My Shares

CITY OF LONDON INVESTMENT: H1 Figures Reveal Record $10.9b FuM And Astonishing 55% Margin But Client ‘Rebalancing’ Keeps P/E Stuck At 11x

24 February 2021
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • Very buoyant markets alongside the Karpus merger helped funds under management (FuM) reach a record $10.9b and lift the dividend by 10%.
  • Client ‘rebalancing’ led to FuM withdrawals and, despite fledgling strategies attracting new money, overall fund flows remain frustratingly low. 
  • Recent leadership retirements have not led to any dramatic changes and shareholder information has remained reassuringly comprehensive.
  • The Karpus merger has raised the group margin to an astonishing 55%, but future bonus-pool arrangements could reduce such profitability.
  • The possible P/E is 11 and near-term yield might top 7%, although the shares have been valued modestly for years and a sustained re-rating remains very elusive. I continue to hold.

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My Portfolio: Year In Review 2020

01 January 2021
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 4,631-word post provides a ‘year in review’ of my current portfolio holdings. I recap how each business performed during 2020 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 2021 will most likely be caused by the shares I already own rather than any new shares I will buy.

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SYSTEM1: Remarkable Q2 May Lead To 8x P/E And Potential Recovery Helped By ITV Progress, New Clients And Net Cash

11 December 2020
By Maynard Paton

Results summary for System1 (SYS1):

  • A pandemic-disrupted first half, albeit with headline numbers that disguised a remarkable return to profitability during Q2.
  • Revenue improvements within the Communications and UK segments suggest the tie-up with ITV is working.
  • A bold pricing structure, greater ambition clarity and even improved film-making may explain why adidas has become a client.
  • The accounts are in reasonable shape, with significant net cash, positive cash generation and perhaps a decent profit margin following various cost savings.
  • Extrapolating the Q2 profit leads to a lowly 8x multiple and intriguing recovery/upside possibilities. I have bought more shares.

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TASTY: Survival Rests On Landlords, Barclays, Vaccinations And Christmas Burgers After H1 Covid Cash Burn Implies June 2021 Receivership

09 December 2020
By Maynard Paton

Results summary for Tasty (TAST):

  • Revenue down 59% led to a £10m operating loss after the pandemic guaranteed an awful performance.
  • Cash of £3.2m and six-month cash burn of £1.6m implies TAST will run out of money by June 2021.
  • Immediate survival hopes seem dependent on landlord negotiations, CVA hints, a loan from Barclays, UK vaccinations and Christmas burgers delivered to your door.
  • One pandemic positive: management has been forced/allowed to instigate much-needed changes to an underperforming restaurant estate.
  • The £4m market cap could be a bargain, assuming government restrictions are lifted, rents are reset, competition is reduced and a recovery one day takes place. I continue to hold.

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MOUNTVIEW ESTATES: Significant Gross-Margin Improvements During Pandemic-Affected H1 May Underpin Possible NAV Of Up To £225 Per Share

04 December 2020
By Maynard Paton

Results summary for Mountview Estates (MTVW):

  • A pandemic-affected H1 that showed revenue down 23% and profit down 18% following procedural delays to property sales.
  • A maintained dividend, a lack for furloughed staff and rents up 1% did not signal inherent lockdown trouble. 
  • Significant gross-margin enhancements may reflect an underlying step-change in performance and have favourable implications for valuation. 
  • Expenditure on property purchases has picked up, with management hopeful of acquiring “exceptional opportunities”. Debt levels remain modest.
  • Book value inched to a record £98 per share, although new profit assumptions now point to a balance sheet possibly worth up to £225 per share. I continue to hold.

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BIOVENTIX: Very Satisfactory FY 2020 Showcases Record 79% Margin, 5th Consecutive Annual Special Dividend And Webinar Remarks Of Troponin Sales Quadrupling By FY 2022

12 November 2020
By Maynard Paton

Results summary for Bioventix (BVXP):

  • Very satisfactory FY 2020 figures, although H2 growth subsided to mid-single-digits after the pandemic reduced demand for routine blood tests.
  • A 21% final-dividend lift plus a special payout for the fifth consecutive year underpinned a generally positive outlook.
  • Revenue from vitamin D gained 10% and may finally have “plateaued”, while troponin sales quadrupling within the next two years is apparently “plausible“.   
  • The books remain in excellent shape with record 79% margins, robust cash flow, a £5m cash buffer and no debt.
  • The ace financials and predictable customer income leaves an understandably lofty P/E of 32. I continue to hold.

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TRISTEL: 20%-Plus Annual Growth, Odd UK Performance, Bumper Overseas Progress And Potential Pandemic Tailwind All Add Up To Possible 39x P/E

05 November 2020
By Maynard Paton

Results summary for Tristel (TSTL):

  • Revenue and profit reached new highs following very satisfactory 20%-plus growth, bolstered in part by the pandemic.
  • The UK performance appeared odd, given H2 sales were lower than H1 despite the Covid-19 boost.
  • Overseas sales surged 35% during H2, with the purchase of Ecomed during 2018 now proving to be a great success.  
  • The accounts remain in good shape with high margins, appealing equity returns, net cash and respectable cash generation. 
  • A possible P/E of 39 might be justified if the pandemic leads to permanently greater demand for hospital disinfectants. I continue to hold.

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FW THORPE: P/E of 21-25x May Be Justified After FY 2020 Figures Reveal 18th Consecutive Dividend Increase, £63m Cash Reserves And Exciting SmartScan Growth Potential

23 October 2020
By Maynard Paton

Results summary for FW Thorpe (TFW):

  • “Creditable” figures that revealed second-half profit sliding 17% due to the lockdown.
  • A 2% final dividend lift, cash reserves of £63m plus the commendable funding of furloughed staff did not imply imminent financial difficulties.  
  • The SmartScan light-monitoring system provides exciting potential, with sales up 18% to represent 23% of total revenue. 
  • Talk of a “global recession” and a “downturn in orders” suggests trading during 2021 will be challenging.
  • A P/E of 21-25 seems generous but may reflect the ‘pandemic-proof’ balance sheet, SmartScan growth and/or resilient profit history. I continue to hold.

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ANDREWS SYKES: Resilient H1 Results Confirm Profit Up 2% And Bumper £14m Cash Flow

13 October 2020
By Maynard Paton

Results summary for Andrews Sykes (ASY):

  • “Resilient” half-year figures that showed revenue down 4% and profit up 2%. 
  • No light was shed on how ASY could sustain its performance when 50% of UK employees were furloughed. 
  • The statement confirmed bumper cash flow of £14m that prompted a special £10m dividend during the summer.
  • The books remain healthy with high margins and net cash, although the pension scheme might require extra funds. 
  • A possible P/E of 17 does not appear completely outrageous for a seemingly pandemic-resistant business. I continue to hold.

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S & U: Monthly Collections Reaching £12m Support Recovery Potential After H1 Statement Discloses Pandemic Write-Offs Of £13.8m

09 October 2020
By Maynard Paton

Results summary for S & U (SUS):

  • Extra write-offs totalling £13.8m did not seem too awful in the circumstances and should reflect the bulk of the pandemic disruption.
  • The interim dividend was reduced by 35% and management hoped for a full-year payout of between 80p and 100p per share.
  • Payment ‘holidays’ have left some 37% of accounts overdue, but monthly collections have rebounded to a respectable £12m after the half-year. 
  • Net debt of £108m remains significant, although cash flow covered interest payments a very reasonable 10x.
  • The shares trade relatively close to book value and could offer double-digit annual returns assuming a full recovery. I continue to hold.

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CITY OF LONDON INVESTMENT: 2020 Dividend Up 11% And Yielding 7.5% After FuM ‘Capacity’ Warning Limits Growth Potential And Explains Upcoming Merger

18 September 2020
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • Funds under management (FuM) endured a rollercoaster second half, but finished the year up 2% to lift profit by 10% and the dividend by 11%.
  • FuM ‘capacity’ has become an issue, and explains CLIG’s limited past progress and probably prompted the upcoming merger. 
  • The Karpus deal appears logical, but similar to CLIG the merger partner has struggled to attract new clients.
  • The accounts continue to sport high margins, decent cash flow, high equity returns and net cash.
  • A potential P/E of 11 and yield of 7.5% seem attractive, although the shares have been rated modestly for years. I continue to hold.

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M WINKWORTH: Stamp-Duty Changes Herald H2 Rebound And Foxtons Outclassed Once Again Following 20% Lockdown Profit Drop

11 September 2020
By Maynard Paton

Results summary for M Winkworth (WINK):

  • A very acceptable lockdown performance, with underlying half-year revenue down 17% and profit down 20%.
  • Temporary stamp-duty changes have supported a “significant uplift in activity” and ought to herald a much stronger second half.
  • Extremely impressive market-share gains continue to be won from London rival Foxtons.
  • Despite a number of accounting re-jigs, the books remain in good shape with respectable margins and net cash.
  • A possible P/E of 11-14 and potential income of at least 4% may offer upside should earnings one day regain their momentum. I continue to hold.

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MINCON: H1 Dividend Disappointingly Deferred Yet Bumper ‘Geotech’ Sales Help Profit Gain Up To 28% And Perhaps Support A Reasonable 14.3x P/E

21 August 2020
By Maynard Paton

Results summary for Mincon (MCON):

  • A generally satisfactory update given the pandemic, with underlying revenue up almost 5% and profit before adjustments perhaps up as much as 28%.
  • The postponement of the interim dividend due to Covid-19 was disappointing after earlier statements barely mentioned the virus.
  • An emphasis on “geotechnical” drills and services has reduced the dependence on mining customers to 52% of revenue. 
  • Modest cash generation, average margins and enormous stock levels offer significant scope for accounting improvements during the current ‘moat-rebuilding’ phase.  
  • Various (perhaps optimistic) assumptions alongside opportunities from new products lead to a reasonable 14.3x P/E. I continue to hold.

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Mountview Estates:  FY 2020 Statement Signals Modest 8% Gearing, ’Happy’ Auction-Room Activity And Potential To Pick Up Possible Pandemic Property Bargains

13 August 2020
By Maynard Paton

Results summary for Mountview Estates (MTVW):

  • Standstill 2020 figures that showed 8% more properties sold at prices 9% lower than last year.
  • A maintained dividend, a lack for furloughed staff and the directors currently being “happy in the auction room” underline some pandemic-resilient qualities. 
  • Net debt representing a very modest 8% of the group’s property estate suggests significant scope to pick up any property bargains.
  • This week’s AGM witnessed a further bout of protest votes against the independent non-executives, the board’s pay and the auditors.
  • MTVW’s book value increased by 3% to a record £97 per share, although my calculations suggest the balance sheet could be worth £200-plus per share. I continue to hold.

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System1: 2021 Recovery Hopes Seem Dependent Upon ITV And (Bizarrely) 18th Century German Literature Following Profit Crash, Scrapped Dividend And AdRatings Write-Off

17 July 2020
By Maynard Paton

Results summary for System1 (SYS1):

  • Somewhat academic annual figures that showed pre-AdRatings profit down 27% due to weak trading prior to Covid-19.
  • The pandemic has since caused demand for SYS1’s services to drop 38% and created pre-tax losses.
  • AdRatings continues to generate minimal revenue at significant cost, although the tie-up with ITV suggests the fledgling service has some inherent value.
  • SYS1 bizarrely remains very poor at marketing its own services. A flagship company film commences with references to 18th century German literature. 
  • A £3.9m cash buffer ought to keep SYS1 afloat as it moves towards more reliable revenue sources. Valuation in the meantime remains anyone’s guess. I continue to hold.

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