Small Cap's look vulnerable.

[striker]

Aside from some nasty trading updates coming through, ATR has gone to the wall and now SAN looks to be distressed, (thanks to the Govt.'s mismanagement of funds and inability to settle their debts ) There could well be more failures looming, particularly in the construction sector. Seems there are storm clouds gathering - this could get nasty for the small caps.

[#2]

Eish, if you are a small cap relying on government for contracts and payment, you are likely to be in deep trouble. You need deep pockets to do business with the state. All those construction companies with their much celebrated cash reserves in the glory days. I suspect that cash was put aside as contigencies for warrantees and performance bonds.

[SimonPB]

ya, a number of copanies waiting for their money fromt he FS gov, but oly SAN hits the wall .. what killed them was not winning the R400m Western Aqueduct tender and when that tender returns ESR and SSK now better placed with less competition ..

[striker]

- It's a miracle that SKY has'nt blown, with their low cost housing model - probably just a matter of time. WEA and RAC also look vulnerable.

[THRESHOLD]

Picked up 600 000 RAC at 35c odd based on earnings projections. Will take this up to 1 million shares. Keeps things interesting. Rail infrastructure throughout Africa is an interesting theme.

[THRESHOLD]

WEA, on the other hand, they can keep.

[kwagga]

Brave move

[THRESHOLD]

Accumulating a spread of "interesting" small caps over time at what I consider to be good prices. So not all that brave - diversity, scaling-in, discounted prices and time - all applied to manage (hopefully) the risk.

[J12]

I have ATR which I bought on a break up basis assuming liquidation. Pity it took this long. By now the company probably has increased it's lending somewhat. Anyway, it had a NAV of 23c as at Aug 2011. I estimate that this has now decreased to around 16-18c. After liquidation there should be about 8c left after accounting for bad debts. This is not so bad considering I bought at 4c. There are still some risks that the winding up can take a long time and the bad debts are much higher than anticipated and the company's debt gets much worse before it's wound up. At that point, I hope to at least get 4c back. Anyways, it was a small bet and it will be a good learning curve if it doesn't work out.

[striker]

- 1tm also maybe heading for a hard landing.

[THRESHOLD]

There's no nalue here. The directors have probably stripped what they can ...and anyway - after a liquidation there is never anything left for shareholders.

[THRESHOLD]

Still - I hope it has a happy ending for you.

[J12]

Yea. You're probably right. At the time though, it seemed like an underpriced share. If it failed, there was something left... and if it survived, it would have recovered well. It had enough current assets to cover all it's liabilities (except for the fact that most of it was debtors, and likely bad debtors at that) and that would have left the fixed assets for shareholders. If I had enough money at the time to buy the whole company and strip it, I would have. Anyways, since I now have a vested interest in the company's progress, I will be keeping track of it. I should at least learn a thing or two about liquidation proceedings.

[THRESHOLD]

The bulk of the fixed assets is plant & equipment - this stuff is practically worthless in a liquidation scenario. The cars willbe heavily discounted. Then there are some tracts of (speculative) industrial land - also not exctiting in a liquidation.