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!
This is how my portfolio has changed since the start of the year
I publish updates every quarter to round-up what’s been happening within my portfolio, and this Blog post recaps my July/August/September activity. You can read all of my previous round-ups here.
The table below shows how my portfolio has changed during this year:
01 Jan 2016 (%)
31 Mar 2016 (%)
30 Jun 2016 (%)
30 Sep 2016 (%)
|City of London Inv||6.8||6.6||6.9||7.8|
|Electronic Data Proc||2.8||3.0||3.3||3.0|
|World Careers Network||2.0||4.0||3.6||3.8|
Antibodies, estate agents, restaurants and fashion
I performed one new purchase, one top-up, one top-slice and one complete sell during the third quarter.
The new purchase is Bioventix (BVXP).
I noted the attractions of this £60m antibody specialist last year, when a mix of an appealing track record, a decent competitive position, impressive financials plus an owner-friendly boss put the business firmly on my watch list.
I must admit to feeling late to the party on this one — the shares were 850p when I first looked at them and yet here I am buying not so long ago at 1,133p including all costs. A decent trading update last month — alongside a growing realisation by me that paying up to buy quality can still produce sizeable gains — prompted this investment.
I’ll write more about BVXP at some point during the next few months.
Next up is M Winkworth (WINK)… in which I have topped-up once again in the face of a weak share price and reports of a slowing property market.
I remain keen on this London estate-agency business. I dare say higher stamp duty and Brexit will see near-term earnings decline, but surely all that must be factored into the share price when the trailing cash-adjusted P/E is 7. I bought more at an an average of 111p including all costs. Purchases were made both before and after WINK’s recent interims.
My top-slice involved Tasty (TAST).
During the summer I had become a little nervous about this fast-growing restaurant chain, as its roll-out plan appeared slightly behind schedule and revenue had suffered a “blip” during the second half of last year.
Results this month were mixed, with sales looking better but with costs becoming larger and the roll-out not accelerating.
Given TAST’s shares were rated highly on near-term earnings and represented my largest portfolio position, I decided to sell part of my holding at an average price of 179p including all costs. My disposals were made both before and after the latest figures.
I sold out of French Connection (FCCN) completely the other week.
Sadly I have given up with the struggling fashion chain and its attempts to turn itself around. Recent results showed further surprise setbacks and the net cash position falling to somewhat worrying levels. I just could not take the risk of any future mishaps causing further deep losses and perhaps creating some balance-sheet problems.
I exited FCCN at 40p a share including all costs.
Among my other holdings, I did not make any trades during the quarter.
I hope my 10% cash balance can one day be reinvested
As usual I have kept tabs on all of my existing holdings — trying to seek out bargain buys just in case.
Here is a summary of all the developments:
* Acceptable figures from City of London Investment;
* Mixed progress at Tasty;
* Unacceptable results from French Connection;
* Nothing of significance from Castings, Electronic Data Processing, Getech, Mountview Estates, Record and World Careers Network.
I am still keen on tightening up my portfolio. I own 16 shares right now and I hope my 10% cash balance can one day be reinvested into some of my smaller positions when they offer decent value.
I analysed all of my investments and calculated a 77% success rate
During the summer I decided to study my longer-term record of stock-picking.
I just wanted to double-check whether my investment strategy needed refining. I found this exercise very useful, not least because recalling my past disasters has motivated me to keep future losers to a minimum!
I kept this study quite simple. All I did was revisit every different share I’d bought since 2004 and calculated the subsequent gain or loss. The study starts from 2004 because I no longer have accurate buying records prior to that year. The company names in bold below are the ones I still hold.
|Share||Amount Invested*||Current/Disposal Value**||Gain/loss (%)|
|London Stock Exchange||20.5||81.2||297.0|
|Assoc British Ports||12.4||27.0||117.4|
|Elec Data Processing||15.7||25.6||63.3|
|City of London Inv||65.3||99.2||51.8|
|Robert Wiseman Dairies||5.7||7.4||28.2|
|3 Legs Resources||31.5||26.2||(17.0)|
|World Careers Network||43.2||24.9||(42.4)|
* Reflects the initial amount invested plus any subsequent top-up amounts.
** Reflects the holding’s current portfolio value plus any distributed dividends plus the proceeds from any disposals.
I have rebased the Amount Invested and Current/Disposal Value figures — 100 is the largest sum I have invested (since 2004) in one single share, and the other numbers in those two columns are shown relative to that.
As you can see from the table, I have bought 31 different shares since 2004 and eventually made money on 24 of them — a 77% success rate.
Among my seven losers are Bioventix, which is a recent investment and the loss simply reflects a hefty bid-offer spread.
Of the other six, four were total failures — where I sold out entirely for a loss.
Mind you, two of those failures — Instore and London Capital — were relatively small investments, so their eventual losses were quite manageable.
That just leaves Getech and World Careers Network. I am still holding these two companies as I am convinced their respective share prices can recover — and I reckon holding tight (and/or averaging down) may one day recoup those losses.
Naturally I’m hoping Bioventix, Getech and World Careers Network can eventually come good and improve my success rate to 27 out of 31 — or 87%!
Anyway, I am quite encouraged with the results of this simple study and I don’t feel my strategy requires an emergency overhaul just yet. But looking back, I must admit to being a bit lucky by escaping with gains on some of my lower quality ‘value investments’.
All I must do now is try to keep my future losers to a minimum!
Until next time, I wish you happy and profitable investing.
Disclosure: Maynard owns shares in Andrews Sykes, Bioventix, BrainJuicer, Castings, City of London Investment, Daejan, Electronic Data Processing, Getech, Mincon, Mountview Estates, Record, Tasty, FW Thorpe, Tristel, M Winkworth and World Careers Network.