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Amber alert for more gains

Aim-traded activist fund manager Crystal Amber has made some astute calls this year to become one of the top-performing small-cap funds

The investment team at Aim-traded activist fund manager Crystal Amber (CRS:228p) has been working its magic, justifying my call to include the shares, at 207p, in my 2018 Bargain Shares Portfolio. I reckon that Crystal Amber’s spot net asset value (NAV) per share is around 264p, up from 230.75p at the end of May, and 39 per cent higher than at the start of 2018.

Two-thirds of my NAV estimate is accounted for by four holdings: Hurricane Energy (HUR), an oil explorer that has a huge resource base in a strategically important part of the North Sea; foreign currency payment services provider FairFX (FFX); media group STV (STVG); and van hire company Northgate (NTG). Newsflow has been very positive.

Crystal Amber Investment Portfolio 9 July 2018 
10 largest shareholdingsPence per sharePercentage of investee equity held
Hurricane Energy71.86.4%
Northgate37.86.3%
FairFX3819.0%
STV31.318.1%
De La Ru17.33.2%
Woodford PCT9.11.3%
NCC7.21.2%
Leaf Clean Energy (includes capital distribution July 2018)7.829.9%
GI Dynamics4.547.8%
Cenkos 3.76.8%
Total of 10 largest shareholdings228.5 
Other investments35.6 
Cash and accruals-0.2 
Total NAV264 

For example, FairFX’s first-half trading update revealed that total transactions processed for clients through its e-banking and foreign exchange services platforms surged by 146 per cent to £1.1bn, or by 22 per cent on a like-for-like basis once acquisitions are stripped out. If anything house broker Cenkos Securities may be conservative in its forecasts which point to an eight-fold rise in full-year pre-tax profit to £7.7m on revenue up from £15.5m to £28.7m. Moreover, with the business operationally geared, if FairFx can maintain its heady progress and lift revenues by half to £43.4m next year, then pre-tax profit could more than double to £16.2m. This implies the shares trade on a 2019 forward PE ratio of 14 and a PEG ratio of less than 0.2, so the growth potential is hardly being overvalued. Indeed, if FairFx delivers on forecasts then the share price could easily rise by half again, or more, which makes Crystal Amber a smart way of playing the upside.

Investors have also been warming to the merits of Hurricane Energy, undoubtedly excited by prospects of first oil – initial daily production of 17,000 barrels of oil is being targeted – coming on stream in the first half of 2019 from its Lancaster field which has 2P Reserves and 2C Contingent Resources of 523m barrels of oil equivalent (boe). Hurricane’s shares trade on a hefty discount to Edison’s risked NAV estimate of 81p a share based on a sensible long-term oil price of $70 a barrel.

2018 Bargain shares portfolio performance
Company nameTIDMOpening offer price on 2.02.18 (p)Latest bid price on 10.07.18 (p)Dividends (p)Total return (%)
ParkmeadPMG3760.2062.7
PCFPCF27360.1934.0
Shore CapitalSGR213260524.4
U+IUAI205234.51220.2
MpacMPAC156185018.6
Sylvania PlatinumSLP14.516.5013.8
ConygarCIC16017509.4
Crystal AmberCRS207.222207.2
TitonTON159.861711.758.1
RecordREC43.3431.653.1
Average    20.2
Deutsche Bank FTSE All-Share tracker (XASX) 427.3428.9516.544.3
Source: London Stock Exchange share prices.    

On a 14 per cent share price discount to my spot NAV estimate the market has yet to cotton onto the investment gains Crystal Amber has been racking up. It will. Buy.

 

■ Simon Thompson's new book Successful Stock Picking Strategies can be purchased online at www.ypdbooks.com, or by telephoning YPDBooks on 01904 431 213 to place an order. It is being sold through no other source and is priced at £16.95 plus £2.95 postage and packaging. Full details of the content is available on YPDBooks website.

Simon's second book Stock Picking for Profit has been reprinted and is available to purchase online at www.ypdbooks.com for £16.95, plus £2.95 postage and packaging, or by telephoning YPDBooks on 01904 431 213 to place an order. Simon has published an article outlining the content: 'Secrets to successful stock picking'