H&T: an algo’s Top Pick Share filtering website Stockopedia applies an algorithmic scoring method to every company in its database. Known as the StockRank, this methodology has been delivering impressive results. In recent weeks, one company has been dominating the StockRank leaderboard: AIM-quoted pawnbroker H&T. At the time of writing, H&T boasts a StockRank of 99, meaning that it is ranked in the top 1% of all companies quoted on the LSE. By ascribing quantitative measures based on share price performance and profit history, valuation and corporate performance, Stockopedia awards a rating to each company for Quality, Valuation and Momentum. These three scores are then blended to give the StockRank. In the Stockopedia system, H&T currently scores 92 for Quality, 88 for Value and 90 for Momentum. It is important to note that Stockopedia’s ‘Momentum’ score considers not just momentum in the company’s share price but also the scale of any past profit forecast increases. The Stockopedia StockRank system has demonstrated significant outperformance of market indices. For this reason, smallcap investors should take a look at the H&T business. H&T is a pawnbroker operating nearly 200 stores across Britain. Customers use the H&T pawnbroking 4
ranked in the top 1% of all companies service (152 stores) to receive cash, secured by a valued asset or an unsecured loan. Another 39 stores are branded ‘est1897’ and operate as second-hand jewellery outlets. In addition, H&T runs foreign exchange and an unsecured loan service titled ‘Personal Loans’. The rates charged by H&T’s Personal Loans have always been significantly less than more maligned participants in the sector. As a result, recent changes to legislation have had little impact on this business. Management describes Personal Loans as a ‘key medium term opportunity’. A pawnbroking customer is,
unfortunately, someone that typically has poor budgeting skills. This type of customer is frequently a regular user of short-term credit. The shop interface is a very personal service, making satisfied customers ‘sticky’. The alternative finance and pawnbroking sector has undergone considerable upheaval in the last five years, due to the end of the bull market in precious metals and changes to lending regulations. H&T cited the decline in the gold price as the principal reason for pre-tax profits falling almost 20% in 2014. Management considerably derisked H&T in 2014, reducing the size of the pledge book and cutting net debt from £20.7m to £9.7m. In 2014, H&T added personal
H&T runs a portfolio of 192 stores across the UK
Published on May 11, 2015
Published on May 11, 2015
Featuring nine AIM-quoted companies: Christie Group, EMIS, Fairpoint, H&T, Keywords Studios, Miton Group, NAHL, SCISYS and Universe Group.