Downing Strategic Micro-... Share Discussion Threads

[spectoacc] 14/10/2020 08:47

RGD looks OK to me, dipped to 2p in April on Covid crash, now at 4p. Doesn't look great operationally but just needs the future cashflows/assets to cover those loan notes.

Don't think buyback does end on 2nd Nov - think the closed period buyback ends then, simply because that's the date DSM's results come out. After that they can take back control of it as they'll no longer be in a closed period.

Open to debate tho! As you say, they're buying back so few (limited to 50k/day in closed period, & not even finding those most days) that it needs to keep going a good long while to have an effect.

[red ninja] 13/10/2020 11:23

Mmm saw the 15k trade at 55.75p, but the extra 0.75p could be due to buying at 16:10. In the first 30 minutes or last 30 minutes they sometimes sting you with a higher price.

The buyback seems to have given confidence to investors to buy and it looks like DSM have only purchased less than 100k of their own shares.

Scheme will end on 2nd November 2020 so interesting to see how share price strength goes after that,

RGD is also struggling due to the pandemic at around 20% of DSM (by secured loan note) IMO it casts a bit of a shadow over DSM.

[spectoacc] 12/10/2020 16:17

Someone had to pay 0.75p over offer for just 15k, the reverse of recent history - does imply the buyback has soaked up the excess.

[red ninja] 12/10/2020 15:39

I wonder if we are close to the top of the range for the buyback given the limit for the DSM buying shares is just over 54p.

Comment on new buy Digital Box in DSM September fact sheet :-

"The company made one new investment in the month in DigitalBox, supporting the
acquisition of The Tab media. DigitalBox owns other titles which earn revenues through advertising through which Digitalbox optimise revenues through their programmatic technology. We believe that Digitalbox can significantly improve The Tab’s subscriber and revenue KPIs and can continue to roll up the space with attractive and underoptimised titles purchased at attractive prices."

hxxps://assets-us-01.kc-usercontent.com/8c961317-6aee-00a7-e4b6-ae38cd847d2d/71111df5-fed2-47e3-8f03-c9c29db92e60/PE3043_Downing%20Strategic%20Micro-Cap%20Investment%20Trust_Factsheet_Oct%20(Sep)%202020.pdf

[red ninja] 08/10/2020 13:59

I seem to recall the limit has one rule saying 82 % of NAV = 0.82 x 65.86 = 54p
based on Wednesday published NAV.

Only one 50k buy transaction so far, we must be due another.

[spectoacc] 08/10/2020 13:53

Judging by the sell quotes, the buyback is finally having an effect. Wonder how close to NAV they'll push it..

[red ninja] 01/10/2020 11:29

DSM splashes some cash :-

"(Alliance News) - Digitalbox PLC on Thursday said it has acquired Tab Media Ltd for GBP750,000 in cash and announced a GBP1.2 million subscription in conjunction with the buy.

The Bath-based digital media company, which owns Entertainment Daily and The Daily Mash, said the proposed subscription by Downing Strategic Micro-Cap Investment Trust PLC was priced at 4.9 pence per share for 24.5 million shares. This represents a 2.0% discount to its Wednesday closing price of 5.0p.

Shares in Digitalbox were up 10% on Thursday morning at 5.50p.

The subscription shares represent 27% of Digitalbox's existing share capital and will represent 21% of share capital once subscription shares are issued. It is conditional on shareholder approval, with proceeds to "be used to accelerate the company's growth strategy through further acquisitions".

As part of this, Downing Strategic Micro-Cap and Digitalbox have entered a relationship agreement that will remain in place while Downing Strategic Micro-Cap holds at least a 10% stake. Under the terms of this agreement, Digitalbox has granted Downing Strategic Micro-Cap the right to appoint an observer to any board meetings.

Digitalbox Chair Robin Miller has said he is willing to resign, pursuant to the subscription agreement, and step down from the board. He will remain in his role until a successor is appointed.

Tab Media runs online news website The Tab, which covers youth and student culture for university students in the UK. It operates a national website plus 32 sub-sites for specific UK universities.

The Tab Media acquisition is expected to be marginally accretive to Digitalbox's earnings per share, as enlarged by the subscription, in the first full year and significantly accretive in the second full year after the buy.

In 2019, Tab Media's revenue was around GBP1.2 million. It made a gross profit of GBP900,000 and a pretax loss of GBP400,000, while its gross assets on December 31 came to GBP600,000.

Digitalbox Chief Executive James Carter said: "The Tab is the UK's leading youth culture platform fuelled by students and a pro team of journalists who love being first with the most relevant stories. The Tab provides a really exciting addition to our portfolio. As well as providing insights into youth and student culture, it is an important training ground for journalists.

"As achieved with The Daily Mash, our technology platform can help drive traffic and advertising revenue to support the site. Since we acquired The Daily Mash in 2019, we have grown traffic and revenue whilst allowing the editorial team to get on with what they do best, and we aim to do the same with the Tab. We very much look forward to working with Editor-in-Chief Grace Vielma and her team as we look to grow and enhance The Tab."

By Anna Farley; [e-mail]

[red ninja] 30/9/2020 12:04

The results for Real Good Food, Fireangel and Synectics have all been a bit disappoint ing due to Covid19 effects.

Adept Tech update today although encouraging is still like likely to be impaired when the results come out IMO

Still yesterdays NAV was still above 67p, presumably due to Volex share price rises.

[red ninja] 22/9/2020 15:39

Notice of AGM

Real Good Food Plc (AIM:RGD) announces that its Annual General Meeting will be held at J F Renshaw Limited, Crown Street, Liverpool, L8 7RF, on Wednesday 23rd September 2020, at 11.00am.

[spectoacc] 16/9/2020 10:04

9p spread. DUKE reasonable t/s this morning.

[red ninja] 11/9/2020 10:37

Totally agree it does not deserve a premium and should not even trade at a par until there is more proof of a turnaround.

[spectoacc] 10/9/2020 16:07

You'd struggle to say it deserves its premium again tho - or even to trade at par.

Over 3 years from £1 issue price and no more than a quarter of the fall is Covid IMO.

[red ninja] 10/9/2020 16:00

To be fair they did pick Volex, but the rest have not shone at best and at worst like Redhall have been a disaster.

If RGD divisions are sold there should be a good payout on the loan notes.

She is right if there is a market crash DSM should be in a good position to buy quality at good prices.

[spectoacc] 10/9/2020 15:42

If only she could pick stocks like she can market the trust:

[red ninja] 08/9/2020 11:21

Downing selling some Pennant International. However, this is now at a low level in DSM so not really too significant.

[hugepants] 01/9/2020 13:24

Market down 1.5%. Volex up 8%!

The other portfolio holdings are flat. Good performance.

[spectoacc] 01/9/2020 11:49

Yes, always stock available in DSM, wouldn't pay Offer.

Also enjoyed:

"Bar a recession, we are hopeful that the company will grow earnings this year.."

Have they missed the c.20% drop in GDP? :)

[red ninja] 01/9/2020 11:29

The launch date for the trust was not opportune.

I like the bit in the reports where they say they are targeting an annual return of 15% although not in the current investors letter. Maybe they are learning.

They are investing in two new holdings ie Toehold 1 + 2, but they appear to be waiting to buy at the correct price. Hopefully they have not picked turkeys.

Hopefully the trust has better days ahead, but there is still a recession to get through.

Some buys at 52.4 and above. Personally I'd wait a bit as price always seems volatile with DSM.

Then again Volex is pushing higher maybe I am too negative.

[spectoacc] 01/9/2020 10:42

Lol yes, always talk a great game.

"A further 20% is comprised
of businesses which we think aren’t trading much higher than what we consider to be a minimum valuation given the quality of earnings and balance sheet strengths underlying."

Um, how about buying them at those prices in the first place?

(The cash/loan notes point is a good one, albeit most of the loan notes are Real Good Food. Buybacks would be highly accretive if a fifth is in cash, & think I'm relieved they've not been punting it instead).

[red ninja] 01/9/2020 10:32

Septembers Investors letter making the case for DSM as normal :-

"Despite our caution, there are reasons to be cheerful with this portfolio from both a downside protection and an upside perspective. Firstly, almost 21% of the portfolio is in cash and another 20% is in loan notes where their value is not influenced by volatile stock markets. That makes over 40% of the portfolio which is entirely unaffected by volatility. Volex comprises just under 16%, and is trading robustly through this period. Bar a recession, we are hopeful that the company will grow earnings this year and should continue to re‐rate. A further 20% is comprised
of businesses which we think aren’t trading much higher than what we consider to be a minimum valuation given the quality of earnings and balance sheet strengths underlying. From an upside perspective, the opportunity is significant. Not only is there over 100% of upside potential to intrinsic value in the portfolio, but investors today can access that upside at a 27% discount to current NAV. That points to a 64% ‘double discount’. The discount has historically
traded significantly narrower than the current gap and we expect that discount to narrow as value creation catalysts are delivered, and the wider market begins to appreciate the quality of some UK smaller companies."

[hugepants] 14/8/2020 10:55

The Volex share price is performing well

[red ninja] 07/8/2020 09:38

Well the challenge to Gamma should come from the groups they mention, but also DSM.

I mean with RGD they were very much the activist investor.

RGD does seem to me in turnaround with DSM approved managers, but it has been dealt another challenge with Covid-19. If the debt burden ever becomes too much for RGD I believe the loan note holders might be forced to do a loan for equity swap. However, I don't believe that is the case at the moment and hopefully will never come to that.