Summary: REC has struggled to make any decisive progress for several years now. The firm’s currency-trading strategies have floundered, clients have regularly jumped ship, while those clients that have stayed have demanded lower fees. Now comes the alarming news that REC’s bog-standard currency-hedging service will cut its fees by 10% to keep clients happy. To add insult to injury, greater costs will be required to cater for this product “enhancement”. I have been frustrated with REC for quite some time, and have belatedly decided enough is enough. I have sold my entire holding.
Happy Easter! I hope you continue to find my Blog useful… and that your portfolio has coped well with the sliding 2018 market!
So far this year, my portfolio has extended its behaviour from 2017. In short, positive contributions from a number of holdings (notably M Winkworth, Mincon and Tristel) have been offset by one substantial loser (Tasty).
It has all meant I have started 2018 down 0.3% versus a 7.2% drop suffered by the FTSE 100. I suppose losing less money than a falling market is not too bad, although I think I would prefer to be thrashed by a rising market — and actually make money.
Anyway, I am glad the RNSs from my shares have been broadly positive. There has been a mix of impressive to acceptable-in-the-circumstances results, with only my smallest holding — System1 — issuing fresh disappointing news.
My portfolio activity has been limited to just one top-up. Let me outline what has occurred.
Summary: The London estate-agency group was never going to issue stunning figures. Nonetheless, a credible performance was reported and I am impressed the business continues to fare well against sector rival Foxtons. Note, too, that WINK’s average percentage commissions actually increased — so perhaps online competition is not that big a threat after all. Meanwhile, the books remain cash rich, the outlook does not seem too bad while the 10x multiple and 6% yield appear modest. I continue to hold.
Summary: These results from the car-loan specialist once again provided an investment dilemma. True, shareholders received yet another respectable progress report from the accomplished executive team. However, the finer details showed potential bad debts soaring 59% — which was double the growth rate of revenue and customer advances. The chairman is set to make some ‘sensible gear changes’ to keep a lid on potential bad debts, but until the changes become evident, the share-price multiple could be stuck at 13. I continue to hold.
Summary: The antibody specialist delivered another set of impressive results. I had been concerned about a possible ‘revenue gap’ emerging this year following the termination of certain product income. However, these concerns have now diminished — BVXP’s other sales still seem to be growing fast (I estimate at 30%) while management has become more confident about the early contribution from the new troponin product. The group’s financials remain top class and could even be improved if all of the royalties were collected on time. The 25x multiple is understandable, and I continue to hold.
Summary: MCON’s subdued years of 2014, 2015 and 2016 now seem long forgotten after the mining-drill manufacturer confirmed a bumper set of 2017 numbers. Greater client activity has now fuelled director talk of “significant opportunities” and “the first year of the current upturn”, and the share price has naturally climbed to a premium level. Meanwhile, the accounts remain cash-rich, several factors may be suppressing certain ratios, and even the standstill dividend has been lifted. I continue to hold.
Summary: These first-half figures actually set new H1 records, but they also confirmed TFW’s good run of double-digit profit growth will pause during 2018. Pressure on prices for tunnel lighting was cited as one reason for the pedestrian performance. Should revenue and profit continue to plateau, the elevated share price — rated at 22x my earnings guess — may be at risk of a de-rating. Still, the lighting specialist remains a very respectable business, and continues to be led by directors that think long term. I continue to hold.
Summary: Phew! I had thought TAST’s plunging share price was signalling these results would be accompanied by an emergency equity placing. As it turns out, the beleaguered restaurant chain continues to report a profit and has surprised me by raising £4m — equivalent to half of its market cap — from two property transactions. Furthermore, management now have a proper turnaround plan in place, the second half showed a few glimmers of hope while the upside could be considerable if a recovery ever occurs. I have bought more shares, both before and after these results.
Summary: A change of year end, various exceptional items, the effect of an acquisition and the company’s own ‘cost base’ definition meant studying these numbers was not straightforward. However, it was clear the geoscience software specialist has returned to profit, while it was also obvious the new boss remains confident about the group’s competitive attractions. Looking ahead, I am still hoping some encouraging revenue talk alongside tight cost controls could one day lead to much higher earnings and decent share-price upside. I continue to hold.
Summary: These first-half figures were slightly better than I had expected, with December’s AGM statement having downplayed the group’s underlying progress. Welcome revenue advances — both in the UK and abroad — were delivered by TSTL’s main disinfectant products, while adjusted profit would have soared 24% were it not for the costs of entering North America. Sadly it remains anyone’s guess as to when those costs will eventually see any payback. Nonetheless, the first North American milestone is looming — an EPA product approval decision is expected on 16 April, and the share price is optimistic. I continue to hold. Continue reading →
Summary: Favourable market movements helped CLIG report its best-ever first-half figures, with revenue, profit, net cash and the dividend all moving higher. However, the finer details showed the emerging-market fund manager struggling to capture new clients as its main strategy under-performed. Meanwhile, fee rates are still being chipped away and staff costs keep on climbing. The shares may look under-appreciated on a P/E of 10 and yield of 6%, but sadly a re-rating does not appear imminent. I continue to hold. Continue reading →
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.
I trust you have enjoyed the festive break and are now raring to do battle with the market for another twelve months!
This first Blog post of 2018 provides a ‘year in review’ of my current portfolio holdings. I recap how each of the underlying businesses performed during 2017, as well as provide a few remarks about valuation.
Summary: From what I could tell from the chairman’s 216-word update, DJAN has had to work hard of late to achieve somewhat modest progress. Currency movements and Brexit apparently kept a lid on this H1 performance, although NAV still managed to creep to a £103 per share all-time high. Dull updates from low-profile businesses often cause share prices to stagnate, and so I’m not too surprised the property group’s discount to book has widened since I first bought during 2015. I now wonder whether I should buy once again. I continue to hold. Continue reading →
Summary: It took MTVW’s chief exec just 265 words to describe the group’s weakest first-half performance for four years. Still, the nature of this property-trading firm means earnings can be somewhat variable from time to time. What is important, though, is that net asset value improved once again to a fresh high while debt continues to be reduced to a new low. My sums point to a possible NAV of £209 per share based on the firm’s long-term margin. I continue to hold. Continue reading →
Summary: This was another frustrating RNS from the specialist currency manager. The cost base has ‘inevitably’ increased, yet revenue and client numbers remain stagnant and — as usual — there’s no real sign of the business enjoying an upturn anytime soon. At least REC continues to generate cash, retains a robust cash pile and distributes a healthy dividend. The yield is 5%, which is not too bad in the current market. I continue to hold. Continue reading →
Summary: Last month’s statement concerning a review of CGS’s machining division had already braced me for worrying news. In the circumstances, this RNS was not too bad. Sure, the machining division has reported a loss and will cut back on certain projects. However, CGS’s main foundry operation appears to be performing very satisfactorily, with profit per tonne reaching a new high. I continue to hold. Continue reading →
Summary: These figures from the recruitment software developer were never going to be great. The overriding theme of the last three years — greater marketing and product investment — once again hit earnings and will continue to do so throughout 2018. The statement talked of some client-fee reductions, too. Still, at least overall revenue and the hefty cash position have both advanced to new all-time highs. Exactly when a profit revival will occur remains anyone’s guess — but I am hopeful the chief exec/71% shareholder will one day oversee a recovery. I continue to hold. Continue reading →