S & U: Why I’m Backing These Moneylenders And Their £103m Family Fortune

03 February 2017
By Maynard Paton

Today I’m reviewing my latest new investment.

The company concerned is S & U (SUS), the shares of which I purchased at an average price of 2,070p (including all costs) during January 2017. The bid price is currently 2,045p and the position now represents between 4% and 5% of my portfolio.

I have to confess that SUS may not be everyone’s idea of a great business. The group was for years best known as a doorstep moneylender, but these days it solely provides hire-purchase finance to buyers of used cars.

A lot could go wrong here. SUS’s customers generally have patchy credit histories, while its loans attract 29% interest and are secured on depreciating assets. A deep recession may well cause substantial problems.

However, some impressive under-writing has delivered an illustrious record of expansion. Notably, bad debts have been controlled carefully — even during the difficult banking-crash years. Recent trading appears upbeat, too, with many potential borrowers actually being turned away.

All told, I’m trusting a family executive team that extols the virtues of “steady, sustainable growth” — and has at least £103m riding on the share price — can ensure the business stays out of trouble and instead continues to prosper and grow.    Continue reading

City Of London Investment: Brexit Creates Best H1 Profit For 7 Years

19 January 2017
By Maynard Paton

Quick update on City of London Investment (CLIG).

Event: Trading update and shareholder presentation for the six months ending 31 December 2016 published 17 January 2017.

Summary: CLIG had already acknowledged it would be a Brexit beneficiary, and this week’s update was the first to give shareholders some actual figures based on the weakened GBP. Even with client money barely moving, this emerging-market fund manager delivered a very welcome 61% profit surge to ensure the near-7% dividend yield remains safe for now. However, the usual downsides remain — not least stagnant funds under management and rising staff costs. I continue to hold.    Continue reading

Softcat: 44 Consecutive Quarters Of Organic Profit Growth

18 January 2017
By Maynard Paton

Today I’m continuing my hunt for Watch List shares with a look at Softcat (SCT).

Here are the initial attractions that prompted this research:

* Illustrious financial progress: The group claims to have recorded 44 consecutive quarters of organic revenue and profit growth

* Owner-aligned boss: The chief executive has been in charge for 10 years and boasts a 7%/£44m stake

* Straightforward accounts: The books showcase net cash, little capex, sound cash generation and no acquisitions

As usual, I’m applying a question-and-answer template to help me pinpoint companies that match the criteria set out in How I Invest. I’m looking for as many Yes answers as possible. Continue reading

Cambria Automobiles: The Boss Owns 40% And The P/E Is 7

11 January 2017
By Maynard Paton

Today I’m continuing my hunt for Watch List shares with a look at Cambria Automobiles (CAMB).

Here are the initial attractions that prompted this research:

* Owner/entrepreneur boss: The company’s founder retains a 40%/£24m stake, has never sold a share, and continues to serve as chief executive

* Respectable financial progress: The accounts exhibit a 10-year history of mostly rising revenue, profit and dividends

* Interesting valuation: The shares have fallen 25% from their high and currently trade on a single-digit P/E

As usual, I’m applying a question-and-answer template to help me pinpoint companies that match the criteria set out in How I Invest. I’m looking for as many Yes answers as possible. Continue reading

Q4 2016: Up 7.6% For The Year

01 January 2017
By Maynard Paton

Happy 2017! I trust you have enjoyed a successful year’s investing and that you continue to find my Blog useful.

I’m currently celebrating my second anniversary as a full-time investor — and I must admit to mixed feelings about how things have turned out so far.

True, I enjoyed a successful 2015 with my portfolio gaining 18%. But 2016 saw my investments collectively languish against a market buoyed by rebounding miners and post-Brexit USD-earners.

I have to confess, watching my portfolio slide 10% during the first six months of 2016 was not a happy experience. Still, a recovery eventually emerged and at least I can enjoy a positive — if hardly spectacular — full-year performance. Continue reading

Year In Review 2016

01 January 2017
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now raring to do battle with the market for another twelve months!

This first Blog post of 2017 provides a ‘year-in-review’ of my current portfolio holdings. I recap how each of the underlying businesses performed during 2016, as well as provide a few remarks about valuation.

As I mentioned this time last year, I find writing such reviews extremely useful — not least because it encourages me to double-check my investment logic to ensure I am still invested for all the right reasons! Continue reading

Electronic Data Processing: 8 Months On And I’m Still Waiting For A Buyer

20 December 2016
By Maynard Paton

Quick update on Electronic Data Processing (EDP).

Event: Preliminary results for the twelve months to 30 September 2016 published 20 December 2016

Summary: What a letdown! I had hoped EDP could announce the conclusion of its strategic review within these results, but no such luck I’m afraid. Instead, shareholders have been left in the dark about possible corporate action as the underlying business puts in another dismal revenue performance. The irony is this company actually develops software for others to improve sales! I can only hope 2017 will see a generous buyer emerge and I can then move on. I continue to hold. Continue reading

Mountview Estates: £83 Per Share NAV Could One Day Be Worth £200 Per Share

24 November 2016
By Maynard Paton

Quick update on Mountview Estates (MTVW).

Event: Interim results for the six months to 30 September 2016 published 24 November 2016

Summary: These were not the bumper results I had become accustomed to from MTVW. The residential-property trader owned up to lower earnings due to rising stamp duty, although the all-important net asset value did march higher as debt was reduced to a new low. My latest sums point to a possible net asset value of £200 per share based on the firm’s previous mark-ups on sold properties. I continue to hold. Continue reading

Daejan: NAV Reaches New £96 Per Share High Despite Brexit

23 November 2016
By Maynard Paton

Quick update on Daejan (DJAN).

Event: Interim results for the six months to 30 September 2016 published 23 November 2016

Summary: These results were better than I had anticipated. Boosted in part by the weaker GBP, the commercial property group declared 6% greater rental income alongside a new all-time high for net asset value. There may be a little question mark with cash generation, but debt is still relatively low while DJAN’s seasoned management should be able to cope with any ongoing sector uncertainty. The shares trade at 59% of net asset value and I continue to hold.  Continue reading

Record: High Margin, High Yield… And High Time New Clients Were Found

21 November 2016
By Maynard Paton

Quick update on Record (REC).

Event: Interim results for the six months to 30 September 2016 published 18 November 2016

Summary: If nothing else, REC’s results are consistent — once again this specialist currency manager revealed stagnant financial progress, a lack of new business and a dependence on a handful of major clients. Nevertheless, the group sports high margins and cash-flush accounts,  while the P/E could be as low as 7 thanks to the weaker GBP. Talk of potential special dividends unfortunately remains talk for now, but at least the ordinary payout yields 5.2%. I continue to hold. Continue reading

Castings: £23m Cash Hoard Can’t Disguise Worst H1 Results For 6 Years

11 November 2016
By Maynard Paton

Quick update on Castings (CGS).

Event: Interim results for the six months to 30 September 2016 published 11 November 2016

Summary: Earlier statements had already signalled lower earnings for 2016/17, and these results were in fact CGS’s worst first-half figures for six years. The engineer still reckons lost work can be replaced, but the immediate outlook remains stagnant at best. The upcoming retirement of the chief executive brings some further uncertainty, too. Still, I don’t think good companies become bad companies overnight and the group’s long track record suggests a recovery will one day arrive. I continue to hold. Continue reading

World Careers Network: Brexit Boost Could Support Cash-Adjusted P/E Of Just 5

09 November 2016
By Maynard Paton

Quick update on World Careers Network (WOR).

Event: Preliminary results for the year to 31 July 2016 published 08 November 2016

Summary: These figures were better than I had expected, not least because WOR enjoyed the benefits of the weaker post-Brexit pound. However, the software developer did warn that costs would continue to rise — which in turn would keep a lid on earnings for the “foreseeable future”. At least revenue is marching higher while the weaker pound ought to help the group’s progress in the States. The accounts remain simple and flush with cash, and you could argue the underlying P/E is just 5. I continue to hold. Continue reading

Getech: H2 Profit Reported But I Am Not Entirely Convinced

08 November 2016
By Maynard Paton

Quick update on Getech (GTC).

Event: Final results for the year to 31 July 2016 published 08 November 2016

Summary: A lot happened at GTC before these results and I am no longer as keen on the group as I once was. That said, the figures from this specialist data supplier to the oil and gas industry were not truly awful — a profitable second half gives hope that one day the business will recover. The asset-rich balance sheet also lends support. But a new boss and various acquisitions just don’t make me entirely comfortable. I continue to hold. Continue reading

Bioventix: £1m Special Dividend Declared As H2 Margin Hits 80%

26 October 2016
By Maynard Paton

Quick update on Bioventix (BVXP).

Event: Preliminary results and shareholder presentation for the year to 30 June 2016 published 17 October 2016

Summary: The antibody developer had already said this statement would reveal bumper results, but the figures were still better than I had expected. Although progress was helped by post-Brexit currency movements, it was clear the underlying business delivered yet another robust performance. The financials remain extremely impressive, with the second-half operating margin hitting an incredible 80%. The icing on the cake was management underpinning its confidence with the declaration of a welcome £1m special dividend. I continue to hold. Continue reading

Tristel: UK Revenue Improvement Confirmed As Management Issues Bold New Projections

21 October 2016
By Maynard Paton

Long update on Tristel (TSTL).

Event: Audited results, annual report and shareholder presentation for the year to 30 June 2016 published 17 October 2016

Summary: July’s upbeat trading statement from this medical disinfectants specialist had already signalled these record results. The finer details revealed UK revenue enjoying a healthy second-half performance and overseas operations progressing consistently well. The financials appear to be in order, too, although cracking the United States is taking a bit more time and money than expected. The executives remain confident and have issued bold new projections, which is all reflected by the elevated share-price rating. I continue to hold. Continue reading

Bioventix: I Could Not Resist Paying Up For Growth

10 October 2016
By Maynard Paton

Today I’m reviewing another of my recent investments.

The company in question is Bioventix (BVXP), which you may recall I revealed as a fresh holding within this third-quarter portfolio update.

I purchased my BVXP shares at an average price of 1,133p (including all costs) during August 2016. The bid price is presently 1,250p and the position currently represents approximately 5% of my portfolio.

I have to admit, BVXP is somewhat racy in comparison to many of my existing holdings. In particular, I may have paid ‘a high price for a cheery consensus’ following the company’s impressive progress.

There are also drawbacks involving a limited customer base and certain product revenue about to cease. The business is not that straightforward either — it develops sheep monoclonal antibodies for use in blood tests.

Nonetheless, supporting the notion that BVXP has above-average investment potential is what seems to be a very respectable competitive position, the benefit of long-term royalty income, some impeccable financials and leadership through the group’s founder.  Continue reading

Q3 2016: 1 Buy, 1 Sell, 1 Top-Up, 1 Top-Slice… Plus A 77% Success Rate

30 September 2016
By Maynard Paton

Happy Friday! I hope you continue to find my Blog useful… and that your portfolio has recovered following the Brexit turmoil!

I wrote in my last portfolio update that 2016 was fast becoming a somewhat grim year for me. I was down 5% at the end of March and then 10% down at the end of June…

…but the ‘Brexit bounce’ has since brought me back to break-even. That’s hardly a fantastic performance given what the wider market has achieved, but it’s a much better position than just three months ago.

Anyway, during the third quarter I bought a new share, topped-up an existing holding, top-sliced another existing position, and sold out completely of a further existing position.

Furthermore, I’ve spent some time evaluating my longer-term record of stock-picking… just to make sure that I have actually done reasonably well at this investing lark! Continue reading

Andrews Sykes: The Question Now About This 6.9% Yielder

29 September 2016
By Maynard Paton

Quick update on Andrews Sykes (ASY).

Event: Interim results for the six months to 30 June 2016 published 29 September 2016

Summary: A very satisfactory set of figures, with the likelihood now that ASY is on course to report its best year since 2008. The group, which supplies air conditioners, heaters and pumps for hire, said all of its divisions made progress and that recent trading had been “positive”. The question now is whether ASY can deliver sustained earnings growth alongside its chunky dividend payments and 6.9% yield. I continue to hold. Continue reading

FW Thorpe: Record Results Once Again As Dutch Division Shoots The Lights Out 

23 September 2016
By Maynard Paton

Quick update on FW Thorpe (TFW).

Event: Preliminary results for the year to 30 June 2016 published 22 September 2016

Summary: A very satisfactory set of record figures from this lighting specialist, underpinned by last year’s Dutch acquisition that appears to have delivered 75% annualised profit growth. TFW’s other two divisions reported positive progress, too, while the balance sheet remains awash with surplus cash and investments. Although the near-term valuation appears rich, the group’s decent financials, illustrious dividend and veteran board remain very captivating. I continue to hold. Continue reading

French Connection: I Have Finally Given Up On This Turnaround

20 September 2016
By Maynard Paton

Quick update on French Connection (FCCN).

Event: Interim results for the six months to 31 July 2016 published 20 September 2016

Summary: It’s taken me five years to realise that I have wasted my time with FCCN’s purported turnaround. The fashion chain’s latest results were very mixed, and I feel cash may now become tight if there is more bad news. I have belatedly concluded the problem Retail division could well lose money for some years ahead, while an activist investor may not be doing enough to instigate the necessary board changes. I have sold my entire holding. Continue reading