September 2019 Portfolio Update

I've decided to turn things around this month and to start with my summary first. That way no one has to wade through all of my RNS thoughts to get to the meat of the matter - did I actually make any money this month? Fortunately, after a miserable summer, most of my holdings have recovered their equilibrium somewhat despite our elected representatives reaching new heights (lows?) of division, diversion and destruction.

Anyway the clear winner this month was Craneware, as it recovered strongly from its profit warning in June, and I can honestly say that I was oblivious to this turnaround. I don't think that I was the only one. Since the big push up on Sep 10/11 (on high volume) I can find almost no discussion of CRW anywhere. It's right under the radar. The only thing that jumps out at me is that the total disclosed short position started falling at that time. And if that's the catalyst then we've got a way to go. Elsewhere NewRiver Retail has been bouncing back now that Neil Woodford has (finally) sold out all of his massive position while Burford Capital has reached a support level. It's still a long way from the peak but there's no doubt that recent presentations from management have largely reassured investors and we haven't heard much out of Muddy Waters recently.

On the downside the biggest losers turned out to be Learning Technologies and Keywords Studios. This isn't particularly surprising as they're both highly rated growth stocks and yet each of them put out reasonable but not outstanding interim results. I can see why investors have decided to play safe and yet both are growing strongly through a combination of acquisition and organic expansion. If this continues then I expect the current price (for KWS at least) to look like something of a bargain.

Winning positions for the month: CRW 40%, NRR 19%, BUR 18%, RWA 8%, GAW 8%, GAMA 7%, III 6%, DOTD 6%, BOWL 5%, IGR 4%, WJG 4%, KETL 4%, K3C 3%, HAT 3%, PPH 2%, PCA 1%

Losing positions for the month: SDI -1%, FDM -2%, SBIZ -3%, ADT -3%, SCT -4%, LTG -8%, KWS -28%

So a pretty good month overall despite a doubling in the cash level of my portfolio to not much under 15%. I seem to be swimming against the tide here but as we move into Q4 I remain nervous about all of the macroeconomic factors that are making it hard work for anyone to turn a profit. Nevertheless the portfolio gained 4.7% during September and has recovered to 8.9% YTD. Definitely healthy enough and I'll be pleased if I can maintain this over the next few trying months.

Purchases

Haynes Publishing Bought at 230p - September 19

Like most people I've always been aware of Haynes as a brand and I've even owned a few manuals in my time. However until I saw management present last year I'd assumed that they were in structural decline. In reality they are migrating to digital content and professional services in a big way although (and this was my concern) this transition is taking time and money. This week however they put out some stunning FY results which easily beat existing forecasts: achieving sales of £36.2m versus £34.5m forecast and EPS of 19.0p against an anticipated 16.4p. In other words the growth parts of the business are more than offsetting the decline in consumer sales. As an extra cash generation is strong and the group is debt free for the first time in six years. Looking forwards the 2020 estimates currently suggest earnings of 24.4p (I can see these being lifted) which puts the company on a very undemanding P/E of just 10. Pretty cheap for growth. Apart from these fundamentals I also like the fact that the share price responded very positively to the results and shot up to ~245p - which is a significant level in that this is about the high point of last year and within a price range last seen in 2011. If this strength continues, and the share breaks through 260p, there's really nothing holding back a quite reasonable re-rating.

LSE_HYNS

Michelmersh Brick Holdings Bought at 105p - September 19

I've known about Michelmersh for many years but it's always seemed to be one of those shares which promised a lot but never quite delivered. For investors the high point of just over 130p came back in 2007 and the price has never regained those dizzy heights (although it has recovered from slumping below 10p in 2009). Anyway I noticed that since putting out some very optimistic results a few weeks ago the share price has risen very strongly and broken right through the 100p resistance level (last tested in 2015). Given how far the company has come in the last 4 years I think there's a decent chance that this strength will continue (given that the forward P/E is only 13.5 and management have just said that they expect to exceed expectations). The latter seems quite likely given that they've achieved 52% of forecast sales and 58% of EPS in H1 with there being no weighting between the two halves of the year (if anything H2 is usually a bit stronger). In addition analysts are only looking for a penny-pinching 1% growth in 2020 and these numbers will have to be lifted if 2019 continues strongly. From a fundamental perspective ROCE is rising strongly as both margin and capital turnover improve, operational gearing is increasing profits faster than sales and there's no pension deficit. So this is a bit of a test to see if the price can sustain its breakout from the 80-100p channel.

LSE_MBH

Spectra Systems Bought at 127p - September 19

I've known about this specialist supplier of banknote security for a few years now but it's always felt a bit to small and speculative for my tastes. A shame really as the share price has quintupled over the last 3 years and the market cap is now above £60m. Anyway in the last six months SPSY have managed one of my favourite tricks which is to put out multiple "exceeding expectations" trading updates. Normally these kinds of updates boost both analyst estimates and the share price, both of which are positive. And yet with Spectra the forecast has leapt 25% (from 8c to 10c) since May while the share price has gone precisely nowhere! This is moderately surprising but it is fair to say that earnings at Spectra Systems have historically been rather lumpy and there's a known H2 weighting to the results this year. So I can understand why investors want to see the colour of the company's money before jumping in. From a technical angle the share price has been rising strongly for several years before settling in the 120-140p range over the last six months. Just recently though volume has picked up significantly and the price has rebounded strongly from a low of ~118p. So I think that the technical and fundamental elements are lining up nicely here for a breakout above 140p.

LSE_SPSY

Things I thought about buying (but didn't)

None.

Sales

Somero Enterprises Sold at 219p - September 19 - 17.5% gain

As mentioned below the interim results from Somero were singularly underwhelming and, in my view, far more loaded with negatives than positives. Having decided not to sell after the original profit warning (since I believed then and still believe that this is a quality enterprise) I really needed to see some positive news. Instead it seems that most of their other markets have run into trouble and an awful lot is being staked on a return to normality in H2. This really isn't enough for me, given the cyclicality of the business, and so I've taken my remaining profit and moved on. In terms of actually selling it's worth mentioning that I did apply a little bit of TA thinking to the process. Rather than selling at 8am I decided to see whether the share bounced after its initial fall and if there were enough interested buyers around to offset some of the selling volume. In the event a weak morning bounce soon dissipated and the share price flat-lined at around 220p. Taking this to mean that the odds of a price recovery would be low in the short-term I closed out at the end of the day.

Beeks Financial Sold at 81p - September 19 - 27.8% loss

Also, as discussed below, the full year results from Beeks really didn't cut the mustard. While they have managed to sign up a couple of Tier 1 clients, which is great, they still missed their already reduced forecasts by some margin. In fact, to my mind, they ran pretty close to needing to warn on profits again and that really would have put the knife in. That said the business is still growing and the board are very confident about landing more and larger clients in 2020. They certainly need to given a P/E ratio of ~30 and present forecasts pencilling in a 50% jump in the bottom line. For me though this feels like a tough ask given a recent track record of over-optimism and under-performance. In addition there are probably a lot of stale bulls still holding on for a bit of price strength and it's going to take a lot for new buyers to outweigh the potential volume of sales. For that reason I've decided to protect my capital here and move on.

PageGroup Sold at 413p - September 19 - 9.5% loss

The interim results from PageGroup really spooked the market last month, despite a solid increase in profits, since future sales look to be under some pressure. The problem seems to be challenging market conditions, particularly in Greater China and the UK. This isn't all that surprising, given a political environment dead-set on mutually assured destruction, and at least a third of profits are under some threat in these areas. That said the EMEA countries contribute essentially half of gross profit and they seem to be doing pretty well - though who really knows with the Eurozone? Anyway I've decided to liquidate my position here for a few reasons. One is that I only invested a starter-position sized amount of money into PageGroup and I'm not confident enough in its prospects to invest more. At the same time I'm concerned that the issues at Somero really are flagging up an imminent slowdown, if not a recession, and recruitment firms will be one of the first to feel the pinch if that happens. So I've waited long enough to qualify for the special and interim dividend (worth over 4%) and have taken my cash off of the table.

BP Marsh Sold at 260p - September 19 - 9.4% loss

Well this is a bit embarrassing but there's probably a lesson in here somewhere. Anyway when BPM put out their profit warning earlier this month I put in a limit order on my account that I hoped might get taken out at 260p. As it happens the price dropped way past this level on the day and eventually bottomed out at 208p. Since then the price has rebounded dramatically, almost as if the warning had never happened. Unfortunately I forgot to remove my limit order and inevitably it got processed. Oops. That said it's hard to believe that the NAV for BPM will be unaffected by the profit warning and so it's not obvious that BPM should be trading much higher than it was before the warning? Either way now that I'm out I might as well wait until the results emerge before doing anything else. Oh and next time I think that I'll check my limit orders more carefully!

Things I thought about selling (but didn't)

None.

Announcements

B.P. Marsh

And so it continues with this hastily released trading update. The big news is that the portfolio's largest holding, LEBC, has agreed to stop providing defined benefit transfer advice with immediate effect. This is a bit of a surprise although, more generally, there have been news articles around the potential for mis-selling in this area. Still with LEBC doing this voluntarily there shouldn't be further repercussions or fines. Now with the DB market providing ~20% of sales it's plausible that earnings might be impacted by 20-40% depending on the margin achievable. Taking the larger figure, and assuming no growth elsewhere for LEBC, then the previous valuation of £35.5m should be cut down to £21.3m. With the latest NAV standing at £126.2m this more than 10% drop takes the NAV per share down to 311p from 350p. Nasty but less than the 20% drop in share price down to 210p (potentially a 32% discount to NAV). In addition the portfolio's other investments are all doing reasonably well, although markets in Australia and Spain are challenging, which suggests that these will provide a valuation uplift in aggregate. So it's not a great situation but there's no point doing anything before the results come out in October. (Update)

Gamma Communications

A reassuring set of results today pushed the share price towards its previous high of 1195p. The key driver here is not the 15% increase in sales but, instead, the 45% increase in profits and EPS. This suggests some great operational gearing at play with profit margins at all levels improving. In addition cash from operations jumped 49% to £27.4m with this representing a 90% conversion rate. It's hard to single out a factor behind this success, since both the UK direct and indirect businesses are performing well, however Gamma's partners have really pulled their weight with gross profit here up 20% to £56m. With the company introducing new products, such as their communications system Collaborate, and retiring older platforms it seems that they're on a roll with public and private customers. There is some risk in that the group are looking to expand into Europe, through acquisition, since the markets there are generally less developed. So far this push has involved buying a couple of Dutch businesses that on the whole have performed well despite revenue from legacy products falling faster than expected. Hopefully the board will remain judicious in evaluating further targets. Overall then it's looking good for the full year. (Results)

NewRiver REIT

The share price here has been under massive pressure for the last two years as investors have taken the view that the NAV is illusory. Just goes to show that you shouldn't fight the trend. Still the NAV has been broadly stable over this period and hasn't yet needed to be slashed dramatically. Part of the reason for this seems to be that management have strategically avoided the High Street and large department stores; instead they've focused on regional shopping centres, retails parks and pubs. Another aspect is that they tactically recycle parts of their portfolio where the yield is low (implying a high price) to buy assets where the yield is high (making them cheap). The risk in doing this is that you're selling your best assets to buy ones that no one else wants but, so far at least, the company has managed to integrate and improve their unloved purchases. For FY20 they want to recycle at least 5% (~£64m) of the portfolio and are well on track with ~£58m sold (or near sold) at a value 1.2% above book value. This suggests that there is appetite for such assets (retail parks, convenience stores, pubs and plots of land) at a price which supports the current NAV calculation. With £15m of the proceeds already invested in four retail parks there's good reason to believe that NRR will turn these around while benefiting from improved cash-flow. (Update)

Somero Enterprises

After the weather-related profit warning early this year I was hoping to learn from these results that trading in the US had bounced back as clients played catch up. Sadly, for reasons I do not fully understand, this just didn't happen. In the event their largest market, by far, fell by 11% with weakness in boomed and ride-on screeds causing most of the damage. At the same time (and this is the additional surprise) sales in Europe fell 26% and those in the Middle East cratered a huge 83% - all of which led to a total sales decline of 13% and a 22% hit to earnings. Operating leverage in reverse. Now some of this may be down to the timing of certain contracts but for just about all of Somero's major markets to hit the buffers at the same time is a concern. There are some positives, to be sure, in that there is plenty of cash on the balance sheet and new products (such as the SkyScreen and Line Dragon) are attracting customer interest. The directors are also confident that the US market will be stronger in H2 and that they are making the right investments for the medium and long-term growth of the business. However I feel very wary about the short-term, given where we are in the economic cycle, and the vulnerability of Somero to a slow-down. For that reason I've exited my position entirely. (Results)

Craneware

Following the hefty profit warning in June I was wondering how these results would look. As a reminder this flagged up reduced sales growth of ~6% and EBITDA growth of ~10%. As it happens this is pretty much what we get with EBITDA up ll% and PBT up 3-5% depending on which adjustments you accept. More importantly the underlying market appears to be healthy with the company having a strong start to the new year with contracts being signed. So it seems that the slowdown in sales last year really was down to indigestion as clients dealt with new product launches. Still there's a knock-on effect here with sales forecast for last year falling from $78m to an actual $71m while those for FY20 have fallen dramatically from $93m to $76.5m! Quite a drop and that probably explains why the share price hasn't reacted to this set of results - it's all about the future. This is partially related to the fact that current year sales are booked over several years and new product sales in FY19 fell from an extraordinary $71.3m to $33.3m (while renewals ticked up from $27.3m to $29.8m). So a delay to sales in one year impacts future years even if the sales are eventually made. Set against this are the high, stable profit margins, low capital requirements and excellent cash conversion rates. I don't think that these aspects have changed and so I see Craneware as a share worth holding with an option to add more when trading surprises on the upside. (Results)

Beeks Financial

I was definitely looking forward to these results given that the interim report highlighted a lengthening sales cycle along with growth being H2 weighted and earnings expectations falling to reflect increased costs. Over the next few months analysts reduced the forecast by 18%, from 3.4p to 2.79p, and sadly Beeks has undershot this with just 2.58p for the year (7.5% below forecasts). Still that is growth of 14%, less than revenue growth of 32% due to expansion costs and margin compression, although not enough growth to deserve a P/E above 30. On this front the H1:H2 sales split was 52:48 for the year (54:46 the year before) so I don't see that the hoped for growth really happened in H2 hence the miss from forecasts. More positively these are high-quality earnings, with 99% of them being recurring, and the annual run-rate revenues have increased by 32% to £9.1m which a good signal for increasing customer demand. This ties in with the very positive outlook statement which suggests that the sales pipeline is larger than ever before and that existing customers are increasing their use of the Beeks Financial Cloud. In addition they're continuing to engage with the larger Tier 1 customers even though they take a long time to close out. My concern is that, given past history, this will be insufficient to meet the punchy FY20 expectations which suggest that earnings will jump over 50% to more than 4p. Given this tough hurdle I think that BKS have another warning in them and will be selling my position. (Results)

PPHE Hotel Group

In many ways this hybrid outfit appears to be a bit of a headache for investors. On one hand it is an operating company that makes operating profits - so you could value it on an earnings basis. On the other hand the reported earnings are all over the place because PPHE is also a real-estate development company that builds and acquires new hotels - so perhaps it should be valued on a NAV basis? Certainly the assets of the group have steadily increased in recent years and the EPRA NAV is now up to £25.52. With the share price at just £17.50, a 31% discount, it's not hard to see PPH as somewhat under-valued with the recent fall from £19.90 something of an anomaly. A reason for thinking this is that the hotel/leisure business is performing strongly with like-for-like RevPAR up to £93.40 compared with £86.90 in 2018 and £88.20 for Q1 this year. This growth has been driven by occupancy rising 2% to 76.8% while the average room rate has jumped 4.8% to £121.70. These are key metrics for any hotel group and it's clear that demand remains strong. Looking forwards analyst expectations aren't too demanding, with sales up just 5%, and unsurprisingly the board expect to meet these numbers. While a no-deal Brexit is clearly a risk to business, in the short-term, management seem to be preparing well for such an event and certainly they're benefiting from a weak Pound. So I see the potential for an upside surprise here if H2 continues the good work of H1 and economy doesn't collapse. (Results)

SimplyBiz Group

The first half of 2019 has been a period of change for SimplyBiz with the hefty, £74m acquisition of Defaqto back in March. This business looked like an excellent match for SimplyBiz with its fintech platform and exposure to the Banking and Insurance markets. In addition Defaqto alone was generating cash and expected to be earnings enhancing within the first year. At the same time the share count increased by 30% to finance the deal so that's a headwind for EPS and the derived P/E ratio. Thus it's no surprise that EPS is up just 8% to 5.52p while profit after tax actually rose 41% (somewhat more than the sales growth of 20%). This amounts to 44% of the FY forecast for 12.6p and I don't see this as an overly challenging target given reasonable growth. On this front the board don't hide the fact that most of the top-line growth came from Defaqto (off-setting a slowdown in the housing market) and that margins have been lifted by the acquisition. Frankly it seems that Defaqto was a lucky purchase and sometimes it's better to be lucky than right! A side-effect of the acquisition is that the largest adjustment to profits is the £2.5m spent on fees, which is fine, with the remainder down to depreciation and some other bits and pieces - so I don't think that management are being reckless with their adjustments. They've also been careful to create a group with several revenue streams which means that a drop-off in one area (such as property surveys) is more than offset by growth elsewhere (like sales of Centra software licenses). I like this diversification and it seems to me that SimplyBiz is growing to become a long-term profitable business. (Results)

Learning Technologies Group

Positive sounding HY results from this acquisitive e-learning services provider. The big purchase of 2018 was PeopleFluent for £107m, which took LTG into the talent software market, and it seems that growth here has been hard to achieve in 2019 (with PF sales down 3% due to client retention issues). This is a bit disappointing but with luck it should bounce back in 2020. If you exclude PeopleFluent then Software & Platforms (68% of total revenue) organic sales growth was 7% with other brands all contributing. On the Content & Services side (32% of sales) revenues fell 3% although management are confident of strong organic growth over the full-year. So there appears to be some H2 weighting here even though H1 sales of £62.6m and adjusted EPS of 2.23p are both roughly half of the (upgraded) analyst forecasts. More practically EBIT margins have jumped 6.6% to 31.1% and strong cash generation has rapidly eroded the net debt level down to just £7.8m at the end of August. So I think that the group is trading well, even if some areas are weak, and that the board are lining up the next acquisition. On a P/E of 26-27 the shares don't look especially expensive if they can keep growing but I would like see this coming from organic efforts rather than being bought in and the jury is still out on that front. (Results)

K3 Capital

Well we always knew that these results were going to be poor given the lack of chunky deals pushed through by the business. That said the bottom-line numbers have come in above expectations. For example sales were bang on the money at £13.6m but EBITDA came in at £5.0m (£4.6m forecast) while EPS amounted to a plucky 9.43p (7.2p forecast). A decent result although it has to be remembered that earnings last year were 14.1p so that's a 34% drop (I had been expecting more like 50% to be honest). The key driver here was the volume brands, Knightsbridge and KBS Corporate, as these are less reliant on lumpy transactions and it's clear that the board are pushing to grow this side of the business. That said apparently KBS Corporate Finance has generated more income in this Q1 than for all of last year so that's a promising start to the year. Right now the analyst forecast of 13.9p for 2020 remains unchanged and if K3C manage to hit this number they'll both look cheap, on a P/E of ~10, and it'll be something of a miracle. On an operational front the company is gearing up to hit its sales targets with improved focus, more efficient software analysis and additional headcount so they're definitely looking to perform despite the macro-economic backdrop. I really don't know whether they'll pull this off but with the corporate finance side trading well in the first quarter and a reduced reliance on the large, profitable deals I think that K3 Capital are moving in the right direction. (Results)

Keywords Studios

It's been a volatile year for Keywords Studios with the share price halving despite ongoing growth in sales and earnings. Driving this fall has been a sharp derating in the P/E multiple that investors are willing to pay from over 50 to around 25 now. With total sales increasing by 39% in H1 and like-for-like coming in at 17% this multiple feels pretty reasonable. Of course that's only true if this growth falls to the bottom line and this is where things become sticky. The adjusted PBT rose 14% in H1 to €18.4m, which is ok but not great, while adjusted EPS was basically unchanged at 18.36c due to a higher tax charge. With the FY forecast being 54.4c that means that 2/3 of the forecast earnings need to be delivered in H2 which is a bit of a concern. In my view the board tacitly acknowledge that this is a stretching target by saying that sales will be at the upper end of expectations while profit expectations are broadly unchanged - which means that the compressed margins of H1 (due to investment costs) should recover but probably not quite enough to make up the shortfall. As such I'm not surprised that sellers dominated the market yesterday, pushing the price down heavily. On a separate note I'm not impressed that €2.8m of acquisition & integration costs have been adjusted out of profits since these are almost 25% of the reported €11.9m and are quite normal for a business like this. Bit of a cheek really. (Results)

Games Workshop

Simple in-line update here. Nothing else to see except for the announcement of yet another dividend! This business really is throwing off cash and it's an absolute pleasure to see management returning excess funds to shareholders rather than engaging in empire building. Kudos to the board for that. (Update)

Strix Group

After listing just a couple of years ago Strix hasn't actually screwed up yet which is rather a relief when you consider the fate of other recent IPOs. On the other hand forecast growth in the mature kettle market is pretty low and analysts aren't seeing much revenue (6.5%) or profit (1.3%) growth this year. Further out investment and diversification efforts should deliver high single-figure growth but not so much in 2019. So 2.5% growth in sales/profits for H1 is pretty much par for the course although with EPS of 5.4p in H1 versus FY estimates of 14.4p in total there's a clear H2 bias here - which is exactly how 2018 played out. There's little to scare the horses here then with ROCE, FCF conversion and dividend yield all remaining high while the company remains on an undemanding rating of around 12x. Operationally things are progressing well with the new factory due to be fully operational in 2 years, a number of partnerships being signed for complementary products and important patents being protected from cut-price competitors. One other positive is that Brexit is, on the whole, an irrelevance for Strix as most transactions are from the Isle of Man to China and so generally unaffected. The only concern is that their main kettle market really isn't growing all that much and so there's no real tailwind to speak of for driving growth. Apart from that Strix seems very prudently run by management with quite a few opportunities for diversification. (Results)

Burford Capital

Continuing their riposte to the Muddy Waters dossier today Burford released a useful presentation on their fair value calculations. This is rather significant as one of the key shorting accusations was that profits had been boosted by manipulating these fair gains while, at the same time, losses were being held back. What the presentation demonstrates is that only a third of the 76 entirely concluded investments, so far, ever had any fair value increases. Out of these 26 cases we are then given a detailed history for the 20 most material investments (with the other 6 being worth less than $1m). This is quite some level of disclosure although it doesn't cover the fact that there are large, ongoing cases (such as Petersen) which have had a disproportionate impact on the total outstanding fair gain amount. With this unrealised gain amounting to $717m, across 111 investments, this is a pretty material sum and we have to believe that Burford have been as prudent with these cases as for the ones that are concluded. If they have then it's reasonable to assume that they are taking fair value write-downs more quickly than any write-ups with the latter being set at a cautious enough level to avoid future restatement. In addition most of the concluded investments have paid out in cash and Burford are really pretty good at getting their hands on this cash - so far no cash receivables have been written-off - and this is a very important part of their investment proposition. All in all a solid, believable presentation. (Update)

Spectra Systems

Following hard on the heels of the recent "significantly exceed market expectations" announcement these interim results are fine without quite reflecting recent progress. What we have is sales down 20%, due to there being an exceptional order in H1 2018, with earnings down 38% due to operating costs being largely fixed. More significantly the G7 customer who drove these sales last year has contracted for significant work in H2 2019 and this is the driver behind recent trading updates. In addition the company is executing a 5-year agreement with a major banknote printer and has extended a supply agreement with a large supplier of security ink. In other words when contracts are won they last for quite a while and provide visibility of locked-in sales going forwards. If anything, according to the CEO's strategy, this is an under-estimate of the technology potential here. In the short term he sees brand authentication driving growth (such as ensuring that tobacco products in China are legitimate) while there could be multi-decade revenue opportunities from covert banknote security. I don't know how these aspirations will play out (given that central banks tend to move slowly) but the business is profitable, cash-generative and not particular expensive on a P/E of ~15. So there's plenty of upside with fairly moderate downside. In addition Nick Slater, who's no mug, has just gone above holding 10% of the company so he must be happy with the potential here. (Results)

Scientific Digital Imaging

A short, in-line trading statement here with the board confident in current trading and meeting expectations. Given that these are for a near 50% rise in EPS, putting the company on a P/E of ~14, I think that the current price is about right. Still I understand that the AGM was very positive and that there's likely to be another acquisition before the end of the year. So with luck the December HY results will show that trading remains positive and that the recent acquisitions have bedded in. (Update)

AdEPT Technology

Somewhat loquacious AGM statement here which doesn't actually mention how the group is performing. Still it seems that both organic and bought growth is occurring which should help meet the forecasts for an almost 20% increase in sales for 2020. As an example of this AdEPT have won a contract to design and roll-out a super-fast network infrastructure across Kent for the NHS. This seems like a pretty decent recommendation of the services which AdEPT provide and I'd expect this to be a pretty sticky contact. Still I'm not surprised that the share price didn't react to this statement, one way or the other, and I'm sure that it'll remain stuck at the 350p level until the interim results emerge in November. (Update)

H&T Group

Well this is a nice way to end the month. Anyone keeping half an eye on the business news recently will know that Albemarle & Bond, a pawnbroking competitor, went under recently with customers left in the lurch. It all looked pretty nasty but H&T have stepped in to acquire 113 pledge books for around £8m. Hopefully H&T managed to obtain a keen price for this asset and they'll be able to reunite customers with their pledges in short order. In addition the existing H&T business is trading ahead of expectations as a result of expansion in the core business and a buoyant gold price. Given this news and the fact that the business is valued on a P/E less than 10 (while yielding over 3%) I think that the recent share strength is likely to continue. (Update)

Disclaimer: the author holds, or used to hold, all of the shares discussed here

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