Company Webinars, RIP David McCallum and Lord Harris Donation

I attended the Mello Trust and Funds webinar yesterday where a number of such organisations presented. That included Impax Environmental Markets, Ocean Dial and the India Capital Growth Fund, Polar Capital Global Financials Trust and JP Morgan UK smaller companies (JMI). I can’t say any of them excited me. When the market is trending down there is a tendency to switch holdings but usually to no advantage. The JMI holdings might have been interesting but their holding in Aston Martin Lagonda, a consistently loss making business, is enough to put me off.

I also attended a ShareSoc webinar on CQS Natural Resources Growth and Income (CYN). This company provides diversified natural resources exposure through smaller companies. It’s a closed end fund. Manager Robert Crayfourd said there were further legs to energy while ESG policies were constraining supply. These have blocked the capitalist response function.

But he confirmed the energy transition was happening and they have been focussing on battery materials. They are also keen on precious metals due to central bank demand.

With 36% invested in oil/gas and 7% in uranium which they are bullish on as demand is exceeding supply I asked why we should bother investing in smaller companies when large oil/gas companies are on high yields at present. Not sure I got a clear answer to that.

The historic financial record looks fairly boring with dividends flat-lining but it was mentioned they will have surplus cash in their investment account so the directors may decide to increase the dividend. In summary I was positively impressed by the presentation and it may therefore be worth further research.

Actor David McCallum, star of the Man from UNCLE, NCIS and other popular TV series, has died. I once landed at New York’s Kennedy airport after a transatlantic flight to find a long queue for a taxi. Confusion reigned as numbered tickets for your place in the queue had been cycled around so there were two people holding the same number. Then David McCallum rolled up and he was clearly in a hurry because he attempted to bribe the queue organiser – to no effect. A memorable occasion! 

Another blast from the past was the news report today that Lord Harris of Peckham, one of my former bosses, has donated £5,000 to Rachel Reeves, Labour shadow chancellor. He has previously been a big donor to the Conservative Party and an active supporter. He is quoted as saying: “Tories don’t deserve to win the next election” and there is a big profile of him in the Telegraph here:

He has made many charitable donations to schools and hospitals from the fortunes he made at Harris Queensway and Carpetright but I doubt this donation will win him many friends.

Roger Lawson (Twitter  )

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Net Zero and Rishi Sunak

In Rishi Sunak’s speech yesterday he is clearly still committed to “net zero” by 2050 to tackle climate change, even though the UK cutting carbon emissions is unlikely to have any significant impact on the worldwide figures. It’s a pointless gesture which will mean we incur enormous costs which the public has not been informed about and to which they have certainly not consented.

But reality has been creeping in after people have discovered that their gas boiler plus their radiators will need replacing by inefficient electric heat pumps. Likewise new sales of oil/petrol powered vehicles were to be banned from 2030, ahead of most other countries, when electric vehicles are still more expensive, don’t hold their resale values and are inflexible in use.

Rishi’s speech is seen as a vote winner but it’s in essence a more pragmatic approach to reducing carbon emissions and relieving the burden on certain households.

It’s certainly worth reading his speech in full (link below) which was only reported in simplistic sound bites in the national media. He concludes by saying: “We are going to change the way our politics works. We are going to make different decisions. We won’t take the easy way out. There will be resistance, and we will meet it”. That surely means he is going to face down the idealists who don’t live in the real world.

But will Rishi manage to take the Conservative Party and Civil Service with him? That is the key question the answer to which we will see in due course. That’s assuming the Labour Party don’t win the next election and reverse the direction of travel.

My view is that this speech is well argued and veers well from extremes. But he will have difficulty convincing the environmental fanatics who have not been listening to reason for some time.

Rishi Sunak speech in full:

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Three Webinars Today – Eleco etc

I attended three webinars today. The first was a presentation by Eleco (ELCO) on their interim results on the Investor Meet Company platform. They reported “revenues slightly ahead of expectations”. They seem to be successfully transitioning to an SAAS model from one-off software licence sales.

Annualised recurring revenue was up 18% and the company seems to be making the right decisions but I wish the CEO would sound more enthusiastic about future prospects. My view is that the financial profile is OK but not good enough to excite anyone at present.

Small cap software companies except in high growth sectors are not popular at present.

The second webinar was with Leicester University to discuss how they can improve their fund raising for IGAN research to which I have been contributing. They have ambitions to raise many more £millions. See for more background. I suffer from this kidney disease and have done so for over 25 years. The research is certainly worth supporting.

The last webinar was on interim results from MyHealth Checked (MHC) who sell a range of home testing kits (for Covid-19 and other diseases). Revenue was down as expected but Covid is now spreading again and panic is rising also. Too early to say whether this business is going to be successful or not. The CEO seemed a bit defensive about the prospects.

You can watch a recording of the webinar on the Investor Meet Company platform.

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Good Articles in Latest ShareSoc Informer Newsletter

Are you fed up with reading about the antics of media personalities in the national press? I know I am. For some more intelligent and useful material, ShareSoc has just published its latest Informer Newsletter on stock market events.

It does include a couple of short articles from me which is not unusual but other interesting ones cover:

  • Can AI give me an edge by Marcus Breese. His conclusions seem to be similar to mine, i.e. probably not as AI cannot be relied upon to give the right answers.
  • A report on the “digital only” AGM of Marks & Spencer by Cliff Weight. Amusing to see my former colleague Gavin Palmer turned up physically regardless. It’s clear that digital-only meetings are unsatisfactory in several regards. Hybrid events are surely preferable.
  • Some comments on the Flint Interim Report on digitisation which is quite rightly called “a betrayal” as the recommendations therein might remove shareholder rights and defeat shareholder democracy.
  • A note on the threat to investors in SIPPs if the manager goes into administration based on events at the Hartley Pensions manager. This certainly needs pursuing.

In summary, an exceedingly useful newsletter and shows how ShareSoc is doing a great job at representing retail shareholders’ interests.

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How Did Silicon Valley Come to Dominate?

Many people have wondered how and why Silicon Valley companies came to dominate several sectors of the modern technology world. Companies such as Google, Oracle, Intel, HP and Apple were all founded in the valley south of San Francisco.

I have just finished reading a book by Ashlee Vance entitled Geek Silicon Valley and it gives you some of the answers. It’s primarily a tourist guide to the sights but it also covers the company buildings and the history of the companies that have built the modern economy in the towns of Palo Alto, Stanford, Menlo Park, Mountain View, Santa Clara, Sunnyvale and San Jose.

I formerly spent some time in the area and the author clearly knows the valley well and its history. If you are visiting the area on business this book is highly recommended and there is more to see in the area than most tourists will know about. Most visitors to the area may stay in San Francisco but that would be a mistake.

The author amusingly points out that some people attribute the success of silicon valley to the fact that William Shockley’s mother lived in Palo Alto near Stanford University. Shockley moved back there when he founded a semiconductor business. Spin-offs from that business were Fairchild and subsequently Intel and it was those offspring that made the area the base for new technology companies.

But it was the development of venture capital businesses that funded, and continue to do so, these new world-beating companies that were the real innovation. This book gives you a good idea of the culture that has made silicon valley such a success.

The presence of Stanford University and the attraction of a good climate and relatively low land and housing cost (at least early on) no doubt helped but there have been a number of factors that helped make silicon valley so successful, as the book helps to explain.

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Four Charged with Fraud over Patisserie Valerie Case

Four people have been charged over the fraud at café company Patisserie Valerie. Ordinary shareholders in the company were wiped out in 2018 after the accounts were shown to be fictitious.

More details here:

A shame it has taken so long to actually bring charges which is not unusual in fraud cases.

Auditors Grant Thornton were also fined over their involvement in the case. Grant Thornton was fined £2.3m because it had “missed red flags” and failed to question information provided by management. A trivial fine in relation to the losses suffered by investors.

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BP CEO Departs

BP has announced that CEO Bernard Looney has notified the Company that he has resigned as Chief Executive Officer with immediate effect.

Why you may ask? It seems that he has had some personal relationships with colleagues in the past, not all of which he had disclosed to the company. No breach of the Company’s Code of Conduct was found after an investigation but more allegations have been received.

As an investor in BP, could I care whether Looney had some personal relationships? I do not. I am only concerned whether he has been doing a good job or not. So far as I can tell he has been. BP needs to manage a transition from being a big producer of oil and gas to a more mixed and lower carbon energy provider. This it seemed to have sensible plans to do.

This looks like a political witch-hunt of some kind. It’s not the first time that BP has lost its CEO due to inappropriate relationships. See the case of John Browne (now Lord Browne) in 2007 and his homosexual relationships. See Wikipedia for details.

The Telegraph had some amusing comments on the latest news. It said: “Mr Looney’s personal life was thrown into the spotlight last year when his ex-wife Jacqueline Hurst, a life coach, wrote about her marriage difficulties in her self-published book, How To Do You: the Life Changing Art of Mastering Your Thoughts and Taking Control of Your Life. In a chapter on anxiety which is understood to reference her marriage to Mr Looney, Ms Hurst claimed that her husband only married her to get ahead at BP. Ms Hurst, who has been married twice, wrote: When my husband ended our marriage suddenly and without warning via a WhatsApp message, I was naturally devastated.”

It seems life at the top of this FTSE-100 company is like any good soap opera.

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Investments Versus Cash

Folks are back from holiday, the heatwave is over and it’s time for some serious consideration of the investment scene. One question is whether it is best to stay in cash (or cash equivalents such as bonds that are paying a high interest rate) or buy some stock market shares. An article by Ian Cowie published by the AIC makes the case for investments versus cash – see . But the AIC does of course have a vested interest in promoting the latter.

With interest on bank deposits rising even instant access saving accounts are paying up to 5% p.a. and National Savings & Investments are now offering a market-leading 6.2% Guaranteed Growth Bond if you can tie up your money for one year. 

But inflation is still higher than the interest you’ll get. For example, the official Consumer Prices Index (CPI) increased 6.8% in the year to July – the most recent figure from the Office for National Statistics (ONS). If inflation remained at that level, the real value of money would be halved in just over ten years as Cowie’s article reports.

Should you put your money into high-yielding FTSE-100 big oil and mining companies instead? Some are yielding more than 4% with potential growth on top of that which you can simply add to get the likely long-term yield. In addition, company profits are effectively inflation proofed. If inflation is rampant their sales and profits rise in unison.

Historically, shares have beaten bonds and cash as investments in the long-term. But you can see in the short-term that there are now good places to keep your spare cash until the stock market picks up.

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VolitionRX and Sepsis

Edison have published a report on the merits of a company named VolitionRX (NYSE:VNRX). This company is developing blood test diagnostics for diseases such as Sepsis.

Sepsis is an exceedingly dangerous infectious disease that causes multiple organ failure as I know from personal experience. A few years ago I almost died from it in Kings College Hospital. The Edison report states there are 42 million cases of Sepsis worldwide every year with 11 million deaths.

Diagnosing the disease is not easy as symptoms can be mixed and treatment with antibiotics can be delayed until it’s too late. A recently publicised case in the national media was of a teenager who died from it after a minor cycling accident. Her mother has campaigned for a right to a second medical opinion in the NHS but the key is to get the diagnosis right first time and without delay. VolitionRX may provide a solution.

Sepsis is a clinical condition that occurs when the body’s immune system overreacts to a bacterial infection and begins to damage its own tissues and organs. If not diagnosed and treated quickly, it can lead to severe, often life-threatening health complications.

I personally spent three weeks in hospital after some time in the intensive care unit and suffered from intensive care neurothapy as a result which meant I had to learn to walk again. Not an experience I would like to repeat. I hope this company is successful in validating a new diagnostic for sepsis where there is clearly a large unsatisfied need.

Whether such a business is a good stock market investment is not easy to judge. They have some competitors targeting the same sector. But anyone with an interest in sepsis will find the report of interest – see 

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Wars in Europe – Lessons from History

One of my summer reading books was “How far from Austerlitz” by Alistair Horne. With the war in Ukraine apparently bogged down in trench warfare with both sides claiming minor victories but in summary a quite static frontline for months it is worth considering how Napoleon managed to win his battles in central Europe.

The book covers the period 1805-1815 when Napoleon and his French led armies defeated several coalitions of Polish, Prussian, Austrian and Russian armies with England financing them but otherwise taking a back seat in the land battles until Waterloo.

How did Napoleon manage to defeat his opposition when he was often outnumbered? In summary by manoeuvre rather than fighting battles of attrition. A unified and single-minded command structure helped the French but ultimately the weight of overall numbers and economic realities defeated Napoleon.

There are a number of lessons to be learned from this book which I would recommend as an easy read even at 430 pages long.

As I said back in March: “The longer the war goes on, the more difficult it will be to reach an amicable solution as attitudes harden on both sides……” (see ). The war in Ukraine is financially very damaging and has resulted in very high energy and food prices. It needs to be settled in some way and getting stuck in trench warfare which is what is happening is certainly not the solution.

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