Commentary

This website has been offline for about 12 months whilst I focused on some personal changes and my main Businesses.

This Post is a potted catch-up, triggered by my visit to the London Investor Show / Mello yesterday. Some great speakers, including Lord Lee, who I had heard of but never encountered – but someone I will now look out for & seek out Podcasts & books. Very similar investment philosophy to mine.

The other main change is that I have inherited some money that I have put to use into my Portfolios. Having used up my ISA and SIPP allowances I needed to open a regular Trading account. This unfortunately means I will need to pay CGT on any gains here, but so be it. I plumped for an AJ Bell Trading Account due to its good reputation and low fees. Been very happy to date.

That was then – Holdings as of July 2023

This is now (2 November 2024)

Total return includes Dividends received since purchase. Apologies for non-pretty formatting. Airtable is good, but there are some parts of Stockmarket Eye that are sorely missed. I’ll work on this.

Changes since June 2023 and commentary

Macro changes – I received an inheritance in a couple of lump sums. Normally the number of shares I have held has been in the mid-teens. I could have carried on, but just making my minimum holding larger, however as I started to use Stocko more, more shares came up as suitable candidates. Again, realising my limitations in that I am an armchair investor, not someone that can or wants to spend all day analysing I decided to widen my Portfolio, which spreads the risk from investments on the edge of my sphere of competence. The number of different Companies I hve invested in has shot up from mid-teens to just under 50!

Towards the summer of 2024 I’d had some decent runs with some of my Property shares and, whilst not unhappy, some had really shot up and I decided to sell a few down as the prospect of a Labour Government loomed – and materialised.

Changes since June 2023 then:

Buys

EPWN – Epwin 72p. Window Manufacturer. Decent DY with cover. Seems a solid enough Business.
VP. – VP 5.79. Tool hire Business, poised for any investment in Housing benefits.
BRCK – Brickability 54p. Makes and sells bricks. Same philosophy as above.
NWG – NatWest Bank 208p, then a second tranche with it dipped to 178. No brainer really. Bank, solid figures and earnings with low PER.
BATS – BATS 2299p. Solid Divi payer, topped up.
STB – Secure Trust Bank two tranches around 700p. Again low PER, plenty of asset backing.
SFOR – S4 Capital 43p – Ad Agency set up by Maurice Saatchi after he left Saatchi. I think it will get absorbed into something larger one day.
CLI – CLS Holdings 91p – Property investment. Super yield, benefit from decreasing interest rates.
GTLY – Gately Holdings 125p. Professional and Legal Services/ Seems a solid Business.
HSS – HSS Hire. 8p. Bit of a Boom or bust punt here. Might multiply – or go to zero. Meh.
FDM – FDM Holdings 350p – Software house providing consultants. Decent PER and DY
RWS – RWS Holdings 193p & top-up at 131 – AI Software. AI is everywhere and it has a fistful of Patents. Possible takeover candidate. Topped up after a profit miss, but only just, this seems so undervalued right now.
JUP – Jupiter Fund Management 88p – Fund Managers seem particularly cheap at the moment
IMB – Imperial Brands 1687p – topping up a stalwart dividend payer
CRST – Crest Nicholson 188p – Topping up an out of favour Property stock
- Sidenote. CRST was subject to a takeover bid and I normally sell using my ‘Gift Horse’ principle. I didn’t and subsequently the Bid was dropped. The shareprice fell back to its purchase level again. D’Oh.
EVOK (was 888) – Evoke/888 82p + top-up at 72p. Another Boom or bust share. If it can tackle its debt there is a greatly underpriced business.
MNG – M&G 202p – See earlier comment about Fund Managers
AVAP – Avation 145p – Bought after it was highlighted on Stocko. A lot of buried value here, especially in Aircraft purchase options, that other can buy to jump the queue. Some say it’s undervalued by about 50%.
STJ – St James Place 497p – See above, but this was also bittersweet as SJP managed the funds that were used to grow the Portfoilo. ‘Managed’ being a generous term as it managed a paltry 4% pa return. This was my way of getting my own back from the bombed-out share price and SJP Associates’ lack of care.
LGEN – Legal & General 228p – A stalwart that I should really have held anyway. Undervalued, decent dividend payer.
PRU – Prudential 696p. Been under pressure because of the China / Hing Kong connection. I have hopes that when China recovers, som Chinese Financial Business will take an interest in it. Until then, lie back and think of the Dividends.
PHNX – Phoenix 477p – Another High Yield player.
WPP – WPP 743p – A big player fallen on hard times.
TATE – Tate & Lyle 598p – no longer into sugar, but some interesting businesses in its portfolio.
RWA – Robert Walters 381p / 339 + top-up on a dip – Recruitment. Out of favour decent Company. Price dipped on what was perceived as a profit warning but I’m not convinced.
SDR – Schroders 341p – See above…
OSB – OS Bank 375p – Low PE, excellent yield.
KGH – Knights Group 128p – Professional Services
LIO – Liontrust Asset Management 581p – you know the pattern by now…
IOM – Iomart 88p – nice solid recurring revenues
HEAD – Headlam 130p – Flooring Company, fallen on hard times, but if Labour’s drive for more property builds takes off…
GSK – Glaxo – One of those I’ve been in and out, catching the cycles. Back in. Big, but not that big it couldn’t be swallowed up.

Buys and subsequent sells

VOD – Vodafone 63 / 70p – Trading the volatility whilst waiting for my existing holdings to turn a profit. One day, Rodney…
SSP – SSP Group 143 / 160p – Sold as it was in profit and I couldn’t actually see the reasoning as to why I had it anyway.
BT.A – BT Group 105 / 145p – Caught this just right when it surged after Results. Sold as I saw it as fairly valued and could better deploy my money elsewhere.
HFD – Halfords 149 / 146p – is it me, or do they never seem to be busy? Got my money back once you include dividends.

Sells

CEY – Centamin – one I have been trading on and off. Missed out on a takeover bid, unfortunately

So there you have it 12 or so months of catch up. Hopefully going forwards I’ll be more timely with my reporting. Off to buy Lord Lee’s Book.

888 Holdings (LON:888) is a Betting and Gaming Company. It recently (July 2022) purchased William Hill, that it is struggling to digest (debt based purchase, so currently owes £1.4B). As well as William Hill, it also owns other big name gambling sites such as 888casino, 888sport, 888poker and Mr Green.

Whilst the debt is massive and will hold back growth, a lot (70%) of its interest payable is fixed rate and therefore not affected by recent rate rises. 30% is, however, and also a lot of its customers will also be affected with increasing mortgage rates. Will this affect turnover and Profit after interest? Undoubtedly.

The debt is, however, covered easily by net income from its activities (as of its last Report).

A couple of months ago, another Gaming Company, FS Gaming bought a 6% stake in 888 with a view (as it later transpires) to install its Directors onto the Board of 888. Longer term, perhaps the idea was to engineer a takeover from the inside. Who knows? Anyway, it put a rocket under the share price and it jumped by about 50% over the next month or so.

I held a significant number at the time and took the decision to take my money and run. Always good to take a profit. It then retreated back a fair way (about 40%) and I was pondering on a re-entry at some point. Luckily (as it turned out) the price started to climb back again, so I held off, knowing the Results were out fairly soon. I wanted a bit more certainty about current trading vs debt repayments before committing.

On Friday, out of the blue, 888 announced that it had been in discussion with FS Gaming about installing its Directors on to the Board, but it has come to light that one of the previous Businesses the Directors had been involved with was under investigation. Gaming Company Directors need to be whiter than white and the UK’s Gaming Commission was investigating this other Company, oh and at the same time it was reviewing 888’s Gaming licences. This is not good news. If 888’s licences are revoked, that’s 60% of its revenues gone in a flash, it will be unable to service its interest payments, the game will be up. 888 announced that it was immediately terminating all discussion as it sought to distance itself from FS Gaming staff.

Unsurprisingly the share price tanked 25%.

Where to from here?

Who knows?

If the Gaming Commission finds issue and revokes 888’s licence, it is toast

If FS Gaming increases its stake to over 10%, this will trigger a review, the licence will probably get revoked and 888 is toast.

If another Organisation takes a 10%+ stake and the Commission deems it unsafe, 888 is toast.

If FS maintains or sells off its stake and 888’s review is clean it will probably rocket again.

Personally I’m sitting it out until Results Day to see what that holds. I don’t have any spare cash currently anyway. I would have had to sell something else to buy in. If the results are not a disaster because of the interest rate double whammy, it might be worth a punt on 888 being given a clean Bill of Health.

In summary: It’s never wrong to take a profit and unexpected news, good or bad can come out of the blue. These can create buying and selling opportunities when Mr Market gets the pricing wrong. I got lucky in my buying and selling. I’m trying to not let that go to my head and am considering carefully whether to get back into 888.

Catch up – November 2024