Q4 2017: 2 Top-Ups And Up 10.5% For 2017

01 January 2018
By Maynard Paton

Happy 2018! I trust you have enjoyed a successful year’s investing and that you continue to find my Blog useful.

I’m currently celebrating my third anniversary as a full-time investor — and I am reasonably satisfied with how things have turned out so far.

Indeed, with no income other than my capital gains and dividends, I am pleased my portfolio has recorded a positive performance during each of the last three years.

However, the three years have not been all plain sailing. In particular, I did wonder whether foregoing an annual salary was such a bright idea during the mid-2016 Brexit lows. Still, a recovery eventually emerged that has continued throughout 2017.

All that said, I’m disappointed to have under-performed the market for the second consecutive year. Unfortunately for me, a decent collection of 2017 portfolio winners was counterbalanced by one big loser.

Let me explain what happened.

How my portfolio changed during the year

You probably already know from my previous updates (Q1, Q2 and Q3) that I publish a portfolio review after every quarter. So here is a quick recap of my October/November/December activity.

The table below shows how my portfolio stood at the start of the year, as well as at the end of March, June, September and December:

HoldingWeighting
31 Dec 2016 (%)
Weighting
31 Mar 2017 (%)
Weighting
30 Jun 2017 (%)
Weighting
30 Sep 2017 (%)
Weighting
31 Dec 2017 (%)
Andrews Sykes3.43.34.24.23.9
Bioventix5.36.66.99.58.8
Castings6.77.16.76.56.4
City of London Inv6.56.77.17.07.0
Daejan7.17.06.65.96.3
Electronic Data Proc2.8----
Getech3.83.42.92.42.9
Mincon3.33.84.04.24.3
Mountview Estates8.98.38.58.28.1
Record5.76.96.46.96.2
S & U-4.34.13.94.4
System12.63.53.62.11.5
Tasty7.63.72.66.36.1
FW Thorpe9.18.810.28.99.1
Tristel8.09.98.99.19.0
M Winkworth5.65.45.75.75.9
World Careers Network4.44.14.13.94.4
Cash9.27.27.55.35.7
TOTAL100.0100.0100.0100.0100.0

I bought more Tasty and Getech

I made two top-ups during Q4.

I increased my Tasty holding by 9% at 32p including all costs. There has been no recent news from the hapless restaurant chain, but I thought the low-profile introduction of a new dining brand was quite promising.

I increased my Getech holding by 31% at 25p including all costs. The geoscience software business issued its annual results during October, and I liked what I heard at a company presentation.

As usual I have kept an eye on all of my existing holdings during the quarter — trying to spot buying opportunities just in case.

Here is a summary of the Q4 developments:

* Satisfactory progress reported at Bioventix, Daejan and Mountview Estates;

* Acceptable updates from Castings, FW ThorpeRecord, S & U and Tristel;

* Mixed news from System1 and World Careers Network;

* Promising recovery developments at Getech;

* Nothing from Andrews Sykes, City of London InvestmentM Winkworth, Mincon and Tasty.

I have written a full review of all the shares I held during 2017 — simply click here for the complete run-down.

That brings me on to my 2017 performance

I always like to study my portfolio’s performance at the start of every year.

It’s just that I’m keen to discover where all my gains (and losses!) occurred during the previous twelve months, and to see whether my portfolio decisions were consistently good, bad or indifferent.

Here are my performance ground-rules:

* My year-end portfolio weightings and returns are calculated using quoted bid prices;

* All dealing costs, withholding taxes, broker-management charges and paid dividends are included;

* My benchmark is the FTSE 100 Total Return Index (that is, the FTSE 100 index with dividends reinvested, as published by FTSE.com)

Here is a summary of my portfolio’s performance for 2012, 2013, 2014, 2015, 2016 and 2017:

YearMy PortfolioFTSE 100 TRI
201246.1%10.0%
201329.1%18.7%
201416.0%0.7%
201518.3%(1.3%)
20167.6%19.1%
201710.5%11.9%
Compound return207.9%72.9%

I have to say that I’m disappointed to have under-performed the market for the second consecutive year. As you will see in a minute, a decent collection of 2017 portfolio winners was counterbalanced by one big loser.

This table contains all the stats

Below is another table that lists every share I owned during 2017. Alongside each holding is my portfolio’s weighting at the start and end of 2017.

This table also shows the total return (that is, the capital gain/loss plus dividends received) each holding produced for me during the year. Each holding’s contribution towards my overall 10.5% gain is disclosed, too:

HoldingWeighting
01 Jan 2017 (%)
Weighting
31 Dec 2017 (%)
Holding
Return (%)
Portfolio
Return (%)
Andrews Sykes3.43.933.01.1
Bioventix5.38.893.54.9
Castings6.76.410.60.7
City of London Inv6.57.028.61.8
Daejan7.16.31.00.1
Electronic Data Proc2.8-(0.9)(0.0)
Getech3.82.9(29.3)(1.4)
Mincon3.34.347.41.6
Mountview Estates8.98.14.80.4
Record5.76.233.11.9
S & U-4.412.10.6
System12.61.5(28.0)(0.6)
Tasty7.66.1(55.9)(8.6)
FW Thorpe9.19.114.31.3
Tristel8.09.069.55.5
M Winkworth5.65.911.30.7
World Careers Network4.44.416.30.7
Cash9.25.7--
TOTAL100.0100.010.5

I hope the above table makes sense.

Just to confirm, during 2017:

* I bought one new holding (S & U at 2,070p);

* I sold one holding entirely (Electronic Data Processing at 67p);

* I trimmed one holding (Tristel at 289p);

* I topped up three holdings (Getech at 25p, M Winkworth at 104p and Tasty at 45p), and;

I left eleven holdings untouched (Andrews Sykes, Bioventix, Castings, City of London Investment, Daejan, Mincon, Mountview EstatesRecord, System1, FW Thorpe and World Careers Network).

Here are a few thoughts on my 2017 stats:

* 13 of the 17 shares I held during the year recorded positive returns (at least for me).

That performance continued my remarkably consistent run of winners versus losers — during 2014 I enjoyed 12 winners from 17, during 2015 it was 13 from 18 and during 2016 it was 12 from 17 again.

* Of my 13 winners during 2017, 11 produced double-digit returns.

Sadly, only two shares gave me substantial (50%-plus) gains. I note my two single-digit winners — Daejan and Mountview Estates — operate in the property sector.

* My under-performance during 2017 can be blamed entirely on one investment — Tasty.

My fourth-largest position at the start of 2017, the shares of the restaurant chain lost more than 70% of their value during the year.

I bought more Tasty shares during 2017, which needless to say are currently showing losses. Without Tasty, my total portfolio return would have been 19%.

* My two biggest winners of 2017 — Bioventix and Tristel — were decent sized positions (5% and 8% respectively) at the start of the year.

Had the rest of my portfolio sat in cash throughout 2017, the combined performances of Bioventix and Tristel would have still given me a 10.4% portfolio return.

* The ups and downs of 2017 have not really altered the concentration of my portfolio.

My top five holdings currently represent 42% of my portfolio (2016: 41%) while my bottom five represent 17% (2016: 16%).

* 11 of my 17 holdings generated total portfolio returns of between zero and +2%.

Not exactly thrilling I know, but this army of smaller performances all added 10.8% to my overall portfolio return and counterbalanced the Tasty mauling.

Here are some other stats you may find interesting

* Portfolio turnover: I still can’t remember how to calculate this ratio properly. But for what it is worth, during 2017 I: i) sold shares equivalent to 6%, and; ii) bought shares equivalent to 14% of my portfolio’s year-start value.

* Dividends collected: Company payouts represented a useful 3.43% of my portfolio’s year-start value. That income included three special dividends (from Bioventix, Record and System1).

* Trading costs: Dealing commissions, stamp duty and account-management fees represented an aggregate 0.10% of my portfolio’s year-start value.

I am 94.3% invested in shares going into 2018

So here we go into 2018, with my current investments confirmed below:

HoldingWeighting
31 Dec 2017 (%)
Andrews Sykes3.9
Bioventix8.8
Castings6.4
City of London Inv7.0
Daejan6.3
Getech2.9
Mincon4.3
Mountview Estates8.1
Record6.2
S & U4.4
System11.5
Tasty6.1
FW Thorpe9.1
Tristel9.0
M Winkworth5.9
World Careers Network4.4
Cash5.7
TOTAL100.0

As usual, I have no idea what the market will do in the next twelve months. All I can say is that the FTSE 100 index and FTSE 100 Total Return index start 2017 at 7,688 and 6,520 respectively.

So… can I return to outperforming the market?

Certainly there seems to be more potential buying opportunities within my portfolio right now than there has been for some years.

In particular, I would like to think my main 2017 losers — Getech, System1 and Tasty — can recover some lost ground during the next twelve months. Daejan, Mountview Estates, S & U and M Winkworth offer attractions, too.

All in all, I will be content if once again the majority of my shares put in positive performances. I have my fingers crossed!

If you want to read more about my portfolio’s 2017 holdings, please click here.

Until next time, I wish you happy and profitable investing!

Maynard Paton

PS: You can now receive my Blog posts through an occasional e-mail newsletter. Click here for details.

Disclosure: Maynard owns shares in Andrews Sykes, Bioventix, Castings, City of London Investment, Daejan, Getech, Mincon, Mountview Estates, Record, Tasty, FW Thorpe, S&U, System1, Tristel, M Winkworth and World Careers Network.

8 thoughts on “Q4 2017: 2 Top-Ups And Up 10.5% For 2017

    1. Maynard Paton Post author

      Hello S&U

      Thanks for the link — Google can helpfully translate the article.

      A few weeks after the launch, System1 could report increased traffic on its website by 15 percent. Lead inflow had risen by almost 90 percent.

      Yes, it is a bit funny SYS1’s sales started to wobble after the implementation, but I have my fingers crossed the slowdown is temporary. It is worth remembering that one half of the business is still doing well.

      Maynard

      Reply
  1. Es

    Great post again. It is a big call averaging down on your biggest loser. If you did not already own it, do you think you would have bought more?

    Reply
    1. Maynard Paton Post author

      Hello Es

      Difficult to say. If I did not already own TAST, I may have not known enough about the business/management to buy given the problems. By owning the share, I have been motivated to look back at the management’s track record, monitor wider sector developments and generally become comfortable with the recovery potential.

      Maynard

      Reply
      1. Ejames

        You have mentioned Fulham Shore in previous posts were you not tempted to invest in them instead of Tasty after the pull back in their share price?

        Reply
        1. Maynard Paton Post author

          Hello Ejames

          I have not been tempted with FUL.

          FUL’s valuation looked very rich at the time and still appears fair at best — at c10p the mkt cap is £60m, so £1m or so per restaurant. FUL has succumbed to the wider industry issues that affected TAST earlier in 2017 and the likes of Restaurant Group in 2016.

          If you look at this comment:

          https://maynardpaton.com/2017/03/28/tasty-annual-results-dish-up-unsavoury-profit-warning-and-33-share-price-sickener/#comment-11596

          …and the sub-comments, I could see FUL’s ratios signalling trouble before the firm owned up to tougher trading.

          I would prefer to take my chances with TAST. The Kayes have built and sold multi-bagger restaurant chains, whereas the lead executive at Fulham ended up selling two previous stock-market ventures at knock-down prices.

          Maynard

          Reply
          1. Ejames

            Thanks for the response Maynard and a very fair point regarding management. Just wanted to pose the question as it is difficult to ignore the huge popularity of the Franca Manca chain in London but, as you have said, this is baked into the valuation.

            Thank you for your posts in general I really enjoy reading them!

            Eric

          2. Maynard Paton Post author

            Hello Eric

            No problem. I have mentioned Franco Manca in the past to TAST’s management, and I wonder if the group’s new Centuno unit https://www.centuno.co.uk/ is some sort of acknowledgement that FM’s simple, low-cost pizza approach can work more effectively than the mid-road WildWood chain.

            Maynard

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