The portfolio finished the week up 0.95% on the week and 62.89% on the year.
XPP continued to perform well up 16.7% on the week and sits at about 10% of the portfolio. Any significant pull back from these levels and I will certainly increase my position size.
The portfolio was helped along by ACSO up 7.87%, SOM up 4.91% and IQE up 4.89%. The only real lagard was TET which was off 3.70%.
I have been listening to Howard Marks – The Most Important Thing and Nicholas Nassim Taleb – Fooled by Randomness, while driving or at the gym (much better for making the time pass that techno music!). Both of these have prompted me to put a little caution into my portfolio and I liquidated a small part of BOO, FEVR and BVXP on Friday afternoon. This brings cash up to being my largest holding at 16.6% of my portfolio. This may just be a case of fixating on the latest piece of information but I think few would argue that the market might be getting ahead of itself. Of course the market (as someone more clever than me said) can stay irrational for a very long time, so it is a question whether I have liquidated to early or whether I should continue to liquidate further tranches of the portfolio.
It was a hard decision to sell even a small part of these holdings but as they represent nearly 50% of the portfolio selling part of these was the only option.
As for the future my inclination is to push this percentage up to 25%. That said I have fresh funds to deploy in the form of my wife’s SIPP, which is currently half in cash and is slowly being deployed with a strong valuation bias (with the exception of BVXP).
This should have been published the day after AVS agreed to a takeover but for some reason that didn’t happen.
I posted back in September:
“I also topped up Avesco. This is a sound undervalued company with good metrics and Stockranks. I anticipate continuing to buy this on the way so that it joins BOO, FEVR and BVXP as fourth heavily over weight holding in the portfolio.”
AVS is currently 5% of the portfolio”
As many (though not if you read the FT, it is not even mentioned) of you will know now AVS was on the end of an agreed takeover offer from NEP Group Inc yesterday (RNS) at a 125% premium to the Wednesday 16th closing price.
To see the RNS come through and then take in what it meant was an amazing sensation. Though whether it will ever be repeated to this degree I am not sure.
It was Paul Scott over Stockopedia on his SCVR who lit the spark. I would love to be able to say and as wrote in column yesterday:
“Unfortunately (or fortunately!) I don’t have the time to analyse the s@&t out of stocks and looking back at my notes I was simply attracted by the ROA etc figures, the divi growth and the fact that it on Stockopedia figures it was trading below book. That was enough for me.”
I still have a business test takes up huge amounts of my time and this simply does not leave the time to spend ages and ages on analysing a stock to make sure it is not a mistake waiting to happen. But I believe:
- The only way to learn is to be in the market and learning from what you do wrong and right
- In the current enviroment there is simply no point in leaving ones money sitting in the bank account
So I continue to invest, read and learn as I go along. Yes there have been some bumps along the way and we have been in a generally rising market but I am well ahead of any metric you want to use. Now I must make sure I am not complacent.
Anyway back to AVS. Before yesterday AVS was about 6% of my ex-cash portfolio and was my 6th largest holding and it had been my intention to top up to the 10% of portfolio level. As I write (18/11/16 10:07) it is now 14.1% of my portfolio showing a gain of £20,592. Most, though not all, of that came yesterday.
Well didn’t Crawshaw take a battering today. Down 43.54% and 8% yesterday. This is by far the largest one day fall I have been on the end of and while not great I am ok with it. It took, along with a 2.13% fall from BOO (probably spooked by disappointing update from NXT which seems daft to me) my portfolio down by 0.8% which is tolerable and nothing like the falls in the days following Brexit where half my all time gains were wiped out. All now recovered and then some.
This was always a bit of a punt and a stock that I should never have probably been in. No delete that should never have bought. But we are where we are.
After the fall yesterday I placed a limit order to top up my holding to 2% out of market hours. (something I learned from another book I read – Guy Spiers Education of a Value Investor I think but I can’t be sure. Place your orders in the cool of the night when you are less likely to be influenced noise and market gyrations.)
I then had to make a descison: exit the position or top up. Doing nothing was not an option I believe. See the book The Art of Execution for more on this. In the end I decide the market had over reacted and I placed a second order to take my holding up to 3.38% of portfolio ex cash or 2.93% of portfolio including cash.
Anyway I bought Crawshaw originally as a punt but also with the intention of sticking with it for the long term and I am sure that Noel Collett having been CEO for barely 18 months is not going to want to throw in the towel at this stage. I will be watching very carefully to see how things go. As an aside I am still holding around 12% in cash.
On the subject of cash I will cover that tomorrow if I have time.
Opened small position in AVON at 1% of portfolio. Reasons:
- ROCE of 19.1%
- ROA of 37.2%
- Forward PE is 13.9 and the historic PEG is only .54
- Growth in sales and profits have been steady.
- There is a small divi.
- Stockopedia are Q=79 V=20 M= 73 giving an overall rank of 62 so nothing special.
- Qualifies for two Stockopedia screens Buffettolgy-esque Sustainable Growth and Buffettolgy-esque Historical Growth Green
- Favourable comments from Paul Scott and commentators.
Only a small position to study some more. I find it useful to put ones toe in the water as long as the fundamentals seem sound and then study some more before selling and moving on or adding to the position.
I tweeted yesterday about my holding in BOO (Stockopedia) (Google Page). This is now up 100% since my initial purchase on 15th October 2015. I then topped up in February 2016, April 2016 and June 2016.
The increase means that Boohoo is now 15% of my portfolio including cash and 17.97% ex cash. It is not my intention to top slice while the outlook for the company remains the same or improves and even then any set backs would have to be permanent rather than temporary in nature.
This raises the possibility of the stock having a huge weighting in my portfolio. For example if Boo doubles while the rest of the portfolio increases by 10%, Boo would become 28.5% of my portfolio. If it goes higher than this, which I believe it will, then there is a prospect of it being 30% to 40% of my portfolio.
I am only aiming for modest returns (in the sense that if I can equal say the FT250 or All Share the journey will have been worth it) over say a 10 year period. So if Boo can be up 20%/25% over a couple of years then I will happy but (and it is a big but) if it can three, four or five bag over a 5 year period then it can truly transform my investment returns.
My final thought on this for the moment is that if BOO was my business (that is I owned 100% of the stock) I would not be selling out now (to say Amazon) just because my share price had increased 100%, so I dont see the logic of selling out when when I own 0.00363% of the business!
That is all for now but this is probably a subject that I will return to again. Portfolio size, diversification, diworsification and running your winners is something that interests me a great deal.