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11 September 2018
By Maynard Paton
Good news — SharePad wanted a second article!
This time I have looked at CMC Markets (CMCX), a high-margin, cash-rich and owner-run spread-betting firm. Let me explain how I pinpointed the share, and what I discovered through SharePad.
Simply click here to read my CMC Markets article for SharePad.
Maynard Paton
***SharePad New Subscriber Special Offer***
Readers of my Blog can claim one month of free data. Click now for details.
31 August 2018
By Maynard Paton
I have started writing articles for SharePad!
My decision to join SharePad was not difficult. I have used the investment software since 2015 and consider it to be an exceptional service for private investors. I also rate the educational and analytical articles that SharePad has become renowned for.
My SharePad articles will cover my stock-screening efforts — tracking down respectable companies that offer attractive financials, capable managers, reasonable prospects and modest valuations. I hope you find what I write useful.
The articles will probably replace my Watch List reviews, which I admit have been somewhat infrequent of late. I would like to think a return to proper schedules and deadlines will increase my content output…
…and in doing so help me find decent buying opportunities and improve my investment returns!
I will post a link on this Blog to every SharePad article that I write. I kick off with a review of pawnbroker Ramsdens (RFX). Simply click here to read my debut piece for SharePad.
Maynard Paton
23 August 2018
By Maynard Paton
Update on Mincon (MCON).
Event: Interim results for the six months ending 30 June 2018 published 13 August 2018.
Summary: MCON extended its bumper 2017 progress with some very satisfactory first-half figures. The specialist drill manufacturer claimed greater orders from the mining sector had supported 12% organic sales growth, while my sums suggested a robust 19% operating margin was reached during the second quarter. In addition, current trading appears healthy and a recent acquisition may have performed much better than expected. However, a P/E in excess of 20 probably reflects all of the positives, especially given cash conversion remains below par. I continue to hold.
01 August 2018
By Maynard Paton
Update on City of London Investment (CLIG).
Event: Trading update and shareholder presentation/summary results for the year ending 30 June 2018 published 17 July 2018.
Summary: Bumper first-half figures and subsequent monthly updates had already ensured the fund manager’s summary annual results would be positive. However, the second half did witness funds under management decline and the group’s own projections for the coming year have now been reduced. In addition, client fees have been cut once again while the main emerging-market strategy continues to underperform. I still hope that, one day, this cash-rich, high-margin business can attract meaningful new mandates to spark a share-price re-rating. Until then, a 6.8% income remains available. I continue to hold.
27 July 2018
By Maynard Paton
Update on Daejan (DJAN).
Event: Preliminary results for the year to 31 March 2018 published 17 July 2018
Summary: The commercial property group once again left its numbers to do most of the talking, as new all-time highs for revenue, net asset value and the dividend were accompanied by only two paragraphs of management commentary. A bonus this year was US tax changes adding £40m to the balance sheet, which now stands at £111 per share and continues to dwarf the £64 share price. Conservative borrowing levels, veteran family management and an illustrious track record remain the foundations of this investment, and, in theory at least, a 14% earnings yield is available, too. I continue to hold.
20 July 2018
By Maynard Paton
Update on Tristel (TSTL).
Events: Trading update for the year ending 30 June 2018 published 13 July 2018, director share sales published 16 July 2018 and shareholder open-day presentation hosted 17 July 2018.
Summary: Earlier this week I attended TSTL’s third annual open day, and this year the event was accompanied by news of hefty director selling as well as confirmation of record revenue and profit. The chairman has reduced his shareholding from 19% to 15%, and confirmed he is looking to sell more during the next few years. The marquee presentation did not provide any great revelations, but one slide did show a useful sales comparison between the UK and overseas, while another slide suggested full-year sales of the group’s ‘core’ disinfectants had just advanced an impressive 18%. I continue to hold.
30 June 2018
By Maynard Paton
Happy Saturday! I hope you continue to enjoy my Blog… and that your shares have been sizzling higher during the recent hot weather!
My portfolio has been simmering nicely throughout the last three months. In particular, positive second-quarter contributions from Bioventix and Getech have now added to the decent first-quarter efforts of M Winkworth, Mincon and Tristel. However, System1 has sadly joined Tasty as a notable 2018 loser.
It has all meant that, half way through the year, I am up 6.7% versus the FTSE 100 returning 1.7%. I am glad to be in positive territory following a tricky Q1, and I trust I can maintain a gap to the market during the second half.
Recent RNSs from my shares have been broadly positive. Once again there was a mix of statements, ranging from very satisfactory to rather lacklustre, and I am very happy that no major horror stories emerged!
There was one underwhelming update, though, which prompted a disposal and my portfolio’s only Q2 activity. Let me explain what has happened.
19 June 2018
By Maynard Paton
Update on Mountview Estates (MTVW).
Event: Preliminary results for the twelve months to 31 March 2018 published 14 June 2018
Summary: This RNS was more interesting for the management comments — all 626 words — than the actual 2018 financials. Indeed, MTVW’s chief exec is probably the first-ever boss to tell shareholders their business has a “finite life” and had essentially operated in an ex-growth market for 30 years. Hardly inspirational stuff… until you realise the dividend was lifted 33% and has now grown 47-fold during the last three decades. Mind you, this property-trading specialist will at some point have to call it a day — and dissolve an estate that could be worth almost double the current share price. I continue to hold.
15 June 2018
By Maynard Paton
Update on Castings (CGS).
Event: Final results for the twelve months to 31 March 2018 published 13 June 2018
Summary: These results came in below the engineer’s earlier expectations — but the performance did not appear too bad in the circumstances. Although CGS’s smaller machining division continues to lose money, its problems now look to be contained. Meanwhile, the larger foundry operation seems to be progressing well following a decent second half. A hefty cash position and the illustrious dividend remain key attractions, but the P/E of 13 does not suggest an immediate bargain. I continue to hold.
08 June 2018
By Maynard Paton
Update on System1 (SYS1).
Event: Annual results for the twelve months to 31 March 2018 published 01 June 2018
Summary: A series of poor updates had already heralded what SYS1’s founder described as a “miserable” performance. However, shareholders did receive a candid explanation of what went wrong — with a Warren Buffett-backed bid to buy Unilever taking some of the blame. However, a greater concern is whether SYS1’s pioneering market-research techniques remain that pioneering — the competition is apparently catching up. A lot now rests on whether SYS1’s founder has the ability to lead another recovery. I continue to hold.
25 May 2018
By Maynard Paton
Today I am experimenting with a new Blog-post format that covers short-ish reviews of three different companies.
The shares involved this time are all small-caps:
* AIREA (AIEA): This flooring group recently received bid interest from quality operator James Halstead. Although the share price seems cheap and offers asset backing, there is no evidence yet of any long-term business qualities.
* Octagonal (OCT): High margins, attractive growth and net cash are among the attractions at this niche financial-services firm. However, management’s ‘connections’ are not those you would associate with tip-top executives.
* Richoux (RIC): A bombed-out share price and Kaye family involvement bring me to this somewhat muddled restaurant group. Can the new boss lead a turnaround… and repeat the multi-bagger success he enjoyed at Prezzo?
Let’s see if any of this trio are worthy of further investigation.
18 May 2018
By Maynard Paton
Update on Andrews Sykes (ASY).
Event: Preliminary results for the twelve months to 31 December 2017 published 18 May 2018
Summary: These results were quite satisfactory, although sadly the record figures I had hoped for did not entirely come through. Indeed, after a bumper first half, I note the second half could only match last year’s H2. Nevertheless, I was pleased the specialist hire group did not have to rely on “significant extremes in climatic conditions” to stimulate extra demand for its air conditioners, heaters and pumps. Meanwhile, margins remain high at 24%, net cash has grown to a hefty £20m and a 14x cash-adjusted P/E does not seem that excessive. I continue to hold.
16 May 2018
By Maynard Paton
Today I am continuing my hunt for Watch List shares by looking at Best of the Best (BOTB).
Here are the initial attractions that prompted this research:
* Long-time entrepreneurial ownership: The chief exec established the group during 1999, has been in charge ever since and continues to boast a 50% shareholding.
* Worthwhile growth history: Online sales quadrupled in value between 2012 and 2017 and currently represent 82% of total revenue.
* Conservative funding: The accounts have regularly showcased net cash and special dividends, and may in time enjoy a VAT reclaim windfall.
As usual, I am applying a question-and-answer template to help me pinpoint companies that match the criteria set out in How I Invest. I am looking for as many Yes answers as possible.
01 May 2018
By Maynard Paton
Update on World Careers Network (WOR).
Event: Interim results for the six months to 31 January 2018 published 30 April 2018
Summary: Yet again the recruitment software developer delivered results that warned of greater costs and lower client fees. However, this statement was also accompanied by details of a company rebranding — which seems a complete joke project to me. Instead, management really should be addressing why the firm looks to have lost its largest customer. I have sat on a 35% loss here for three years now, and have been taught a tough lesson about illiquidity. Sadly I continue to hold.
20 April 2018
By Maynard Paton
Update on Record (REC).
Event: Trading update for the three months to 31 March 2018 published 20 April 2018
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.
30 March 2018
By Maynard Paton
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.
29 March 2018
By Maynard Paton
Update on M Winkworth (WINK).
Event: Final results for the twelve months to 31 December 2017 published 28 March 2018
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.
28 March 2018
By Maynard Paton
Update on S & U (SUS).
Event: Preliminary results and presentation for the year to 31 January 2018 published 27 March 2018
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.
26 March 2018
By Maynard Paton
Update on Bioventix (BVXP).
Event: Interim results for the six months to 31 December 2017 published 26 March 2018
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.
21 March 2018
By Maynard Paton
Update on Mincon (MCON).
Event: Final results for the twelve months ending 31 December 2017 published 20 March 2018
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.
16 March 2018
By Maynard Paton
Update on FW Thorpe (TFW).
Event: Interim results for the six months to 31 December 2017 published 15 March 2018
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.
13 March 2018
By Maynard Paton
Update on Tasty (TAST).
Event: Preliminary results for the 52 weeks to 31 December 2017 published 13 March 2018
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 has 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.
08 March 2018
By Maynard Paton
Today I’m continuing my hunt for Watch List shares by evaluating Town Centre Securities (TOWN).
Here are the initial attractions that prompted this research:
* Illustrious payout history: The business boasts an unbroken 57-year record of dividend payments.
* Substantial long-term shareholders: The founding/managing family boast a sizeable 52%/£78m investment.
* Discount to book value: The 281p shares trade at a 25% discount to the group’s 375p net asset value.
As usual, I’m applying a question-and-answer template to help me pinpoint companies that match the criteria set out in How I Invest. I’m looking for as many Yes answers as possible.
02 March 2018
By Maynard Paton
Update on Getech (GTC).
Event: Final results for the seventeen months to 31 December 2017 published 28 February 2018.
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.
23 February 2018
By Maynard Paton
Update on Tristel (TSTL).
Event: Interim results and shareholder presentation for the six months to 31 December 2017 published 20 February 2018
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
15 February 2018
By Maynard Paton
Today I’m re-starting my hunt for Watch List shares with a look at James Latham (LTHM).
Here are the initial attractions that prompted this research:
* Owner-friendly management: The Latham family has £75m-plus riding on the share price and appear to run the business in a sensible (and LTIP-free) manner.
* Respectable track record: Recent decades of the group’s 261-year history have witnessed average dividend growth of approximately 10% a year.
* Asset-rich accounts: The books boast a sizeable cash position, freehold assets and a share count that has not changed since at least 1994.
As usual, I’m applying a question-and-answer template to help me pinpoint companies that match the criteria set out in How I Invest. I’m looking for as many Yes answers as possible.
19 January 2018
By Maynard Paton
Update on City of London Investment (CLIG).
Event: Trading update and shareholder presentation/summary results for the six months ending 31 December 2017 published 17 January 2018.
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
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.
01 January 2018
By Maynard Paton
Happy New Year!
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.
29 November 2017
By Maynard Paton
Update on Daejan (DJAN).
Event: Interim results for the six months to 30 September 2017 published 29 November 2017
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