Monthly Archives: July 2017

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 

Novae Takeover!


On May 18th I wrote a post analysing Novae. My premise was that the Insurance Group’s net net working capital was very nearly at the same level as the market capitalisation of the company. You can read the full analysis here

It looks like I was right to identify this as a value investment as Axis Capital Holdings Ltd today agreed a 700p per share cash takeover of Novae. Interestingly, the shares are now trading at a slight premium to 700p as perhaps there is a potential for a second bidder.

The current price represents a 27% profit on my original purchase price – so not stellar but a decent amount for a couple of hours work.

The issue with value investing is that you have no power over when the market recognises that value. It can be within weeks, as in this case, or it could be years. It’s nice to get the occasional quick turnaround to keep things interesting.

Makes up for my currently disastrous inability to predict where on earth Oil prices are going to go next.

Good luck all.