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Sunday share tips: Games Workshop, OSB Group

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The Sunday Times’s Robert Watts sounded the retreat for investors in shares of Games Workshop, the maker of table-top figurines for The Lord of the Rings, Warhammer and other fantasy settings.

In particular, he took issue with the company’s decision to clamp down on fans who were creating animations using its intellectual property, which had sparked calls among its user community for a boycott of the firm.

The tipster was also dismayed by the company’s unwillingness to engage with the financial press.

“Put this all together and there are grounds to think that this is a management starting to believe its own hype,” he added.

Analysts at Jefferies had also taken note of the significantly “negative community feedback”.

Over at Peel Hunt meanwhile, analysts were anticipating that the company’s margins would be lower this year than last, on account of exchange rates, higher distribution costs and ongoing investment.

“Sales are still in good shape, but after a great run, the shares are already down more than 20 per cent since a trading update in September. Time to bank those gains. Sell.”

The Financial Mail on Sunday’s Midas column recommended readers ‘buy’ shares of OSB Group, the holding company for savings and specialist lender One Savings Bank.

The lender’s stock has done well, soaring from 170.0p when it listed in 2014 to 501.0p.

Its chief executive officer’s mantra was ‘keep banking simple’.

That translated into three key principles: most of its long-term funding came from retail savers, lending was secured against solid property portfolios and service was paramount, Midas explained.

The group served its clients through several distinct businesses which had been designed to appeal to slightly different customers.

Charter Savings Bank, for instance, targeted digital-savvy savers, whereas Kent Reliance had its own branch network.

OSB also enjoyed lower costs, thanks to its subsidiary in Bangalore, which it owned outright, allowing it to ensure high quality back office and call centre services.

Midas also called attention to analysts’ forecasts for a 60% leap in OSB’s full-year earnings and a rebound in its dividend payments from 14.5p per share to at least 21.0p.

Share buybacks and special dividends next year were a possibility too, the tipster said.

“There is even a chance of bid activity as small UK banks seem to be attracting plenty of attention these days.”

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