19th Mar 2020. 8.55am

Regency View:


Regency View:


We would like to start today’s update by wishing all our clients the very best during these testing times.

The escalation in selling pressure during the last two weeks has been unprecedented even by 2008 standards. ‘Price stabilisation’ notices have become the norm not just on AIM but across large cap equities on both sides of the pond.

After showing resilience earlier this month, our portfolio has unfortunately succumbed and many of our positions have experienced sharp sell-off’s this week.

From a portfolio management perspective, now is not the time to panic. History tells us that a bounce of some form, be it ‘dead cat’ or otherwise is inevitable, and it is during more stable market conditions that portfolio cleaning should begin.

Whilst the rapid contraction in both domestic and global demand has and will continue to impact every market sector, there will be certain stocks that are able to ride out the storm much easier than others. Our task now becomes to identify the stocks, in our own portfolio and the wider market, that have the quality to prevail.

Ramsdens Provide COVID 19 Update

Pawnbroking and foreign exchange broker Ramsdens (RFX) released a statement this week highlighting the impact of COVID 19 on their outlook for 2020 and beyond.

CEO Peter Kenyon commented:

“We are in unprecedented times. The COVID-19 situation continues to evolve quickly and the extent and duration of its future impact across all areas of peoples’ lives is difficult to assess. Our first concern continues to be the wellbeing of our colleagues and our customers and we have taken actions to protect them.

At the start of February, we were looking forward with optimism to accelerating our growth plans.  Just a few weeks later, we have no visibility on how long the current international travel disruption will last and how this will impact our Foreign Exchange income stream in the year ahead.

Despite these challenges, as a business we have the benefit of offering diversified services to customers and, given the uncertainty, we anticipate an increasing need for our asset-backed pawnbroking and gold buying services to support customers through potential short-term cash flow difficulties.  Our store expansion plans are under review as we continue to assess the Government’s ongoing response to controlling the virus and efforts to support the economy.

The Board will provide a further update as and when appropriate.”

This week’s market reaction has been extreme, and the shares are actually now changing hands back at their IPO price which is likely to create some support. As mentioned above, we will review all positions in our portfolio when markets become more stable.

RFX 1-Year Chart

RFX 1-Year Chart

Midwich Release Solid Set of Full-Year Numbers

Specialist audio-visual distributor Midwich (MIDW) have delivered on their full-year guidance with ‘strong revenue and profit growth across all markets and geographies’.

Full-year revenue came in at £686m, up 19.6% on 2018 – including organic revenue growth of 6%.

Managing Director, Stephen Fenby commented:

“In a challenging year of economic and political factors, I am very pleased that the Group continued to grow strongly across all markets and geographies. Our organic growth was robust and we have continued to strengthen our presence in more technically complex market areas. Our targeted acquisition programme means that the Group entered three new countries during the year, in addition to strengthening our specialist audio and lighting businesses… ”

Post year-end, I was delighted to welcome Starin Marketing, Inc and Vantage Systems into the Group.  Starin represents not only our entry into the major North American market but also a significant strengthening of our presence in the attractive unified communications market.

“Market conditions continue to be generally challenging, but stable, albeit that the potential impact of the spread of the Covid-19 virus is still being assessed.  At present, excluding any potential impact of the Covid-19 virus, the Board’s expectations for the full year remain unchanged.”

MIDW 1-Year Chart

MIDW 1-Year Chart

Gamma’s Gross Profits Jump 26%

Gamma (GAMA) released an impressive set of full-year numbers on Tuesday.

The Voice Over Internet Protocal (VOIP) specialist delivered gross profit of £166.5m on revenues of £3.28.9m, an increase of 26% and 15% respectively.

CEO Andrew Taylor commented:

“We have delivered a strong business performance and an excellent set of financial results for 2019, with both our UK Indirect and UK Direct businesses continuing to grow well.  Despite an increasingly competitive market, our product performance was positive, and during the period we continued to strengthen our market capabilities, through the development and launch of new products and services…

Our Dutch business continues to build market share and we will shortly be operating in Spain following the acquisition of Voz Telecom.  Through the acquisition of both Telsis and Exactive, we are executing against our UCaaS strategy, while ensuring that we continue to strengthen both our direct and indirect channel propositions.”

The shares continue to hold above the key support zone created by the 2019 lows of 967p-920p and this resilience in the face of a brutal market sell-off is highly encouraging.

GAMA 1-Year Chart

GAMA 1-Year Chart

Best of the Best Well Positioned to Weather the Storm

Best of the Best (BOTB) released an upbeat trading statement this week which read:

‘The Company has experienced a strong start to the second half of the financial year and the Board is pleased to report that this momentum has continued.

The Board has continued to drive investment across all marketing channels and this increased spend has led to a rise in customer engagement and new customer acquisition. As such, the Company is pleased to advise that it is currently trading ahead of market guidance, as updated on 30 January 2020, in respect of both full year revenue and profit.’

Having made the transition to 100% online last year, the company is uniquely positioned to deal with the current COVID 19 outbreak. The mass cancellation of sporting events has had a catastrophic impact on bookmakers but Best of the Best, being an organiser of weekly competitions to win cars and other lifestyle prizes, is largely unaffected.

The shares have outperformed all other stocks in our portfolio in recent weeks and we expect Best of the Best will continue to do so.

BOTB 1-Year Chart

BOTB 1-Year Chart


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