01 July 2025
By Maynard Paton
Happy Tuesday! I hope the first six months of 2025 have been positive for your shares.
A summary of my portfolio’s first half and Q2 trading:
- H1 return: -11.1%*
- Q2 trades: 2 Top-ups (Bioventix at £24.08 and S & U at £14.64).
(*Performance calculated using quoted bid prices and includes all dealing costs, withholding taxes, broker-account fees, paid dividends and cash interest)
What a difference a year makes. Twelve months ago I was trumpeting “my best-ever H1 [+20%] since I commenced this blog at the beginning of 2015“.
Today I am staring at my weakest relative six-month performance since I commenced this blog at the beginning of 2015! Year to date my portfolio is down 11.1% while the FTSE 100 has powered 9.5% higher. I will now have to re-read whether I am a good investor :-(
This year’s underperformance follows the rollercoaster share price at System1, in which I have an oversized position because of its multi-bagger potential. That potential took a knock during April following an ominous Q4 update that implied a slowing of key revenue streams and talked of a “downside risk” to client budgets.
Let’s just say System1‘s FY results and Q1 update next week are likely to prove pivotal to my portfolio’s 2025 performance.
Newsflow from my other holdings has been mixed, with a 10% dividend lift from M Winkworth somewhat counterbalancing flat payouts at Andrews Sykes and Mountview Estates. And despite a dividend cut at S & U, the specialist moneylender has been my best performer this year!
Possibly the most intriguing announcement during the last three months was the sudden and unexplained departure of the chief executive of City of London Investment.
Abrupt exits do not occur if all is going well and I am braced for unfavourable short-term news. But I welcome the board’s decision to seek fresh leadership to help find new clients, as this fund manager’s investing style is commendable and its cash/bond returns have been impressive.
I have summarised below what happened to my portfolio during April, May and June. (Please click here to read all of my previous quarterly round-ups). I then discuss my investing approach and how I hope to become a better investor.
Contents
Disclosure: Maynard owns shares in Andrews Sykes, Bioventix, City of London Investment, Mincon, Mountview Estates, S & U, System1, FW Thorpe and M Winkworth.
Q2 share trades
Bioventix
I have increased my Bioventix (BVXP) position by approximately 8% at £24.08 including all costs.
Nothing has really changed since my Q1 2025 BVXP top-up, apart from the shares declined and offered a 6.4% dividend yield at my purchase price. My latest BVXP review.
S & U
I have increased my S & U (SUS) position by approximately 40% at £14.64 including all costs.
I spent 13.5 hours during the Easter weekend watching the recordings of the Supreme Court hearing about ‘secret commissions’ within the motor-finance industry.
The possibility of the Supreme Court upholding an earlier legal verdict — and therefore opening the floodgates to substantial compensation claims — has overshadowed SUS’s shares since October.
My layman view of the recordings did not suggest the Supreme Court would simply rubber-stamp the earlier legal verdict. Among the five Lord Justices hearing the case, the tone of questioning from the two most vocal Lords (Briggs and Hodge) did appear more supportive towards the lenders (Close Brothers and MotoNovo) than the borrowers (Miss Hopcraft, Mr Johnson and Mr Wrench).
Assuming the deliberations of the Lord Justices follow a path similar to the hearing, I suspect the lenders could emerge as winners with at least a 3-2 decision.
Submissions on both sides covered the legal definitions of “bribery” and “fiduciary duty“, and I would summarise the hearing as the lenders taking a wider, practical view of both terms with the borrowers spotlighting the finer details of particular case laws.
A very positive outcome for the lenders was forecast by the legal experts at Quadrant Chambers, who commendably hosted this post-hearing seminar. They concluded only the most “egregious” of ‘secret commissions’ may be subject to repayment and dismissed the notion of widescale compensation payments:
[Quadrant Chambers] “On the invite, we asked whether the Supreme Court would apply the brakes to these cases [against the motor-finance lenders]. We don’t say the Supreme Court has put the handbrake on, but the brakes are certainly on the car, there are nails in the tyres and it’s not driving very well. It has not been towed yet, but it is not looking good.“
I wrote in my H1 2025 review:
“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.“
After watching all 13.5 hours of the hearing, I would be amazed if the Lord Justices unanimously found in favour of the borrowers. At £14.64, I believed the risk-reward ratio strongly favoured a top-up… but let’s see what the Supreme Court actually decides. A decision is expected this summer. My latest SUS review.
Q2 portfolio news
As usual I have kept watch on all of my holdings. The Q2 developments are summarised below:
- Andrews Sykes: FY 2024 operating profit up 2% to a record £23.2m despite revenue slipping 4% following French depot closures and “poor summer temperatures” (review coming soon).
- Bioventix: Nothing of significance
- City of London Investment: Q3 2025 funds under management suffering a further $212m outflow plus the sudden — but probably welcome — departure of the chief executive.
- Mincon: Q1 2025 talking remarkably of “strong” order books followed by the retirement of founder Patrick Purcell from the board (blog coverage ceased for now).
- Mountview Estates: FY 2025 net asset value inching less than 1% higher to a record £103.27 per share after the “law of averages” led to fewer sold properties.
- S & U: Adverse regulatory developments reducing FY 2025 pre-tax profit by 29% offset subsequently by “above budget” Q1 2026 motor-finance trading.
- System1: An ominous Q4 2025 implying slower ad-testing/US revenue growth plus an LTIP requiring a 635p share price to vest.
- FW Thorpe: Nothing of significance.
- M Winkworth: FY 2024 revenue up 17% and underlying operating profit up 24%, then supported by the Q1 2025 dividend up 10% plus an informative AGM (review coming soon).
Q2 portfolio returns
The chart below compares my portfolio’s monthly progress to that of the FTSE 100 total return index:
The next chart shows the total return (that is, the capital gain/loss plus dividends received) each holding has produced for me so far this year:
This chart shows each holding’s contribution towards my 11.1% H1 loss:
And this chart confirms my portfolio’s holdings and their weightings at the end of Q2:
How I (Now) Invest
I have been buying shares for approximately 30 years and writing this portfolio blog for more than ten.
During all that time I have often tweaked my investing philosophy as I learn more about what works for me in the markets. The same reflective process also leads me to increase my commitment to certain aspects of my approach.
I thought it useful to clarify a number of points that I have mulled over of late. I am hoping what follows can eventually help me become a better investor.
1. Deeper company understanding
I last introduced a new share to my portfolio during 2017. Eight years without buying a completely fresh idea makes me extremely unusual among private investors.
I never suddenly decided to buy only existing holdings. The approach instead simply evolved over time as I delved deeper into my positions to understand them just that little bit more than most of the market.
I now realise I continue to learn significant information about each holding years after my initial purchase, and I now doubt I would ever have the same insight and purchase conviction with a completely new investment.
This ‘deeper understanding’ strategy — at least in theory! — ought to increase my chances of identifying a bargain within my portfolio while decreasing the chances of panic selling during a crash. The approach also helps me run a concentrated portfolio, which I still believe creates a greater chance of long-term outperformance.
I continue to analyse a different company every month through my ShareScope articles, which every so often provide me with a possible portfolio idea.
I do have a handful of names on my watchlist to maybe buy one day… but future portfolio movements are more likely be top-slicing an existing position to top-up another.
2. Embracing smaller positions
I used to believe a new share would never be worth buying unless I was prepared to invest 10% of my portfolio on Day 1. My thinking has since moved on and I am now prepared to purchase much lower amounts at first.
This change of heart is due in part to practical considerations. As my portfolio has become larger — and because the shares I like are generally illiquid — that 10% ambition has become increasingly unworkable.
Take Andrews Sykes (ASY) for example. I first bought these shares during 2013 and ended up with a modest 3% portfolio position because the price rallied quickly and I stopped buying.
ASY has since typically represented 2-3% of my portfolio and I have often wondered how this position could ever influence my overall return. But I now take the view this 2-3% position prompts me to monitor the company closely — and gives me the chance to take it towards a 10%-plus position if/when I identify an appealing top-up opportunity.
Any new share I now buy will almost certainly be a sub-3% position. I am sure I will then develop more conviction about the new holding… and that even better buying opportunities will arise thereafter!
3. Employees versus owners
I do sometimes question whether all UK small-caps are now run for the benefit of their employees rather than their owners. In fact, some companies always seem keen to lift the remuneration of their ‘most important assets’ even though their shareholders might be facing a stagnant dividend income.
The employee-vs-shareholder conflict almost certainly stems from most executives being long-time employees. They have established an entrenched mindset of following instructions for a salary and a possible bonus, with priorities such as career development and flexible working eclipsing the abstract task of delivering shareholder value. Boards may well mention ‘shareholder alignment’, but often the amount spent on their shares tells a different story.
I have always been convinced directors with substantial shareholding are far more likely to possess an ‘owner mindset’ — one that believes their workforce is inherently employed to reward shareholders through greater earnings and higher dividends.
But these days I am even more convinced about the need for ‘owner mindsets\, especially as institutions just seem to waive through generous executive pay and soft LTIPs that then flow down to the lower ranks.
I now always seek to invest alongside somebody with the shareholding clout who ensures the board behaves like owners.
4. Thinking for myself
I follow various investor newsletters through Substack and several have been dabbling with AI to research new ideas. Although their results to date have been less than impressive, the temptation to save time and effort is great. One Substacker has even declared an ‘AI policy’, so readers can presumably distinguish between him and his bot.
I have never used ChatGPT or similar, and never will for investing. I am an old-school stock-picker, and my ABC of investing remains: Assume nothing, Believe nobody and Check everything.
I truly believe investors should be studying companies for themselves rather than outsourcing the work to a persuasive bot. Reading annual reports requires effort of course, but at least you will gain much greater knowledge — that should lead to better decisions — versus the AI-adoption crowd.
Such are my old-school ways, I still input accounts manually into a spreadsheet. That way restatements, exceptional items, pension deficits and other bookkeeping nasties come to light and help form a judgment.
I know ChatGPT and similar scrape my website for source material. There is an old computer-science concept called ‘garbage in, garbage out’ and I can only hope AI is scraping the right websites.
5. 40-year horizon
Warren Buffett will retire as Berkshire Hathaway chief executive at the end of 2025 at 95 years of age. If I can last as long as Mr Buffett has as Berkshire’s CEO, then I have another 40 years of investing ahead of me.
Four decades years is a long time to compound my wealth, assuming of course: i) I make it to my 90s, and; ii) I don’t spend my portfolio in the meantime!
Anticipating I have decades left to invest helps insulate me from market ructions (‘this too will pass‘) and leads me towards businesses run with similar long-haul attitudes. Family-controlled companies in particular can be ideal candidates for such extended horizons.
I used to view investments on a five-year horizon, hoping they could double during that time. These days I occasionally imagine my portfolio simply becoming a mini-Berkshire… stocked with reliable, owner-managed ‘permanent’ holdings that could compound without fanfare over a decade or two.
Mr Buffett tends to prefer buying entire companies outright over buying minority stakes through the stock market, and a good discipline for me is to consider whether I too would want to own my holdings outright.
Summary
We all evolve as investors. Since 2004 for example, my investments have ranged from FTSE buy and holds such as London Stock Exchange to microcap value traps such as 3 Legs Resources.
I have chalked up a few successes, sworn off certain types of shares and gradually learnt to focus on a small group of familiar companies in which I might enjoy an edge over most of the market.
Within my company reviews, I have increasingly placed a greater emphasis on ‘workforce productivity‘ to help avoid shares where the board and employees are paid too much for doing too little.
What is somewhat scary is that, if I do have another 40 years of investing ahead of me, I am not yet half-way through my stock-picking career. I trust I will continue to evolve as an investor and no doubt I will publish many more ‘How I (Now) Invest’ updates before 2065.
Until next time, I wish you safe and healthy investing.
Maynard Paton
