The investor’s guide to Sharemark

A full rundown of all the companies on the Aylesbury mini-market

I’ve posted before about the bargains sometimes to be found on Sharemark, the auction market for unquoted shares run by Aylesbury stockbroker The Share Centre. The market is little known so I thought it might be useful to do a summary of all the securities that trade on it.

Investors should take note of the risks of Sharemark, the very high risks of small unquoted shares, and do their own, thorough research.

A fairly substantial but not very profitable insurance broker that trades at 4x book and maybe 12x ongoing earnings. There is some trading volume and steady director buying but it would be hard to justify a higher valuation.

A large residential property developer that went private and delisted from AIM. City Lofts failed to get the required 75 per cent vote for a scheme of arrangement and so couldn’t squeeze out the minorities who can now trade only via the Sharemark listing.

I wouldn’t touch them given the large majority shareholding even were the heavy debts and lack of equity in the business not offputting enough.

A sleepy agricultural supplies business with an unprofitable operating business but a valuable asset base. I have looked at Countrywide carefully because it trades at only 0.26x its tangible book value and on that measure it is very cheap.

My concern, though, is that with no dividends and a term in the Articles of Association that stops any individual shareholder owning more than 3 per cent, it is likely to stay that way.

Countrywide is one of the more liquid Sharemark issues and there appear to be a number of active buyers of the shares.

The DFOB loan stocks are one of my largest investments and I have commented on them before. They are issued to former members of the agricultural cooperative as a way of cashing out their interest on retirement.

No stamp duty is payable (except on the 2012 stock) and in recent trades the yield-to-maturity has been 15 per cent or above. There is credit risk but, in my opinion, not enough to justify such low prices.

Liquidity is sporadic, concentrated in the 2012 and 2016 issues, and tends to pick up during the winter. There seem to be a few semi-regular buyers of whom I am one.

Biotech company dual-listed on Sharemark and AIM. Only 15 per cent of the equity is in public hands and what little trading there is goes through AIM.

Getmapping is my other large Sharemark investment. It produces comprehensive aerial photography of the UK and supplies, amongst other customers, the UK data for Microsoft Live.

It is a refugee from AIM that delisted to save money during a period of heavy losses. It is now steadily profitable, has launched a range of promising new products, and trades at 0.8x book value and a 2006 price-to-earnings of 2.6x.

There is little liquidity in Getmapping and I have noticed only one big buyer other than myself.

Reading-based professional rugby club that trades at 7x book and makes steady losses. I’ll never understand why people buy British sports clubs and will happily leave this to any billionaire who is tempted. Liquidity is minimal.

A maker of fancy furniture for corporate offices. Trades at 4.5x book, and while it has generally made profits, the amount has been volatile and there has been little growth.

Liquidity is close to non-existent, the company is too small even for Sharemark, and the current suspension does not bode well.

Venture capital trusts dual-listed on Sharemark and AIM. There is next to no liquidity on Sharemark, although if I had to sell one of these things I would try it, as the AIM marketmaker spreads are murderous. I have commented on the large discount to NAV on these trusts but the immature and unquoted underlying portfolio means that they are likely to stay cheap.

One of London’s largest taxi companies: not that you’d know it from the market cap. Radio Taxis is laughably cheap - it trades at 0.1x book value - although it steadily loses money.

Unfortunately, the Sharemark dealing facility is only for employees, so if any Radio Taxis driver would like to act as my agent then please get in touch. Whichever insider is buying the shares off their co-workers at the moment is getting them for a song.

By far the most liquid issue on Sharemark is the parent company of its owner. Share’s main business is The Share Centre, a large discount retail stockbroker.

Share trades at 4.3x book and 21x last year’s EPS which is more than enough for a retail broker at this point in the cycle. Share is looking at a dual-listing on AIM - which caused a flurry of excitement and a rise in the stock - but directors have been selling steadily.

Share is the only equity on Sharemark that can consistently be traded in any volume.

Disclosure: I own shares in Dairy Farmers of Britain loan stocks 2012, 2015, 2016 and in Getmapping.

October 31, 2007 | Filed Under Companies

 

Comments

3 Responses to “The investor’s guide to Sharemark”

  1. Special situation and microcap links : The Rogue Analyst on November 5th, 2007 1:53 pm

    […] Small auction market for unlisted securities. I have written about Sharemark here and […]

  2. The rules of Sharemark : The Rogue Analyst on December 13th, 2007 6:10 pm

    […] Vigus, who runs Sharemark, has kindly posted a comment on the site which is worth reading in […]

  3. Sharemark Auctions Jan 25th : The Rogue Analyst on January 24th, 2008 12:47 pm

    […] There are monthly auctions for a range of stocks on Sharemark tomorrow, notably the Dairy Farmers of Britain loan stocks, Countrywide Farmers, and the weekly auction for Share plc. […]

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