SPRP. Sprue Aegis. Investing is hard

I see that SPRP, “one of Europe’s leading developers and suppliers of home safety products” tanked today, down 26% to 140p. The problems:

the Company is in breach of certain provisions … the breach is not curable and as such BRK is terminating the Distribution Agreement

and

the audited final results … will not now be announced in late March

Delayed publication of results is never a good sign, although under the circumstances, you hardly need me to tell you that.

The company is on a PE of 15.5 or 20.9, depending on which data source you choose to belief. Well, in light of the revelations, I’d say that this is due to a re-rating downwards, and the shares will be lower in a year’s time than they are now despite the clobbering it has just taken. I’ll make a note in my diary, and we’ll see who’s right: me, or Mr Market.

I seem to recall SPRP was a bit of a darling amongst investors much savvier than me. Mostly due to “Not Invented Here” syndrome more than any insight on my part, I never did invest in it.

Trawling through the archives on Stockopedia, I noticed an article dated 29 May 2014 (https://www.stockopedia.com/content/the-best-of-aim-the-worst-of-aim-83673/) that listed SPRP as amongst the best of AIM shares. The price was around 278p.

In Sep 2017, Graham gave the opinion:

it seems like a pretty reasonable holding and a decent-quality smallcap

The price was 210p at the time.
So be warned, stock ranks are for buying on a group basis, and the endorsement of knowledgeable investors is no guarantee. Let me emphasise that I have great respect for Graham’s ability, and I acknowledge him as a better investor than me.

Stay safe out there.

140p

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About mcturra2000

Computer programmer living in Scotland.
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