September Performance Review

This month was a reasonable one, with profits of £5,518. ISA balance is now £213,167 representing an annualised rate so far this year of 27.92%.

Next staged a decent recovery following a more upbeat outlook from the Board than has been the case in recent times. Overall I still see this as having a very strong position in the UK retail space. They are focused on using the High Street stores as advertising space for their products, accepting that much of the actual sales will now occur online.

Sports Direct have also had a good month, retaining the gains from a very positive July and August. As far as I can tell this is primarily because that nasty man Mike Ashley said what a great bunch of staff he has and paid them all some money.

Don’t get me wrong, I’m all for fair pay and good working conditions but was it really news to anyone before the summer that retailers don’t treat their warehouse staff very well? Pretty sure every other retailer does the same thing, but they aren’t headed by a fat bloke in a football shirt and the analysts get a nice cup of tea and a biscuit at the M&S annual presentation, which seems to matter more than the actual performance of the company.

In any case, Mr Ashley is, for the moment, playing the game, and his reward is a surging share price as Rupert and Hugo decide he might not be such a bad chap after all.

Glencore slid down a few points as copper prices suffered. Demand out of China dropping by any chance? Same old story, same old over-reaction, same end result. I don’t normally like making predictions regarding when a share will hit a certain price, but with Glencore performing as well as it is I’m going to stick my neck out and say it will hit 400 pence before the middle of next year.

Markets continue to take the news of potential nuclear war in their stride and the S&P continues to hit all time highs. The top will come off the mountain at some point, but I’m staying in for the time being with a careful weather eye.

Good luck all.


Performance Report – August 2017

Another good month. Top performers have been Glencore (Glen), Sports Direct (SPD) and quite a nice recovery from Next (NXT)

Total shares plus cash in the ISA now stands at £207,649. That is a 38.4% simple return since the start of the project which is 18 months in now bar a few days. Year to date – six months in I am running at an annualised rate of just over 26%. That is a good performance but still fairly short of the 40% overall required to hit my target in 5 years. Any shortfall in the early years gets compounded so the 40% goes up significantly.

I’m actually torn about the time limit on the target. I don’t really want to encourage reckless gambling in myself or others just to hit some arbitrary time limit. If this takes 10 years it frankly doesn’t matter so it is really just a reference point.

So Where is the market going and how does the private investor adapt?

Donald Trump is still in the White House, although it must be quite lonely in there at the moment seeing how everyone else has left. Brexit is still happening, although I suspect that the duped leave voters might secretly want a re-vote. North Korea hasn’t actually launched a missile but is on a knife edge. The EU still has the problem of Greece – they haven’t magically grown a new economy with lots of tax payers. Russia is still in the Crimea – remember that one? Banks are holding too much capital due to the wrong type of regulation which means they aren’t lending to small businesses, which mean low or no economic growth. The Oil price has not recovered as I predicted and is stuck in a 45-50 $ barrel range.

So can anyone tell me why the stock market (particularly in the U.S.) is hitting all time highs?


So it’s been a much better quarter than the last one. I’ve made good profits (£18,282). But have I managed that because the market is too high? I’d like to think it is because I have picked relatively few, good stocks and stuck with them, proving myself at least a competent if not yet good investor- but when the top comes off the mountain I guess we’ll see.

More and more I feel that the U.S market in particular is heading for a correction. In the meantime it is steaming ahead and I don’t want to miss out. So do I move more into cash or do I ride the wave for a bit longer?

There was a research guy at a bank I knew in the early 2000’s who told me around 2002 that the credit markets were going to meltdown. Every year in the ensuing boom he said the same thing – this year the market is going to “puke” as he put it. Eventually in 2007, the market “puked” at which point he said he’d told me so.

It’s fine being a bear – but if you are short too early – in this case 5 years too early, you miss out on the upside. If I say there is going to be a stock market meltdown for long enough, eventually I will be correct.

The range of advice on this point is wide. On one hand you will get the value investors saying you shouldn’t try to time the market – buy good quality companies at a good value and wait. On the other hand are the chartists – completely driven by what is happening here and now and following the herd.

Whereas by nature I’m a value investor, the market feels over-bought – so my search for good value companies is coming up against my view of the overall economic environment – making it hard to find new investments that I believe in.

I’d love to hear your views



July 2017 – Performance Report – that’s a bit better!

July has been a decent month, with the grand total now standing at £199,112 and the month P&L at £11,149. That beats last quarter’s total of £186 as I mentioned in my Q1 Year 2 Performance Report

So what went right this time? Well Glencore, Next and EOG have all done well, and my long term hold of Sports Direct also took a bit spike up with the appointment of a new CFO – Always good to have a grown up in the Boardroom apparently.

Probably of least importance from a P&L perspective, but most important from a process viewpoint was Novae. I found Novae using a filter from Deep Value Investing by Jeroen Bos. I set out my investment logic  on 18th May here. This looked like a cheap share given the net asset position of the company, and I wasn’t the only one thinking that as the firm was subject to a takeover bid as reported 6th July here. It took ages to filter through the data to find this one but I made about 27% in just under 2 months, which is the sort of returns that are going to get me to my goal if I can string a few together.

In terms of the goal of getting to £1 million in 5 years, I have currently 3.6 years left and I am coming up on the 200k mark. This means that my required return rate has moved up from a very stretching 40% to a probably impossible 56.5%. Still, speed is probably the least important variable and I’m going to carry on running the project. Getting the monetary goal at some point would be great – doing it the right way and learning about investment along the way will be more important for me long term than if I take an extra year or so to do it.

Now I need to go and battle my own psychology – but do I stay patient and ride the winners or do I recognise when prices are unsustainable and not get caught up in the market hype?



Ranger DLF (RDL) investment analysis

Ranger Direct Lending Fund (RDL) is an interesting situation in the distressed situation with decent underlying assets mould. They basically buy exposures from peer to peer and other direct lenders.

What is interesting is this:

Current Assets £48.78 mln

less debt   £3.23 mln

Net £45.55 mln

Versus market cap of £129.31 million

That doesn’t look so good leaving a shortfall of £83.76 mln, but then when I look at the Fixed assets I get to Fixed Investments (i.e. the fund assets) of £183.3 million.

Now if I take the 83.76 “shortfall” and compare to the book value of investments of £183.3 mln I can then see that I have a breakeven valuation on those assets of 45.6 cents in the dollar.

Now I’m not assuming the historic book value of those investments is par, but if the value is significantly above 45.6% of par I’m in good shape.

There have been a few issues with some of the exposures in the portfolio for sure, but the last reported NAV I have is 963.3 pence per share. 16.12 mln shares in issue x 963.3 pence gives a portfolio valuation of £155.28 mln.

To get the portfolio valuation price I need to ignore the net current assets mentioned above of £45.55 mln so I take that off the NAV number.

This leaves me with a Fixed Investments market valuation of £109.73 mln. Dividing this by the “shortfall” gives me a portfolio price of 59.9%, well above the breakeven price of 45.6%.


That seems a decent discount to NAV to me. Added to this the fact that known activist investors are picking up the shares gives me confidence that this discount to NAV wont be allowed to carry on forever, so I’m in at a price of 811 pence.


13th July – thoughts on Next, EOG

Next. I’m a long time holder of this share and I am still a fan of the business. It has been selling off recently, but let’s take a look at some figures (courtesy of


25 Jan 2014 (GBP) 24 Jan 2015 (GBP) 30 Jan 2016 (GBP) 28 Jan 2017 (GBP)
turnover 3,740.00 100.00% 3,999.80 100.00% 4,176.90 100.00% 4,097.30 100.00% m
pre tax profit 692.50 18.52% 794.80 19.87% 836.10 20.02% 790.20 19.29% m
attributable profit 553.20 14.79% 634.90 15.87% 668.00 15.99% 635.30 15.51% m
retained profit 388.40 10.39% 200.50 5.01% 100.50 2.41% 321.20 7.84% m
eps – basic 366.10 428.30 450.50 441.30
eps – diluted 355.60 417.90 443.00 431.80
dividends per share 129.00 150.00 158.00 158.00

So the last four years seem pretty stable

  1. Turnover has increased by less than 10% – that’s ok this is already a large company and growth is not always the best route forward. Sustainable, quality earnings.
  2. EPS I tend to ignore unless I can trace how many shares were in issue at each date, but attributable profit is remarkably steady. Down slightly on last year but still significantly up from 2014
  3. Dividends have remained steady from last year but grown over a long period of time.

Next has a very stable and capable management team. Brexit won’t help general economic conditions but this is a very well established business with trading on a PE of 8.39. The share price is now at its lowest level since mid 2012

Europa Oil & Gas (EOG)  moves around a lot on news about the back and forth battle regarding the Wressle Oil field planning permission in Lincolnshire. Whatever your views of onshore exploration on what is, after all, a fairly small island, this issues seems to drive the value of EOG far more than the actual financial effect of a yes or no from the local authority. The real value seems to me to be locked up in the Irish sea.

Therefore, the postscript of the RNS release from this morning is the more relevant from a valuation perspective and should be good news in the near future:

In the meantime, we were pleased to note that Providence Resources has begun 
drilling operations on the Druid and Drombeg prospects in the South Porcupine 
Basin offshore Ireland.  With the recent arrival of a number of major operators 
to the region, we believe this well will be the first of many to be drilled 
over the next few years.  Success at this or any other well in Atlantic Ireland 
will have positive read across for our industry-leading portfolio of licences 
offshore Ireland where we have already identified 32 prospects and leads in a 
diverse range of six play types and three basins across all seven of our