Category: Portfolio

Twixmas musings

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I’ve spent the Christmas break tidying up this website a bit, updating the year’s figures and also having a run through my filters to see what opportunities are out there.

Apart from previous holdings that I may buy back into, I have two filters set up on Stockopedia that reflect my ‘value’ approach.

1. Low PE – P/E < 8, div yield > 5% and larger than £20M

2. Near year lows – Price within 20% of year’s lows, Div yield > 4%, P/E < 10 and, again larger than £20M

There are certain sectors that I exclude such as Biotech research (feast or famine), Semiconductors, Automobiles, renewables and REITs (amongst others). I just don’t know enough about most of these to make an informed decision.

From the rest, this is my current list of ideas.

Hilton Food Group (HFG). Supplies food to supermarket chains. Price/Sales is only 0.1 and the 7% yield is covered, however it operates on really tight margins. One wrong move and zero profit.

Investec (INVP).

“Investec plc is a United Kingdom-based company. The Company provides its clients with products and services in the corporate mid-market, bespoke solutions to high-net-worth clients and access to a wealth management offering through its strategic partnership with Rathbones.” [Stockopedia]. Decent Business, good margins, great PE and PEG and DY.

Not bargain basement territory (it has risen fivefold since 2020) but is still at 2018 levels. Hmmm.

Sabre insurance (SBRE). Car insurance

“Sabre Insurance Group plc is a United Kingdom-based holding company. The Company is a motor insurer with a diverse, multi-channel distribution strategy. It is engaged in the writing of general insurance for motor vehicles, including taxis and motorcycles. It has a network of approximately 1,000 insurance brokers across the United Kingdom.” [Stockopedia]

Earnings are volatile, which is reflected in a PEG of 16 currently. PE is 9 and DY is knocking on 10%

Arbruthnot Banking (ARBB). Banking Services

“Arbuthnot Banking Group PLC is a United Kingdom-based holding company. The Company is primarily involved in banking and financial services. Its segments include Banking, Wealth Management, Renaissance Asset Finance (RAF) ” [Stockopedia]

Niche banking and financial lending services. Share price has been on a rollercoaster this year, starting at 900p, hitting 1100p and back down to 900p again. PE 8, useful 6.5% DY, covered twice. Margins a little below average and share price hasn’t really gone anywhere for 5 years.

In addition, these have been on my watchlist and are getting interesting, once again

WPP (WPP). Very undervalued compared to its peers currently and has had a few recent Contract wins.

Pets at Home (PETS). Everyone loves their pets and with the bolt on Veterinary Agreement with CVS renting floorspace it’s at decent value currently.

Time to have a think about the above. Watch this space.

Secure Trust Bank (STB) What a difference a seasonal break makes.

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Just before Christmas I was mulling selling some shares to keep my powder dry. All the predictors are for a tough 2026 Q1 for the consumer and Business owner (myself included).

Some of the mulls were shares that had made decent gains and others that were in profit but not well understood by me. I don’t analyse my post-sale share performance. Obviously I take the odd peek (who doesn’t) but once you have made the sale you shouldn’t really look back, unless it is cyclical and you are looking to buy back in should it fall back. I sold BATS and IMB about a year ago and they have continued to climb. On the other hand, I gave up with EVOK, sold at a loss and it has now dropped by another 60%. Swings and roundabouts.

Whilst I eventually decided to sit on my hands for now, Secure Trust bank (STB) was mulled at one point as it had had a great run following it getting off lightly after the car finance issues blighting the trade. Anyways, at Close of Play Christmas Eve, literally 2 minutes before the Market shut down it issued a Press Release stating that it had sold its Car Finance Book at a Premium. It had already stopped writing new Business and was running it off, so this is a nice clean way of ending and it can concentrate on the rest of the Business.

When I logged on this morning – the first time the Markets had opened since then, it took me a while to spot the reaction. I check RNSs first thing and as this information was released 5 days ago I didn’t spot anything, until I saw the share price reaction. As I type, it’s up 16-17% and climbing.

That is a great End of Year Brucie Bonus and re-emphasises the adage about “It’s not timing the Market, but Time in the Market that counts”. If I had sold, I would have missed out. Instead the shareholding is knocking on a 100% return over 2 years.

Top of the Season to you all.

Dominos (DOM) – Sell, Brickability (BRCK), VP (VP.) and Epwin (EPWN) buy

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Dominos

Dominos leapt after a smashing set of results and it seemed rude to not take a 50%+ profit after just 6 months. I just think it’s got a bit ahead of itself now and hopefully it might sink back later in the year to buy back in again.

Sell price: @ £4.02
Buy price: £2.62
Dividend income: 2.5%

Gain: 55.5% total (2.5% + 53%) 130% pa (not compounded)

With the Dominos money burning a hole in my pocket I’ve been playing with the Stock Screening tool on Stockopedia. I’m looking for companies within 20% of their 52 week low, with a reasonable PER and PEG. Minimum size £20M although in practise I’m more comfortable with the £50M + Organisations. I also filtered out certain sectors as they are not for me. Pure exploration and Biotech for instance.

This threw up a list of about 120 and I trawled through the figures this weekend. This narrowed it down to a shortlist of about 40, which I then ranked, then had enough cash to purchase three of the top ones. Plenty more to purchase, just no cash to do so… ones that didn’t make the cut, for instance, include the Banks Barclays and tarnished NatWest.

Brickability

Brickability Group PLC is a United Kingdom-based construction materials distributor. The Company supplies facing bricks, blocks, rainscreen cladding systems, architectural masonry, paving, roof tiles and slates to the construction industry (Stockopedia)

Does what it says on the tin. Makes bricks. Income has grown rapidly in its 3 years of trading from £11m to £600m with profits of about 5-10%. Positive trading update and cost pressures are abating. Taken a modest stake as it’s a smaller than my normal size Organisation.

Buy @ 54.47p with a Dividend yield of 6% and PER of 5.4
Portfolio %: 2.2%
Total Portfolio Holdings: 2.2%

VP Group

Vp plc is a United Kingdom-based equipment rental specialist company. The Company provides specialist products and services to a diverse range of end markets, including infrastructure, construction, housebuilding, and energy (Stockopedia)

More steadily rising turnover and profit, but positive noises from the Management team. Brisk are not yet going out of fashion, especially with the drive for more affordable housing, whatever the colour of the Government over the next 5 years.

Buy @ £5.79 with a Dividend yield of 6.5% and a PER of 7
Portfolio %: 2.8%
Total Portfolio Holdings: 2.8%

Epwin Group

Epwin Group Plc is a manufacturer and supplier of energy efficient and low-maintenance building products, including windows, doors, and fascia systems. (Stockopedia)

Energy efficient”, “low maintenance”. Nice.

Trading Update end July:

Trading ahead of a strong 2022 comparative; confident of achieving full year expectations

and

Trading during the first half of 2023 was in line with the Board’s expectations. Revenues increased to approximately £180 million, with the Group continuing to trade ahead of a strong 2022 comparative.

Buy @ 72.3p with a Dividend yield of 6.2% and a PER of 7.3
Portfolio %: 2.2%
Total Portfolio Holdings: 2.2%

888 Reports next week (15th). It’s bounced back strongly and quickly since the sell-off after I sold, so it will be interesting to see whet the effects of interest rate rises have had on both its costs and the ability of its customers to place bets. I’m still cautious and, so far, it’s about 10% below my selling price.

I’ll update the Portfolio later this month.

888 – what a difference a day makes

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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.

Centamin Mining (CEY) – Buy

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Aand we’re back in with a modest investment. This is one I’ve been in and out of, trying to ride the waves. So far that has paid off. Not a recommended investment method on its own, but small amounts of speculative money on top of the main Buy and Hold strategy.

All cash is now committed so will need a sale to add anything new anywhere.

I have a mental note to complete the Portfolio Q2 summary. A few things have been going on in the background, which has delayed this, but it was another quarter of outperformance.

Buy @ £0.90 with a 3-4% Dividend yield whilst I wait for the value to climb.
Portfolio %: 1.8%
Total Portfolio holdings: 1.8%

888 Holdings (888 – Sell)

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Sometimes you cannot look a Gift Horse in the mouth, as they say.

Earlier on this month a couple of Gambling Companies declared a stake in 888. This has put a rocket under the share price, taking it from about 70p to about £1.20 today.

888 is a high risk stock since it bought William Hill for massive amounts of debt. Whilst a lot of it (70%) is fixed debt for a couple of years, the rest is not. In their April Trading Statement, 888 highlighted debt being a possible issue, restraining investment. Since then, inflation remains stubbornly high and rates have climbed, with more to come.

Whilst I don’t follow Sports (so take my thoughts with a pinch of salt) , I’m not aware of any significant events in 2023 that could lead to a surge in betting. Similarly, a lot of fixed rate Mortgages are coming to an end and money is going to be tighter for the remainder of 2023.

This is a Business with a high level of debt that means that any dip in earnings will put the Business into the Red. Debt payments will have a disproportionate effect on profitability. With a half-year Report due any day now, there is a not insignificant chance that earnings will be down and possibly even some sort of money raising to pay down debt.

For me the downsides currently outweigh the upsides, so I have sold all my holdings. I’ll have a muse as to what to do with the cash. TEP, IHC, CEY and ULVR are under consideration.

Sell price (ave): £1.195

Buy price (ave): £0.79

Dividend income: 0

Gain: 50% total (0% + 50%) 250% pa (I wish….)

Centamin (CEY – Sell) / 888 (888 Holdings – Buy)

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OK, so after musing over the weekend I’ve swapped my Centamin Holdings for more 888.

Centamin just trundles on. I don’t think it’s ever going to make vast profits – a lot of it is given away as parts of its Joint Ventures with (say) the Egyptian Government. Reviewing figures it seems to be moderate feast and moderate famine, a lot depending on the Gold price.

Nothing fundamentally wrong with the Business but I’m happy to trade the cycles, so if it drops to double digits I’ll revisit it. I’m happy to sell at a 10% profit over 2 months.

Sell price: £1.0981

Buy price: 99.25p

Dividend income: 0

Gain: 10% total (0% + 10%) 60% pa (linear, not compounded)

As promised, I’ve topped up my 888 Holdings at 82.3p to a shade under 8% of the whole portfolio. That will do for now.

888 Holdings (888 – Buy)

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Had a few dividends come through so have topped up these today. Whilst they have huge debt in relation to their Capital, the interest payments are well within their cashflow and Gambling, whatever your opinion, is a solid form of income. Following the takeover of William Hill that cashflow should start kicking in as well.

I’d like to go overweight in these but would need to sell something to do so. Mulling this option over currently. In the meantime they now represent about 5% of my Portfolio. I’d like to get that to 10%.

No chart update just yet.

Buy price: £0.83 ish
Portfolio %: 6%
Portfolio total: 8%

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This Blog must in no way be construed as investment advice. I’m not an Advisor, I’m just a Private Investor that takes an interest in Stocks and Shares as a way of increasing my standard of Living & having a bit of fun. Feel free to comment. All comments are Moderated before publication, keep them relevant, short and interesting otherwise they won’t be published. My Blog, my Rules.

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