Monday, October 29, 2012


Good afternoon. Lots of discussion about Trinity Mirror (TNI) over the weekend on the bulletin boards. The shares have bounced this morning, up 7% to 54p, possibly as a result of bottom fishing from people who believe the hacking situation may not be as bad as feared. Also there is an announcement this morning that TNI are in discussions about taking a minority stake in a new company which will own the regional newspapers of Northcliffe Media (currently part of the Daily Mail group). As long as they don't overpay, then this should be positive as the regional newspapers market consolidates.

As an aside, there have been one or two really silly comments on some bulletin boards concerning my posts & TNI. To emphasise, that this is NOT a share tipping website. It's just a free Blog, where I air my opinions on shares of interest. Nothing written here is ever a recommendation, and readers invest at their own risk & must do their own research, and make their own investment decisions. I don't ask, and don't want people to blindly follow me in & out of shares. The emphasis is to DYOR!

I never advise anyone to do anything, let's be 100% clear about that. And if it becomes too much hassle, then I'll just close this Blog down. The one criticism that I do accept, is that perhaps my analysis didn't put enough emphasis on the risks from phone hacking. However, the bottom line is that the shares are still more than double the entry price flagged up here a few months ago.

The market has reacted positively to a trading statement from internet video company, Blinkx (BLNX), with the shares up 8p to 60p, valuing it at a hefty £217m.

Revenues are ahead of expectations for H1, at $80m, but this only delivers $2.4 profit before intangibles & one-offs. They expect H2 to be about the same as H1. I know growth companies always look expensive during the growth phase, but I'm not convinced by this company. Their product just seems to be an inferior version of YouTube, but perhaps I've missed something?

A company in which I hold shares, Staffline (STAF) announces another acquisition - of a company called Select Appointments Ltd, which operates franchised-based recruitment of white-collar workers (whereas STAF is mainly for blue-collar). No details are given as to the cost, which is being met through the existing bank facility. It is expected to be earnings neutral in the first year, and earnings enhancing thereafter.

Interestingly, STAF say they plan on tripling the number of franchises in the acquired company over the next 3 years. This reinforces my view of STAF as a well-managed group, with ambitious management. It's a long-term hold in my portfolio, and hopefully I can persuade their CEO to do a MelloCast video interview with myself & Dave Stredder. We are being highly selective about who we want to interview, and Staffline is at the top of my wish list! I think it would be great to get their message out to investors through a Mellocast video, but it's up to them.

I see that Brewins are changing their name yet again, to the even more silly "N+1 Singer". Sounds like some backstage instructions from X-Factor. What was wrong with "Brewin Dolphin"? It was a nice name that everyone could remember & was used to. Branding can go haywire sometimes, what on earth were they thinking?

GB Group (GBG) puts out an in line trading statement. I held shares in this years ago, and am wishing I'd kept them, as they've shot up in the last couple of years. At 93p the mkt cap is now £101m, which is starting to look pretty warm for a forecast turnover of £40m this year, with forecast profit of £5.1m. That works out at a PER of 21 times broker consensus. Difficult to see much upside from that price.

Tristel (TSTL) shares are up 2p to 38p (£15.4m mkt cap) on the back of results for y/e 30 Jun 2012 which are "ahead of adjusted market expectations".
Adjusted EPS is up 39% to 1.77p, so that puts them on a hefty PER of 21 times.
I don't know anything about their products or markets, so can't really comment on whether the growth is likely to continue or not. The valuation is too rich for me to spend the time finding out.

The market also likes results from Lok'n Store (LOK), up 5p to 120p (for a £30m mkt cap). The divi is up 67% to 5p, which looks pretty good. Quite a big discount to adjusted NAV of 229p per share. Might be worth a deeper look, possibly? I don't have time today, but if anyone else fancies doing some research on it, would be interested to hear what you think.

That's it for today, have a good day everyone!
Regards, Paul.


  1. Hello Paul,

    I'm sure I reflect the vast Majority opinion who really appreciate your online comments and we take full responsibility for whatever investments we make. Unfortunatley there will always be a tiny minority who try to make trouble - but they'll disappear pretty soon i'm sure!

    Now, hope you've been getting those miles in your legs - you'll get some real stick if you don't finish that Half Marathon -:)


    1. Hello Si,
      What a nice message, thank you!
      Yes, I have very much been motivated by all the kind donations for my charities, and did my best ever training run this weekend - managed 7.5 miles in 1hr:21mins.
      Legs are a bit stiff today though! As I'm 2 stone overweight, am also dieting, so more training & weight loss combined should make the half marathon do-able by February! I will finish it, come hell or high water!
      Cheers, Paul.

  2. Hi Paul,

    Just want to say I have also viewed some of the comments on the board you speak of and understand what you mean-it just seems to get into a free for all.

    Please do not stop the blog I am new comer to your site and share dealing and really enjoy reading your blog.

    I enjoy hearing your thoughts and NEVER EVER buy just cause some one has posted that they have brought a share.

    I believe and understand the DYOR so dont be put of by people posting comments that upset.

    I am new to all this and feel I am actually learning something so dont stop the good work !

    Maybe if its a possible maybe you could if time allows try and explain your thought process in more layman terms..but thats purely a suggestion :)as sometimes I get slightly confused with NAV compared to PER etc etc.

    Kind Regards


    1. Hi H,

      Thanks for your kind comments, much appreciated.

      It's difficult to explain things in layman's terms, although I try not to use too much jargon, but a certain amount is inevitable.

      I'll give some thought to putting together an explanatory page at some point, where I can go into more detail about how I assess value in shares. Very short of time at the moment though, but it's something I could maybe do over Xmas hols?

      Regards, Paul.

    2. "I'll give some thought to putting together an explanatory page at some point, where I can go into more detail about how I assess value in shares."

      That would be fantastic paul think it would bode very well and be most helpful. Just a sugesstion which I am sure may beenfit others as well.

      Best of luck with the half marathon ! keep up the excellent work...!


  3. Paul,

    Had a brief look at STAF though not run the numbers in detail yet. The issue which I had with them at first glance was the gross margin, given that it fell sharply from 11.8% to 9.3% at the interims.

    This obviously then flows down through the P&L and, unless it reverses in H2, I struggle to see how they'll meet the consensus EPS figure of 34p given the only made 12p at H1 (even though they did say at interims that they they were on course to meet expectations).

    Annualising 12p would put them on a PE of 9x-10x, which, while not expensive, probably isnt a bargain either.

    Can I ask how you got comfortable with this gross margin issue?


    1. Hi Adam,
      The gross margin is very low because turnover includes the actual wages paid to the workers. There were some one-offs in causing the gross margin to dip at the interim stage, one was small losses on the closure of the old Govt scheme I think, from memory.

      The excitement with STAF is really all about the new Govt work programme - it's building nicely & could become very lucrative for STAF over the next couple of years. That's my main reason for investing - because at the moment the market has not priced in anything for this substantial growth in the pipeline.

      I believe they have an H2-weighted year, so the FY should be more than double H1.

      Management here are very impressive - I met them at PCB lunch a few months ago. Very ambitious for the company, and totally on top of the numbers.

      Regards, Paul.

  4. "The one criticism that I do accept, is that perhaps my analysis didn't put enough emphasis on the risks from phone hacking."

    Don't be hard on yourself - you can never anticipate every risk! Would hate to see this blog go.

  5. There are some nutcases on those BBs paul - often they are one and the same person who we believe has mental problems. Take no notice and dont rise to it.

  6. Don't be put off Paul. You are a great analyst and your blog has become a must read. Thanks for making the effort to share your thoughts.

    Regards, David.

  7. Hey Paul,

    As I hope I made clear at the other place - the knockers are out of order - in fact some have clearly shown themselves up to be nothing but trolls - just don't feed em!

    For my part I much appreciate your insights - may not always agree with them, but that probably only serves to make them more valuable.

    I must have missed earlier references to this half marathon - what's that all about then?



  8. Hi Paul,

    I totally echo all the supportive comments above. You write exceptionally well, and it is a great blog to read and learn from. So no need to apologise whatsoever.

    I bought into TNI at 26p and am still holding. But my stake is smaller than yours so I do not get sleepless nights! I think your analysis of TNI has got to be quite well known (it is so funny to read professional journalists quoting your analysis, verbatim, without attributing it) that when you sold out it genuinely moved the market. Few investors have that kind of clout, so enjoy it! Admittedly TNI is a very small cap company these days, so is very suseptible, but even so! Keep up the good work

  9. Hi Paul,

    It's a fact of life that if you stick out in any way, there will be people who want to knock you down. Take the flak over TNI as a complement then.

    I continue to hold large number of TNI shares and have a different reading of the hacking scandal to yours. Except in a disaster scenario: ie TNI have been egregriously awful (worse than News International) the sums to be paid out are rapidly manageable by freee cash flow.

    Again I have a different view to you on possible reputational damamge, as The Mirror doesn't have much of a reputation to lose in thr first place. And unless they've equalled or surpassed News Int, i think this is a non-issue.

    Anyway keep posting and never be put off by people who personalise it - not on BBs and not in real life.



    1. Thanks CJohn.
      You might well be right on TNI, I don't know.
      Just decided to play it safe myself, I can always buy back in once the position on hacking becomes clearer.
      Thanks for your kind comments too, much appreciated.
      Regards, Paul.