Trump Reverts to Petulant Five-Year-Old

11 November 2020 Page 1

Issue 2020/12 www.trendwatch.co.uk 11 November 2020

“Loser” and “sucker” Trump reverts to petulant five-year-old

HE TRUMP ABERATION is finally over. The US It’s a vivid illustration of how polarised America is. Stock market sectors electorate have spoken loud and clear. In all- There are tens of millions of voters there, who like me, T ☺ uptrends time record numbers, cannot begin to understand how and despite Covid-19, the peo- FTSE 100 anyone could conceivably vote * Automobiles & parts 4 ple have gone for the “anyone 7,500 for a cruel, narcissistic, amoral, * Banks 2 but Trump” option and deci- racist liar who is arguably com- 7,000 * Electricity 3 sively ousted Trump in favour plicit in the death of 240,000 US Electronic / electrical eq. 33 of Joe Biden. City centres all 6,500 citizens. around the nation erupted in Conversely, there are tens of Equity inv. instruments 107 spontaneous joy and relief. 6,000 millions of other voters who can- FTSE SmallCap ex Inv Co 23 I’ve been predicting this re- 5,500 not understand why people like General industrials 43 sult in these pages for years. me cannot see what to them is 5,000 Industrial engineering 105 Easiest prediction I’ve ever had D J F M A M J J A S O N D J F M A M J J A S O N blindingly obvious: that Trump is Industrial metals 112 to make. a courageous warrior fighting Except that, to borrow a phrase used by Trump to against socialism and for the rule of law. He is Ameri- describe himself, I fear that my claim to be a “very sta- ca’s only bastion against the destruction of US city Stock market sectors ble genius” is quite possibly delusional. centres by the Black Lives Matter movement.  downtrends It wasn’t quite the landslide that frankly, I and many Those are the people who constitute Trump’s mas- * Tobacco -2 others were expecting ― although in some vehemently sive base: millions of predominantly white working- anti-Trump states, a landslide is what we got: class people without a college education, living largely Food producers -37 Health care eq. & serv. -19 • Washington D.C: 93.4% : 5.2% for Biden in America’s vast rural areas. This is also the biggest reservoir of overt or covert racism that has plagued Life assurance -38 • Massachusetts: 65.7% : 32.5% for Biden America throughout its history. A large majority of Software & comp. serv. -11 • California: 65.3% : 32.9% for Biden these people believe that Trump can do no wrong. They believe unquestioningly in every lie he utters. Maryland: 62.6% : 35.6% for Biden • That’s why 71 million people just voted for him. • New Jersey: 60.7% : 38.2% for Biden To paraphrase Rudyard Kipling (who, in his poem • Washington State: 60.2% : 37.5% for Biden The Ballad of East and West, originated the phrase that has now graduated to a cliché): ...and several other states where Biden won more than “Oh, Republicans are Republicans and Democrats 55% of the vote. are Democrats, and never the twain shall meet.” Trouble is, for every one of the above states, there The latest result at the time of going to press is that, was a state going just as big for Trump: with counting still in progress and three states left to • Wyoming: 70.4% : 26.7% for Trump call (in two of which Biden is ahead), Biden has won 279 of the all-important Electoral College votes (the • West Virginia: 68.7% : 29.6% for Trump winner needs 270) compared to Trump’s 217. In the • North Dakota: 65.5% : 31.9% for Trump (irrelevant) popular vote count, Biden is beating • Oklahoma: 65.4% : 32.3% for Trump Trump by a margin of more than 5 million votes. That’s 2 million more votes than the 3 million margin • Idaho: 63.9% : 33.1% for Trump that Hillary Clinton beat Trump in 2016; a statistic • Kentucky: 62.6% : 35.7% for Trump that unhinged Trump even more then the fact that Obama’s inauguration ceremony attracted a far bigger • Arkansas: 62.6% : 34.5% for Trump crowd than Trump’s. Another notable achievement by Biden is that he be- TrendWatch Barometer came only the fourth president-elect in the past 100 years to unseat an incumbent president. The others London-listed shares were: % of total no. of % change 1932: Franklin Roosevelt ousted Herbert Hoo- 12-Oct 09-Nov • shares monitored on fortnight ver; OFFICIAL LIST: • 1980: Ronald Regan ousted Jimmy Carter. Uptrends 17.65% 12.57% -5.08% • 1992: Bill Clinton ousted George HW Bush Indeterminate 70.21% 68.95% -1.26% S0 not an anti-Trump landslide, that many were Downtrends 12.14% 18.48% +6.34% predicting, but a very respectable win for the Biden- Harris ticket. AIM-LISTED: So why do I have the unsettling feeling that my bril- Uptrends 17.58% 13.62% -3.96% (Continued on page 9) Indeterminate 64.96% 66.12% +1.16% Downtrends 17.46% 20.26% +2.80% SHARE SELECTIONS IN THIS ISSUE INVESTMENT TRUSTS: Uptrends 19.88% 10.98% -8.90% Beeks Financial Cloud Group (BKS) 4 Indeterminate 73.70% 78.65% +4.95% Bigblu Broadband (BBB) Downtrends 6.42% 10.37% +3.95% Jet2 (JET2) EXCHANGE TRADED FUNDS: Marshall Motor Holdings (MMH) Uptrends 14.61% 13.48% -1.13% Indeterminate 81.46% 83.15% +1.69% Randall & Quilter (RQIH) Downtrends 3.93% 3.37% -0.56% Tremor (TRMR) 11 November 2020 Page 2

SDI soars by nearly a quarter as it shrugs off Covid threat

The TrendWatch portfolio: Valuation as at 9 November 2020 Date Buy price Price now gain/ loss F/c gross Mkt. gain/ Outperf. STOP- Share (EPIC) bought (p) * (p) (%) yield (%) loss (%) (%) LOSS **

Aquis Exchange (AQX) AIM 15/10/2020 410.00 435.00 6.1 - 1.2 4.8 348 Arrow Global (ARW) 17/09/2020 106.40 135.80 27.6 - -2.1 30.3 108 Avingtrans (AVG) 23/07/2020 266.00 260.00 -2.3 1.6 -4.0 1.8 232

Blackbird (BIRD) AIM 17/09/2020 20.50 21.25 3.7 - -2.1 5.8 17 Bluebird Merchant Ventures (BMV) 15/10/2020 5.30 5.55 4.7 - 1.2 3.5 4

Cake Box Holdings (CBOX) AIM 17/09/2020 167.00 176.00 5.4 3.5 -2.1 7.6 149

CareTech Holdings (CTH) AIM 02/08/2020 441.00 455.00 3.2 3.2 -1.4 4.6 380

CentralNic (CNIC) AIM 28/05/2020 88.50 76.00 -14.1 - -4.3 -10.3 73 Codemasters Group (CDM) 23/07/2002 353.50 470.00 33.0 - -4.0 38.5 332

CVS Group (CVSG) AIM 25/06/2020 988.00 1314.00 33.0 0.5 -3.0 37.2 998

Eagle Eye Solutions Group (EYE) AIM 02/08/2020 245.00 323.00 31.8 - -1.4 33.7 268

Franchise Brands (FRAN) AIM 15/10/2020 99.50 96.00 -3.5 1.4 1.2 -4.7 80

Frenkel Topping Group (FEN) AIM 15/10/2020 48.50 42.50 -12.4 3.5 1.2 -13.4 39 Future (FUTR) 25/06/2020 1236.00 2055.00 66.3 0.1 -3.0 71.5 1620 Gamesys (GYS) 30/04/2020 877.00 1200.00 36.8 3.1 0.8 35.7 1012 GVC Holdings (GVC) 17/09/2020 905.60 994.60 9.8 - -2.1 12.1 872 Hilton Food Group (HFG) 30/04/2020 1120.00 1150.00 2.7 2.3 0.8 1.8 963

Joules Group (JOUL) AIM 17/09/2020 103.00 104.50 1.5 - -2.1 3.6 92 JTC Group (JTC) 25/06/2020 479.00 538.00 12.3 1.4 -3.0 15.8 430 Macfarlane Group (MACF) 20/08/2020 93.20 91.50 -1.8 2.6 -1.4 -0.5 75 Motorpoint (MOTR) 15/10/2020 286.00 282.50 -1.2 2.2 1.2 -2.4 240 Plus500 (PLUS) 30/04/2020 1250.50 1483.50 18.6 4.3 0.8 17.7 1305 Redcentric (RCN) 23/07/2020 139.00 129.00 -7.2 2.0 -4.0 -3.3 124 Scottish Mortgage Inv. Trust (SMT) 23/07/2020 913.50 1077.00 17.9 0.3 -4.0 22.8 856

SDI Group (SDI) AIM 20/08/2020 64.50 80.30 24.5 - -1.4 26.2 59

Smart Metering Systems (SMS) AIM 30/04/2020 598.00 580.00 -3.0 4.6 0.8 -3.8 520

Sumo Group (SUMO) AIM 28/05/2020 190.00 270.00 42.1 - -4.3 48.4 208 UP Global Sourcing Holdings (UPGS) 23/07/2020 74.70 91.00 21.8 4.6 -4.0 26.9 85 Urban Exposure (UEX) 23/07/2020 56.50 69.50 23.0 7.2 -4.0 28.2 55

Venture Life Group (VLG) AIM 28/05/2020 67.00 103.00 53.7 - -4.3 60.6 83

Averaged gains (%): 14.5 -1.7 16.5

TrendWatch portfolio's percentage profit: 14.47% Change since last full TW: +1.28% Market's percentage profit (tracker fund)†: -1.75% TrendWatch has outperformed market by: 16.50%

* Buy price is the price as at close of business on the Thursday following publication of the recommendation. ** A blue stop-loss limit means that the limit has been raised since the last issue; red means it has been lowered. † 'Market gain' is the resultant gain/loss if the holding had been invested in a tracker fund. (See 'Technical Notes' on back page).

11 November 2020 Page 3

THE London stockmarket went wobbly during the past four proposal from US company Take-Two Interanctive Inc to acquire weeks, the result of the government’s decision to initiate a second Codemasters’ entire share capital at a price of 485p, comprising Covid-19 lockdown, plus uncertainty over the result of the US presi- 120p per share in cash and 365p per share in Take-Two’s shares. In dential election. response, Codemasters said: “...it is the current intention of the You can see from the Barometer on page 1 that there was a Board of Codemasters to recommend unanimously that Codemas- marked deterioration in investor sentiment. Only 12.6% of shares ters' shareholders accept the Possible Offer”. The initial deadline were in uptrend as at the start of trading this week, a 5% deteriora- for Take-Two to formally make its offer is 4 December. tion over the four weeks. That level of uptrends is well below the Other news in brief: Recall that Bluebird Merchant Ven- historical average. It’s a similar situation on AIM. tures (up 4.7%), which focuses on re-opening disused gold mine in But what about this week, I hear you ask. Will this not have dra- Asia, is currently involved in acquiring Southern Gold's 50% joint matically improved the situation? venture interest in certain South Korean gold interests for 90% of Probably not. Yes, there was a uptick in the FTSE All Share index. the value of that interest. Southern Gold rejected Bluebird’s valua- But Monday in particular saw huge volatility, with prices whipsaw- tion, therefore the next step is for an independent valuation expert ing up and down, with some share finish up, while other not only to be appointed. This expert has now been appointed and is due to lost there early gains but actually finished down on the day. give his valuation in the next few days. Our portfolio performed well despite the nervousness over the Cake Box Holdings (up 6.7%) issued an encouraging trading past four weeks, clocking up three double digit percentage gains on half year trading update, which said that it had traded strongly the four-week period, versus two corresponding fallers, with the during a period that encompassed the first lockdown ― though of rises being much bigger than the falls ― though we did have several course we’re now into a second lockdown. However, the company stop-outs (see back page). The value of the existing portfolio rose by did note that online sales increasing 81% compared to the same 1.3% since the last issue. period last year, helped by the launch of its delivery service through The star performer by a mile was SDI Group (formerly Scientific takeaway platforms including Uber Eats, Just Eat and Deliveroo. Digital Instruments), up by more than a quarter. This was thanks CareTech Holdings (up 2.5%) said in a trading update that to a full-year trading update in which said: robust trading, especially at its UAE subsidiary, meant that its full- “Given the very positive level of sales at Atik Cameras and MPB year results would be slightly ahead of market expectations. Industries and the cost savings effected in the other businesses, the GVC Holdings (down 8.8%), the global sports-betting and gam- Board now believes that the Group is likely to achieve sales and ing group, has been awarded four sports-betting licences in Germa- profit before tax broadly at the levels budgeted for this financial ny. The German regulator has issued licences for the bwin, Sport- year before the onset of the pandemic, and therefore above cur- ingBet, Ladbrokes and Gamebookers brands to enable each of them rent market expectations.” to offer sports-betting products to customers across Germa- To clarify, this means that its full-year results are expected to be ny. However, it also said it would take a 43m hit to profit if its gam- more or less in line with the previous year, which doesn’t sound bling stores remained closed for all of November under Britain’s that great. But because investors were expecting it to be badly hit latest coronavirus lockdown. by Covid, it’s statement that it won’t be is a big positive. Finally, Venture Life (up 2.0%), supplier of health products for The other big news of the past four weeks is that computer games the elderly) has been included in London Stock Exchange Group's developer Codemasters (up 19.8%) has received a non-binding “1000 Companies to Inspire Britain' 2020 report for a fifth consec- utive year. The report recognises the UK's fastest-growing and most 4-week GAINERS % gain Reason dynamic small and medium sized businesses and highlights the entrepreneurial spirit shown by these companies. ❑ SDI Group (scientific +23.2% See text. instruments) 4-week LOSERS % loss Reason Codemasters +19.8% See text CentralNic -13.1% No price-sensitive news. (computer games (sale of domain names) developer) Frenkel Topping -12.4% No price-sensitive news. Blackbird (cloud- +14.9% No price-sensitive news. (financial advice to per- based video technol- sonal injury and clinical ogy) negligence victims).

(p) SDI Group (p) Codemasters Group (p) Blackbird

90 450 20 80 400 70 350 15 60 300

50 250 10 40 200 30 150 D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N 5 D J F M A M J J A S O N D J F M A M J J A S O N

(p) CentralNic Group (p) Frenkel Topping (p) Macfarlane Group 50 110 90 45 80 100 40 70 90 35 60 80 30 50 25 70 40 20 60 D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N

11 November 2020 Page 4

Beeks now has 7 new data centres, bringing total to 18

BEEKS FINANCIAL CLOUD GROUP (BKS) subscription-based model also results in good earnings visibil- ity. Recurring revenue now comprises around 94% of total Business description: The purpose of Beeks Financial Cloud revenue. is to facilitate low-latency, high-frequency financial trading. In other • Its main strategic objective remains growth in the institutional words, it helps traders – whether they be private or corporate – to customer base, especially Tier 1 clients. In the last financial gain an edge over the year, it recruited two more of these, bringing the total to 5. It less well-healed riff- (p) Beeks Financial cloud 130 says it’s confident of winning more of these in the year ahead. raff such as us. Its total number of institutional customers increased last year It achieves this by 120 from 220 to 242. locating its data cen- 110 tres in close proximity • It opened 7 new data centres during the year, bringing the total to financial exchang- 100 to 18. This increases Beeks’ capacity by 45%. es, so that the time it 90 • Covid-19 appears to be having only a minimal impact on the takes for data to pass 80 Group. along cables between the two is reduced by 70 Risk factors: microseconds. D J F M A M J J A S O N D J F M A M J J A S O N • The shares are certainly not conspicuously cheap. However, it’s Established in 2011 sometimes necessary to pay a bit more for quality, and it does by CEO Gordon McArthur, it has grown from having a single site in look as through Beeks is on a strong growth trajectory. New Jersey, to having a presence in 18 international data centres, offering both low latency connectivity within the data Year: to June: 2016 2017 2018 2019 2020 2021** 2022** centres to various venues and a Point to Point Wide Area Revenue (£m) 2.68 3.97 5.58 7.35 9.42 12.2 14.9 Network joining its sites around the world. Pre-tax profit (£m) 0.144 -0.761 0.757 1.06 0.575 1.80 2.30 In April this year, Beeks acquired Velocimetrics, a data analytics business. Now we know why. Less than a week ago, Normalised eps (p)* 0.51 -0.051 2.97 2.28 1.57 2.82 3.70 it launched “Beeks Analytics as a Service” based on Veloci- Norm. eps growth rate (%) -18.9 -23.2 -31.1 +79.6 +31.2 metrics technology. This is highly technical, so I’ll let Beeks’ Prospective price/earnings (p/e) ratio: 35.6 27.2 CEO explain: “Providing our customers with a view of their trading Prospective p/e:earnings growth (PEG) ratio: 1.14 1.31 performance right the way down to individual network Forecast dividend yield (%): 0.41 0.50 packets, at microsecond resolution, is a critical element that *Normalised earnings per share takes into account any unusual or one-off items **Forecast financial firms struggle with in the cloud and which Beeks is now able to offer. We feel there will be strong up-take for this prod- Summary: As I said when I first recommended this company last uct across all asset classes, but particularly in the FX market, where year, I have a mild ethical objection to companies like this, whose customers need to manage connectivity to large numbers of differ- objective is to tilt what should be a level investing playing field in ent sources of liquidity." favour of those with deep pockets. The Analytics as a Service offering “will be able to monitor all of Fortunately, I have a relatively low bar when it comes to ethics. the essential financial metrics which clients require, including fine- Some ethical funds won’t invest in companies in the energy, pharma- granularity microburst detection, gap detection, Transmission Con- ceuticals or defence industries. I have no such hang-ups. Probably trol Protocol (TCP) anomaly detection and financial protocol decode my only red line is the tobacco sector, where companies deliberately and latency measurement. All of this is backed by Precision Time set out to addict their customers, knowing full well that most of those Protocol (PTP) time synchronisation that some financial regulations customers will go down with terrible diseases that will ultimately require, as well as robust access to packet captures”. cause them great distress, and cut their lives cut short. There ― I told you it was highly technical! Anyway, I think you’d agree that Beeks is not even close in ethical The company’s head office and Network Operations Centre is based terms. Indeed, to quote Beeks’ CEO: “That’s how it all started… be- in the UK. It has a team of contractors who are engaged across of its moaning the fact that individuals were at a disadvantage to large datacentres in the UK, US, Austria, Singapore, Indonesia Sydney and institutional investors when placing trades. We initially thought of Japan. a solution to help ourselves, the difference is now we’ve scaled it The Group IPO-ed on AIM almost exactly three years ago, in No- worldwide”. So if you happen to be a high-volume individual inves- vember 2017. tor, Beeks actually tilts the playing field back in your favour vis a vis the institutions. That said, the biggest users of Beeks’ services are in Bull points: fact the institutions, with only 15% of turnover coming from retail • The company gets most of its revenue from subscriptions to its clients. Nevertheless I’m happy to recommend Beeks as a fast grow- services, therefore “Annualised Committed Monthly Recurring ing business with a great future. BUY (97.76p; yield: 0.4%; market Revenue” is a key performance indicator. In its last full-year capitalisation: £51.3 million; initial stop-loss: 78p; EPIC: BKS; sec- results for the year to June, it reported that this metric rose tor: Software & IT services; classification: AIM; website: https:// 23% year on year to £11.2m. Total revenue was up by 27%. A www.beeksfinancialcloud.com). ❑ Jet2 set to thrive as mainstream airlines struggle to survive

JET2 (JET2) tember it changed its name to Jet2. Jet2holidays is Business description: Until earlier this year, this company was now the UK's larg- (p) Jet2 called Dart Group and consisted of two very different divisions: Its est tour operator to 2,000 logistics arm, Fowler Welch and the holiday operation, comprising many Mediterrane- 1,750 the airline Jet2 and tour operator Jet2holidays. an and Canary Is- 1,500 At the end of May, it announced that it had completed the disposal lands leisure desti- 1,250 of Fowler Welch for a gross consideration of £98m. nations and Euro- Also in May, it completed a placing of new ordinary shares at a pean cities; and 1,000 price of 576.5p per share, representing 20% of the then existing ordi- Jet2.com is the 750 nary share capital, raising gross proceeds of £171.7m. The Placing UK's 3rd largest 500 was significantly over subscribed and the shares were placed at zero airline in terms of 250 discount to the prevailing market share price. the number of pas- D J F M A M J J A S O N D J F M A M J J A S O N Finally, as its business is now solely focussed on holidays, in Sep- sengers flown. 11 November 2020 Page 5

Bull points: they do upon the how quickly Covid-19 is defeated ― if indeed • In September (prior to the second lockdown), it said that it can be. “bookings to date were encouraging, with average load fac- • Recall that we tried the same strategy when I recommended tors ahead of the same point last year and package holiday another highly successful travel company, On the Beach in customer numbers as a proportion of total departing custom- June at 292p. It got stopped out in September at 230p. The ers showing a material increase”. This seems to indicate that same fate could befall Jet2. However, it should be noted that it can recover quickly when normality returns, as holiday- the On the Beach share price now stands at 343p (up 29.4% on deprived consumers become ever more eager to make up for Monday alone). That too could happen to Jet2. what the virus has deprived them of. Year to March: 2016 2017 2018 2019 2020 2021** 2022** • It’s not surprising that Jet2 is more resilient than mainstream flag-carriers. Unlike them, Jet2 is not dependent Revenue (£m) 1,405 1,729 2.380 2.964 3,585 1,746 2,967 on lucrative business travel, which has now pretty much Pre-tax profit (£m) 88.8 76.7 107 140 116 -223 190 collapsed. Weaker competitors may well go under. Normalised eps (p)* 59.9 51.5 71.7 90.3 60.6 -215 74.6 • Financially, it is immensely strong, partly due to the Norm. eps growth rate (%) +90.7 -14.0 +39.2 +26.0 -33.0 £98m gross proceeds from the sale of Fowler Welch; partly to the £171m raised from its institutional placing Prospective price/earnings (p/e) ratio: 12.3 in May; and partly from the currently unutilised £300m Prospective p/e:earnings growth (PEG) ratio: from the Bank of England’s Covid Corporate Financing Forecast dividend yield (%): - - Facility. As at the end of August, it had an “own cash” *Normalised earnings per share takes into account any unusual or one-off items **Forecast balance (i.e. excluding customer deposits) of £629 million. This means it has the financial strength to withstand Summary: Jet2 remains well positioned at the forefront of the lei- whatever Covid-19 throws at it. sure travel industry. It regularly wins bucketloads of travel industry

Risk factors: awards, especially for consistently excellent customer service and product offering. The Group is well set to reinforce its market posi- • The news from Pfizer re the vaccine is very encouraging. How- tion and reputation as the industry normalises, particularly as com- ever, we need to remember that, even assuming that that vac- petitors retrench. Jet2 has demonstrated that it can react quickly to cine passes all its hurdles and continues through to produc- market opportunities. If (a big ‘if’, I know) there are strong indication, it will be well into next year before mass vaccination gets tions by earlier next year that Covid is being brought under control, I under way. We also need to remember that, when talking suspect we could see a dramatic re-rating of the shares. BUY (1258p; about international travel, there needs to be widespread vac- yield: nil; market capitalisation: £2.2 billion; initial stop-loss: 1006p; cination in Jet2’s destinations as well as in the UK. EPIC: JET2; sector: Passenger transportation services; classification: • The forecasts in the table are highly speculative, depending as AIM; website: www.jet2plc.com ). ❑ Tremor: a chequered history but now has critical mass

TREMOR INTERNATIONAL (TRMR) • This is a truly global company, with operations in more than 60 countries. It has more than 450 major advertisers as cli- Business description: Tremor International (formerly Tapti- ents, including Disney, Amazon, Twitter, Expedia and Open- ca) is a small but rapidly growing global leader in advertising tech- Table. It has more than 50,000 supply and publishing partners nologies. It leverages (p) Tremor International worldwide. As at July last year, it had more than 334 million the latest video and 240 unique global users. display technologies, 220 • The Unruly acquisition extends Tremors global reach. Unruly including artificial 200 intelligence and ma- currently works with 95 of the top 100 Ad Age brands, includ- chine learning, to 180 ing P&G (the former Proctor & Gamble), Unilever, Nestlé, enable its clients to 160 American Express and many other Fortune 500 companies. reach their most valu- 140 • In its most recent trading statement, it said that trading had able customers. 120 been strong and that momentum continued to build, with the Based in Tel Aviv, 100 result that “the Company now expects trading for the full year where it has its R&D 80 ended 31 December 2020 to be ahead of market expectations.” facilities, it has offices D J F M A M J J A S O N D J F M A M J J A S O N around the world in Risk factors: the US, Canada, Asia Pacific, Europe, India and Latin America. • Israeli companies have always been regarded as carrying a big It has three main businesses: political risk, and therefore usually trade at a discount to com- • Tremor Video parable businesses. • RhythmOne: • There is an investor trust issue with this company. It isn’t the easiest company to understand, not least because of its many • Taptica: This is Tremor’s original business, which floated on name changes. There are mixed signals in that directors have AIM in May 2014. been selling, while an activist investor, Toscafund, has been The differences and similarities between its constituent businesses buying and now holds a 23% stake. That said, there doesn’t are arcane, except to those working in this industry. Suffice it to say appear to be a trust issue with its customers, many of which that the most important common factor between them is that they all are blue chip, nor indeed with News Corporation. work at the leading edge of screen-based advertising, where Year: the screens in question can be TV, computers or mobile devic- 2015 2016 2017 2018 2019 2020** 2021** es. Revenue ($m) 75.8 126 211 277 326 350 420 Early in January this year, it acquired from media giant Pre-tax profit ($m) 2.15 16.5 13.8 22.2 6.22 2.20 26.6 News Corp a fourth business, Unruly, which is said to be a Normalised eps (ȼ)* 3.26 26.3 24.4 32.0 7.03 2.0 19.0 good fit with RhythmOne. The transaction is being satisfied by the issue of 6.91% of Tremor’s share capital to News Corpo- Norm. eps growth rate (%) -68.1 +707 -7.28 +31.3 -78.0 -71.5 +850 ration, which has agreed to an 18-month lockup period. Trem- Prospective price/earnings (p/e) ratio 149 15.6 or has committed to an ad spend of £30m with News Corp Prospective p/e:earnings growth (PEG) ratio 0.175 over a three-year period as part of this agreement. Rebekah Brooks, CEO of News UK (owner of The Times, Sunday Times Forecast dividend yield (%) - - and the Sun) will be joining the board as a non-executive di- *Normalised earnings per share takes into account any unusual or one-off items **Forecast rector, representing News Corp. Summary: I originally recommended this share in the February Bull points: issue. But like all of our shares, it got stopped out in March when the 11 November 2020 Page 6

lockdown knocked the stuffing out of global stockmarkets. ment looks to be great for Tremor. As much as I deprecate Rupert Murdoch (owner of the phone hack- BUY (230p; yield: nil; market capitalisation: £295.7 million; initial ing specialist newspapers The Sun and the now defunct News of the stop-loss: 184p; EPIC: TRMR; sector: Media & publishing; classifica- World, and the fake-news channel Fox News, now the official dis- tion: AIM; website: https://www.tremorinternational.com). ❑ seminator of Trump lies), I cannot deny that News Corp’s involve- An insurance company, yes ― but not as you know it

RANDALL & QUILTER INVESTMENT HOLDINGS (RQIH) tions. Indeed, it is probably acting as a tailwind, in that Covid- 19-related labilities may increase pressure on insurers to take Business description: Randall & Quilter (which I’ll now refer to advantage of R&Q. as R&Q) is a non-life global specialty insurance company. But it’s • Its two main businesses are highly complimentary. Programme somewhat different from the conventional common or garden insur- Management ance form. generates con- (p) Randall & Quilter The Bermuda-based company has two main divisions: tracted high 220 • Program: R&Q delegates underwriting authority to managing quality fees, ra- 200

general agents (MGAs) to provide program capacity through ther like an in- 180 its licensed platforms in the US and Europe. Its platforms pro- surance broker. vide the authorised insurance paper, enabling insurance entre- Legacy services 160 preneurs to develop and build the businesses in partnership generates a high 140 with the capital providers. return on capital, 120 rather like a spe- • Legacy: Be careful not to misunderstand the name of this divi- 100 sion. Normally, “legacy” implies old businesses or divisions in a ciality insurer. D J F M A M J J A S O N D J F M A M J J A S O N company that is no longer core. That doesn’t apply here. The Both have high Legacy division acquires legacy portfolios and insurance debt barriers to entry. from other insurance companies, and Lloyds syndicates, thus • There is a 6.1% prospective yield. enabling those insurance companies to strengthen their capital • There is good potential for international expansion ― it moved ratios. and provides capital support to the Company’s managed into the Italian market last year. Lloyd’s Syndicates. Risk factors: It’s worth expanding on this concept of “legacy”. If, for example, an insurance syndicate at Lloyds of London wishes to disband, there is a • It suffered a £7.1m loss on its investment portfolio in H1, problem. Lloyds’ rules require that the syndicate remain liable for which impacted its profits. However, it said that it has claims up to three years into the future. This creates consider- “substantially reversed” this in H2. able uncertainty. The syndicate can offload its future liability Year: 2015 2016 2017 2018 2019 2020** 2021** by reinsuring with R&Q, which itself owns a Lloyds syndicate (1110) specifically for this legacy reinsurance purpose. Last Revenue (£m) 71.8 60.9 185 80.8 211 year, Syndicate 1110 complete 16 of these legacy transactions. Pre-tax profit (£m) 2.99 8.41 22.9 7.34 37.3 30.5 45.6 The company has more than 250 insurance professionals Normalised eps (p)* -8.10 -3.58 -6.95 4.15 -4.04 14.6 20.3 based in Bermuda, the US and Europe. Norm. eps growth rate (%) +38.7 The Group was founded by Ken Randall and Alan Quilter in 1991. It floated on AIM in 2007. Prospective price/earnings (p/e) ratio: 11.3 8.2

Bull points: Prospective p/e:earnings growth (PEG) ratio: 0.29 0.55 • The Group is ideally positioned for Brexit. It owns a Forecast dividend yield (%): 6.0 6.2 European insurer, Accredited Insurance (Europe) Ltd, *Normalised earnings per share takes into account any unusual or one-off items **Forecast which is rated A- (‘excellent’) by insurance ratings business A. M. Best, and which has passporting rights throughout Summary: I know, I know… it’s difficult to get excited about in- the EU. surance companies. They tend to be highly cyclical anyway. But don’t • In May, it raised $100m of new equity to fund its future growth. be confused (dot com). R&Q is far from being a normal insurance company. It’s actually pretty exciting, with every prospect of strong • Last month, it reported record interim results, with contracted earnings growth to come. BUY (182.5p; yield: 5.6%; market capitali- insurance premium income up 95% to $925m. Interim pretac sation: £408.2 million; initial stop-loss: 146p; EPIC: RQIH; sector: profit rose by 30% to £10.4m. Insurance; classification: AIM; website: www.rqih.com). ❑ • Covid-19 appears to have had no significant effect on its opera- Marshall: A consolidator in the fragmented car sales sector

MARSHALL MOTOR HOLDINGS (MMH) Bull points: • Last month, it issued an exceptionally strong Q3 trading state- Business description: Marshall Motor is currently the seventh ment. Previous expectations were for it to break even on the largest UK motor re- full year. The trading updated showed that it had an exception- tailer, operating 117 (p) Marshall Motor Holdings 180 al August and September, with the result that it noe expects to franchises across 24 make an underlying pre-tax profit of around £15m. It per- brands. Marshall rep- 160 formed strongly across the board, including fleet and used car resents all of the Ger- sales, aftermarket sales and servicing. Furthermore, it said man and British pre- 140 that margins remained strong, indicating that it did not slash mium brands with a prices to maintain sales volume. total brand coverage 120 • It has a very strong balance sheet, with £31.5m of cash and no of 79%, as well as be- 100 ing the largest VW pension liabilities. As the company says, this leaves it “well Group partner in the 80 positioned to “take advantage of strategic growth opportuni- UK. D J F M A M J J A S O N D J F M A M J J A S O N ties.” It was founded in • Covid-19 is likely to accelerate consolidation in a highly frag- 1909 by David Gregory Marshall, in a small lock-up garage in Cam- mented industry as weaker players drop out. It seems highly bridge as a chauffeur drive It has been in motor retailing for more probably that Marshall will emerge as one of the winners. Mar- than a century. It floated on AIM in April 2015. shall’s management team has a strong mergers and acquisi- tions track record, having bought or sold 161 businesses since 11 November 2020 Page 7

the current CEO arrived. other two have no rating. Furthermore, the consensus price target is • The consensus price target is 40% above the current 190p, or 40.7% above the current price. It’s hard to believe that 190p share price. Year: 2015 2016 2017 2018 2019 2020** 2021** • When a lockdown occurs, it seems that car dealers are Revenue (£m) 1,233 1,860 2,232 2,187 2,276 2,135 2,186 quick to recover afterwards as a result of pent-up de- Pre-tax profit (£m) 11.7 17.8 49.4 14.0 15.6 11.7 11.4 mand. Normalised eps (p)* 19.0 18.9 20.2 27.8 29.0 14.8 1.4 Risk factors: Norm. eps growth rate (%) +48.6 -0.536 +6.87 +37.3 +4.63 -48.9 -2.92 • The latest lockdown is a further setback ― but the com- Prospective price/earnings (p/e) ratio 9.1 9.38 pany has demonstrated its ability to weather the storm far better than the industry writ large. Prospective p/e:earnings growth (PEG) ratio 0.675 • In common with other companies in the sector, opeat- Forecast dividend yield (%) - 4.5 ing margins are tight. *Normalised earnings per share takes into account any unusual or one-off items **Forecast

Summary: In the last issue, I recommended Motorpoint. That company and Marshall have quite different business models but would be the target price or a company whose earnings were falling they’re both in the same business, and both companies are excep- to that extent. Maybe one broker hasn’t updated its forecast to take tionally good at what they do. into account the most recent trading update. You’ll note from the above table that, far from seeing double-digit Whatever the reason for this anomaly, I’m prepared to take the earning growth forecasts, which is normally a requirement before we risk, if only because this highly successful company purports to trade recommend a share, the table shows an earnings decline. So why am on a PEG of just 0.675 for 2021. BUY (136.5p; yield: nil; market I still recommending it? capitalisation: £106.8 million; initial stop-loss: 109p; EPIC: MMH; The truth is, I don’t believe the forecasts. These are consensus fore- sector: Speciality retailers; classification: AIM; website: https:// casts from three analysts, one of whom rates it as a “strong buy”; the www.mmhplc.com ). ❑ Sale of UK and European broadband bolsters Bigblu’s finances

BIGBLU BROADBAND (BBB) Bigblue has the ideal technology for this. Bigblue initially deploys fibre to a base station mast that has line of sight to a Business description: Bigblu Broadband provides broadband customer’s household. This then enables a focused wireless services to homes and businesses that are outside of the fibre foot- connection using 5G to be established between the mast and print, which means predominantly in rural areas. antenna equipment at the customer’s premises. Once Quick- Until now, many homes and businesses in such areas have had to line has won the tender to roll out its technology in a given rely on traditional fixed telecoms networks such as BT Openreach, area, it will effectively have a monopoly, since it would not be which typically offer a low speed, low reliability service. In contrast, economic for competitors to go through the whole tedious Bigblu either deploys its own network infrastructure to offer fixed approvals process against an incumbent. Not even satellite wireless solutions, or it procures satellite capacity from satellite operators to offer satellite broadband to customers. Earlier this year, it sold its satellite operations in the UK and mainland Europe to Eutelsat for a maximum consideration of £39.3m cash. Following this disposal, its continuing operations are in Australia (c60% of group revenue), the UK (c20% of group revenue) and the Nor- dics, primarily Norway (c20% of group revenue).

Bull points: • Selling off its UK and mainland European business has left it with much lower debt, the flexibil- ity to invest in the continuing operations, and potentially to raise shareholder returns. It got a good price from Eutelsat: around a 50% premium to the prices it paid for those assets over time. • Bigblu’s SkyMesh is the leading satellite retail service provider This image may help you understand how Quickline (RSP) in Australia. Bigblu is targeting growth in its subscriber works. Bigblu runs a fibre optic cable to a high place or a base there by around 10,000 a year, given its strong competi- mast in the vicinity its target market. From there, a 5G tive position. It currently has around 7m subscribers using its radio antenna in line of sight of its target subscribers network, including 96,000 satellite subscribers. It’s also beams a signal to a receiver mounted on its subscriber’s thought to be probable that Bigblu will leverage its Australian home or business. operation by expanding into New Zealand. • The sale of its UK satellite business to Eutelsat does not mean operators will be able to compete, since Quickline’s technology that it no longer operates in the UK. The UK government is as around 5 times faster than satellite broadband. targeting gigabit broadband for all UK households by 2025, • When new satellite capacity is launched in 2022 and2023 to but less than 60% of households can currently access 100 provide better coverage in more northern latitudes, there is Mbps. To this plenty of scope to grow its Nordic satellite operations, where end, the UK gov- (p) Bigblu Broadband around 80% of consumers are signed up to slow broadband of ernment to pro- 130 only 10 Mbps or less. There is also the potential to expand into vide funding to 120 Sweden and Finland. deploy ultrafast 110 • In the view of analysts, Bigblu is substantially undervalued broadband in 100 rural areas. relative to its peers. The consensus price target is 177.5p, which 90 is more than 70% above the current price. Thanks to Quick- line, a business 80 Risk factors: in which Bugblu 70 • If it does not move into profit next year, investors may be very took a majority 60 disappointed and my lose patience. stake in 2017, D J F M A M J J A S O N D J F M A M J J A S O N • Other technologies / competitors may come along and under- 11 November 2020 Page 8

cut Bigblu’s offering. For example, Elon Musk of Tesla and SpaceX fame is in course of deploying around 1,500 of low Year to November: 2015 2016 2017 2018 2019 2020** 2021** orbit Starlink satellites with a similar aim to Bigblu’s: low- Revenue (£m) 7.44 21.5 43.9 55.4 62.1 27.2 29.7 cost broadband to hard-to-reach areas around the world. Pre-tax profit (£m) -6.01 -6.04 -7.63 -13.3 -8.02 1.99 3.32

Summary: Don’t be too concerned at the sea of red in the Normalised eps (p)* -5.74 -18.3 -17.1 -23.5 -10.3 -1.0 5.75 track record table. This is a relatively young company that has Norm. eps growth rate (%) been successfully investing for its future success. If brokers’ Prospective price/earnings (p/e) ratio: 18.1 forecasts are correct, that success is in sight as a breakthrough to profitability finally beckons. BUY (100p; yield: nil; market capi- Prospective p/e:earnings growth (PEG) ratio: 4.0 talisation: £61.3 million; initial stop-loss: 80p; EPIC: BBB; sec- Forecast dividend yield (%): - - tor: Telecomms services; classification: AIM; website: https:// *Normalised earnings per share takes into account any unusual or one-off items **Forecast bbb-plc.com). ❑

Not a lot happened to our portfolios… until Monday of this TAM 2 was not so badly affected by stop-outs. Nevertheless, week, when all hell broke loose on news of the Pfizer vaccine. some big gains on Monday rapidly turned into losses. Markets whipsawed up and down like an elevator with a lunatic at Fortunately, things started to settle down as the euphoria evap- the controls orated and more realistic assessments of the vaccine situation This was especially apparent with TGF where, for example, came to the fore. The net result as at late on Wednesday evening gold and silver quickly triggered their opening trades but were (when the above snapshots were taken) is that neither TAM 2 nor then equally quickly stopped out by the crazy volatility. TGF were significantly changed over the the past 4 weeks.

If you’re not yet a Trendwatch investor and you’re looking for exceptional investment returns, please visit www.trendwatchAM.com

The charts accurately reflect the performance of the TAM 2 master account each time a trade is placed on the master account. The effect of this will be that, from its inception on 1/10/2012, and TGF from its inception on 1/10/2015.. other things being equal, a profitable client account will show a bigger NAV gain However, even investors who invested at inception will see an appreciably than the master account gain. different performance from the master account, for two reasons. Clients investing after the inception date may see a very different perfor- First, the master account does not include client charges. mance profile, as with any other investment. Second, the trade sizes on the master account are fixed, whereas the trade Remember too that these are historic figures. While they give an indication of sizes on client accounts will grow as the NAV of these accounts grow. This is the skill of the investment managers, past performance is not a guide to future achieved through a real-time adjustment of the multipliers on client accounts performance.

(See page 9 for charts of the sold shares). (p) Boohoo Group (p) Inspired Energy (p) Litigation Capital Management

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(p) Pan African Resources (p) RA International (p) Serabi Gold 120 25 60 100

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Technical Notes

liant prescience is a sham? tator giving any credence to America’s verdict TREND DEFINITION My colleague Phil (who manages TGF) and I have on the validity of their election after this deba- The analytical criteria that had a lot of discussion about US politics. I have always cle. believed that Trump would be a one-term president. we use to identify uptrends • Trump appears to be have embarked on a and downtrends are tightly Phil has always believed he would be re-elected. scorched earth policy by sacking anyone in his In the end, Biden’s victory came down to a handful of administration who has stood against him and defined. Our criteria are battleground states where the margins between the not shown total loyalty ― defense secretary designed to filter out data two parties were wafer thin. Those states were Penn- Mark Esper is the latest victim ― and replacing series which are technically sylvania, Arizona, Georgia, Wisconsin, Michigan and them with his own cronies, no matter how ill- in uptrend or downtrend, but Nevada. Forget about the other states. Had there been suited and inexperienced they may be. Why? the smallest of swings to Trump in those six states, which are in reality only What’s the point? Whatever he does, Biden will drifting sideways. Trump would have won a resounding victory, and Phil simply reverse it, just as Trump has reversed would have been spot on. everything Obama did. I fear this may be worse Here is a full list of the Of course, when we were debating this over a glass or than Trump acting like a petulant 5-year old criteria we require for a data three of wine prior to March this year, what neither throwing toys out of his playpen (an insult to the series to be formally Phil nor I knew was that a hitherto unknown virus average 5-year-old) . I fear for his sanity. identified as an uptrend: was about to snatch away Trump’s trump card: the buoyant US economy. Full marks to Biden, who is refusing to rise to • The actual value must Would Trump still have lost even without the accurs- Trump’s bait but is quietly getting on with preparing lead the 25-day moving ed virus? We’ll never know now, but I’d like to think for office while pretty much ignoring Trump, which average; he would. After all, even in those halcyon days, must be driving Trump crazier than he already is. Trump’s approval rating never rose above 50%. From January onwards, things won’t get any better • the 25-day moving But to be brutally honest, given how close this elec- f0r Trump. He’ll lose his immunity from prosecution average must lead the 65- tion was in that handful of key states, I suspect that and faces a slew of civil actions and criminal charges, day moving average; the most serious of which are likely to be charges of Phil’s forecast would have been triumphantly vindicat- the 25-day moving ed. tax evasion and obstruction of justice. If he loses those •    as well, jail beckons. average must have been The only good news to have come out of this, at least rising for at least 5 days; Meanwhile, we’re left to count down the days to 20 so far, is that there hasn’t been an uprising by his • the 65-day moving January when the Trump aberration finally comes to a enormous base. Maybe the majority of them are more close. That’s the date Biden, a decent and honest poli- sensible or more sane than Trump. Maybe they realise average must have been tician, takes the helm. In contrast, Trump long ago lost that the game is up, at least until 2024. rising for at least 1 day; any connection with truth and decency. Indeed, in act- to filter out passive ing like a petulant five-year-old boy refusing to accept    • that he is now a “loser” and “sucker” (his description uptrends, the data must Meanwhile, as America drifts rudderless from day to show a rise of at least of American military personnel who gave their lives day, the terrible Covid tragedy continues to unfold fighting for their country), it seems that he has even there. New records are being set daily: 2.5% on the month. lost his grip on reality. Oh, the irony of it: a realty  The total number of cases now exceeds 10.25 The analytical criteria for show host who now lives in a world of delusion. a downtrend are exactly I and millions of others around the world can scarce- million. ly believe what is happening to America in the dying  The positivity rate in many states is way the converse of the above days of the Trump presidency: above 20%. criteria. • It’s now 8 days after the election. However you  Yesterday alone, 62,000 Covid patients were Any data series not look at it, whether in terms of electoral college hospitalized, a record. conforming to either set of votes or the popular vote, Biden is the clear win- criteria we describe as Yesterday, there were 1,400 new Covid ner. Biden has beaten Trump by a bigger margin  deaths, a record since the summer peak, and having an indeterminate than Trump beat Clinton. Yet still Trump will trend They are not listed. not concede, insisting that the election was rising exponentially. As one commentator “stolen” from him by massive electoral fraud. He pointed out, that’s the equivalent of four ma- Note that it is quite normal and his cronies have launched a slew of lawsuits jor plan crashes per day but no one in the for a data series to alternate in the hope that some of the mud will stick. So Trump administration has anything to say between determinate and far as I’m aware, there isn’t a single authenticat- about it. Total deaths now exceed 240,000. indeterminate trends from ed fraudulent vote. Not one. Apparently there  Texas is the first state to have reached one time to time, but not for it to was one court case where the Trump legal team million cases. The situation there is so dire jump directly from an alleged that they had found a person who knew that El Paso, where 1 in 29 people have Covid, another person who claimed to know of some is increasing the number of mobile morgues uptrend to downtrend, or kind of fraud. Hearsay is not evidence. Double (refrigerated articulated trucks) from 4 to 10. vice versa without an hearsay is a bad joke. The judge dismissed the  Yesterday, 45 state out of 50 were reportig interval of several days. case in seconds. that the virus was out of control. The percentage figures • Almost unbelievably, almost every Republican which appear in the title box    politician in Congress is continuing to back of each section represent Trump, even though they MUST all know that What effect has all this had on the stockmarket? In- the percentage of securities that Trump is deranged. Why are they doing it? vestors have been galvanized ― but not necessarily in in uptrend or downtrend Is it out of fear of Trump? Is it because they a good way. On Monday in particular, shares on Wall think Trump will stand again in 2024 and they Street surged to new all-time highs. However, in many relative to all securities that believe Trump can advance their careers? Is it financial markets, including the London stockmarket, we monitor in that section. because they think Trump has the ability to there was much fire and fury but little real progress. These figures correspond overthrow the US constitution and remain in of- The volatility was ridiculous. Shares were marked up with the latest uptrend and fice? It’s beyond my comprehension. early on Monday by stupid amounts (sometimes by downtrend percentages • Secretary of State Mike Pompeo, America’s 25% or more) only to come crashing back down by the shown in the various number one diplomat, has said publicly that the end of the day, sometimes finishing up with double- digit losses. TrendWatch barometers. ❑ transition arrangements are moving ahead smoothly with a view to a second Trump term. If Probably some of this action was triggered by the PRICE CHART KEY: some banana republic had tried to overturn a same euphoria that triggered dancing in the streets properly run election, Pompeo would be the first when Trump lost. However, there was almost certainly ———– 65-day moving to expose it. Yet in America, in 2020, apparently a bigger factor: the announcement by New York-based average. America itself is at risk of becoming a banana Pfizer and its partner BioNTech that early results from ———– 25-day moving republic. It’s difficult to imagine any tinpot dic- phase III trials showed their vaccine to be more than average. 11 November 2020 Page 10

Technical notes

OUR SHARE SELECTION 90% effective in preventing COVID-19 among those to a very low temperature of -70C while being trans- PROCESS with no evidence of prior infection. ported and stored. This is genuinely great news. The US regulator, the Nevertheless, this is a real light-at-the-end-of-the- Our strategy for selecting FDA, would likely approve a vaccine even if it were on- tunnel moment. Furthermore, there’s a stack of other the 6 shares recommended in ly 50% effective. It will be several months yet before Covid vaccines in the pipeline, which may turn out to each issue is systematic, easy trials are complete, the product is licenced for emer- be safer / more efficacious / easier to transport and to understand, transparent – gency use and the vaccine is in production on an in- store / requiring less doses than the Pfizer vaccine. dustrial scale. There are also severe logistical problems It’s not unreasonable to hope that the news from and very effective. that need to be solved. This is an mRNA-based vaccine Pfizer marks the real prospect of this heralding the Our starting point is the which is unstable, and therefore has to be refrigerated death knell for the virus. ❑ uptrend list. Note that each share in our uptrend and downtrend lists carries a numeric suffix. This number represents the number of days that the 65-day moving * ADES Intl. 5 Admiral 92 Dignity 72 Informa 12 McBride 16 Spire Healthcare 44 average has been in uptrend * Barclays 6 Aggreko 19 Drax Group 104 ITV 25 NCC Group 26 Sportech 16 or downtrend. For uptrend * Bloomsbury Pub. 9 AO World 128 DWF Group 42 Jersey Electricity 40 Norcros 17 St Modwen Prop. 12 lists, this number is always * Braime (T & J) 5 Ashtead 113 Evraz Group 108 JKX Oil & G. 22 OneSavings Bank 43 Superdry 30 positive. For downtrend lists, it * Helical 6 Augmentum Fin. 115 Ferguson 104 JTC 33 Pendragon 19 Synthomer 45 is always negative. * NatWest Group 4 Big Yellow 25 Flutter Entert. 43 Kainos Group 116 Premier Foods 141 TI Fluid Systems 12 All new uptrends (or down- * SSE 3 Bodycote 23 Games Worksh. 117 Kavango Res. 112 Provident Financ. 43 Trifast 16 trends) - those that have * Taylor Wimpey 1 Chemring 23 Genus 45 KAZ Minerals 21 Rainbow Rare E. 107 Valeura Energy 14 occurred in the past 10 bus- * Virgin Money 6 Connect Group 79 Halma 29 Kenmare Res. 56 Reach 23 Wincanton 52 ness days - are collected * Vivo Energy 7 Crest Nicholson 25 Helios Towers 24 Kin & Carta 35 RPS Group 13 XAAR 134 together at the beginning of * Workspace Group 4 Dechra Pharma. 106 Inchcape 22 Luceco 103 Spirax-Sarco 123 Zoetic Intl. 106 the lists, prefixed by an aster- isk. However, we evaluate all shares that have been in uptrend (or downtrend) for up to 20 business days, because that is the number of business * Aveva -2 Atlas Mara -236 Centamin -26 Gulf Marine -48 Morrison (W) -42 Resolute Mining -35 days since the last issue of * Boot (Henry) -2 Avast -28 Chesnara -17 Hargreaves Lans -24 MS International -78 RM -54 TrendWatch. * Brit Am. Tobac. -2 Avation -60 CML Microsys. -20 Hawkwing -139 NMCN -48 Rolls-Royce -58 New uptrends are the ones * Britvic -9 Aviva -18 Coca-Cola HBC -38 Hays -48 Non-Standard F. -14 Ross Group -110 of most interest to investors * Centrica -10 Babcock Intl. -97 Costain -81 Hostelworld -53 Nostrum Oil & G. -43 SAGA -48 because it is desirable to get * Compass -2 BAE Systems -15 Dalata Hotel -58 Imperial Brands -90 OTAQ -58 Sage Group -13 into the trend early. * Creightons -3 Balfour Beatty -61 Danakali -38 IntegraFin -14 Panther Sec. -16 Serco Group -37 Having identified the new * Dialight -8 BATM Adv'd C. -26 DP Aircraft -442 Intosol -42 Paragon Banking -20 Shaftesbury -19 uptrends, our next step is to * GoCo Group -5 BHP Group -20 DP Eurasia -26 Keller Group -17 Parity -65 Smith & Nephew -19 perform limited fundamental * Hilton Food -1 BP -66 Essentra -49 Kier Group -86 Petropavlovsk -12 Softcat -11 analysis on them. The idea is * Johnson Matthey -8 Camellia -74 Filtronic -21 Lon.& Assd. Pr. -177 Premier Oil -56 TP ICAP -75 to produce a shortlist of com- * M&G -9 Canadian O'seas -31 Fire Angel -70 Man Group -58 Prudential -36 Triad Group -72 panies whose shares appear * Quarto Group -10 Capita -58 Galliford Try -93 McColl's Retail -80 QinetiQ -58 to have potential to appreciate * Restaurant Gp. -3 Capital & Count. -88 Genel Energy -52 Medica Group -29 Quilter -38 in value. * Sanne -10 Capital Drilling -17 Grainger -16 Micro Focus -86 Rathbone Bros. -14 Finally, we do in-depth * Tharisa -9 Card Factory -49 Greencore -97 Mitie Group -83 Raven Property -84 fundamental research on the Assd.Brit.Foods -36 Carr's Group -29 GSTechnologies -16 Moneysupermkt. -72 Reckitt Benckiser -24 shares in the shortlist. The six shares that, in our view, are the best of the bunch become our six formal share recommendations. As described in the previous * Beeks Fin. Cloud 3 Beximco Phar. 79 Escape Hunt 26 Jet2 21 Pembridge Res. 14 Sumo Group 30 Technical Note (Trend Defini- * GetBusy 2 Bezant Res. 38 Fletcher King 28 John Lewis of H. 97 Plexus 17 Surface Transf. 106 tion), the 65-day moving * Gooch & House. 4 Bigblu Broadband 17 Focusrite 115 Jubilee Metals 112 Polar Capital 26 Sylvania Platin. 101 average is our prime moving * Judges Scientific 10 Blackbird 20 G3 Exploration 25 Kingswood H. 90 Polarean Imag. 116 Thor Mining 113 average. Remember that, for * LIDCO Group 5 Blue Prism 65 GB Group 30 Lansdowne Oil 133 Power Metal R. 105 Tissue Regenix 21 a share to get into the list, all * Petards 2 Boku 25 Goldplat 104 LPA Group 32 Premier Miton 15 Tlou Energy 23 other criteria as set out in the * Tern 6 Braveheart Inv. 47 Greatland Gold 219 Marshall Motor 19 Randall & Quilter 19 Touchstone Exl. 117 above Technical Note have to * Vela Tech. 10 Cadence Miner. 77 Griffin Mining 66 MC Mining 21 Remote Monitor. 55 Trackwise Desig. 52 be satisfied. If they are not, * WH Ireland 8 Cake Box 22 Heath (Samuel) 54 Metals Explorat. 65 Robinson 138 Tremor Intl. 39 the share will disappear from * XLMedia 5 Cambria Automo. 17 Helios Underwr. 23 Mkango Res. 101 Sareum 74 Tristel 32 the list. If all criteria are sub- Abcam 12 Ceres Power 37 Hornby 32 Mortgage Advice 103 Savannah Res. 17 United Carpets 44 sequently satisfied and the 65 Access Intellig. 151 Chariot Oil & Gas 44 Ideagen 36 MPAC Group 88 SDI Group 77 Van Elle 57 -day MA was not affected, the Agronomics 18 Codemasters 15 IDOX 14 Naked Wines 25 Secure Trust Bk. 12 Volex Group 70 share will reappear in the list Alien Metals 83 CPL Resources 101 Ilika 15 Netcall 107 Sensyne Health 58 Water Intelligen. 113 as a mature (non-asterisked) Alumasc 39 CVS Group 103 Immedia Group 83 Novacyt SA 48 SimiGon 20 Wey Education 31 trend. If the setback was such Anpario 66 Destiny Pharma 69 Impax Asset M. 114 Oncimmune 164 Smartspace Soft 115 Wishbone Gold 57 that the 65-day MA suffered a Aquis Exchange 42 Dewhurst 75 Inspiration Health. 23 Open Orphan 46 Spectra Systems 40 YouGov 114 reversal, the recovery will see Arkle Resources 30 Diversified G & O 50 Ixico 54 Ormonde Mining 22 Springfield Prop. 17 the share reappearing in the Ascent Res. 44 ECR Minerals 98 Jangada Mines 14 Orosur Mining. 119 Stanley Gibbons 59 list as a new (asterisked) Benchmark 112 EKF Diagnostics 138 Jaywing 13 Panthera Res. 32 Steppe Cement 33 trend. ❑ 11 November 2020 Page 11

Technical notes

BENCHMARKING * Andrews Sykes -10 * San Leon Energy -4 Celtic -78 H&T Group -56 Mountfield -176 Smart Metering S -15 Accurate monitoring of our * Animalcare -2 * Serabi Gold -9 CEPS -164 Haydale Graph. -13 Nanoco Group -39 Spaceandpeople -69 * Ariana Res. -5 * Solid State -8 Chaarat Gold -31 Holders Tech. -15 Nexus Infrastruct. -79 SRT Marine S. -19 investment performance is of * Belvoir Lettings -8 * Sterling Energy -8 Chamberlin -169 Hurricane Ener. -238 Nichols -58 Starcom -46 critical importance, both for * Brand Architekts -4 * Tavistock Inv. -9 City Pub Group -58 IDE Group -76 Northbridge Ind. -28 Surgical Innovat. -19 you and for us. It is not * CentralNic -10 * Tekcapital -7 Clinigen -58 IG Design -93 Northern Bear -46 Synectics -23 enough to simply monitor the * Clear Leisure -10 * Trinity E.& P. -3 Clontarf Energy -23 Immunodiagnost. -13 Nucleus Financ. -79 System1 -24 profit (or loss) on our selec- * CPPGroup -6 * Watkin Jones -2 Cohort -11 ImmuPharma -48 One Media iP -42 Tasty -33 tions. You are entitled to * Duke Royalty -8 Active Energy -44 Comptoir -35 Impellam -14 Oracle Power -39 Tekmar Group -85 know how we have done * Eco (Atlantic) O. -8 Adamas Fin. Asia -42 Concurrent Tech. -36 Ince Group -45 Orchard Fund. -180 Ten Lifestyle -59 relative to the market as a * Elecosoft -5 Allergy Therap. -13 Coro Energy -246 Inspecs Group -23 Ovoca Bio -26 Thruvision -15 whole. It is no use us boast- * Evgen Pharma -8 Altitude Grp. -88 Craven House -135 Inspired Energy -50 Pebble Group -39 Touchstar -43 ing of a 20% profit if the mar- * Fevertree Drinks -7 Angle -76 Creo Medical -45 Instem Life Sci. -14 Personal Group -38 TP Group -42 ket as a whole has risen * Galantas Gold -10 Angus Energy -18 Croma Security -23 iomart -15 Petrel Resources -13 Tracsis -49 30%. * Intercede -6 Arbuthnot -86 Curtis Banks -80 Jadestone En. -38 PetroTal -25 TransGlobe En. -44 We therefore monitor each * Iofina -8 Arena Events -24 Directa Plus -28 James Halstead -35 Phoenix Glob. R. -45 Tungsten Corp. -34 of our recommendations * Jarvis Securities -6 Argentex -23 Dods (Group) -26 Jersey O & G -28 Physiomics -16 UK Oil & Gas -52 against a benchmark index. * KEFI Minerals -2 Argos Resources -48 Egdon Res. -42 Kore Potash -46 Pittards -19 ULS Technology -16 Ours is the FT All-share In- * Knights Group -2 Aukett Swanke -33 EMIS Group -15 Litigation Cap.M. -14 Powerhouse En. -50 Union Jack Oil -35 dex (exc. investment compa- * Marechale Cap. -2 Autins Group -29 Europa Oil & G. -40 Manolete -84 Premier African -59 Velocys -38 nies). * Numis Corp. -2 Berkeley Energia -12 Falanx Group -35 Mercantile Ports -231 Prime People -85 Verditek -18 Whenever we recommend * Oxford Metrics -3 Best of the Best -12 Faron Pharma. -14 Mereo BioPharm. -34 Property Franch. -11 Vianet Group -27 a share, we record the value * Plutus PowerG. -7 Billington -24 Filta Group -42 Metal Tiger -23 Provexis -34 WANdisco -52 of this index as at the date * Primorus Inv. -7 Bonhill Group -27 finnCap -23 Michelmersh -36 Restore -73 Westminster -73 the share was bought. When * Proton Power S. -9 Brickability -15 FRP Advisory -50 Midatech Pharma -13 Safestay -57 Wynnstay Group -14 we do a valuation or when * Quixant -8 Brighton Pier -71 Getech Group -46 Minds+Machines -24 Serinus Energy -143 Young & Co 'A' -91 we sell a share, we record * QUIZ -5 Brooks MacDon. -12 Good Energy -43 Mirada -71 Shearwater -90 Young & Co 'NV' -59 the latest value of the index. * RA International -8 Caribbean Inv. -20 Gran Tierra En. -42 Mobile Tornado -72 Shoe Zone -84 Zambeef Prod. -49 We then add the percentage * RTC Group -9 Catalyst Media -19 GYG -39 Morses Club -51 SkinBioTherap. -19 Zoo Digital -79 change in the index to the cost of buying the share. This tells us how much our investment would have grown had DB X-trackers Emerging Asia 113 ETFS Aluminium 29 ETFS Zinc 103 we invested in a market DB X-trackers FTSE Vietnam $ 41 ETFS Copper 107 iShares Core MSCI EM IMI UCITS 107 tracker fund rather than in the DB X-trackers FTSE Vietnam 33 ETFS Corn 55 iShares Elect. Vehicles & Driving Tech. 110 actual share – the market DB X-trackers FTSE/XINHUA CHINA 25 12 ETFS Grains 57 iShares FTSE BRIC 50 20 gain/loss. DB X-tr. MSCI AC Asia Ex Jap. Ind. $ 112 ETFS Industrial Metals 103 iShares FTSE/Xinhua China 25 12 To determine how much DB X-trac. MSCI AC Asia Ex Jap.Ind. £ 113 ETFS Soybean Oil 100 iShares MSCI China A UCITS 17 we have outperformed (or DB X-trackers MSCI Emerging Markets 107 ETFS Soybeans 89 iShares MSCI Emerging Markets 23 under-performed) the market, ETFS Agriculture 74 ETFS Sugar 35 iShares MSCI Far East ex-Japan 23 it is tempting to subtract the tracker gain from the actual gain – but this is mathemati- cally flawed. The industry- standard formula for outper- * ETFS Gasoline -10 DB X-track. STOXX Europe 600 Tech. -14 iShares DJ Euro STOXX Value -35 formance / underperfor- DB X-track.DJ Euro STOXX Sel.Div. 30 -19 ETFS DAX 2x Long Fund € -17 iShares MSCI Turkey -67 mance is: ((100 + actual gain) / (100+ tracker gain) x 100 – 100 If we sell a share at a profit, but the tracker index for * Brunner IT 1 Canadian General Inv. 111 Intl. Public Partner. 17 Octopus Titan VCT 2 29 that share shows an even * Manchester & London IT 6 Doric Nimrod Air Three 20 INVESCO Asia Trust 107 Pacific Horizon IT 127 bigger rise, we record it as a * Real Estate Inv. 3 Dunedin Enterprise Trust 64 JPMF Japanese IT 124 Polar Capital Tech. 21 loss against the market. If we Aberdeen New Dawn IT 107 EPE Special Opportunities 101 JPMorgan US Smaller Cos. 25 Schroder Asia Pacific IT 113 sell a share at a loss in a Asia DragonTrust 101 Fidelity China Special Sit. 117 JPMorgan Glob.Em.Mkts.Inc. 21 Scottish Mortgage & Trust 150 rising market, we record it as Aurora IT 21 Fidelity Japan Trust 118 Jupiter Green IT 66 Standard Life UK Smlr. Cos. 46 an even bigger loss against Baillie Gif. Shiin Nip. 123 Fundsmith Emerging Eq. 107 Mercantile Investment Trust 15 Templeton Emerging Mkt. 107 the market. Blackrock Frontiers IT 20 Hargreave Hale AIM VCT 1 103 Monks IT 116 Throgmorton Trust 103 You can find how well each Caledonia Inv. 13 Impax Env. Mkts. 104 New Century AIM VCT 27 Unicorn AIM 99 share has performed against the market by looking in the “Outperf.” colum in the portfolio valuation table on page 2. * AEW UK REIT -6 * Sequoia Economic Intra.Inc. -5 Chelverton Growth Trust -213 Henderson Far East Income -37 ❑ * Baker Steel Resources -5 * Value & Income Trust -8 Crown Place VCT -22 K&C REIT -442 * CIP Merchant Capital -3 Aberdeen New Thai IT -58 Electra Private Equity -23 Maven Inc. & Growth VCT -304 * Custodian REIT -7 Alcentra Eur.Fl..Rate N.Inc. -28 Empiric Student Property -20 Perpetual Income & Growth -17 * Doric Nimrod Air One -5 Alpha Real Trust -34 Finsbury Growth & Inc. -13 PRS REIT -18 * FastForward Innovations -9 Amedeo Air Four Plus -12 Foresight 4 IT -29 Reconstruct. Cap.II -322 * Hansa Trust 'A' -6 Ashmore Global Opport. $ -431 GCP Infrastructure Invest. -14 Troy Income & Growth -19 * Jupiter UK Growth IT -1 Baring Emerging Europe -37 GCP Sudent Living -32 * Regional REIT -8 Blue Planet Euro. Fin. -56 Geiger Counter -13 11 November 2020 Page 12

Among the most infuriating of the 6 stop-loss sales was Boohoo Group. Recall that, in early July, it Stop-loss sales during 2020 suffered some bad press at the hands of the FT, which Date Buy price Sell price Gain/ loss Mkt. gain/ Out-perf. had discovered that one of it’s suppliers was floating Share Date sold labour laws. As I explained in the last issue, I felt that bought (p) (p) (%) loss (%) (%) * Boohoo’s handling of the situation was exemplary. It Sales previously reported in Jan - Sep 2020 (74 shares) 1.64 -13.33 17.27 Share sale Reason Sales since last issue: Boohoo Group 15/10/20 21/10/20 313.40 261.80 -16.46 -0.83 -15.77 Boohoo Group No adverse news. Profit-taking after Inspired Energy 25/06/20 03/11/20 17.25 12.00 -30.43 -7.23 -25.02 (fashion retailer) its highly successful IPO in June? Litigation Capital Mgt. 20/08/20 27/10/20 72.40 56.90 -21.41 -4.21 -17.96 Inspired Energy No price-sensitive news. Pan African Resources 28/05/02 23/10/20 15.65 20.70 32.27 -4.72 38.82 (energy consultancy) RA International 25/06/20 27/10/20 45.60 47.50 4.17 -5.82 10.61 Litigation Capital No price sensitive news but buying Serabi Gold 20/08/20 27/10,20 91.50 83.00 -9.29 -4.21 -5.30 Management may have dried up following the fall in (litigation finance) FY profits announced in September. Averaged gain / loss (%): -6.86 -4.50 -2.47 Pan African Re- No price sensitive news. Possibly the sources drifting gold price is a factor. (gold explorer) Percentage loss on most recent sales: -6.86% RA International End of share buy-back programme? Percentage market gain (tracker fund): -4.50% (remote site services) Trendwatch has underperformed market by: -2.47% * Serabi Gold The impact of Covid-19 in Brazil plus the drifting gold price. * See 'Benchmarking' note [panel, right] to see how this figure is calculated. took full responsibility, appointed an independent person to investigate and accepted all the recommendations from has declined to participate in that tender process. that investigation. Just as I thought it was safe to go back into this I wonder if there’s more going on here than meets the eye. Was remarkable company, its auditor, PwC said it was resigning as as Boohoo dissatisfied with PwC? Which came first: Boohoo’s an- auditor, citing reputational damage. At least that’s what the head- nouncement of the tender process or PwC’s announcement that it lines said. wouldn’t participate? But that wasn’t exactly true. PwC remains as Boohoo’s auditor. Whatever, it is what it is. Don’t you just love it when the market Boohoo said that “The Group's Audit Committee has recently makes you look like an idiot. launched a competitive tender process for the Group's audit”. PwC (See page 8 for charts of shares sold)

Date Date Date Date Rank Share % gain Rank Share % gain bought sold bought sold 1 Haynes Publishing 16/10/19 27/03/20 125.1 11 Sureserve 07/03/19 02/03/20 42.2 2 SDI Group 07/03/19 25/02/20 67.7 12 Sumo Group 28/05/20 - 42.1 3 Future 25/06/20 - 66.3 13 Franchise Brands 22/08/19 02/03/20 37.5 4 Oxford Metrics 09/11/17 13/03/20 64.7 14 Gamesys 30/04/20 - 36.8 5 Petropavlovsk 02/04/20 12/08/20 61.8 15 Countryside Properties 19/09/19 11/03/20 36.6 6 Mpac Group 30/05/19 28/02/20 56.6 16 Marshalls 10/01/19 10/03/20 35.4 7 Venture Life 28/05/20 - 53.7 17 Codemasters 23/07/20 - 33.0 8 4imprint 13/09/18 03/03/20 51.2 18 CVS Group 25/06/20 - 33.0 9 Cohort 30/05/19 10/03/20 45.1 18 Pan African Resources 28/05/20 23/10/20 32.3 10 Creightons 06/12/18 02/03/20 43.6 20 Eagle Eye 02/08/20 - 31.8 THIS TABLE shows our biggest recent gains, taken from shares that were sold within the past 12 months and from those shares that are still in our current portfolio (page 2). IN THE NEXT ISSUE we'll show our best performers since TrendWatch was first published.

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