[Podcast] BIOVENTIX With Roland Head And Maynard Paton

28 January 2023
By Maynard Paton

I have recorded a podcast with my good friend Roland Head. This time we talked about Bioventix, the antibody specialist that at the start of 2023 represented my largest shareholding. We discussed the wonderful economics of antibodies, information gleaned from the AGM and the research into testing for Alzheimer’s Disease: 

We cover: 

  • My 2016 purchase of Bioventix at £11 and the shares now representing 12% of my portfolio.
  • Roland buying Bioventix at £36 during 2021.
  • What antibodies are, how they work within blood tests and Bioventix’s range of diagnostic antibodies.
  • Bioventix’s financial track record and how antibody royalties support incredible margins.
  • Bioventix’s laboratory, customers and industry competition. 
  • How successful diagnostic antibodies can earn royalties for more than 20 years.
  • An example of a new diagnostic antibody dislodging an established diagnostic antibody. 
  • Bioventix’s lack of visibility on what hospitals pay for blood tests, the volumes of antibodies being used and what customers use antibodies for.
  • Bioventix’s superb dividend record.
  • AGM protest votes and boardroom diversity.  
  • Industrial pollution R&D, barbecued sausages and a low spreadsheet value.
  • Alzheimer’s R&D and a new treatment for the disease. 
  • The academic publication covering antibody test results at the University of Gothenburg. 
  • The potential income from Alzheimer’s testing being a “2030s thing“. 
  • Bioventix’s investments, further Alzheimer’s research and future growth rates.
  • The dependence on vitamin D testing and other shareholder risks.
  • How the £40 shares appear on a dividend basis and possible future returns.
  • Reasons to sell Bioventix and concluding thoughts.

Extra links:

Happy listening!

Maynard Paton

PS: The AGM was held on 8th December 2022 and the podcast was recorded on 26th January 2023.

Disclosure: Maynard owns shares in Bioventix.

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

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20 January 2023
By Maynard Paton

Today I have revisited a SharePad 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 consistently above 20% is probably quite special.

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

(Source: SharePad)

I selected Quartix because it was among the worst share-price performers during the last twelve months. Let’s take a closer look.

Read my full Quartix article for SharePad.

Maynard Paton

TRISTEL: Pandemic-Disrupted FY 2022 Reiterates Reassuring 10-15%/Year Sales-Growth Ambition As US Regulatory Approval Now Relies Upon FDA ‘Negotiation’ Over Product Batches

12 January 2023
By Maynard Paton

Results summary for Tristel (TSTL):

  • Another pandemic-disrupted performance, although 10-15% per annum sales-growth guidance suggests hospital customers will soon resume normal purchasing activity.
  • Progress was complicated by an accounting U-turn, with Brexit stock-piling, share options, US costs and write-offs creating a wide range of profit outcomes.
  • Management webinar comments suggested a positive US regulatory verdict is dependent on a “negotiation” with the FDA concerning data tests using different product batches. 
  • A useful 17% operating margin, net cash of £10m, worthwhile cash conversion and low capital requirements imply the group’s disinfectants still enjoy favourable economics. 
  • An estimated 24x P/E for FY 2025 is not an obvious bargain, but a premium rating may be justified by a US product approval and hefty royalties appearing soon thereafter. I continue to hold.

Read more

Q4 2022: Down 23.3% For 2022

01 January 2023
By Maynard Paton

Happy 2023! I hope you survived last year’s tough market and continue to find my blog useful.

A summary of my portfolio’s 2022:

  • Total return of -23.3% (Q4: +0.2%)*;
  • 2 holdings recorded a gain while 9 holdings recorded a loss;
  • Returns ranged from up 23%, for Bioventix, to down 67%, for System1;
  • One share was topped-up: City of London Investment, and;
  • No new shares were purchased and no shares were sold.

(*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 2022 performance.

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My Portfolio: Year In Review 2022

01 January 2023
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 4,680-word post provides a ‘year in review’ of my current holdings. I recap how each business performed during 2022 as well as provide a few remarks about valuation. 

These reviews are very useful to write, not least because they help ensure I am still invested for the right reasons. Any upsets I will suffer during 2023 will most likely be caused by the shares I already own rather than any new shares I will buy.

I undertook the same annual review at the start of 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022.

My portfolio lost 23.3% during 2022. This other post explains that performance in more detail and clarifies how my portfolio begins 2023.

Read more

[Podcast] FUNDSMITH With Mark Atkinson And Maynard Paton

28 December 2022
By Maynard Paton

I have recorded another podcast with my good friend Mark Atkinson. This time we talked about Fundsmith, the fund managed by Terry Smith that helped Mark to retire early. We discussed the fund’s performance, strategy, holdings and annual meetings:

We cover:

  • Mark buying Fundsmith during 2014.
  • The fund’s performance and Mark retiring early.
  • How Mark’s portfolio is split between Fundsmith, trackers and individual shares.
  • The favourable impact of re-ratings and currency movements on the fund.
  • Fundsmith’s valuation, its top ten holdings and Novo Nordisk.
  • Terry Smith’s ‘do nothing’ approach.
  • Reasons for selling 3M, Colgate-Palmolive and Nestle, but still holding Unilever.
  • Terry Smith’s stock-picking versus our stock-picking.
  • Why not go all in with Fundsmith?
  • Investing with conviction and concentrating on your winners.
  • Mark’s questions at Fundsmith’s annual meetings.
  • Terry Smith buying Facebook despite concerns from investors.
  • Terry Smith buying Amazon after changing his mind.
  • Fundsmith’s move towards non-dividend-paying shares and ‘tech’.
  • How Mark monitors Fundsmith and the risk of fund managers losing their touch.
  • Fundsmith versus the FTSE 100 and paying high P/Es for quality companies.
  • Should I buy Fundsmith?
  • Was buying Fundsmith luck or skill?

Extra links:

Happy listening!

Maynard Paton

PS: The podcast recording took place on 16th December 2022.

[SharePad] Small-Cap Spotlight Report: STRIX

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12 December 2022
By Maynard Paton

A profit warning and 32% share-price crash brought Strix to my attention the other week:

(Source: SharePad)

This small-cap dominates the market for kettle controls, and I wondered whether that strong competitive position could support an eventual recovery.

Let’s take a closer look.

Read my full Strix article for SharePad.

Maynard Paton

[Podcast] CITY OF LONDON INVESTMENT With Mark Atkinson And Maynard Paton

24 November 2022
By Maynard Paton

I have recorded another episode of The Private Investor’s Podcast with my good friend Mark Atkinson. We discussed City of London Investment (CLIG) and my recent share purchase, my AGM attendance and the company’s 9% dividend yield: 

We cover:

  • My recent CLIG purchase and history of ownership.
  • A lack of capital gains, but superb dividends.
  • Where CLIG stands in my portfolio now.
  • How does CLIG invest for its clients?
  • My attendance at the AGM and previously receiving a letter from CLIG’s founder.
  • Major shareholder George Karpus and his future plans.
  • The performance of Karpus Investment Management following the merger.
  • CLIG’s regular client income, but fees are being squeezed.
  • Employee remuneration versus client returns.
  • The share-price KPI and potential double-digit returns.
  • CLIG’s investment team approach and employee retention.
  • History of funds under management and recent client-money inflows.
  • The S&P 500, institutional ‘allocators’ and portfolio ‘buckets’.
  • The attractions of emerging markets and potential for outperformance.
  • Private investors holding CLIG and liking cash-rich income stocks.
  • The 9% yield, valuation comparison with Liontrust and closing thoughts.

Extra links:

Happy listening!

Maynard Paton

PS: The AGM took place on 31st October 2022 and the podcast recording took place on 21st November 2022.

Disclosure: Maynard owns shares in City of London Investment.

BIOVENTIX: Exceptional H2 Profit (+30%) Plus Promising Biotins Sales (+67%) Support Better-Than-Expected FY 2022 And 7th Consecutive Annual Special Dividend

22 November 2022
By Maynard Paton

Results summary for Bioventix (BVXP):

  • A somewhat better-than-expected FY performance, with record revenue and earnings supported by an exceptional H2 profit (+30%) that was bolstered by a post-pandemic recovery and stronger USD.
  • Encouraging sales progress from best-seller vitamin D (+13%), future big-seller troponin (+81%) and sudden surprise-seller biotins (+67%) more than offset lost income from an expired product. 
  • Tweaks to management’s commentary plus a revised pipeline grid suggest the development work on dementia research now offers a greater chance of becoming a real money spinner.
  • The accounts remain in great shape, with an astonishing 82% H2 margin, terrific employee productivity and robust cash conversion leading to the company’s seventh consecutive annual special dividend.
  • Troponin’s finite income and a basic sum-of-the-parts valuation may explain why the £36 shares have not made headway during the last three years. I continue to hold.

Read more

[SharePad] Small-Cap Spotlight Report: TRUSTPILOT

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18 November 2022
By Maynard Paton

Read a set of company results, and chances are you will spot a reference to Trustpilot. Examples of quoted businesses mentioning the popular review website include:

  • AJ Bell: Our operational performance indicators have shown excellent levels of customer service as demonstrated by our high 4.5-star Trustpilot score.
  • AO World: “Over 350,000 Trustpilot ratings, averaging an “Excellent” 4.6/5 stars.
  • Big Yellow: “We have over 3,200 reviews from the independent review site TrustPilot. These reviews average a 4.7 out of 5-star rating, labelled as “Excellent” on the TrustPilot ratings scale.”
  • Procook: “We are pleased to have retained our excellent-rated Trustpilot score of 4.8.
  • Redde Northgate: “Customer satisfaction is the cornerstone of our business success and the ‘excellent’ satisfaction scores achieved across our businesses from Trustpilot.
  • Redrow: “We continue to be rated as ‘excellent’ on Trustpilot.
  • ScS Group: “Improved Trustpilot rating to the maximum 5 stars, maintaining our ‘Excellent’ rating with over 370,000 reviews.”
  • Travis Perkins: “The experience with Toolstation remains best-in-class with the business achieving a 4.6-star rating on Trustpilot.

With so many quoted companies trumpeting their Trustpilot reviews, is Trustpilot itself worthy of a 5-star investment rating?

Let’s take a closer look.

Read my full Trustpilot article for SharePad.

Maynard Paton

M WINKWORTH: Yield Approaches 7% Despite Acceptable H1 2022, Quarterly Dividends Lifted 23% And Confidence Towards £2m Profit Forecast 

04 November 2022
By Maynard Paton

Results summary for M Winkworth (WINK):

  • An acceptable H1 performance that would always struggle against the comparable (and exceptional) H1 but encouragingly matched the preceding H2.
  • The subsequent Q3 update provided reassuring ‘mini-budget’ commentary, reiterated an earlier £2.1m profit forecast and announced a further 23% quarterly dividend lift.
  • Claims of a leading SSTC market share may contradict statistics from Foxtons, with fresh leadership at the London rival set to create stiffer competition. 
  • A robust 25% margin plus £4m net cash left the accounts in good order, although cash conversion was impacted by rising intangible expenditure and more franchisee loans.
  • The gloomy outlook for the economy and housing market looks responsible for the possible 10-13x P/E and yield that approaches 7%. I continue to hold.

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[Podcast] SYSTEM1 With Mark Atkinson And Maynard Paton

23 October 2022
By Maynard Paton

I have recorded another episode of The Private Investor’s Podcast with my good friend Mark Atkinson. We talked about System1 and the investment potential of testing adverts:

We cover:

  • My fourth System1 AGM and my share purchases.
  • What the company does: testing television adverts and marketing ideas.
  • ‘System 1’ and ‘system 2’ thinking within broadband adverts.
  • Validation of the company’s service through the partnership with ITV.
  • The transition from ad-hoc consultancy work to automated data services.
  • The competitive advantage gained through years of accumulating advert data.
  • The chairman’s handling of the AGM.
  • Microphones, voting cards and special lunches. 
  • AGM formalities and Section 319A of the Companies Act.
  • Protest votes against two non-execs and the strategic review. 
  • The company’s podcast becoming a sales tool.
  • Mark’s verdict and closing remarks.

Extra links:

Happy listening!

Maynard Paton

PS: The AGM took place on 28th September 2022 and the podcast recording took place on 21st October 2022.

Disclosure: Maynard owns shares in System1.

CITY OF LONDON INVESTMENT: H2 2022 Profit Drops 20% And FuM Slides To $8.5b Although Yield Now Tops 8% And Run Of Net Inflows Extends To 4 Quarters

21 October 2022
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • Rough market conditions causing funds under management (FuM) to fall 17% to $9.2b led to H2 net fee income dropping 5% and H2 profit diving 20%.
  • A post-year update showed FuM sliding a further 8% to $8.5b, but also the fourth consecutive quarter of net FuM inflows that may signal clients re-appraising CLIG’s ‘value’ approach.
  • Buying SPACs at discounts to cash helped merger partner KIM outperform the original CLIM division with 6% five-year annualised returns versus 3-4%.
  • Revenue “100%” denominated in the stronger USD, handy cash conversion plus net funds and investments of £30m counterbalanced an H2 margin squeezed to ‘only’ 42%.
  • Near-term earnings could now be running at 36p per share, which should still support the 33p per share dividend and 8%-plus yield at 400p. I continue to hold.

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

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20 October 2022
By Maynard Paton

Difficult market conditions have led to depressed ratings for many asset-flush shares.

Hence a new screen to pinpoint companies offering cash-rich balance sheets and market caps below their book value. I have attempted to avoid ‘value traps’ by demanding the shares pay a dividend and offer a history of trading above book value.

The exact filter criteria I employed for this search 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.

I applied the screen the other day and SharePad returned 22 matches:

(Source: SharePad)

I selected Redrow from the five house builders at the top of the list because the group’s recent results included very clear guidance:

Redrow’s own projections put its 400p shares on a P/E of approximately 4 and a yield of at least 8%

Combined with a net asset value of 554p per share that gives a price to book of 0.72, the FTSE 250 constituent is very much trading at the ‘deep value’ end of the market spectrum.

Let’s take a closer look.

Read my full Redrow article for SharePad.

Maynard Paton

Q3 2022: Portfolio Winners As GBP Slides Towards USD Parity

02 October 2022
By Maynard Paton

Happy Sunday! I trust your shares continue to perform better than mine during 2022.

A summary of my portfolio’s progress:

  • Q3 return: -9.2%*.
  • Q3 trades: None.
  • YTD return: -23.4%* (FTSE 100: -3.9%).
  • YTD winners/losers: 2 winners vs 9 losers.

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

I am heading for my worst annual performance for at least two decades after my portfolio fell 9.2% during Q3 to leave my shares down 23.4% for the year so far.

Yet despite another miserable quarter of negative returns, the Q3 newsflow did not seem particularly awful. 

Special dividends were in fact declared by Andrews Sykes and Tristel, which takes one-off payments for me this year to six and cements 2022 as my best-ever year for extra income. The quarter also witnessed higher payouts from M Winkworth and S & U.

Read more