Q1 2025: Finding Ammunition For My Elephant Gun

02 April 2025
By Maynard Paton

Happy Wednesday! I trust your shares have performed better than mine since the start of the year. 

A summary of my portfolio’s first quarter:

  • Q1 return: -6.5%*
  • Q1 trades: 1 Top-up (Bioventix at £30) and 1 Sell (Tristel at 352p).

(*Performance calculated using quoted bid prices and includes all dealing costs, withholding taxes, broker-account fees, paid dividends and cash interest)

I will do well to catch up with the FTSE 100 during 2025. The blue-chip index has powered 6% higher during this Q1, outperforming every one of my holdings. Indeed, seven of my shares declined despite the rising market.

Newsflow from my holdings has been mostly unremarkable, as demonstrated by the modest dividend improvements or unchanged payouts at Bioventix, City of London Investment, Mincon, FW Thorpe and M Winkworth. S & U has meanwhile continued to trim its dividend following adverse regulatory matters. 

The subdued progress has left most of my holdings trading at prices first seen during 2017 or before, with their ratings the lowest for years. I am not short of top-up ideas.

Picking winners has certainly become harder. A quick check on ShareScope reveals only 191 of the 552 FTSE All-Share constituents — 35% — delivered share-price gains during this Q1. Over the last three years, the proportion is a woeful 33%.

You may not be surprised to learn that picking AIM winners has been even harder. During the last three years, just 20% of AIM-traded shares have moved higher. 

Nonetheless, buyers remain out there for the right opportunities. I wrote about Filtronic recently, mostly to remind myself that multi-baggers do still exist!

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S & U: Court of Appeal Ruling Overshadows 40% H1 2025 Profit Slump As £14 Shares At 0.73x NAV Imply Up To £63m Potential ‘Secret’-Commission Compensation Liability

29 March 2025
By Maynard Paton

H1 2025 results summary for S & U (SUS):

  • Yet more figures blighted by ongoing regulatory matters, with H1 profit slumping 40% and the dividend cut once again after “voluntary” motor-finance restrictions led to loan impairments surging 162%.
  • The H1 performance was overshadowed by the Court of Appeal deeming the FCA’s disclosure rules on car-loan commissions to be unlawful. The Supreme Court will hear the cases next week and the “definitive pronouncement” declared thereafter.
  • Given the £14 shares trade at 0.73x NAV — a rating last seen at the banking-crash lows — investors have seemingly decided SUS could be liable to repay ‘secret’ commissions of up to £63m… although the “appropriate compensation” could arguably be minimal.
  • Debt headroom of £88m, a shift towards “lower-risk” motor-finance customers alongside “sparkling” progress at the (unregulated) property-loan division (H1 profit up 42%!) may help SUS muddle through any “industry-wide redress scheme“. 
  • Then again, post-H1 updates did not bode well following another dividend cut and the motor-finance division curtailing lending by 33% and suffering a further 50% profit reduction. I continue to hold. 

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[ShareScope] Small-Cap Spotlight Report: FILTRONIC

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22 March 2025
By Maynard Paton

“London Stock Exchange boss warns AIM is under threat of collapse“

“London AIM market should be axed for failing to win tech floats, say think-tanks“

“Why AIM is in danger of becoming a self-fulfilling doom loop“

Despite all the gloomy headlines, AIM can still deliver amazing returns for investors prepared to unearth revitalised companies the crowd has dismissed.

The shares of Filtronic in particular have defied the junior market’s negative press, recently topping 100p to deliver a ten-bagger for anyone lucky enough to purchase at just 10p only three years ago:

(Source: ShareScope)

But just how did this specialist developer of communications equipment manage to deliver such wonderful gains?

And could any of us have spotted this AIM multi-bagger opportunity beforehand?

Let’s take a closer look.

Read my full FILTRONIC article for ShareScope >>

Maynard Paton

BIOVENTIX: £155k R&D Revenue And Commencement Of ‘Large-Scale Production’ Signal Increasing Alzheimer’s Success After Troponin Error Creates Below-Expectations FY 2024 And Leaves Dividend Yield Exceeding 5%

04 March 2025
By Maynard Paton

FY 2024 results summary for Bioventix (BVXP):

  • A record FY, showing revenue up 6% and profit up 5%, although the 3p per share reduction to the H2 dividend illustrated a below-expectations performance following an unfortunate troponin-royalty error.
  • Sales progress was very mixed, with best-seller vitamin D up just 1%, the now “mature” troponin up only 3%, the once-popular testosterone down 29%, 30-year-old T3 up 21% and general Chinese royalties becoming “more significant“.
  • R&D revenue of £155k, the commencement of “large-scale production“, promising snippets from scientific papers alongside ongoing Quanterix promotion suggest BVXP’s Alzheimer’s work has increasing potential to become a substantial commercial success.
  • The wonderful economics of the antibody portfolio continue, as this FY displayed a majestic 78% operating margin, a super £800k revenue per employee, net cash equivalent to a hefty 44% of revenue and capex of just £16k.
  • The £30 shares currently trade at their lowest P/E since 2016, offer a 5%-plus yield for the very first time and might value the Alzheimer’s R&D at a very pessimistic zero. I continue to hold.

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[ShareScope] Screening For My Next Long-Term Winner: BIG TECHNOLOGIES

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22 February 2025
By Maynard Paton

“It’s Probably Overpriced“

IPOs have suffered badly during the last few years.

Buoyant markets encouraged lots of companies to go public at optimistic valuations…

…only for economic conditions to turn and valuations to quickly deflate.

ShareScope lists 225 shares that joined the stock market since the start of 2020, of which 168 (75%) currently trade below their flotation price — including 66 that have lost 80% or more of their value.

But could the flotation carnage now be hiding good buying opportunities?

I have devised a new ShareScope screen to search among the IPO rubble, seeking companies that have:

  • Floated since the start of 2020;
  • A market cap of more than £50 million;
  • Net cash (i.e. net borrowings excluding IFRS 16 finance leases of less than zero);
  • A positive operating margin (i.e. are profitable);
  • Director holdings of 10% or more, and;
  • A GBP-denominated share price.
(Source: ShareScope)

ShareScope returned 11 matches, and I selected BIG Technologies because of its remarkable 51% operating margin and hefty 49% post-IPO share-price dive.

Let’s take a closer look.

Read my full BIG TECHNOLOGIES article for ShareScope >>

Maynard Paton

FW THORPE: FY 2024 Declares 22nd Consecutive Annual Dividend Increase After ‘Impressive’ Stock Procurement Improves Gross Margin To 49% While Subdued Outlook And Modest LTIP Targets Leave P/E At Lowest For 10 Years

18 February 2025
By Maynard Paton

FY 2024 results summary for FW Thorpe (TFW):

  • A 1% revenue decline was countered by a 9% profit advance, with H2 profit improving a remarkable 17% to help raise the ordinary dividend 5% and extend the run of annual payout advances to 22 years.
  • TFW’s gross margin improving to 49% through “impressive” stock procurement led to some welcome operating margins, including 20% for Thorlux, 23% for Lightronics/Famostar and 19% for Zemper’s H2, although profitability at the group’s Other subsidiaries remains poor.
  • Very satisfactory cash flow supported cash finishing £18m higher at £53m, which triggered the third special dividend in four years and almost certainly enhances the likelihood of further acquisition activity.  
  • The slimmed-down board with its M&A expertise may wish to consider the success of acquisition specialist Halma, which assesses its ‘capital allocation’ through return on total invested capital and includes the KPI as an LTIP measure.
  • The 15x P/E is the lowest rating for ten years, and seems more influenced by TFW’s subdued near-term prospects and modest LTIP targets rather than the group’s distinguished operating history and longer-term demand for energy-saving lighting. I continue to hold.

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CITY OF LONDON INVESTMENT: Subdued FY 2024 Admits $320m FuM Outflow, 5-7% Client CAGRs And KPI Failure To Reinforce ‘Value Trap’ Credentials With Barely Covered Dividend Yielding 9%

29 January 2025
By Maynard Paton

FY 2024 results summary for City of London Investment (CLIG):

  • Another very subdued performance, showing revenue up 1%, profit down 1% and the annual dividend unchanged for the third consecutive FY after client withdrawals of $320m left average funds under management (FuM) just 3% higher.
  • “Constructive meetings” continue with 31.5% shareholder George Karpus, who now carries “high hopes and high expectations” for CLIG — despite the group failing to achieve its sole KPI after client-fee rates dropped 3bps while salaries climbed an average 6%.
  • Long-term client CAGRs of just 5-7% may reflect the inherent limitations of CLIG “exploiting the discount volatility” of UK investment trusts, and raises awkward comparisons to cash/bonds, the S&P 500 and sector activist Saba Capital.
  • While new clients remain elusive, plans to reduce expenses by $2.5m — albeit mostly through non-staff costs — alongside a stronger USD should help sustain this FY’s barely covered GBP dividend.
  • The subsequent H1 2025 witnessing further client withdrawals of $564m reinforces CLIG’s ‘value trap’ credentials, underlined by a share price that is back to 2007 levels and currently paying a 9% yield. I continue to hold.

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[ShareScope] Small-Cap Spotlight Report: PINEWOOD TECHNOLOGIES

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25 January 2025
By Maynard Paton

Investment ideas can emerge from the unlikeliest of sources.

I booked my car for a service the other month and the confirmation email was sent by Pinewood DMS:

DMS stands for ‘dealer management software’ and Pinewood Technologies is one of two dominant suppliers of such systems within the UK.

A DMS allows car dealers to handle all aspects of their business — such as vehicle sales, customer enquiries, workshop appointments, parts ordering, accounts processing and marketing campaigns — within a single IT package.

Pinewood was part of car dealer Pendragon for 25 years, but for the last twelve months has operated independently and now describes itself as a “pure-play SAAS business with an accelerated growth plan“.

The growth plan centres upon sophisticated IT displacing outdated competitor systems — with US dealers in particular a lucrative target.

High levels of recurring revenue earned through a ‘scalable platform’ — alongside the prospect of bumper contract wins — have meanwhile led to very attractive profit guidance.

Let’s take a closer look.

Read my full PINEWOOD TECHNOLOGIES article for ShareScope >>

Maynard Paton

Q4 2024: Up 22.4% For 2024

03 January 2025
By Maynard Paton

Happy 2025! I hope your shares prospered last year and you continue to find my blog useful.

A summary of my portfolio’s 2024:

  • Total return of +22.4%*;
  • Individual returns ranged from up 120% for System1 to down 28% for Mincon;
  • Three shares were topped-up: City of London Investment, Mountview Estates and S & U;
  • No shares were top-sliced or sold entirely, and;
  • No new shares were purchased.

(*Performance calculated using quoted bid prices and includes all dealing costs, withholding taxes, broker-account fees, paid dividends and cash interest)

I publish a portfolio review after every quarter (Q1, Q2 and Q3), and this post recaps my October/November/December activity as well as my 2024 performance.

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My Portfolio: Year In Review 2024

03 January 2025
By Maynard Paton

Happy New Year!

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

This post provides a ‘year in review’ of my current holdings. I recap how each business performed during 2024 as well as provide a few remarks about their attractions, drawbacks and valuations.

These reviews are very useful to write, not least because they help ensure I am still invested for the right reasons. I also hope the reviews help me avoid disappointing returns during the year ahead! I undertook the same review process at the start of 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023 and 2024.

My portfolio gained 22.4% during 2024 and this other post explains that performance in more detail.

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TRISTEL: Record FY 2024 Discloses Impressive 32% UK Growth As Sudden US ‘Purchasing Bureaucracy’ Explains Leadership Change, Boilerplate LTIP Seeks Only 5.5% EPS CAGR And P/E Drops To Lowest Since 2018

23 December 2024
By Maynard Paton

FY 2024 results summary for Tristel (TSTL):

  • A record FY, showcasing revenue up 16%, profit up 32% and the dividend up 29%, with impressive 32% UK growth based upon 9% greater volumes and 23% higher pricing through a new NHS agreement.
  • The retirement of the previous chief executive now makes sense after “purchasing bureaucracy” suddenly beset North American progress, which left TSTL alarmingly “a year behind” schedule after US partner Parker Laboratories proved ineffective with sales.
  • The new chief executive has still to publish his financial targets, although the board has already re-committed to 5%-plus annual dividend growth while a new ‘boilerplate’ LTIP depressingly seeks only a 5.5% adjusted EPS CAGR to vest.  
  • The high-margin, cash-rich, low-tax accounts generally remain in good shape, but are let down by regular restatements alongside stagnant employee productivity that may be due to a 25% margin target limiting additional investment.
  • The trailing 25x PE is the lowest since 2018 and could be justified by further meaningful growth within established markets, the prospect one day of lucrative US royalties, the ongoing ability to raise prices and the possibility of bumper surface-disinfection sales. I continue to hold.

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[ShareScope] Screening For My Next Long-Term Winner: TATTON ASSET MANAGEMENT

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14 December 2024
By Maynard Paton

Today I have revisited a ShareScope screen that applies two ratios favoured by ‘quality’ investors — operating margin and return on equity (ROE).

The exact criteria I re-used were:

  • An operating margin (latest and 10-year average) of 20% or more, and;
  • An ROE (latest and 10-year average) of 20% or more.

Any business with a margin and ROE of at least 20% is probably quite special.

To narrow the field down further, I also sought companies that carried net cash (i.e. net borrowings excluding IFRS 16 finance leases of less than zero):

(Source: ShareScope)

This time the filter returned 17 matches, including Rightmove, Games Workshop, Cerillion, Property Franchise and six other shares I have studied for ShareScope.

I selected Tatton Asset Management because its impressive 40%-plus margin was the highest among the remaining seven names.

Let’s take a closer look.

Read my full TATTON ASSET MANAGEMENT article for ShareScope >>

SYSTEM1: New ‘Performance Culture’ Delivers FY 2024 Platform Revenue Up 43%, Record £208k Employee Productivity And Tantalising Illustrative £18m Ebitda Projection Supporting Possible £16 Share Price

30 November 2024
By Maynard Paton

FY 2024 results summary for System1 (SYS1):

  • The positive transition to data services continues, with a new “performance culture” delivering FY platform revenue up 43%, the highest reported FY profit for seven years and a reinstated annual dividend.
  • SYS1’s “unique selling proposition of predictiveness” keeps winning ad-testing clients, plaudits and attention, but remains frustratingly under-exploited for innovation testing that offers a 5x addressable market.
  • The bumper 87% gross margin, record £208k revenue per employee and near-£10m cash position were counterbalanced by one-off profit gains, mediocre bank interest and hefty bonuses obscuring margin progress.
  • The board’s true growth ambitions will be revealed through a revised LTIP, and I would trust the award-winning directors to retain the scheme’s £45m-£88m revenue range and reinstate a profit ‘underpin’.
  • A tantalising illustrative projection of revenue doubling to £60m should be very achievable given SYS1’s “3 Reasons to Believe“, and would support an adjusted Ebitda of £18m — and possible £16 share price — if the group’s margin target is met.

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[SharePad] Screening For My Next Long-Term Winner: WYNNSTAY

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08 November 2024
By Maynard Paton

I am back again looking for ‘value bargains’ and revisiting a screen that identifies companies trading at less than book value.

Importantly, this screen attempts to avoid ‘value traps’ by demanding the shares offer net cash, dividend payments and a history of trading above book value.

The exact filter criteria I redeployed were:

  • A price to net tangible assets of no more than 1;
  • A dividend being paid during the most recent year;
  • A 10-year average price to net tangible assets of at least 1;
  • Net borrowings less total leases of no more than 0 (i.e. a net cash position excluding IFRS 16 lease obligations), and;
  • A share price denominated in pounds sterling.

This time SharePad returned 13 companies:

(Source: SharePad)

I selected Wynnstay because the shares were priced at a steep discount versus their ten-year average valuation. I also liked the reassuring 20-year run of dividend payments.

Sure enough, Wynnstay’s 318p shares trade nearly 40% below the group’s 503p per share net tangible asset value:

(Source: SharePad)

My filter results indicate the shares have traded at an average 1.2x book value during the last ten years. The rating reached 2.3x during 2013, sank to 0.5x during the pandemic and languishes now at a lowly 0.6x.

Wynnstay’s net tangible assets have advanced over time, and so has the dividend. The payout has in fact been lifted every year since the group joined AIM during 2004 at 190p:

(Source: SharePad)

Given the illustrious dividend, Wynnstay does not seem the type of business that should be valued well below asset value. Yet the shares have effectively moved sideways for years; the recent 318p price was first achieved during 2011 and today supports a £73m market cap.

Let’s take a closer look.

Read my full WYNNSTAY article for SharePad >>

Maynard Paton

MOUNTVIEW ESTATES: £90 Shares Trade 12% Below NAV — Steepest Discount For More Than 10 Years — After FY 2024 Admits Third Consecutive Sub-60% Gross Margin And Re-Emphasises Subpar Gains From Post-2014 Purchases

02 November 2024
By Maynard Paton

FY 2024 results summary for Mountview Estates (MTVW):

  • A reasonable FY performance, which showed revenue up 8%, profit up 22% and the final dividend up 10% after buyers looking for “improvement potential” paid “good prices” for a more normal “profile” of properties.
  • Sales by larger landlords allowed MTVW to spend a substantial £48m on new properties, but the advance to net asset value (NAV) was just 2% after MTVW took on greater debt, paid 6%-plus interest, incurred higher tax and sold properties for £59m.
  • The absence of another formal estate valuation remains frustrating, especially given properties purchased after a 2014 valuation continue to realise subpar ‘reversionary’ gains and the overall property-sales gross margin was less than 60% for the third consecutive year.
  • The board continues to be well paid, attract 30%-plus protest votes and enjoy entrenched support through a family concert party… although not every family member seems a die-hard shareholder and recent AGM remarks even hinted MTVW could one day undertake a trade sale.
  • The £90 shares offer a 5.8% income, trade 12% below NAV — the steepest discount for at least ten years — and may be worth £182 if the group’s properties were all sold today at their vacant possession value. I continue to hold.

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