publishing: Hold at 155p ('Below the radar', 19 Mar 2015)
■ Redde: Buy at 108p, target 125p ('In the fast lane', 23 March 2015)
■ Pittards: Buy at 137p; Crystal Amber: Buy at 152p; Record: Buy at 35p; Arbuthnot Banking: Buy at 1,420p; Inspired Capital: Buy at 17p; Stanley Gibbons: Buy at 257p (‘Bargain shares updates 2015’, 23 March 2015)
■ Accumuli: Accept NCC offer; Getech: Buy at 49p, target 67p; Faroe Petroleum: Trading buy at 79.5p, target 94p (‘Buyouts and bumper profits’, 25 March 2015)
■ Moss Bros: Buy at 108p, target range 120p to 130p; Vislink: Buy at 47p, target 60p ('Suitable investments for growth', 26 March 2015)
■ Safestyle: Buy at 180p, target 230p; GLI Finance: Buy at 57.5p, targte 80p; Oakley Capital Investments: Buy at 165p, target 180p; First Property: Buy at 34p, target 380 to 40p ('A quartet of small cap buys', 30 March 2015)
■ Cenkos Securities: Buy at 197p, target 250p; Polo Resources: Sell at 6p; Greenko: Hold at 105p; Bezant Resources: Hold at 2.5p (‘Small cap updates’, 31 March 2015)
■ Miton: Buy at 23p, target 35p (‘Poised for a profitable recovery’, 7 April 2015)
■ Nationwide Accident Repair Services: Accept bid; SeaEnergy: Buy at 21.5p; Netplay TV: Buy at 9.5p; Stanley Gibbons: Buy at 253p ('Profiting from M&A', 13 Apr 2015)
■ Getech: Buy at 61p, target 80p; Cohort: Buy at 280p, target 300p; Faroe Petroleum: Buy at 86.5p, target 100p; Gama Aviation: Hold at 272.5p ('Flying high', 14 Apr 2014)
■ Entu: Buy at 145p, target 165p; Flowtech Fluidpower: Buy at 121p, target 150p ('Riding the new listings gravy train', 15 Apr 2015)
■ Inland Homes: Buy at 64.5p, target 80p; Walker Crips: Buy at 45p, target 54p; Software Radio Technology: Buy at 32p, target range 40p to 43p ('Decision time', 16 Apr 2015)
■ Bioquell: Buy at 124p, target range 155p to 159p ('Bug busting profit potential', 20 Apr 2015)
■ Stadium: Run profits at 123p, target 140p; Trifast: Buy at 108p, target 140p; First Property: Run profits at 39p ('Running bumper profits', 20 Apr 2015)
■ Somero Enterprises: Buy at 140p, target 185p ('On solid foundations', 22 Apr 2015)
■ Creston: Buy at 124p, target 150p; K3 Business Technology: Buy at 226p, target 275p ('On the acquisition trail', 23 Apr 2015)
■ STM: Buy at 35p, target 47.5p ('Tapping into a pensions payday', 27 Apr 2015)
■ Trakm8: Buy at 117p, target 135p; Redde: Buy at 124p, target 140p; Conygar: Buy at 185p, target 200p; Record: Buy at 34p; Camkids: Sell at 20p (‘Hitting target prices’, 28 April 2015)
■ Persimmon, Bellway, Barratt Developments, Taylor Wimpey, Berkeley Group: Take profits; Daejan: Take profits; Inland: Run profits at 64p; Henry Boot: Buy at 225p; Mountview Estates: Buy at 11,000p (‘Politics and the housebuilders’, 29 April 2015)
■ Simon Thompson's book Stock Picking for Profit can be purchased online at www.ypdbooks.com, or by telephoning YPDBooks on 01904 431 213 and is being sold through no other source. It is priced at £14.99, plus £2.95 postage and packaging. Simon has published an article outlining the content: 'Secrets to successful stockpicking'
