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.
As many of you will know (though not if you read the FT, it is not even mentioned) by now AVS was on the end of an agreed takeover yesterday from NEP Group Inc at 125% (2.25 times) the closing price on 16th November 2016.
Reading the RNS was surreal and I expect not to be repeated experience.
It was Paul Scott over at Stockopedia who lit the spark and I would like to say that then my razor sharp investing skills kicked in and I analysed the stock to death and then decided to take a position. However things were slightly different to that, as I wrote yesterday in comment to Paul’s column:
“I bought in June, September and early October. 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, was trading below book. That was enough for me.”
I still have a business that takes a huge amount of my time and I simply don’t have the time to spend analysing a stock to death before I invest (I am comforted by the fact that there is some research that indicates that you can over analyse and that beyond half dozen metrics you don’t increase your advantage. Somebody wrote yesterday that he was held back from buying because of the spread but if you think you are going to see say 100% over 3 to 5 years is a spread of 5% that important?) but I do some analyst and like to see:
- Little, ideally no debt. (Thanks to Robbie Burns for that one)
- Substantial management stake. (Thanks to Lord Lee for that one)
- Honest management so no VLK for me. (Thanks to Warren Buffett for that one.)
- Good ROE, ROA, ROCE and operating margin figures
- Dividends (preferably rising)
- Low PE (nice but not essential. I own FEVR and BOO after all!)
What I now have to do is work out what I can learn from the AVS
investment and whether this might translate across to other investments.
Anyway back to AVS
. Before yesterday’s rise it was my 7 largest holding and about 7.15% of my ex cash portfolio. It is now my second largest holding (BOO
still has the top spot).
My ex-cash portfolio was up 7.5% on the day.
My average purchase price was 266p
My gain on the stock is £20,313.
I have not sold as to do so would be to give up £1,000 by not waiting for the sale to complete though may be makes sense to lock in half now and give the market makers their turn! But it does seem a lot of money to me!
Reports coming out of China at the weekend made me optimistic that external pressures from the economies that matter – US, China, Japan and the EU will mean that Brexit when and if it happens has a chance of being very benign.
I therefore decided to top up my holdings in Barratt, which I should have done after the Brexit fall but I was too traumatised (I have to say more from the effect on my business rather than the falls in the stocked market). That said I still failed my first to buy when there is blood on the streets or being greedy when others are fearful. Hopefully I will learn from this for the next time around.
BDEV is still a modest 5% of the portfolio.
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
Finally I added to my position in EMR. This is not a massive conviction holding and represents only 2.5% of the portfolio and has a very high Stockrank of 98.
I wrote this on Monday 5th September