Breaches of the Peace and Stockmarket Trends

The demonstrations in London and other cities against Israel are clearly “breaches of the peace” and should have been prevented. They were not simply peaceful demonstrations calling for a ceasefire in Gaza. The police are being way too feeble in enforcing the law and should call in the army if they feel that they do not have sufficient resources to enforce calm.

A ceasefire by Israel is not going to happen unless Hamas releases the hostages they hold and stop firing rockets into Israel – that also requires Iran to stop funding the attacks on Israel by Hamas and Hezbollah.

The demonstrators against Israel are being completely unrealistic in their demands. Palestinians may have some grounds for complaints about their treatment in Gaza but they are not helping to resolve their problems by the recent terrorist attacks on ordinary civilians.

Stockmarket Trends

Have we reached the late stage of bear market capitulation as Paul Scott suggested last week? I certainly get that feeling so far as small cap stocks go. Good news has little impact while bad news causes abrupt share price falls.

Last week the main good news was that I had sold shares in Fireangel (FA.) and Strix (KETL) some time ago thus avoiding big losses, For example Fireangel has received a bid at 7.4p when I sold for a small loss in 2016 (originally bought at less than 300p in 2014). Reason for sale? Total lack of confidence in the management. Strix I held onto for too long resulting in a 36% loss. The company went into “diworsification” with some unwise purchases and the CFO has quit. Moral: it’s never too late to sell.

Safestyle (SFE) has been suspended and is “game over” with a likely nil return which I held briefly in 2016. Incompetent management seemed to be the problem.

CAB Payments (CABP), a payments business that only recently listed lost three quarters of its value after a profit warning last week. Moral: don’t buy new listings – wait until the business model is proven. I did not hold it. Similar problems at Argentex (AGFX) after the CEO left abruptly.

Difficult to justify buying small cap stocks even at current prices when big oil and mining companies are paying such high dividends and interest on cash deposits can be as high as 5%.

Rishi Sunak may have stabilised the UK economy after the Truss debacle but fears of a prospective Labour Government are undermining confidence in the stock market, particularly by foreign investors. With UK taxes too high there are clearly many people sitting on their hands waiting to see which way the economy trends.   

Roger Lawson (Twitter  )

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Strix Shares Crash, GB Group Results and Segro Bond Issue

Shares in kettle control supplier Strix Group (KETL) fell by 40% this morning after they published a trading update. It reported that the Covid lockdowns in China had adversely affected their major OEM customers. Along with negative comments about the future impacts and “continued macroeconomic and political uncertainty” you can see why investors are nervous.

I used to hold this stock but sold the shares in May and August last year – at a small loss I hasten to add – as growth prospects seemed to be weakening and the valuation seemed too high. So I am currently suffering from schadenfreude – pleasure in escaping from that disaster.

Yesterday GB Group (GBG) issued an interim statement which received some negative comments. This is what Graham Neary said on Stockopedia about it: “…. the outlook statement tells us that H2 has started in line with expectations, and there is no change to forecasts. Net debt currently sits at around £118m. This is a large and reputable business providing advanced digital intelligence services to some of the world’s biggest businesses. However, there are many different moving parts to understand, and I perceive it as a black box type of investment. It is in my “too difficult” tray at this time”.

My response to some of the other posts was “Re all the comments on GB (LON:GBG) the accounts are complex but it helps to watch the company’s presentation here: . There have clearly been negative impacts from declines in cryptocurrency and internet companies generally but I am not as negative as others about prospects.  A lot of the issues are one-offs and judging a company on one half-year’s results is not wise in my view. I am a long-term holder and am likely to remain so”.

This is clearly one company affected by all the negative reports on cryptocurrency trading and the collapse of several companies operating in that sector (FTX etc). It appears there are many fewer people opening crypto trading accounts and needing to have their identity verified – surely a good thing.  

Another company announcement of interest today was from property company Segro (SGRO). It said it is issuing a 19-year bond with an annual coupon of 5.125%. It was six times oversubscribed apparently. This shows that property companies can still raise debt easily which was one concern affecting their share prices recently but it seems they now have to pay a lot more in interest on such debt than they have been doing of late. If they need to refinance existing debt it is clearly going to be at much higher rates. Can they still make a profit if debt is that much more expensive? They surely can if inflation is running at 10% and rents they can charge are up to match.

Roger Lawson (Twitter:  )

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