Voyager RNS Log Weeks Commencing 16/09/2018 & 23/09/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key to the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. After the game at Blackpool last Saturday, I had a few days away walking in The Lake District; I never need much of an excuse to visit some of the lovely locations in the UK and try wherever possible to blend it in with an away game. Sorry, I am in relaxed mode and drifting along but a point that I was mulling over when walking was how long does one really want to stay active in the market? After you have reached a point of sustainable comfort why do investors continue to strive for more and more? Why do Buffett and the like keep investing when the financial need has long been satisfied? What keeps such investors going? Why do folk such as Bezos of Amazon keep accumulating massive fortunes yet have such unhappy staff? Lots of questions yet no real answers that I can come up with but nevertheless interesting. Oh well, time for another lazy chunk of loot to be looked after by Terry Smith within his new Investment Trust, Smithson. I already have a sizeable holding, which I have held for a good number of years, in Fundsmith and indeed I use it’s excellent performance as one of my benchmarks. This IT will concentrate on “small to mid-cap companies” that Terry defines as between £500m & £15b but typically around the £7.5b market cap” which still to my reckoning are pretty substantial businesses but not the giants ROCE players of Fundsmith. Terry’s approach is difficult to fault giving an outstanding performance for lazy money since inception. For that reason, I rather expect the IT may trade at a premium to NAV; I do so much prefer Its over Unit Trusts/OEICs. General view on the markets: Still in my view, a degree of uncertainty lingering over the market and I rather doubt that will disperse until the UK’s future in its ongoing relationship with the EU is resolved. The FTSE All-Share index is down about 2% since the turn of the year and has experienced a fair amount of volatility and at one time was down by around 10%. So, most definitely a stock pickers market but as in my case with plenty of powder kept dry. Just a thought on software: whatever type of financial software you use, it’s so important in my opinion to become really familiar with all the facilities it offers. My favourite by some distance is SharePad but like anything, you really need to invest time learning how to get the very best out of the system; works so well for me right from the early morning RNS filtration to historic and current financial ratios. In a couple of previous Voyager logs, I have mentioned before the investment book I am bringing together that will cover 25+ years of my investing journey, approach, protection of capital, market timing and many other points learnt from both making mistakes and learning from the best investors. I am currently tinkering with a title, rather irrelevant I know, maybe the hitchhiking investor, maybe the hitchhikers guide to the investment universe; who knows! I hope to update in a couple of weeks time progress and then start to introduce the book by modular chapter/subject on the StockWhittler site. It’s not designed to be an “oh what a clever dick I am book” but rather a book that will aid some in their own investment journey. Onto the RNS log which does really remain a little sparse as there is just not much in the way of announcements recently. I am pleased to say that I dodged the bullet with respect to Bonmarch BON which issued a profits warning on Thursday 27/09/2018. I sold BON for a 25% profit at the end of July as a started to seriously reduce risk & exposure in the Voyager. I feel there are times to be fully invested and times to be cautious and at the present time, I place a lot of faith in the protection of profits. Tuesday 18/09/2018: Keyword Studios: KWS: Mkt Cap £2.2b: RNS Interim Results & a 2nd RNS regarding the acquisition of the Sound Lab and also The Trailer Farm: The key numbers Outlook: Trading in the second half has been good and we expect to meet market expectations for the full year before the positive impact of any additional acquisitions. My View: every time I write about KWS it seems that the market capitalisation has gone up appreciably since the last time I hit the keys. When I first wrote about KWS it’s market cap was a touch over £100m we now have it bloated to over £1.2b is it grows at a speedy rate both via its highly acquisitive nature and organically. Is it pricy? Well, you could argue that it is but then how many companies are there on the LSE with such a proven track record at this high level of market capitalisation with such a great growth story. As for the acquisitions, in the early days of holding KWS I visualised the risk of the boardroom with all of those spinning plates on sticks representing each of the many acquisitions; these days, I take comfort from the excellent track record that KWS have of integrating these many bolt-on businesses. Unlike many companies, the CEO of KWS Andrew Day does a very good job of communicating with investors and the excellent PI video gang have again given Andrew a platform to discuss the results with investors. I am happy to continue my free ride and will keep holding. A link to the excellent PI World video where CEO Andrew Day talks us through the interims and discuss progress may be found on the following link: www.piworld.co.uk/2018/09/18/keywords-studios-kws-h1-results-september-2018/ Wednesday 19/09/2018: Games Workshop: GAW: Mkt Cap £1.25b: Trading Update: Games Workshop Group PLC announces today that trading is in line with the Board's expectations. Cash generation also remains strong. My View: although I normally dislike the approach of releasing an RNS on trading other than at 7 am, this looks absolutely fine. Its very simple, very concise yet the initial market reaction was subdued. I just reckon that many punters expect to see “Ahead….” Time after time. However, no matter, the shares duly pushed ahead over the next few days and even topped the £40 mark. I am happy to hold and just possibly for a rather long time. Then on Thursday after markets closed we had another RNS informing the markets that the ex-chairman Tom Kirby was selling via a placing in the order of £20m of shares. The shares were within an hour of that announcement at £36-50. That sale will probably have a little knock on the share price and maybe offer an opportunity for a little top up. Monday 24/09/2018: Spectra Systems: SPSY: Market Cap £49m: RNS Interim Results: Commenting on the results, Nabil Lawandy, Chief Executive Officer, said: "The Company's revenues for the first half of 2018 are 11 % higher than 2017 and were driven by delivery of a large G7 customer order and royalty and license revenue from our agreement with a major banknote supplier. As a result of our operating gearing adjusted EBITDA for the first half of the year is markedly higher, 30%, than last year resulting in strong midyear profitability. The continued in line performance of the Secure Transactions Group as well as Brand Authentication puts the company in a strong position to meet market expectations for the full year. The delivery of two quality control devices to a tobacco manufacturer has increased our chances of introducing our TruBrand smartphone authentication technology in China. This is in addition to the recent allowance by the United States Patent Office of our patents on this technology. The Board therefore believes that the Company, by achieving key business milestones, will continue to perform well for the remainder of 2018 with excellent prospects for ongoing earnings growth thereafter." My View: well I have held SPSY for over 12 months buying at just over 80p and making further top ups a little later. Note: I usually limit my exposure to the more illiquid stocks and tend to never hold more than one sub £50m Market Cap in the Voyager. If something goes wrong it can be so difficult to sell small-cap stocks and even ones of around the £200m Mkt Cap for that matter. Anyway, the results and outlook look absolutely fine and indeed rather encouraging in my view yet Mr Market was a touch relaxed on the news. Finally, I see that the market has decided by Thursday 27/9 that “hey these are rather good” and the shares put on a spurt to 118p. Note although I don’t select stocks via the Stock Rank (SR) system, I see that SPSY scores a SR of 82 which is reasonably comforting. It also enjoys a nice royalty stream of earnings and pays a 4% yield; fine for me I will continue to hold. Wednesday 26/09/2018: BooHoo: BOO: Mkt Cap £2.5b: RNS Interim Results Guidance
Group revenue growth for the year to 28 February 2019 is expected to be 38% to 43%, up from our previous guidance of 35% to 40%, with adjusted EBITDA margin between 9% and 10%. We reiterate our medium term guidance to deliver sales growth of at least 25% per annum and EBITDA margin of 10%. My View: I have traded BOO a few times since the days of 25p post its early profits warning shortly after IPO. Without doubt the growth rate in revenues of the group is impressive as is the management team who certainly seem to know their business area inside out. Note: an RNS dated 17/09/2018 covered the appointment of John Lyttle currently CEO at Primark who will become as from 15/03/2019 the new CEO of BOO. The headlines accompanying the interims choose to focus in on gross margin which is indeed impressive but I prefer to look for the EBIT margin which is just down a tad by 50bps but the cash position is looking very healthy. Overall nothing to worry about and indeed a good set of results: the market certainly reacted positively to the results: note in mid-September BOO was trading at 170p, as I write this log the price has risen to 220p. I will continue to hold. For investors who wish to hear a discussion of the results then log onto: protect-eu.mimecast.com/s/yVdaCvgOQhEDREOuQnSTn?domain=webcasting.buchanan.uk.com One new purchase added to the portfolio: Adept Telecom (ADT) Mkt Cap: £90m. ADT, which has been on my radar for a fairly long time having what I believe is a good business model with recurring contract revenues, increasing EBIT margin, increasing and good CROCI, modest dividend of 2.5% covered by more than 3x FCF & the good Prof Piotroski sees it as pretty sound with a Piotroski value of 7 and also loved by the SRs well into the 90’s. An RNS of 27/09/2018 gave a rather upbeat trading statement and announced that the company was changing its name: “Included in the AGM resolutions there is a proposal to change the name of the Company to AdEPT Technology Group plc. With more than 75% of revenues being generated from managed services and IT, the board believes that this new name better reflects the products and services being provided by the Company. Should the resolution be passed, the Company is expecting the change of name to take effect from Monday, 1 October 2018”. Note: generally I am not impressed when a company changes its name e.g. Matchtech to Gattaca, Post Office to Consignia but in this case, I fully understand and support the rationale for the change in company name. Well, that’s it for now. The next Voyager log will depend upon RNS news flow which should pick up a touch as we move into October. In the next couple of weeks I expect to see trading updates from XPP, TEF, NXR and finals from BVXP. As ever Happy Investing, have a good weekend and catch you again soon.
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Voyager RNS Log Week Commencing 03/09/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key to the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. I enjoyed a lovely drive last Saturday taking the slow way through the glorious Buckinghamshire countryside to High Wycombe for our football match. In fact, the drive was so leisurely I even had time to drop into the Bell Inn Winslow for a coffee and spot of lunch; what a lovely way to enjoy a Saturday at the tail end of summer. I note a lot of investors are commenting on social media that the markets at the present time are somewhere between annoying and tough going. That feeling are I feel sure is being voiced by folk who have yet to experience a real bear market. Believe me when the bear growls you most certainly know about it as you watch the various indices drop in a non-uniform stepwise direction usually spearheaded by the previous overstretched darlings of the market. In those surreal days when the technology bubble burst in 2001 and then seven years later this mystery concept of toxic debt emerged, many investors stumbled around on a slippery slope totally dazed seemingly either unwilling or unable to reduce their positions to the sanctuary of cash. Today, we are suffering no more than a very minor skin rash but as we head to the conclusion of the Brexit negotiations and of course the bad boys Trump & Putin playing a game of chicken in some location of the globe when domestic boredom sets in. It’s largely to risk manage these relative uncertainties that I have slimmed down the Voyager and become cash biased. My approach to investing is not one of greed and for that reason, I am simply protecting some of the very generous gains harvested from the last few very fruitful years. If all turns out well and the markets don’t wobble, then fine, as I say, greed does not drive me. On the other hand, if we do suffer some turbulence then I have a cash pile to go bargain hunting with. What I have learnt over the years is that with investing you simply have to have a plan and that plan should consider your reaction to various events both market-wide and stock specific. To run without a plan is simply close to gambling and hoping that things turn out all right. One other thing I would say is that I think investors should not get overly envious in comparing their returns with those of others, especially short term. Your goals are yours and that includes your time horizon. You may well have an entirely different risk/reward balance, maybe you don’t need to sleep at night, maybe you manage a few £k or maybe a million or two. The approach you choose is yours and hopefully, it is well thought through and based on a style that suits your personality. I always say that your prefered style should be backed by a plan. As regards measuring returns, a year is a short period and I only taker serious interest over a minimum three year period whilst at the same time continually jettisoning the lesser performers; it seems just a simple fact that the bulk of your progress is down to a very small number of exceptionally performing portfolio stocks that should be treasured. Looking back over the years, if I have twenty stocks over a period of time it's invariably maybe three or four that do the stellar stuff, the rewarding stuff; ok, the others can contribute a touch as well BUT you can’t let that stop you from exiting the losers. Remember the great words of wisdom from Lynch/Buffett "Selling your winners and holding your losers is like cutting the flowers and watering the weeds." If more private investors could live by those wise words rather than justifying losers by keeping them as “long-term holds”, then I truly believe their returns would greatly improve. Anyway, I reckon there is just about enough RNS news flow this week to warrant a bashing of the keys so, here we go: Monday 03/09/2018: Spectra Systems: SPSY: Mkt Cap £42m: RNS Two New Lottery Wins and Results Date. Firstly what an unfortunately worded headline. The more trusting may well have thought that SPSY had won the Euro Millions not once but twice, wow that’s a nice stroke of good fortune. However, when you read the words within the announcement you become aware that they have actually been awarded two fairly handy but not especially financially significant contracts that run over 7 & 8 years. I guess the interesting aspect is that these contracts are with two customers who have switched from other suppliers presumably that says something very positive about Spectra Systems. SPSY is one of my smaller holdings within the Voyager and just about earning it’s keep so it can stay but with a watchful eye. Monday 03/09/2018: IG Design Group: IGR: Mkt Cap £450m: RNS Informing the market of the completion of the acquisition of Impact Innovations Not that much to say really apart from reiterating the quality of IGR and I expect that quality and production efficiency to become part of the culture within the newly acquired business. Monday 03/09/2018: Bioventix: BVXP: Mkt Cap £168m: RNS Re: Date of Finals Well, the finals for the year ending 30/06/2018 will be revealed in early October which is fine enough in itself but I rather felt there may have been included a trading update as there has been in the last two years with the announcement of the finals. Still, I suppose no news is good news and we wait for the finals on 08/10/2018. Tuesday 04/09/2018: No RNS relevant to the stocks within the Voyager. Wednesday 05/09/2018: Somero: SOM: Mkt Cap £225m: RNS Interim Results Current Trading and Outlook The positive trading momentum experienced in North America has carried over into H2 2018 reflecting robust non-residential construction markets and a high-level of confidence by our customer base. We are pleased with these strong market conditions as well as in the broad customer interest across our product lines highlighting a wide-range of project activity in the market. Positive market conditions and healthy customer project backlogs give us confidence in delivering a solid performance in North America for the remainder of 2018. The momentum of trading activity in Europe is expected to carry over in H2 2018 and we expect sales in the territory will be broad-based, with a variety of countries contributing meaningfully to sales. We expect the market will continue to be driven by demand for replacement equipment and technology upgrades, as well as interest in new products. In China, we are aiming to gain increased traction in H2 2018 with the sales and marketing initiatives launched at the beginning of the year starting to deliver returns, in addition to positive contributions to market performance over the medium-term from the recently added local leadership. We continue to view China as a significant long-term opportunity for the business and one which we are committed to pursuing. In the Middle East, we expect to see a continuation of the H1 2018 performance for the rest of the year while in Latin America, we anticipate H2 2018 will improve due to the meaningful opportunities and solid level of activity across a variety of countries in this territory. In our Rest of World territories, we also anticipate that the solid H1 2018 performance will continue through the remainder of the year and are particularly pleased with the traction we are gaining in the India market. Overall, we see strong activity across our entire geographic footprint and strong interest across our product categories in H2 2018. With the broad-based opportunity for growth and the performance of the Company in the first half of 2018, the Board remains confident in delivering another year of profitable growth for our shareholders in line with current market expectations. My View: a very impressive and solid set of figures from SOM and also excellently presented in such a straightforward upfront way i.e. you don’t have to search to find out how performance sits against expectations, it’s included in the first three lines of the report. Look at this lovely line which appears close to the front of the report “Four of six territories grew compared to three in H1 2017 led by strong contribution from Europe and North America, which together represent 83% of total revenues”. So, let's go and chuck in a very nice SR of 97 (my first purchase was in the days before the SR system was available), a very undemanding valuation and a dividend of about 5%; all in all a great company that I am happy to have as one of my top half dozen holdings. Incidentally three of those top six by value holdings, SOM, BVXP & KWS are now riding for free as although they are significant positions, in “Dragons Den Style” I have taken the capital value of my original investment back. Thursday 06/09/2018: Dart Group: DTG: Mkt Cap £1.5b: RNS AGM Statement "The positive start to the financial year as reported in our Preliminary Results Statement of 12 July 2018 has continued, with Leisure Travel bookings growing slightly ahead of our 25% summer 2018 seat capacity increase and winter bookings satisfactory at this stage. Demand for both our flight-only offering and our higher margin package holiday product remains strong and package holiday customer numbers as a proportion of total departing customers have increased slightly for summer 2018. Progress continues to be made at Fowler Welch, our Distribution & Logistics business, which is currently trading in line with management's expectations." Overall the Board expects the Group to meet the recently upgraded market expectations of profit before foreign exchange revaluations and taxation for the year ending 31 March 2019 and will provide a further trading update on publication of its interim results on 15 November 2018." My View: nice and simple confirmation of the positive outlook reported in the final results issued on 12/07/2018. I have commented on Dart for years now and that simply because it’s been such a key element within the Voyager. When I originally bought DTG back in 2013 at about £2, I was very watchful as feared I may have missed the boat, or plane in this case, as in the previous 12 months prior to my purchase, the stock had appreciated by over 100%. The point I am making is that as with SOM, buying into quality at a reasonable price backed by positive momentum, good EBIT margin and attractive return on capital (ROCE & CROCI) is a very successful formula that was discovered probably way before I ever landed on planet earth. Friday 07/09/2018: No RNS relevant to the stocks within the Voyager. That’s it for this week’s log so it’s time to head off into the weekend for a trip to rather welcoming Doncaster to see the Hatters play. I will be meeting up with a few Hatters mates from around the UK and am already being bombarded with the “why are you not drinking” line, followed by “are you unwell”. I seem to get strange questioning looks when I simply say I am dry at the moment with those looks turning to disbelief when I tell them the money saved is being donated to charity: folk are strange. Oh, almost forgot & indeed should have included in the August log, I added a starter position in Beeks last Wednesday at 82p. On reading through the results last week I was impressed with the potential for good EBIT margin and growth, so, we will keep a look see. Have a great weekend and should the RNS news flow be sufficient, I will post another Voyager log next Friday. In the meantime, I am drafting the outline for a dynamic/evolving investment book that should appear on this site in the next few months. The book will have sections covering my investment journey from the early 90’s, mistakes along the way, learning points, making an investment plan, searching for gems, buying & selling, risk mitigation and a section covering what I consider to be the sensible or useful side of “reading the tea leaves/technical analysis”. As ever not advice but simply the development of a private investor who has enjoyed the good times as well as two of the most savage bear markets in living memory. Hope to catch you next week. |
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