Small Caps Podcast with Paul Scott – Episode 9

Paul’s weekly summary of companies covered in this week’s Stockopedia SCVRs (small cap value reports). Plus some moaning about markets & macro, and a rant about Bitcoin! Always just personal opinions, never advice.

Thanks for all your comments, I really enjoy reading them, both here and on Stockopedia itself.

EDIT 29 August. Progress! I’ve managed to work out how to publish these podcasts on Acast, which should then distribute them through the main podcast platforms, although it takes a while for them to get uploaded. So far, I’m now on: Spotify, Amazon Music, and Apple podcasts. Just search for “Paul Scott small caps” and it should appear. I know very little about IT, so am just muddling my way through by trial & error, but seem to be making progress!


  • Peter Ritchie - Also Catalogue in Stockopedia

    Hi Paul,
    I know you are interested in Hostmore, previously Invicta and in Unbound.
    I got a call from Unbound Group, unsolicited, asking me if I intended to vote and whether I was going to take up my entitlement under the recent open offer, which is quite unusual. I am showing a loss of 88% since demerger from Electra. I’m still feeling stupid for believing that the parts might have been more valuable than the Electra shares. Even if they were, Electra was unlikely to give it to hapless DIY investors. I was amused to read the Electra Private Equity report and the statement “Having delivered what we set out to do over the past six years, in delivering the creation of shareholder value whilst leaving behind strong and sustainable businesses, up to the demerger of Hostmore PLC in November 2021, Electra has delivered an annual Total Shareholder Return of 15.3%, more than double that of the FTSE 250 at 7.3%.”. Like Goldilocks, someone has my share!

  • Another excellent update, thanks Paul.

    The problem with Β£100bn handout to support energy bills is that it will be hugely inflationary. The BoE will therefore have to hike interest rates much higher than would otherwise be the case to bring inflation down. Mortgage holders would therefore end up subsidising the highest energy consumers which is clearly not equitable and would not create the right incentives in an energy supply crisis.

  • Loving this weekly roundup.

    Is there anyway to get your podcast on this Android app?

    I don’t have Apple, or Spotify and would like to subscribe.

  • Hi Paul,

    thanks for the podcast – and for sharing your views so openly. That can be a difficult thing to do nowadays, as a society we seem to be much less considerate of the views of others. And I think we are the worse for it. I normally learn from considering the views of others – even though I might not agree – and it’s normally an improvement on trying to impose my own flawed views.

    Anyway back to shares. I’ve also found it increasingly hard work. I find the worse part of a bear market like this, is the false hope that each bear rally brings – it really sucks the remaining energy from me each time it dissolves.

    MACF has been a long time hold of mine – and for a while pre-covid was my largest holding. Good to hear you liked the results. I was impressed. The ability to pass on the price rises as a distributor was remarkable. Understandably in a bear market – the share price reaction seems to be that Mr Market thinks it won’t last. I suspect that the market does not understand the difference between ‘protective packaging’ and ‘packaging’. Most cardboard boxes are wrapping rather than protection. Marcfarlane sell on the basis that their packaging saves on wastage, damage and improves satisfaction. Protective packaging for bottles sent online – as distinct from the wrapping used for cased delivered to supermarkets, being an example. Management appear to have navigated covid and now the energy/cost of living crisis very astutely. I’m not betting against them. But anything can happen – and on current form it probably will. Current forecasts for the year are not demanding. With H1 revenue and their recent acquisition they on;y need to do the same revenue in H2 as H1 – which does seem cautious given their proven ability to pass on prices. Similarly H1 profit was held back by acquisition costs, operational investments and repayment of a debt to the pension fund on the sale of the labels business – so unless the economy runs into a brick wall across the whole board from defence through to retail I expect them to exceed their own cautious expectations. Again. And if the economy does hit a brick wall, there may be a silver lining in their ability make continued acquisitions at lower prices.

    Right. Time to get back to my long-covid therapy – chopping my winter firewood. At least that’s becoming more valuable whilst my share prices are withering πŸ™‚



  • On energy Paul if the uk cut off the power line 3GW from portsmout* to france which is now and forever only going to go one way to the french as half of there nuclear power stations are offline, we would save gas here. The uk is over producing electricity at the moment to serve the EU meaning we have to use gas to do that. Even at night up to 3GW is going across the channel from gas power station therefore lack of storage of gas build up. I do wonder if the french have taken their nuclear power stations off line an purpose as brexit payback, maybe liz truss is right?


    Hi Paul

    Your end comments on what the ‘new’ government should do re the energy crisis made a lot of sense. Keeping things simple usually makes for quicker action and less opportunity for ‘creative’ get arounds by the wide boys.
    If we put a liveable cap on bills for the domestic sector, do we apply the same per unit cap to business users? Open question and I don’t have an answer. I worry however about, for instance, hospitality who must burn energy at a rate of knots. Also any business with a retail shed and the car showrooms come to mind… Just museings, no answers.


  • Interesting. Im not sure I agree with some of your broader points but Ive long been a SHOE fan. Solidly run company and an amazing opportunity during covid with a huge bounce back. I think still a buy at this level

    • Hi JJ, absolutely, I don’t expect people to necessarily agree with me, it’s just interesting to air our opinions, and debate. SHOE looks very nice again, after the sharp plunge last week. We’ve covered it quite a lot in the SCVRs this year, see the archive. Keeps beating expectations, which is impressive given a tightening macro picture. And you cannot beat entrepreneurs running a company they own half of! Although it’s been a major beneficiary of business rates relief I think, so might struggle to beat 2023 forecasts, but we’ll see.

  • Nice one Paul – enjoyed listening by the pool whilst taking a break from the markets in Mallorca. Keep up the great work and continued candour about the state of current markets and your own performance – makes for enjoyable listening!

    • Thanks Rich! At this rate, we could all end in Malllorca, or Gran Canaria, for the winter, just to save on the ‘leccy bill back home πŸ˜‰ At least my dismal performance helps other people feel better about their own troubles, that’s the way I look at it – always trying to draw a positive out of a negative! We’ll get the money back in the next bull market. Best wishes, Paul.

  • Excellent as always. Agree with what you say about trying to keep emotions out of the equation.
    Some years ago (maybe 20) I went on a budget golf holiday in Tunisia. The hotel and local bar was full of Norwegians which puzzled me. Turns out they were all non-working in Norway and on the ‘social’ which they could access overseas. Thus allowing them to enjoy a pleasant non-working lifestyle in a cheap country! It may well be worth thinking about a cheap off-season holiday overseas (longer stays are usually very good value) to avoid the bills here in the UK!

  • Cheers Paul. A very sensible analysis, particularly on the macro level. Enjoy the BH and hopefully things will improve soon, though I suspect there’s still a gut wretching down period to come, but who knows!

  • Lot in that podcast. Well worth the listen.

    On your entertaining chat with Alistair – I read somewhere that in a low interest environment QE put money into HMG due to differences in interest rates paid and received, but at 2% this becomes balanced and any higher than 2% reverses the flow. So the government’s headroom for energy price intervention might be interest rate dependent. Definitely the same household though πŸ™‚

    • Hi Poolwatcher,
      Someone on Twitter made a very good point, that higher inflation would cause the cost of servicing Govt debt to rise, on index-linked gilts. I googled it, and it says that a quarter of UK Govt debt is index-linked, so the problem doesn’t sound too large, but is certainly still a consideration that I overlooked initially, so happy to correct that point. It’s not clear how much of the index-linked gilts are owned by the Bank of England (not a problem, as the interest paid just goes in a circle).
      The way I look at things, this is an energy emergency, and hence the Govt needs to act decisively, as we did with covid, and wars, and then worry about how it’s paid for after normality has returned.
      If inflation stays at say 10% for 2 years, then that’s going to wipe out about Β£500bn of the National Debt in real terms. So as long as they keep the annual deficits below Β£250bn in each of the next 2 years, then overall net debt in real terms would remain static.
      The OBR website shows that last year’s Govt deficit was c.Β£160bn, and this year (FY 3/2023) is forecast to be about Β£100bn. Hence there’s clearly some scope there to do emergency measures on energy. It wouldn’t surprise me if they end up doing a massive package, of up to Β£100bn. And there is scope to do that.
      Then what happens once inflation has subsided? We probably return to zero interest rates, and more QE, I reckon. Now they’ve discovered these policy tools, I don’t suppose they would be locked up and never used again!
      But it’s all educated guesswork, I just enjoy discussing & thinking about it all, whilst being completely open about the fact that I’m not an expert, am just an enthusiastic commentator! Although the nice thing with economics, is that sometimes amateurs produce better forecasting results than the experts! There’s a fantastic book on that, called “Super-Forecasting” by Tetlock & Gardner. A very interesting & easy read, full of brilliant points – e.g. that talking heads on TV, etc, are never called to account for being consistently wrong with their views & predictions. All that the media require, is an authoritative-sounding delivery style, and a compelling, dramatic sounding narrative! Hence why the same old faces make the same bad predictions, time & time again. Same with newspapers & magazines too. Often terrible judgement, but they never get challenged on being wrong most of the time! (mind you the same accusation could also be levelled at me, given how badly my shares have done in the last year, so glass houses & all that! πŸ™‚
      Best wishes, Paul.

  • Thanks Paul for another interesting podcast.
    Much appreciated.

  • Hi Paul.

    Apologies, as this is off topic from your excellent podcast but I was wondering how your autobiography is progressing ? I’m hoping Covid gave the opportunity to move it forward. I’ve been watching for it for several years (in fact since you first mentioned you were doing it) as I want to give it as a xmas present to a fellow investor. So I guess the question is … will it be out by this coming xmas ?

    • Hi Gordon, It’s very kind of you to ask, but I haven’t got anywhere on that project. It’s too busy dealing with day-to-day work, and there’s nothing left in terms of energy or motivation once that’s done each week. Sorry about that. Regards, Paul.

    • Great podcast as usual. We all feel pain at the moment and it’s reassuring to hear your frank and honest report. Many thanks.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.