Tristel had been on my watch list for some time and I eventually bought in at 69p in late March 2015. They met many of my usual buy criteria including decent cash flow, decent ROCE, increasing sales, increasing profits, cps greater than eps, no debt and decent news.
The share has been an outstanding performer and I must say I have commented a couple of time that I felt the stock was possibly becoming a tad overheated. During my December/January risk mitigation when I converted a lot of positions into cash, I did consider selling my position in Tristel but decided it could just about hold it’s place in the portfolio as the noises from the company had remained quite positive.
As on every day before I head off to the pool for a quick mile, well, to be honest, the miles stays the same but the time marginally increases as the years pass, I went through the various RNS of the day just after 7am. Tristel put out an encouraging headline but a quick flash through the numbers left me feeling that I needed to have a much more detailed look after getting back home. On item that initially caught the eye was the £1m share-based payments item. Not ideal, but I was not unduly spooked as the company had made profits from which the payments were taken. Alright, not an ideal item to be seeing but if growth continues then we can live with that in my opinion. However, what did start to concern me was the apparent slow down of sales in the UK, it’s current largest market and the overall 8% increase sales which for a company closing the previous night on a PE of 23.5 did not make me feel totally comfortable. Note, I am not saying a disaster by any measure but it just added to my view that maybe the valuation had become overstretched and that at current valuation the risk is a touch higher than I am happy carrying. The market seemed a little spooked and after a touch more thought decided to sell as the shares had fallen some 14% on the day. Selling with any small company can often be a pain due to NMS but that’s part of the territory with small cap shares. I sold all of my holding for an average price of 124p which gave me something on the order of a total return of 88%; happy days!
So the cash pile grows ever larger as the uncertain market progresses and I must admit that currently I am happy to wait for conditions to become a little more certain before making further investment; I am still of the opinion that there will be many attractive bargains in the coming months.
Welcome to my Blog Page - I hope you find my whittling on to be of some interest. I am a private investor who is happy to share thoughts on the market and individual stocks. Please remember that I am definitely not offering tips or investment advice.