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Small-cap value buys

Small-cap value buys
August 9, 2016
Small-cap value buys

The same is true of the Aim-traded shares of Gresham House Strategic (GHS:780p), an investment company focused on using strategic public equity strategies to create value for shareholders primarily in the small-cap space, my own hunting ground. I included the shares in my 2016 Bargain shares portfolio and updated the investment case six weeks ago ('Exploiting a pricing anomaly', 27 Jun 2016). The price is unchanged since then even though the company's net asset value (NAV) per share has risen by another 5 per cent and I estimate a spot NAV per share of 1,089p. This means that the share price discount is around 28 per cent even though the company has net funds of 312p a share on its balance sheet, not to mention a valuable investment portfolio too.

For instance, Gresham House Strategic owns 10.5m shares in Aim-traded technology company IMImobile (IMO:195p), a business that helps companies engage with their customers across all mobile devices by offering smart software products based on proprietary technology. It's doing rather well as last month's full-year results highlighted: organic revenues grew by around 10 per cent in the 12-month trading period, propelling adjusted cash profit up 17 per cent to £10.7m and prompting analysts at brokerage Investec to upgrade their forecasts. They now expect adjusted pre-tax profit of £9.4m and EPS of 11.3p in the current financial year, up from £8.5m and 10.4p in the 12 months to end March 2016.

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