A national scandal

I have read the Investors Chronicle for fifty two years. It is a terrific starter course for someone wishing to kick off their investing career (prior to methodically following up leads on Master Investor of course). One reason is the small company coverage where private investors are, time and again, given terrific ideas which institutions cannot be bothered to benefit from since they cannot get size and so justify review costs over the years.

The lead proponent for this programme is Simon Thompson who has in recent years come up with value investments which are inescapably sound. By that I mean that it is virtually impossible for these shares and their prices to decline since the businesses covered are solvent and making money and yet quoted at a discount to tangible net asset value.

People forget another factor: it is always possible for such a share to be transformed into a stock which is correctly and seriously re-rated materially above tangible net asset value. The best example of this in recent years is Avesco, where patient investors were eventually rewarded by a 650p takeover and the starting off price had been 25p as reduced by a 115p cash distribution and several dividends of the order of 3p.

In last weekend’s IC the stock that stood out to me was/is Volvere (LON:VLE). Here effective management is sprucing up sound acquisitions and selling them where sensible. This is a great skill and current purchasers can enter the party at a discount to tangible net asset value. Now 540p offer.


*****

Trump seems to be a pretty good chump. However, one thing he has got right is an immediate deep review of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. A chum, then a director of some London-based subsidiary of WPP, where WPP itself as a worldwide company had appreciable US interests, told me that the petty cash box was kept under review by permanent cameras just so that this company could check whether adequate controls were installed and observed along Dodd-Frank lines. The cost of this exercise can only be imagined. And, all along, there have been silly people such as I who thought that the finance department was permanently charged to see how and when cash was withdrawn from the bank and thus its subsequent application.

*****

Older readers may recall my brother-in-law’s claim against Charles Stanley which ended up at the Financial Ombudsman Service. This was a simple matter which a ten minute study of the facts would have resolved. It took a year. The FOS in practice is a national scandal.

*****

Finally, I yesterday had for lunch a longstanding chum who is disrupting the business of the high street betting shops through developing much tighter profit margins. As matters stand, and what with the constraints of the FOBTs, major trouble for these retail outlets is on the way. The conclusion is to sell the shares of the lot of them.

Evil Knievil: