October 2017 UK Investor magazine

UK INVESTOR MONEY // SHARES // INTERVIEWS

ISSUE 26 // OCTOBER 2017

ADAM REYNOLDS Tom Winnifrith talks to the king of shells five buy tips, three sell tips, gay penguins of Bristol

UK Investor Magazine — 1 — October 2017

Intro

From The Editor INSIDE 3 An investment to build on Chris Bailey 4 Three resource shares to buy for October Gary Newman 5 Why you should pay for ShareProphets.com Tom Winnifrith 7 Q&A with the king of shells, Adam Reynolds Tom Winnifrith 8 Gay penguins of Bristol Tom Winnifrith 9 Should Swallowfield be a part of your portfolio make up?

Steve Moore 10 UK Investor Show special offer ends 30 September 11 The EU means last call for Britain, says Wetherspoons honcho Tom Winnifrith 12 The moral bankruptcy of the left Tom Winnifrith 14 Three shares to sell in October Tom Winnifrith 18 The House View: Don’t mess with capitalism

CONTACT US UK Investor Magazine 91 - 95 Clerkenwell Road London, EC1R 5BX E: info@ukinvestorshow.com

Is this the latest we have been in publishing our monthly UK Investor Show magazine? I like to think that it is and that we have surpassed ourselves with a new record. Forgive me if I seem flippant but it has been a month of great distractions. But the magazine is with you at last and comes with five buy tips, three sell tips, a cracking interview with the king of the AIM shell game,the shellmeister himself Adam Reynolds and much else besides. I hope there is something for all.

As to the distractions. Thankfully it is not another libel suit from someone who objects to my exposes. I still have two cases outstanding on that matter. There is the minor distraction of my wife heading back to full time work now that our son has turned one. As someone almost fifty it is a good time to become a master nappie changer and thus , for half the working week I am now a house husband. How liberated!

But the real distractions this month were the relaunch of ShareProphets (see page 6) and a major push on the UK Investor Show. Our big event on April 21 is still seven months away but already we have a full speaker lineup and almost 100 of the 133 AIM and Main Market PLC stands booked in.

Never before in 16 years of running such events have I found myself in such an advanced stage of readiness. It is not that I am getting any cleverer or more persuasive it is entirely down to the fact that the show is now organised by MBN, the business of Nigel Wray’s daughter Lucy. Nigel’s son Joe plays a big part in MBN and the whole team are just terribly efficient folks and it is a pleasure working with them. When you have fun working with colleagues doing a job it is hard to get bored and to contemplate doing anything else or calling it a day.

The upshot is that the 16th show I put on 21 April 2018, will be our biggest and most exciting ever. We have a special offer on page 10 which runs out Sunday so make sure that you act on it NOW!

W: www.UKInvestorShow.com EDITORIAL

Tom Winnifrith Editor

Tom Winnifrith Editor

www.ShareProphets.com www.UKInvestorShow.com www.TomWinnifrith.com

UK Investor Magazine — 2 — October 2017

Kingfisher’s split personality... but always embrace that round number level Writes Chris Bailey

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ack in early 2016 I said you wanted to wait for a 3 quid level to get excited about Kingfisher (KGF). If you did have a go at the owner of B&Q, Screwfix and in France Castorama then you are probably pretty chilled about the latest numbers because after plunging below that round number level during the summer, the shares are now heading pleasantly north of it.

We all know UK consumer stocks cover a variety of sins and I rambled on about the more trading-centric strategy you have to adopt last week when I wrote up the Next (NXT) trading win with the words: ‘when you have a situation of extreme pessimism (as you have with the UK retail sector currently) you have to adopt a bit of trading savvy as well - and that means for stocks that have those fundamentals I like of leading market positions, good cash flows and a neat balance sheet, you buy the dips and sell the romps’ Buying the dip with Kingfisher sub 3 quid required nerve with the correlation DIY stocks have with the bloated property market as well as the company’s own material exposure to the still troubled French economy. The latest numbers would hardly improve your tone with a clear dichotomy between Kingfishers’s different divisions and geographies with the loud and proud observation of: ‘impact from business disruption, albeit with an

overall improving trend, and continued weaker sales in France, offset by continued solid growth at Screwfix and Poland, and self-help initiatives’ Well it is all a bit breathless...but you get the point. Some bits are good and some bits are less good. All of this means huge boredom at the numbers level with a 2.1% growth in ‘underlying basic EPS’ juxtaposed deliciously with an ‘adjusted basic EPS’ showing a 4.4% fall on a yearon-year basis. At least net cash remained positive and the half year divi was edged up 2.5%. I also liked the sound of over 5% of the market cap being returned to investors so far via the dividend or a share buyback - shareholder remuneration by a company with a decent balance sheet always pleases me.

Self-help initiatives also got a shout-out as noted above. I also generally like these and One Kingfisher is pretty standard fare...but ultimately a sensible mix of freshening up ranges, consolidations, better purchasing and enhanced embracing of the digital economy. Bottom line is you buy the stock below 3 quid and trade it for 10%+. And after the recent share price action that makes me a holder today of the shares.

And if you don’t hold it then let the market come to you - that’s what active share trading is all about in times of strife and uncertainty. For this one you can tattoo on your forehead: ‘3 quid or under’.

Chris Bailey is editor of FinancialOrbit.com

UK Investor Magazine — 3 — October 2017

Three resource shares to buy for October

By Gary Newman

T

he big mining companies have performed incredibly well recently and many of them have seen large share price rises.

generate free cash flows of $1.3 billion – that starts to rise significantly if you factor in higher nickel prices.

These rises have largely been confined to those companies that are already producing, but if commodities continue to show this amount of strength, then I think that eventually some of those still at the exploration stage, and especially those with proven resources which are yet to be brought into production, are also going to benefit.

There is of course a flipside to that, and factoring in the cash costs of production plus capital investment over the life of the mine, it would need nickel to remain above the $9,400/t level to remain profitable, on a discounted net present value basis.

Since hitting lows of just below $9,000 per tonne back in June, nickel has been showing a lot of strength and is now trading at around the $12,000/t level. Going forwards the metal should remain strong, especially if lithium batteries and electric cars continue to grow in popularity, as nickel makes up a substantial of this type of cell – for instance the ones used in Tesla vehicles – far more so than lithium itself.

Currently the company is carrying out a feasibility study, which is expected to be completed in early 2018, and is also in the process of applying for an installation licence, and once that is granted – it is expected to come in Q1 2018 – construction of the mine can start.

Of course the project will have to be funded, and Horizonte certainly don’t have the money to do that alone, but once the project has all the approvals in place and is proven to be feasible then I would expect plenty of interest from larger companies looking to get involved. Looking at the3 shareholder register though, we can see that Teck Resources –a very large Canadian mining company holds 17.9% of the shares here, along with Glencore with 6.4%, so any funding could easily come from one of these companies.

The shares are currently trading at 3.2p to buy, with a market cap of just £36 million, so although you may have to wait a while, there is plenty of upside potential here.

For something a bit more speculative that gives exposure to nickel, I would suggest that Horizonte Minerals (HZM) is well worth a look, although it won’t be producing anything until 2019 at the earliest.

The company owns 100% of the Araguaia nickel project in Brazil and has already carried out a prefeasibility study which shows that the mine would have a lifespan of around 28 years, during which time it would produce around 14,500 tonnes of nickel per annum.

The project hadn’t looked so good at lower nickel prices, but now that it is back around the $12,000/t level, the model shows that it would take just four-and-a-half years to pay back the $345 million that would initially need to be invested, and over the life of the mine would

Another company which is a couple of years away from production but could have large upside if it makes to that stage, is KEFI Minerals (KEFI), although in this case it is gold that is the focus – another metal which has performed well of late.

Its Tula Kapi project in Ethiopia has probable reserves of in excess of 1 million ounces of

UK Investor Magazine — 4 — October 2017

gold, along with a further 1.72 million ounces of resources, some of which could be upgraded to the reserves category as we move forwards.

The company completed a definitive feasibility study back in May, which showed that open pit production over a ten year period would amount to 980,000 ounces, with the bulk of that coming during the first eight years at an average of 115,000 ounces per annum.

Gold prices are now even higher than when the study was carried out, and should be well above the $55 million per annum net operating cash flow that was being predicted – with all-in sustaining costs of just $800/oz giving plenty of leeway should gold pullback at any point.

A stumbling block here had been finding the cash to get the project off the ground, but the company has worked hard to significantly reduce the initial capex required, and recently announced a deal with Oryx Management to fund the bulk of that. A further $24 million still needs to be found, but the company is expecting to be able to fund a fair chunk of that from a finance facility based on the value of ore stockpiles, as well as from equity within the project, in order that the company is able to retain control of the bulk of the project.

Shares are currently trading at around 5.2p to buy, giving a market cap of nearly £17 million, and although production is unlikely before 2019, I can see value in tucking a few of these away until then and ignoring the ups and downs in the meantime.

It is also hard to ignore oil at the moment, and although part of the recent spike is likely down to the effects of the hurricanes that have been battering the US, there have also been positives from elsewhere, especially when it comes to cuts in supply and reducing inventories.

So even if the oil price was to drop back a bit once things settle down after the hurricanes, I would still expect it to remain fairly strong and to trade around the $50 level.

In my opinion possibly the most undervalued oil company trading on AIM at the moment is Serica Energy (SQZ), which operates in the North Sea.

The company is already in production via its 18% owned Erskine field, from which it has been making a decent net profit and has managed to build a very nice pot of cash as a result.

Recently the share price has taken a hit, losing over 25% of its value, as the field temporarily closed down to allow de-waxing to take place on the Forties Pipeline, which Serica uses to transport its oil. An announcement that the work would take a couple of weeks longer than initially expected hasn’t been taken well by the market.

As a result of the shutdown whilst the work is carried out, the company amended its production guidance for this year to the 2,200boepd to 2,400boepd range.

With this being a fairly regular occurrence at Erskine, it is even more important that Serica secures another producing asset to reduce that risk, and that is where Columbus could eventually come into play.

The field is 50% owned by Serica, with net contingent resources of 6.2mmboe, and currently the best options in developing it are being considered, with a full field development plan expected by the end of 2017. With that in place work would get underway next year and gas could be being produced commercially by the end of 2019.

In the meantime the company has been actively looking at possibly acquiring other producing assets as it has been building quite a cash pile for itself, with production costs per barrel of just $14.

At the end of March the company was debtfree and with $25.7 million in the bank, and that wasn’t including the $3.5 million due from sales during March, so even allowing for the shutdown in operations, that would have grown significantly in the meantime, even though production guidance is down from the original 2,500-3,000boepd estimate.

This is a company that is careful how it spends its money and has been making a very good profit for several years – net profit for 2016 was $10.8 million – and I think that makes it look very cheap at the current market valuation of just £58 million. Certainly if it was one of the more ‘fashionable’ AIM companies I would expect it to be trading a lot higher than the current price of 23p.

I hold shares here myself, and have done for some time now (going right back to the 5p days), and I would expect to see the share price regain upwards momentum once production restarts at Erskine. The one thing I would like to see at some point though is funds being returned to investors via a dividend, but in the meantime I am more than happy if the company spends the cash that it has on another producing asset to lower the risk here.

UK Investor Magazine — 5 — October 2017

You can read UK Investor Magazine for free but ShareProphets now costs — why??????

By Tom Winnifrith

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pending by advertisers online is booming. That s a fact. There is a clear transfer of advertising budgets from offline to online. That is the good news for us at ShareProphets. The bad news is that all of that growth in online advertising has gone to Google and, to a lesser, extent Facebook. So many advertisers who used to give business directly to ShareProphets when we launched insist that they still support us use our site. But by that they mean they use Google ads which pay websites such as ours buttons.

Thus, like many other specialist sites which offer unique, premium content of value we have had to risk losing all our readers by asking them to pay £5.99 a month to get access. It was, in the end, a simple choice. Carry on as we were and ShareProphets only existed thanks to subsidy from the UK Investor Show and that subsidy could not be guaranteed forever. Besides, as a capitalist, I just don’t see that it is a way to build a sustainable business.

After a while loss makers must simply adapt or die.

Well 12 days into the experiment I am happy to say that ShareProphets revenues are already on a run rate of around four times the old model.

Sure, fewer folks read my articles or listen to my Bearcasts and if I cared more about ego than creating a sustainable business that might hurt. And right now ShareProphets is still loss making but as each day brings more folks realising that it is worth paying for quality content and signing up, the run rate deficit narrows that bit more. I said that I’d give it a year. At this rate I’d be disappointed if we were not running at breakeven by November, if not before.

To those many hundreds who have already joined I say thank you! If you have not, why not? There are 300 reasons a month why you should pay as little as £5.99 a month for our content.

And it is simple to do.

Just click ShareProphets.com/membership/join.php You will get a confirmatory email later in the day to welcome you on board.

We produce around 300 articles and podcasts every month on ShareProphets - sometimes it is more . That is content you really cannot access anywhere else it is unique, it is often brave, not always popular but it is, we believe, of real value. Some of it - notably our fraud exposes on companies such as Globo, Quindell, Telit and the China cons - has been genuinely groundbreaking. There are numerous websites that just say buy, buy, buy, blah, blah or which are supported by money from listed companies and so cannot be objective. There is only one ShareProphets.

I hope that for the price of a large glass of mediocre red wine at a poncey London bar or 12 cigarettes or 1 day’s travel zones 1 & 2 you will back us and sign up HERE

UK Investor Magazine — 6 — October 2017

Q&A with Adam Reynolds The King of Shells

By Tom Winnifrith

I

n the lead up to the latest AIM RTO brought to you

by Adam Reynolds, that of Orogen Gold, I met up with the great man to ask why this was so exciting and what was happening elsewhere.

bit of a rally of late. What will take it higher in terms of news? Is news enough, I mean does it not need to start to show real revenues and cash generation in order to drive more of a re-rating?

AR: The sector Opti are in has huge growth opportunities and hopefully we will sign up with other multi-national customers, secondly when we are able to demonstrate the revenue model and a lot of this is generated from licensing income that is when I believe the stock should get re-rated

TOM WINNIFRITH: I do not know about you but I worry that the stockmarket looks pretty fully valued and may be riding for a fall. Do you share that concern?

ADAM REYNOLDS: The market has had a great run, but you must factor in the weakness of sterling which will not improve anytime soon and any export lead business should do well, so I think the market has further upside TW: But does the wider market bother you? Are you such a bottom up investor that you do not really care?

AR: As long as the market has relative stability I am fine, if we have a major downward correction of course it has an impact on raising funds in the short term, but I take a long term approach and am investing in the Company rather than the market TW: Orogen has been a resource dog on AIM since, as they say, Adam was a boy. What is being reversed into it and what is the excitement?

AR: We are reversing an on-line ladies fashion business - very exciting with exceptional growth opportunities TW: People are always saying that company x is the new Boohoo/ASOS - what makes Sosander different?

AR: Where they are in the market place demographics huge opportunity - ladies who are time poor but want to shop

TW: I was a bit pissed to see Big Sofa do another placing the other day not that far above the RTO price when the stock has been so much higher. Is this a sign that it is missing targets for breakeven?

AR: No, it is about scaling the business up to try and cope with some of the bigger projects we are getting offered TW: The market cap of Big Sofa is £14 million. Is not its problem that it is too small to attract serious investors?

What will change that and when?

AR: Maybe but we will get a larger following once we have numbers / forecasts and further major client wins that have traction and scalability. Once this is visible and demonstrated that is when we will get institutional support TW: Concepta is another one of your shares that I own and where I am not exactly feeling rich. Can you remind me what exactly this company does? What is the excitement here as it just does not seem to be anywhere close to delivering the sort of sales we might have hoped for? When will that change?

AR: They should return to market on the third week of October

AR: Concepta specialises in improving fertility the product which is revolutionary has passed all Chinese hospital trials we have received our first order and shipped it - we are a commercial business and not a business that you are continually trying to bring a product to market - we have done it and now you will see our sales grow rapidly

TW: Optibiotix is my biggest holding and it has had a

TW: Thank you for your time.

TW: I gather the RTO is at 15p ( post a 1 for 10 consolidation), when will shares resume trading and what are you hoping they will get to?

UK Investor Magazine — 7 — October 2017

Parson Street Primary in Bristol and the gay penguin family - I really despair Writes Tom Winnifrith

T

he politically correct BBC here in the South West creamed itself as Parson Green Primary here in Bristol picked up an award for its work to promote LGBT equality.

Kids at the school are allowed to wear trousers or skirts whatever their gender, toilets are unisex and the school prides itself on teaching the kids from the start that gay is normal.

Head teacher Jamie Barry told a drooling BBC that pupils needed to “grow up in a culture of acceptance”. The award was handed out by a body called Educate and Celebrate which gets stacks of wonga from the BBC’s Children in Need and which,according to its CEO Dr Elly Barnes, aims “to eradicate sexism, homophobia and transphobia” and “smash stereotypical views of gender”.

Stephanie Akinbulumo, a teacher at Parson Street Primary, told Pravda: “We want pupils to leave with a sense of empowerment that you can do anything, no matter who you are.”Stephanie s shown on camera teaching five year olds about a family of penguins with two dads. I am prepared to concede that there are gay penguins (I believe homosexuality is part of nature) but, I hate to break it to Stephanie, Elly Barnes and the BBC but gay male penguins do not have kids. They cannot conceive and there are no LGBT adoption services in the penguin community. Teaching kids about the normality of homosexuality by pretending that two gay animals or indeed men can create life is a lie.

Pointing this out to my PC sister N, I was told that it was important to show that homosexuality was normal at an early age as some of the 400

kids at Parson Street will be gay. I accept that statistically 8 of the 400 will in later life be gay.

And maybe some of them will protest as some gay adults do that “they have always known.” But I find it hard to believe that at 5 any kid knows about sex or has sexual urges at all. Let alone knowing for sure that they want to engage in same sex relationships when - a few years later they are physically capable.

The BBC was told by Parson Street’s head teacher that kids had to know about same sex relationships as o kids at the school might have same sex parents. Really? Data I have seen suggests that gay couples have adopted c3000 kids since 2006. In which case the chances of there being any kids at your average primary school with gay parents is very small indeed.

My sister N thinks I am just not with it in not wanting my son Joshua exposed to this piffle. I will discuss LGBT issues with him as a parent I do not want his five year old mind confused by gay penguin families at 5 or being told that wearing a skirt is, as a 5 year old boy, normal. Because it quite simply is not.

Luckily we live in a working class/lower middle class district. The young mums at our local primary are either good Catholic Polish speakers, wearers of Muslim headscarves or solid working class folk none of whom will tolerate this sort of nonsense. If it is imposed on us I, for one, will opt for home schooling. It is not the job of The State to teach 5 year olds, who really can’t understand the complexities of this matter, lies all about the facts of life.

This article first appeared on www.TomWinnifrith.com

UK Investor Magazine — 8 — October 2017

company profile Swallowfield

A summery outlook?

S

By Steve Moore

wallowfield (SWL) is a developer, formulator and supplier of personal care and beauty products which was my first tip of the year for 2017. That was at a 270p offer price and the following profiles the company and its current situation with the shares presently at 330p…

upside from the current sub £56 million market capitalisation. This particularly with pre-tax profit currently forecast to grow to more than £5 million in the now current year (earnings per share of circa 24p) – and further solid growth anticipated to follow.

The company’s customers include many leading brands, and it also has owned brands – the latter including The Real Shaving Company (male shave and skincare), Bagsy (premium beauty), MR (male haircare) and Tru (value brand).

Having paid a 1.7p per share interim dividend (prior year: 0.8p), a further 2.7p per share is anticipated to be announced with the results (prior year: 2.3p), rising to a total of more than 6p per share for the now current year. This prospective dividend yield currently of just under 2% thus not a defining attraction, but also not to be sniffed at in this prevailing low interest rate environment. I currently target a future 400p+ share price here, whilst looking forward to the further detail of the 19th September results.

In June 2016 the company acquired The Brand Architekts Ltd, the owner and manager of brands including Dirty Works (female beauty products), Kind Natured (natural beauty products), Argan (skin oil), Happy Naturals (bath and body products), DrSalts (bathing salts), Superfacialist (skincare) and Senspa (body therapy range).

Results for the group’s year ended 24th June are scheduled for 19th September, so what to expect?

Management

House broker to the company, N+1 Singer, is looking for an adjusted pre-tax profit of £3.7 million on revenue Swallowfield expects of “approximately £74.1m” (organically +7%). Net debt was reduced to £3.7 million and Chief Executive Chris How has emphasised “the acquisition of The Brand Architekts has delivered fully against our expectations and has been integrated smoothly and effectively into the group”.

Chris How joined the company as CEO in 2013. He had prior extensive international experience across the personal care and household sector from senior general management and sales & marketing positions with PZ Cussons and Colgate Palmolive.

Singer argues “underpinned by the successful integration of BA, Owned Brand prospects remain compelling. An exciting pipeline of new products combined with additional customer wins means the Manufacturing division also remains well placed. In both businesses, international expansion remains a key opportunity”.

These are thus factors to look for in the upcoming results announcement, whilst the broker has concluded “our 375p fair value estimate are unchanged. This equates to 9.5x cal18 EV/EBITDA based on 12.5x Owned Brands (prudently assuming a 20% peer discount) and 7.0x Manufacturing”.

Despite the shares nicely up from the start of the year circa 270p, I concur that there is further

Finance Director Mark Warren joined in 2010 with extensive financial, commercial and operational management experience from prior senior roles at GEC, Whitbread, Interbrew, Alpharma and Actavis.

UK Investor Magazine — 9 — October 2017

Book UK Investor Show ticket, save 25% and get a very special book worth £12.99 Offer ends 1 October

T

he Global Group UK Investor Show is now recognised as the dominant one day event for folks who want to make money from shares. Now what is in store for 2018? Great things!

But first... Book your seat BEFORE OCTOBER 1 at a 25% discount and make sure you get a very special limited edition book worth £12.99 The Global Group UK Investor Show 2018 will be the 16th show organised by the team. The event may be many months away, on April 21 2018, but we have already secured our biggest and best ever main stage line-up. The stars of 2017 are all coming back: Mark Slater, Nigel Wray, Paul Scott, Jonny Hon, David Lenigas. Tom Winnifrith, Lucian Miers, Vin Murria, Matt Earl, Chris Bailey, Dominic Frisby et al. But there are new big name speakers joining the main stage lineup.

We start with Nick Leslau, the secret millionaire and legendary property investor.

Will the housing market have imploded by then?

Is commercial property a busted flush? Nick is the man with all the answers.

And then there is Ed Croft the genius behind Stockopedia - the man who shows how using stock screens and data can make you a better investor.

For a limited time only (UNTIL SUNDAY) we are selling tickets for the show with a 25% discount. That means if you book now it is only £9 for an investor class seat and £67.50 for a golden ticket (which gets you access to the after show drinks, guaranteed front row seats and a ticket to the Saracens cabaret featuring Nigel Wray, Private Eye’s Chris Booker and Dominic Frisby the comedian). You can get your discount seat by using the promotional code UKI25 when booking at www.ukinvestorshow.com In terms of the companies attending... we are still seven months away but.....

In 2017 there were 123 stands. In 2018 we have made room for 135 stands and already many companies from 2017 have committed to coming back including Nostra Terra, Skinbiotherapeutics, ChapelDown ( with free samples) Ariana Resources, Optibiotix, Orogen Gold, Red Rock Resources, Alliance Pharma, Amryt Pharma, Powerhouse Energy, Kefi Minerals and Regency Mines... the list grows by the day.... as things stand

we have 90 of the 135 stands booked in already and that list grows daily as you can see at www. ukinvestorshow.com And there are also new breakout session including a panel lead by Adam Reynolds on making money from biotech and small pharma.

More on that later. The Big question is why book your ticket for April 21 2018 now? There are TWO Compelling reasons 1. We are selling tickets priced at a 25% discount ONLY UNTIL MIDNIGHT ON SATURDAY. Then the price goes up. That means £9 for an investor class seat and £67.50 for a golden ticket (which gets you access to the after show drinks, guaranteed front row seats and a ticket to the Saracens cabaret featuring Nigel Wray, Private Eye’s Chris Booker and Dominic Frisby the comedian). Prices go up in a few weeks but IF YOU BOOK TODAY you can get a discounted seat by using the promotional code UKI25 when booking at www.ukinvestorshow.com 2. There is the book. Next April we will publish a book “ The 21 top investment ideas of the UK Investor gurus.” Every main stage and big name speaker from Nigel Wray via Dave Lenigas and Adam Reynolds down to Darren Atwater will contribute 600 words on the most important lesson he or she has learned from investing. This is a VERY limited edition print run but while stocks last you will be able to buy the book at £12.99 from 21 April 2018. But if you buy a ticket to the show you will be given a free copy. Buy a golden ticket and it will be autographed by the key speakers. manage to scrounge a ticket for free and there is no book.

UK Investor Show is now clearly the dominant one day event for those who want to make money from shares. And with our new big name speakers it just got better still. We hope the date is in your diary already so to get your copy of this limited edition one off book, get your discounted seat now.

Just go to www.ukinvestorshow.com and use the promotional code UKI25 when booking your seats.

UK Investor Magazine — 10 — October 2017

Take a wise-up pill Juncker & Barnier says heroic Tim Martin of JD Wetherspoon Writes Tom Winnifrith

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nce again, Tim Martin of JD Wetherspoon ( JD) has let rip with a devastating attack on the EU and its attitude to Brexit. It came as JD unveiled a 43% increase in Full Year Profits achieved, as the fake news broadcasters at Channel 4 and the BBC would say “despite Brexit.” Over to the great Tim Martin: “It is my view that the main risk from the current Brexit negotiations is not to Wetherspoon, but to our excellent EU suppliers - and to EU economies.

As the public instinctively understands, but few academics, economists, boardrooms and City institutions grasp, democracy is the strongest economic steroid - hence the astonishing rise of countries like Japan, Singapore and South Korea, after its adoption. A fascinating insight into the thought processes of many pro-Remain ‘elites’ can be found in an article in The Spectator

by Professor Robert Tombs of Cambridge University.

In the current negotiations, democraticallyelected politicians from the UK are dealing with unelected oligarchs from the EU. Since the oligarchs are not subject to judgment at the ballot box, their approach is dictated by more sectarian factors - the interests and ideology of EU apparatchiks like them, rather than residents or businesses from EU countries.

As a result of their current posturing and threats, EU negotiators are inevitably encouraging importers like Wetherspoon to look elsewhere for supplies. This process is unlikely to have adverse effects on the UK economy, as companies will be able to switch to suppliers representing the 93% of the world’s population which is not in the EU, but this evolution will eventually be highly damaging to the economy of the EU. Wetherspoon is extremely confident that it can switch from EU suppliers, if required, although we would be very reluctant to initiate such actions.

It is my view that Juncker, Barnier, Selmayr, Verhofstadt and others need to take a wise-up pill in order to avoid causing further economic damage to struggling economies like Greece, Portugal, Spain and Italy - where youth unemployment, in particular, is at epidemic levels.

There seems to be little genuine appetite for a free-trade deal from the Brussels bureaucracy, so EU companies are, paradoxically, reliant on the goodwill of UK consumers, who are likely to prefer tariff-free goods in the future from nonEU countries, which are generally in favour of free trade, rather than deals with companies which are subject to the diktat of those who wish to punish the UK.”

UK Investor Magazine — 11 — October 2017

That the Guardian and Labour MP Chi Unwurha even have to ask if racism is worse than raping 13 year olds shows the moral bankruptcy of the left Writes Tom Winnifrith

“T

he grooming of girls in Newcastle is not an issue of race – it’s about misogyny” says Labour MP Chi Onwurha in the Guardian. She continues “What’s worse, rape or racism? I found myself posing that question after the Operation Sanctuary investigation was finally made public, revealing horrific abuse of

girls and vulnerable young women in Newcastle.”

What follows defies belief.

As you may remember the rapists in Newcastle were nearly all Muslims and all either Asian and Middle East in origin. The victims were all white working class girls. The “racism” to which

UK Investor Magazine — 12 — October 2017

the Labour MP and the Guardian refers is that of those they deem to be far right because they have stated that there is a problem with mainly Muslim Asian gangs raping young, nearly all, white girls on an industrial scale in Cities across, mainly Northern, England.

But facts are facts. To deny the ethnicity of the victims and also the perpetrators is not going to make what is clearly a problem go away. Indeed it is clear that in Rotherham and elsewhere Police failed to tackle this issue early on precisely because of the ethnicity of those doing the raping, because they feared being branded racists by folks such as Chi Unwurha and the Guardian.

Yet statements made by some of those convicted suggest that there was a racist element to the crime. One member of the Newcastle gang, Badrul Hussain, had claimed “white women are only good for one thing.” And thus his gang raped or assaulted 700 girls nearly all of whom were white. Lord MacDonald a Lib Dem peer and former Director of Public Prosecutions has stated the actions of the Newcastle gang were a “profoundly racist” crime. He added that there was “a major problem in particular communities” of men viewing young white girls

as “trash regarded as available for sex”.

Folks like Lord Macdonald and the Labour MP for Rotherham Sarah Champion are hardly neo Nazis seeking to make political capital. They are just decent folks who accept that there is a real problem and want to see the most vulnerable in society, the “white trash” of our inner cities gain basic protection. But for Chi and the Guardian such words are racism which is worse than rape.

That is the moral bankruptcy of the left in Britain today, the abandonment of the traditional working class by a metropolitan elite who actually despise those they are meant to represent. Nothing could be worse than the rape of teenage girls on an industrial scale. Nothing at all and certainly not faux racism.

Chi says that the Newcastle gang was driven by misogyny. So we are meant to think that the real issue here is with the attitude of men towards women. But is that all me Chi or just some men? If it is all men then your point is just ridiculous since 99.9% of we men are not involved in industrial rape gangs. But if it is just some men involved in such gangs what tends to be the common thread? Or do you not dare to spell it out?

This article first appeared on www.TomWinnifrith.com

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ROCKETS Stocks Ready to take off hotstockrockets.com UK Investor Magazine — 13 — October 2017

Three shares to sell in October

By Tom Winnifrith

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ucian Miers wrote an interesting piece the other day, HERE, about how shares in slam dunk frauds can be great investments in the latter stages of a bear market before the inevitable final collapse. His case study was Eros an Indian fraud listed in the US. The points that Lucian makes is that in a bull market no one cares about facts or fundamentals folks are happy to trade momentum or “buy into the bigger picture” but also that some funds will aggressively target stocks with a big bear position just to try and engineer a bear squeeze.

In the end frauds, like socialists, always run out of other people’s money. And that triggers a final collapse in the share price but, along the way, we bears can - for a while - look rather foolish.

Next up is 88 Energy (88E). My pal Waseem Shakoor is a man almost as detested by the pond life of the bulletin board moron community as I am. One of his most astute observations is of the consistent ability of private investors to mis-price - on the upside - small resource stocks. 88 Energy shares are down 75% at 1.1p but this company is still valued at £53 million which is way too high.

88 Energy has talked telephone numbers for the potential of its icewine prospect in Alaska but the second well has just been shut down for the winter without finding anything of note. Operations will not resume until April so we face eight months without news. Meanwhile the balance sheet is a mess.

And so that allows me to start with Telit (TCM) shares in which have bounced from 105p to 185p.

That will be some consolation fƒdroor those who backed a $50 million placing on May 5 or who bought £24 million of shares dumped by the, now, former CEO on May 24. I await a trading statement from Telit within days.

The facts as we know it are that the company was founded and run as a 1 man show by Uzi Katz until he was “resigned” when it emerged he was a fraudster and fugitive from US justice. The new CEO dumped all his shares knowing that the company had breached bank covenants and was due a profits “miss” so is an insider dealer. The company is drowning in debt, burns cash and some of the outfits it claims distribute its goods either don’t or simply don’t exist.

However Telit and its morally bankrupt Nomad FinnCap, which appears happy to bank the fees to act for a company run by a proven insider dealer, polish the turd with the next trading statement this is not going to end well. Telit is the stand out sell on AIM right now.

As at June 30 2017 it had cash of £31.5 million but also trade payables of £10.7 million and short term borrowings of £22.8 million. i.e Negative net current assets. Its net cashburn is just under £2 million a month. Those numbers do not lie. As I write cash will be c£25 million and if all the bills were paid it would be sub £15 million with those pesky borrowings still hanging over it. i.e. net debt would be £8 million and rising. So a placing is needed PDQ. That makes the shares a stand out sell.

Finally a new entrant to this column as my third stock to sell. Westminster Group (WSG) is a security firm which has been a serial disappointment in terms of hitting operational targets and a serial cash guzzler to boot. It has just raised a paltry £750,000 gross at 10p to keep the lights on. Any company chaired by the loathsome ex Tory MP Tony Baldry, of 3DM infamy, is a no go for me and here is why Baldry’s Westminster is in a real pickle.

At 13p before this placing was conducted the company was capitalised at £15 million. An AIM company of that size should have easily been able

UK Investor Magazine — 14 — October 2017

to raise a seven figure sum and to do so without giving the stock away. Yet Westminster managed to raise just three quarters of a Bernie and at a pretty chunky discount ( 10p to 13p). That tells you that the only folks taking stock were bucket shop spivs who will be flipping as fast as they can. And the fact that the bucket shop community put up so little shows its reluctance to have any exposure to this dog.

but by September 1 we have been told that it was down to £400,000 ( which may well overstate the position due to rounding up). But at June 30 trade payables were £1.055 million and you can bet cash strapped Westminster has not been rushing to pay bills since. So current assets minus trade payables at June 30 were just £538,000 ( there was also the little matter of £2 million of debt repayable within a year.). But you can bet the ranch that even ignoring the debt, net current assets were sub £200,000 by September 1 and almost nothing before this placing.

But with a cashburn of £200,000 pcm just how long will the proceeds of the current placing last before the company is again technically insolvent?

January? February? And then there is the matter of the debt which is repayable in June 2018. The lenders could convert into shares at 35p but with the stock at 11.375p, with insolvency only postponed and the company hexed by its Jonah like chairman that is not going to happen is it? So where will Westminster find the cash?

Westminster’s paltry fund raise still leaves it in a total mess. As at June 30 cash stood at £759,000

It will struggle and that is why, at 11.25p the shares are my third sell of the month.

Tom Winnifrith’s

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newsletters.advfn.com/tomwinnifrith UK Investor Magazine — 15 — October 2017

the house view

Mess with Capitalism at your own peril

T

he power of capitalism is that it constantly adapts and evolves. From death comes life. From the desire of capitalists to make money, from greed, comes greater choice for consumers and every great advance for mankind. Cures for cancer and aids, greater yields on crops to end hunger, more efficient cars to cut pollution, vaping which has slashed smoking rates, it is capitalism not the State that makes the world a better place.

Capitalism achieves all that but it can be scary. Most businesses started today will have gone bust within five years. A few will make their owners rich thanks to a takeover and it is that dream of wealth which encourages us all to risk our capital knowing that the odds are stacked against us. But that does not take away from the scary nature of risking capital or running a business.

Of course from each corporate failure workers are freed up to go elsewhere.

From each takeover capital is released which can be redeployed. From death comes new life. And from life comes new life as well. We entrepreneurs have a bug so when we make a profit the odds are that some or all of that cash will be reinvested in new ventures rather than just sent back to fat cat towers as those who hate capitalism would have us believe.

Capitalism always adapts and what might be a winning formula one year may not work out long term. That is frightening. Running a business you may have to change your whole approach to survive. We know all about that from first hand experience at ShareProphets as you can see on page 6. But that is the nature of the beast. Adapt or die.

However we note that the mood is changing. Again there are calls for a foreign takeover f a British firm (Imagination Technologies) to be blocked.

Vested interests seem to have “done for” market disrupter Uber in London.

Useless Mrs May wants curbs on corporate remuneration while Labour plans to seize assets from capitalists (the utilities) at sub market value. And the popular mood is so anti-capitalist that all of this may come to pass. And worse. When the state meddles with capitalism it may seek to curb what it perceives as excess but, invariably, it disturbs a natural order which benefits workers, consumers, society and - via taxes on profits and wealth created the Treasury. The outcome as the UK heads down that path again will be no different this time.

UK Investor Magazine — 16 — October 2017

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UK Investor Magazine — 17 — October 2017