The market has been having a hard time of it; this year the FTSE250 index of medium-sized companies has fallen 28%. I figured back in February that the economy and the share markets were headed for tough times and so sold a number of holdings, leaving 40% of my portfolio in cash ready to deploy when Mr Market’s fear became really manifest. We still haven’t got to the “teenager I a harem” moment yet, where everywhere you look there are attractions enough to make you goggle-eyed. There is still too much optimism out there for that. But some companies are starting to look attractive even if a deep recession is on the cards. So I’m getting ready to go back in – probably at the moment when most “investors” will be rushing for the exits. Back in early 2020 I followed a strict caution-first value investing approach at the beginning of the Covid-19 crisis and similarly went to 40% cash. This pile of cash was very useful later in 2020 and 2021. The shares bought in those years have generally risen nicely – see first table. The remainder of the money I handle, following diversification by investing in property abroad to give our family more options in a Putin-crazed world, is invested 60% in solid shares such as Smiths News and Dewhurst which are equipped to withstand a recession and 40% in cash looking for a home in deep value shares in a period of extreme flux after the market capitulation. The capitulation draws ever closer: a moment when, shocked by severe downward moves in investments, people sell even their best-loved shares “just to hang onto something of our savings in a form which is safe, that is in cash”. They lose the hope that by hanging onto shares they can recoup losses. A list of all the shares I bought in the Covid-19 crisis (Newsletters published at the time of each purchase set out my rationale for buying) Company Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 Smiths News (Connect Group) 18.3.20 £0.151 2.55p £0.317 127% Character 5.6.20 £2.52 27p £4.90 106% McCarthy & Stone 1.10.20 £0.718 0 Sold 7 Dec 2020 £1.185 65% Capital & Counties Properties 6.11.20 £1.032 0 Sold 19 Aug 2021 £1.743 69% Dewhurst “A” 11.11.20 £5.94 27.75p £5.30 -6% MS International 16.12.20 £1.292 10p Sold 20th Sept 2021 – 7th June 2022. £2.488 100% Wynnstay 29.12.20 £3.405 15p Sold 24Mar 2021 – 3 Feb 2022 £5.58 68% Lloyds Bank 12.3.21 £0.4169 3.37p £0.4167 8% J Smart 18.3.21 & 24.3.21 £1.253 3.22p Sold 7 Feb 2022 £1.575 28% Fletcher King Feb 2020 – May 2021 £0.3265 0.5p Sold Sept 2021 – Feb 2022 £0.40 24% Orchard Funding 7.6.21 £0.568 4p £0.46 -12% Caffyns 22.6.21 £4.65 22.5p £5.00 12% Highcroft 22.7.21 £8.75 55p £9.50 15% Town Centre Sec 10.8.21 £1.426 1.75p Sold 2 Feb 2022 £1.581 12% bp 26.1.22 £4.006 13.7835p £4.336 12% AVERAGE 42% Longer run performance Nine years ago that I left a tenured professorship to concentrate on investment. Back then the FTSE 100 was around 6,600. It is now 6,860 – a slow rise. In addition, there have been dividends of around 3% per year. The FTSE 250 index has gone from around 15,000 to 17,100. I believe the numbers in the tables below show that I have outperformed, which is quite a relief given the salary and security sacrifice I made nine years ago. The tables display the results (so far) of all the purchases I’ve been writing about in my newsletters. The comments I made at the time explaining the rationale for each investment are available for you to read in older newsletters - there is nowhere for me to hide from my appraisals I made three, four or seven years ago – all the errors of omission and commission are there in broad daylight. I present the returns after taking the hit on broker costs, stamp duty and bid/offer spread. (Some of you have joined us recently so, in case you are not familiar with them, I briefly describe the criteria for my portfolios following the portfolio performance tables.) The 2013 Net Current Asset Value, NCAV, portfolio Company Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 French Con. 25.7.13 £0.3047 zero Sold July 2015 £0.4378 44% Caledonian T 25.7.13 £0.70 zero Sold April 2020 for £1.391 99% Fletcher King 6.8.13 £0.30 14.25p Sold June 2016 for 46p 101% Northamber 22.8.13 £0.287 1.6p Sold Oct 2016 £0.303 11% Titon 5.9.13 £0.379 6.5p Sold May 2016 £1.06 197% Mallett 12.11.13 £0.7682 12.7p Sold Nov 2014 £0.60 -5% AVERAGE 75% The 2014 NCAV portfolio Company Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 Holders Tech 10.10.14 & 3.11.14 £0.47 1p Sold March 2017 £0.33 -28% Airea 4.11.14 £0.1195 0.9p Sold Sept 2016 £0.309 166% Northamber 17.11.14 £0.4265 0.7p Sold Oct 2016 £0.303 -27% Caledonian T 30.12.14 £1.39 zero Sold April 2020 £1.391 0 AVERAGE 28% The 2015 NCAV portfolio Company Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 PV Crystalox 15.1.15 £0.122 zero Sold Dec 2016 £0.237 94% Arden Partners 1.9.15 £0.422 1p Sold May 2018 £0.364 -11% Northamber 4.9.15 £0.443 0.4p Sold Dec 2016 £0.303 -31% AVERAGE 17% The Buffett-style portfolio This type of share is rarer than the others, and so I combine all years. Company Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 Dewhurst 9.4.14 £3.18 70.5p Sold February 2020 £7.217 149% MS International 9.10.19 £1.723 13.50p Sold 20th Sept 2021 – 7th June 2022. £2.488 52% Character 20.1.20 & 5.6.20 £2.811 35p £4.90 87% Dewhurst 11.11.20 £5.94 27.75p £5.30 -6% MS International 16.12.20 £1.292 10p Sold 20th Sept 2021 – 7th Sept 2022. £2.488 100% AVERAGE 76% (I bought some more of Dewhurst in June 2014 at £3.11, December 2014 at £3.75, November 2017 at £5.46, February 2019 at £5.54 and April 2019 at £5.64. These were sold Feb 2020). Modified price earnings ratio portfolio 2015/16 Company Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 Haynes 11.2.15 £1.159 33.5p Sold 2.10.19 £2.9175 181% AGA 11.3.15 £1.002 zero Taken over June 2015 £1.456 45% Hogg Robinson 10.4.15 £0.4709 2.37p Sold June 2016 £0.656 44% MS International 3.7.15 £1.86 46p Sold 20th Sept 2021 – 7th June 2022. £2.488 58% BHP Billiton 24.9.15 £10.43 127p Sold May 2018 £16.90 74% TClarke 5.11.15 £0.7916 13.61p Sold Feb 2020 £1.1215 59% Premier Farnell 8.4.16 £1.222 3.6p Taken over 20.6.16 £1.632 36% AVERAGE 71% The AGA holding was doubled 30 April 2015 at a price of £0.9466. Modified price earnings ratio portfolio 2017 Company Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 Braemar 28.6.17 £2.848 20p Sold June 2018 £2.639 0% Caffyns 10.8.17 £5.012 52.5p Sold July 2020 £2.389 -42% Connect/Smiths News 27.9.17 £1.046 13.35p £0.317 -57% MS International 14.11.17 £1.84 30p Sold 20th Sept 2021 – 7th June 2022. £2.488 52% AVERAGE -12% The 2017/18/19 NCAV portfolio Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 Caledonian Trust 7.11.17 £1.23 zero Sold April 2020 £1.391 13% J Smart 30.1.19 £1.13 4.14p Sold Mar/Apr 2020 £1.101 1% Northamber 6.12.19 £0.504 0.3p Sold Mar 2020 £0.5717 14% AVERAGE 9% More Caledonian Trust shares bought in February 2019 at £2.29. More J Smart bought 30.4.19 at £1.16 The 2018/2019 modified price-earnings ratio portfolio Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 Connect/Smiths News 14.6.18 £0.285 6.65p £0.317 35% N Brown 17.8.18 £1.42 9.93p Sold Sept 2021 £0.557 -54% Spaceandpeople 31.10.18 £0.224 0.5p Sold Dec 2020 £0.128 -43% Tandem 2.4.19 £1.59 9.49p Sold Aug 2020 £3.707 139% MS International 6.6.19 £2.22 20p Sold 20th Sept 2021 – 7th June 2022. £2.488 21% Character 25.10.19 £3.506 40p £4.90 54% AVERAGE 25% More Connect Group shares bought in February 2019 at 40.86p, March 2019 at 38.29p and May 2019 at 39p. More N Brown bought May 2019 at £1.30. The 2020/21/22 modified price-earnings ratio portfolio Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 Wynnstay 7.1.20 & 29.12.20 £3.33 29p Sold 24Mar 2021 – 3 Feb 2022 £5.58 76% Daejan 5.2.20 £52.90 zero Sold 21 Feb 2020 £79.41 50% Connect/Smiths News 18.3.20 £0.151 2.55p £0.317 127% Lloyds Bank 12.3.21 £0.4169 3.37p £0.4167 8% bp 26.1.22 £4.006 13.7835p £4.336 12% AVERAGE 55% The 2020/21 NCAV portfolio Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 McCarthy & Stone 1.10.20 £0.718 0 Sold Dec 2020 118.5p 65% Capital & Counties Properties 6.11.20 £1.032 0 Sold 19 Aug 2021 £1.743 69% J Smart 18.3.21 & 24.3.21 £1.253 3.22p Sold 7 Feb 2022 £1.575 28% Fletcher King Feb 20 – May 2021 £0.3265 0.5p Sold Sept 2021 – Feb 2022 £0.40 24% Orchard Funding 7.6.21 £0.568 4p £0.46 -12% Caffyns 22.6.21 £4.65 22.5p £5.00 12% Highcroft 22.7.21 £8.75 55p £9.50 15% Town Centre Securities 10.8.21 £1.426 1.75p Sold 2 Feb 2022 £1.581 12% AVERAGE 27% The return reversal portfolio Purchase date Purchase price Divs to 30 Sept 2022 Price 30 Sept 2022 Return to 30 Sept 2022 Havelock Europa 20.5.15 £0.14609 zero Sold Dec 2016 £0.0915 -37% AVERAGE -37% Brief description of criteria for the portfolios Shares are allocated to portfolios designed around ideas flowing from research conducted when my PhD students and I asked the question “what works in investment?” These investigations were often inspired by the ideas of great investors such as Benjamin Graham. More detail on these ideas is presented in earlier posts (if you put key words into the search box those Newsletters will appear). Net current asset value, NCAV, criteria
Return reversal
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Glen ArnoldI'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk investing is about making the right decisions, not many decisions.
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