Magic Hat portfolio: RM in, MRW out

Time for me to do some swapping in the Magic Hat portfolio.

Over 1 month, the portfolio is up 0.48%, compared to the comparative index that I chose of MCX (FTSE 350); although the ASX (FTSE All-Share) would have been a better choice in hindsight. I am actually quite pleased with this performance, as two shares in the portfolio – MJW (Majestic Wine) and MRW (Morrisons) – issued trading statements that saw their share prices decline substantially.

Furthermore, Stockopedia highlighted both companies as Earnings Downgrades, so I was determined to give one or the other the chop.

MRW is on a cheaper valuation, but MJW has better growth prospects. Supermarkets seems to be going down the road of Mutually Assured Destruction at the moment. MRW reported on 13 March that turnover was down 2%, like-for-like sales were down 2.8%, and underlying PBT was down 13%. MRW’s share price seems to be reacting in much the same way as TSCO (Tesco) did at the beginning of 2012. TSCO actually beat the indices over a 1-year period, assuming you bought after the crash, of course. The recovery was erratic, and timing would have been key.

MJW disappointed the market with its trading statement that it issued on 20 March. It expects to announce that PBT will be broadly in line (which is likely to be code for “slightly worse”) than the previous year. Like-foe-like was up 2.8%, but sales are expected to be flat for the year as a whole. MJW is currently on a PE of 15.8, which is not unreasonable, and it does have room to grow. “Furthermore, as part of our longer term growth strategy to increase the store footprint to over 300 and expand our e-commerce operations, the Board has decided to invest in the necessary infrastructure enhancements to underpin our future growth plans.”

In the portfolio I sold MRW at a price of 204.8p, for a loss of 28.4%. It’s a reminder that “safe” or “cheap” doesn’t necessarily mean you will make money. As I say, MRW could now go on to beat the Footsie, and undergo a valuation correction.

There’s a few companies in Stockopedia’s Greenblatt screen that caught my attention and I though was worthy of mention.

FLYB (Flybe) is at the top of the Greenblatt rankings, with a ROC of 114% and an EY (Earnings Yield) of 62.1%. I own shares in this. The calculations look a bit skew-whiff to me, though. I think Stockopedia is basing its calcs on what it thinks is TTM. Those figures look wrong to me, and are totally out of line with full-year reports, and projected reports. It’s a little difficult to tell. Digital Look estimates around a £30m AVERAGE PBT over the next 2 years. It net interest is say 2m, that gives an estimated EBIT of £32m. If I take Stockopedia’s EV of £400.8m as a given, then the EY is more like 8% (=32/400) – way below their calculation of 62.1%.

The Magic Hat portfolio already has an airline in it, so I’ll pass on FLYB. FLYB issued a trading update on 4 April: “The Group performed in line with management expectations … Despite a 4% capacity
reduction in Flybe’s UK scheduled airline in Q4 2013/14 … passenger volumes grew 6% year-on-year to 1.6m, with load factors increasing by 6ppt to 70%. ” The market reacted enthusiastically to the results, which is a good sign.

Another share that looked interesting is NPT (Netplay TV), which provides “interactive casino services to customers in the United Kingdom”. They operate SuperCasino.com, and you can watch and play live every night on Channel 5. NPT passed the Earnings Surprise screen, which caught my attention. Its trading update on 9 Jan was upbeat: “33% increase in total net revenue … Mobile and tablet net revenue increased 121% on prior year now accounting for 30% of total net revenue”. The market reacted well to the news.

NPT has an earnings yield of 8.6%, which isn’t great; but they do earn fantastic returns on capital, and a lot of growth is expected. As ever, gambling is still the subject of much government tinkering. It seems that governments will NEVER settle whether these internet companies should be legal or illegal, and how much tax they should pay. The big uncertainties surrounding NPT are:
1. the new POC (Point Of Consumption) tax. This means that the company will have to pay tax based on where the punter is, rather than the company’s tax domicile. Big chunks of profit could be taken out NPT as a result
2. there may be a ban or restrictions on advertising the kind of sites that NPT offers.

Digital Look also shows that directors did some heavy offloading of shares in Sep 2013.

The fact that there are
many uncertainties, heavy director selling, and a valuation that isn’t compelling puts me off, though, and I think it’s better not to risk money on it. NPT reports its finals tomorrow, so I’ll guess we’ll see if I was right, or not, to omit it from the portfolio. You should note that I do actually have a small position in NPT in my own portfolio, though.

So that leaves me with what I did actually add to the Magic Hat portfolio: RM. “RM plc is a United Kingdom-based company engaged in the provision of products and services to the United Kingdom and international education markets. It operates in four segments: Education Technology, Managed Services, Education Resources and Education Software. Education Technology, includes information technology (IT) hardware, network, Internet services and related installation and support.”

RM has a ROC of 94.2%. Its EY is 17.0%, which is nice. It has a stock rank of 100 (Value 91, Quality 99, Momentum 99), which is nice to see. RM is “restructuring” its Education Tech division, which will have a big negative impact on the forthcoming results, although should result in improved margins thereafter. RM has an EV/EBITDA of 4.05, which is undoubtedly less than half of the market. Stockopedia puts the market median EV/EBITDA at 27.0. The last time I checked, which was admittedly some time ago, the figure was around 8. That figure has likely increased since then, but I sincerely doubt it is as high as 27. I generally look at shares at over about £100m, so maybe Stockopedia is getting the high figure by including many micro-sized companies. I wouldn’t take a figure of 27.0 to be representative of the pool of investments most people are likely to consider.

RM as a PV50 of 6.6% (Price vs 50dma), which should mean that the share price isn’t over-extended. RM issued an IMS on 19 March, which was reasonably non-descript: trading was in-line with expectations, the restructuring of the Education Technology division was going according to plan, and the cash position went from £39.4m to £60.7m. The market reacted to well to the news, sending the share price up 2.74%, on a day that the ASX actually went down 0.41%.

So overall, RM looks like a good bet, and was added to the Magic Hat portfolio at 154.75p. I do own shares in RM.

Happy and prosperous investing to you all.

Update 08-Apr-2014 : NPT released their final year results today (8 April). They showed a 31% increase in net revenue and 32% in adjusted EPS. Despite this increase and a positive outlook (“I am confident that we will continue to improve performance year on year), shares traded down 8% at 9am. The potential impact of the POC seems to be weighing heavily on the minds of investors. CantEatValue has posted on The Motley Fool with an estimate of the impact.

Update 09-Apr-2014 El1te Trader posted on his blog, quantifying the likely effect of the POC. He sees good value at current levels (17.8p), but he doesn’t like the chart technicals, and notes that Henderson Global remain sellers of the stock.

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Portfolio review

It’s the end of the tax year, so I thought I would do a little portfolio review. It’s generally more convenient for me to do my accounting based on the tax year, as opposed to calendar years.

My personally-selected portfolio returned around 28% for the year, which compares favourably with the ASX (FTSE All-Share) of 9%. That sounds great, but when you consider that the MCX (FTSE 250) returned around 22%, and I am heavily invested in mid- small- caps, there is nothing to be impressed about. The portfolio is net of all transaction costs, but ignores dividends, special dividends, and any CGT liability. Some of that portfolio will be protected within ISAs. My dividend receipts were way down on last year, due to the high churn in my portfolio. I should learn to leave alone!

My OEICs did OK, gaining about 16%,which will include a distribution element. Again, that’s ahead of the ASX, but behind the MCX. I have held my OEICs for YEARS, some of them stretching back over at least 15 years. It is certainly not always the case that my personally-selected portfolio beats my OEICs. My favourite holdings are AXA Framlington UK Select Opps, and FSS (Fidelity Special Situations). FSS has come under a lot of fire on account of the stewardship of Sanjeev Shah. I have seen some YouTube videos with Sanjeev in them, and it appears to me that he knows what he’s doing. Personally, I am willing to give him the benefit of the doubt, and say that his style of investing just didn’t work in the environment of the time. Alex Wright now heads FSS, and he has shown an impressive performance with other funds.

I am actually thinking of selling down some of my OEICs, maybe getting rid of a few stragglers, either due to their relatively small size, or their persistent underperformance. This has been prompted by the new fee structures for discount brokers that has come into effect. I need to be careful, though, and try to balance my expectations for the kinds of returns I am likely to generate. I find that I tend to do very well after the market has had a period in the doldrums. The market has been going gangbusters since 2009, so I just need to be conscious of the fact that I could be making a switch at precisely the wrong time.

Stock valuations look pretty consistent across all market caps (http://is.gd/IyrsUS), so there might be a more level playing field between the top 100 companies and the rest of the market. It is interesting to see a plot of the ASX (red line) and MCX (blue line) in the chart below. Note that although the MCX has beaten the ASX handily over the last decade, both indices were neck-and-neck at the end of 2008. Really, the MCX looks like it is acting like a high-beta version of the ASX. Good on the way up, not so good on the way down. So there needs to be a note of caution there.

chart

My best performers include RGS (Regenersis), THT (Thorntons), TCG (Thomas Cook), and TLDH (Top Level Domain Holdings). They were either growth or recovery plays. The first three companies will be familiar to many people. I still hold THT, although I regret selling all of them.

TLDH is an internet company: “provide services in all facets of the domain name industry, from registry ownership and operations to consumer sales through its Internet Corporation for Assigned Names and Numbers (ICANN)-accredited registrar.” I had written about TLDH in the past, negatively. In October 2013, the company had a placing in which there was heavy director participation in order to commercialise their domains. The share price sank on the announcement. I changed my mind about the prospects on TLDH, figuring that the company would actually do good business and earn high returns on capital. I bought at 5.99p. I sold out in March at 15.0p when I realised that revenues were unlikely to come through as quickly as hoped. The company changed its ticker and name to MMX (Mind and Machines Group) in March. I intend to keep an eye on it. You never know, I could change my mind and decide to buy some again.

Now is as good a time as any to build up a “watch list” of hi-tech companies. It’s impossible to know, of course, exactly how far along the hi-tech bull market we are. With companies like ASC (ASOS) coming off the boil, and internet companies comping to market at very stretched valuations, we may have already reached the peak. But that’s only MAYBE. For all I know, these companies are merely pausing for breath in a bull market that could run for a few more years. I think it’s sensible to stay on the sidelines for now, and wait for the enthusiasm to be drained from the sector.

In terms of my worst performer, that would be OFF (Office2Office), which does office supplies, and suchlike. I bought in at around 46.1p, and sold on 2 January at 29.0p, for a 37% loss. Ouch. Their trading update on 13 January was downbeat, sending the shares down around 14%. I had neglected to write down my reasons for selling, which is an oversight on my part. I clearly thought I made a mistake.

My golden rule for turnarounds is: if you think you’ve made a mistake about its turnaround potential, then sell, even if you have to take a hit. If you had seen the RNS, and took that 14% hit, you would have sold out at 24.5p. The share price is now 20.75p. Turnarounds are risky, and you need to be able to take decisive action.

So, overall, my investing performance for the year probably rates a C, maybe C-. Still, I guess 28% is not to be sniffed at – I could imagine a lot worse results! But it could really only be that it was all down to luck. The bull market has been humming along nicely for a few years now, so it’s not certain that small and mid caps will outperform the blue chips. It’s simply too difficult to say whether the Footsie will be up or down in a year’s time.

It’s also worth noting that relative performance can depend critically on whereabout you choose endpoints. The start of the 2013/4 tax year coincided with a low point in the indices. A few days either way, and my outperformance might well have been in double-digits. I also find that I tend to have phases where my performance is quite contrary to the indices, with frustrating declines when the indices are advancing, but then with healthy advances even in the face of poor overall market performance. It happens like that sometimes.

Anyway, that’s enough rambling from me. Happy and prosperous investing to you all.

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Recovery position – additional perspective

Schroder’s “The Value Perspective” wrote an interesting article in Jan 2014 entitled “Recovery position – Companies that have fallen heavily in value can go on to make big returns” (http://is.gd/doMrkE)

The notes that of the shares that lost 90% of their value, just 3% went bankrupt. About 40% of them lost money. 16% went on to 5-bag.

I have taken the values from their graph, and re-computed returns on a spreadsheet (http://is.gd/Onro8J). I have made an assumption that the high end of companies returns 500% returns is 2000%.

This raises a number of interesting observations. One is: can you improve your odds? My answer is: I can possibly give you three yesses and a no.

My first ‘yes’ is that you can probably improve your odds by reading RNSs, and eliminate those companies which say that value is unlikely to be attached to the company.

My second ‘yes’ takes the form that you should look for extreme cheapness, rather than just a 90% fall per see.

Before I get to my third ‘yes’, I want to give you my ‘no’: making money at this is a numbers game, not an intelligence game. Intelligence could well be counterproductive in this exercise. You have to go in with the attitude that you DON’T know what will happen, NOT that you have insight into the situation.

My third ‘yes’ is that you can probably improve your chances with highly-volatile shares. PREDICTABILITY is BAD. You want high uncertainty, not high certainty (insofar as you are not CERTAIN that the company will fail).

What you are doing is aiming for long-tail effects. Your median return is around -14.5% (i.e. negative), as shown in row 6 of the spreadsheet. But the mean return is 261%.

You need to place many bets, and get lucky, rather than place concentrated bets.

These conclusions are nothing new. If memory serves, Tweedy Browne wrote a paper on catching falling knives, and noted they obtained market-beating results. The above-average returns seemed to be from the longshots that paid off. So if you adopt the strategy, you should probably expect most of the shares to not work out.

In my observations above, I suggested using high-volatility shares. I suggest that as a proxy for the uncertainty surrounding the company’s prospects. I think that liquidity is also likely to work in your favour. One measure of volatility might be the company’s beta. I’m not sure I like that measure, as it measures share price movement correlated with the market. But that’s not quite the same as I’m suggesting. I don’t think high betas are going to provide an advantage per se. I’m just throwing ideas out here … you could of course actually take historical share prices and compute a normalised standard deviation. Failing that, if that was too much bother for you, then you might take the 52w high less 52 w low, divided by their average. That will give you a crude proxy for volatility.

Happy investing to you all.

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$FIF.L, $MRW.L, and Magic Formula

An article by Richard Beddard on MCB (McBride) (http://is.gd/SNm56o) prompted me to share my thoughts on FIF (Finsbury Food) and MRW (Morrisons).

It will be decision time for me with regards how I intend to change the Magic Hat portfolio over the weekend.

Richard sums the problems with respect to supermarkets and their suppliers in a nutshell: “Morrisons’ highly publicised strategy to cut prices may force other retailers to follow resulting in a much feared price war and pressure on suppliers to share the cost.”

I’m pretty sure he’s right. It’s one reason why MRW is in the firing line to be jettisoned from my Magic Hat portfolio. It was not a Magic Formula stock to begin with, or at any time throughout, so I have only myself to blame to including it. MJW (Majestic Wine) is also in the firing line to get the can. We shall see which one survives.

I had written about FIF on 5 February (http://is.gd/NUh1m5). The shares have an EY (Earnings Yield) of 15%, which is very good value. The market reaction to their results were poor at the time, and I was very much afraid of walking into a value trap. So far, my reasoning has proved incorrect, and the shares have moved from 47.1p to 58p, a very healthy gain of 23%.

I doubt that I’ll choose to buy into FIF, as I perceive the call to be too tricky for me. My perceptions about the share price movement has been wrong so far, so they could be well be wrong about the future, too. We shall see.

Happy investing to you all.

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$NANO.L – Nanoco – some preliminary notes

I’m just assembling some notes before bedtime about NANO (Nanoco).

I has said that it was likely overpriced at 139p back in December. It has since slipped back to 106p, giving it a market valuation of £229m.

If I play just “the pricing games”, then it should be noted that many listed semiconductor companies took a decade or more to reach revenues of £100m starting out from a position that was arguably better than NANO. Return on capital was actually quite poor, and often had cumulative negative free cashflow throughout that period.

IMG, IQE and WLF have average sales of £130m, and an average market cap £270m. Purely playing a pricing game, let’s suppose those kind of numbers were feasible for NANO – in a decade’s time. Applying a reducing cost of capital from around 10.25% to 8%, I would need to apply a discount factor multiplier of about 0.4, to give NANO a value of about £110m. And that’s to say nothing about the capital
injections that are likely to be required over the next decade. NANO still looks vastly overvalued to me.

I’m putting together a spreadsheet on a DCF for NANO:
https://docs.google.com/spreadsheet/ccc?key=0AvgR2LZ8mUlDdDFWSHhrT1cyZGR4SGxXWXRMa2t6elE&usp=sharing It’s highly preliminary, and I’ve put in some known wrong values to get some of the estimates to be more sensible.

The PV of the terminal value comes out at £39m, which is considerably less than the value of £110m above. Remember, though, that the £110m is based on a market pricing guess, and I think it’s a reflection of the fact that tech is overpricing companies relative to the cashflows that they are likely to be able to generate.

The PV of the cashflows of the next 10 years came out at £-71m, implying that the company is effectively worthless: i.e. it will gobble up more capital than it will ever generate in returns. I reckon that £-71m is wrong, though. I did some number-crunching on some other companies, (I use IQE, IMG and WLF a lot, although many will dispute that they are suitable comparables), and estimated that the
total free cashflow for NANO over the next decade is more likely to be in the region of £-15m. That’s way better than £-71m; but still implies that NANO is going to be a net money-sink over the next decade. I figured that the -15m was worth about -8.4m in discounted terms.

That would put NANO on a firm-wide valuation of around £46m (£40m for the PV of the terminal value of the cashflows, £-8.4m for the PV of the net cash outflows over the next decade, plus £14.3m in cash that it has). That of course means that NANO is still wildly overvalued. A lot can happen over the next 10 years, and it’s quite possible that the valuation will increase as time progresses.

Something like NANO is an interesting share, because it’s so speculative, and I’m sure they’ll be plenty of opportunities to buy it at an attractive valuation some time in the future. That time is not now, though. We really need everyone to get fed up with tech stocks.

Also worth mentioning that is that I have just been plugging in very very crude numbers for cost of capital. I haven’t done anything about looking at possible debt/equity structure. So there’s considerable tweaking that could go on there.

Here are some stats that I pulled off, which might give some clues as to where I’m getting some of the numbers from my spreadsheet.

     OPM% Sales  LTA    NCA  CAP Sales/Cap
           £m
 ARM 21.5 715   858    497  1355   0.528
 IMG 11.9 151.4 197.8   50.2 248   0.610
 IQE  5.8 126.8 163.7    7.9 171.6 0.739
 WLF -7.0 108.7  42.4   35.9  78.3 1.388

There are many more companies that I really should be tabulating, but haven’t gotten around to yet.

OPM is Operating Margin, Sales is the revenue, LTA is the fixed assets, NCA is the net current assets, CAP is capital (the sum of LTA and NCA), and Sales/Cap it the ratio of sales to capital. The median OPM is 8.85%, which you’ll see being used in the spreadsheet (cell B24), and the median Sales/Cap is 0.675, which is also used (cell B5).

What surprised me is just how much capital is required to generate revenue. For every £1 of capital you invest, you only generate 67.5p in sales. Compare that with a company like RMV (Rightmove), that generates £140m in revenue using capital of less than £10m. Plus it has huge margins, too. But that’s a different story.

Lastly, but not leastly, I found an interesting article here: http://www.prweb.com/releases/quantum-dots-qd-market/09/prweb11144697.htm It estimates that the total market for Quantum Dots is expected to reach $7480m (£4500m) by 2022. For comparison purposes, my esitmate of revenues for NANO 2 years is around £90m, implying that NANO captures 2% (90/4500) of the market.

We shall see.

106p

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March 2014 artwork

March 2014 artwork

Baby Ryuzaki, destined to become the world’s greatest detective, has his first donut.

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Summary market stats

Here’s a summary of companies over £100m in valuation:

 

--- GROUP: FTSE_Index , STAT: PER ---
 AIM 17.07
 FLEDGLING 17.25
 FTSE100 16.66
 FTSE250 16.75
 NONE 17.49
 SMALLCAP 16.20


 --- GROUP: FTSE_Index , STAT: EV_Sales ---
 AIM 3.85
 FLEDGLING 0.64
 FTSE100 2.20
 FTSE250 2.04
 NONE 2.05
 SMALLCAP 1.44


 --- GROUP: FTSE_Index , STAT: PBV ---
 AIM 2.99
 FLEDGLING 4.93
 FTSE100 2.99
 FTSE250 2.59
 NONE 1.44
 SMALLCAP 1.89


 --- GROUP: Sector , STAT: PER ---
 AEROSPACE AND DEFENCE 14.42
 ALTERNATIVE ENERGY 26.48
 AUTOMOBILES AND PARTS 13.91
 BANKS 11.66
 BEVERAGES 21.88
 CHEMICALS 19.43
 CONSTRUCTION AND MATER 16.80
 ELECTRICITY 22.16
 ELECTRONIC AND ELECTRI 19.81
 EQUITY INVESTMENT INST 17.07
 FINANCIAL SERVICES 14.66
 FIXED LINE TELECOMMUNI 24.23
 FOOD AND DRUG RETAILER 14.72
 FOOD PRODUCERS 16.41
 FORESTRY AND PAPER 13.21
 GAS WATER AND MULTIUTI 18.50
 GENERAL INDUSTRIALS 13.98
 GENERAL RETAILERS 18.02
 HEALTH CARE EQUIPMENT 19.44
 HOUSEHOLD GOODS AND HO 16.44
 INDUSTRIAL ENGINEERING 19.48
 INDUSTRIAL METALS AND 0.67
 INDUSTRIAL TRANSPORTAT 20.66
 LEISURE GOODS 20.41
 LIFE INSURANCE 12.39
 MEDIA 16.09
 MINING 12.02
 MOBILE TELECOMMUNICATI 3.50
 NONLIFE INSURANCE 11.73
 OIL AND GAS PRODUCERS 6.84
 OIL EQUIPMENT SERVICES 13.24
 PERSONAL GOODS 22.43
 PHARMACEUTICALS AND BI 19.68
 REAL ESTATE INVESTMENT 18.80
 REAL ESTATE INVESTMENT 22.07
 SOFTWARE AND COMPUTER 18.66
 SUPPORT SERVICES 17.91
 TECHNOLOGY HARDWARE AN 22.14
 TOBACCO 13.45
 TRAVEL AND LEISURE 16.25

 --- GROUP: Sector , STAT: EV_Sales ---
 AEROSPACE AND DEFENCE 1.62
 ALTERNATIVE ENERGY 1.77
 AUTOMOBILES AND PARTS 1.01
 BANKS NO DATA
 BEVERAGES 2.62
 CHEMICALS 1.97
 CONSTRUCTION AND MATER 0.94
 ELECTRICITY 7.22
 ELECTRONIC AND ELECTRI 2.36
 EQUITY INVESTMENT INST 7.82
 FINANCIAL SERVICES 3.49
 FIXED LINE TELECOMMUNI 1.84
 FOOD AND DRUG RETAILER 0.58
 FOOD PRODUCERS 1.54
 FORESTRY AND PAPER 1.00
 GAS WATER AND MULTIUTI 4.30
 GENERAL INDUSTRIALS 0.99
 GENERAL RETAILERS 1.01
 HEALTH CARE EQUIPMENT 2.69
 HOUSEHOLD GOODS AND HO 1.86
 INDUSTRIAL ENGINEERING 1.89
 INDUSTRIAL METALS AND 1.00
 INDUSTRIAL TRANSPORTAT 1.46
 LEISURE GOODS 1.70
 LIFE INSURANCE NO DATA
 MEDIA 2.24
 MINING 2.02
 MOBILE TELECOMMUNICATI 10.88
 NONLIFE INSURANCE 2.69
 OIL AND GAS PRODUCERS 3.37
 OIL EQUIPMENT SERVICES 0.80
 PERSONAL GOODS 2.95
 PHARMACEUTICALS AND BI 5.75
 REAL ESTATE INVESTMENT 8.54
 REAL ESTATE INVESTMENT 16.86
 SOFTWARE AND COMPUTER 4.14
 SUPPORT SERVICES 1.11
 TECHNOLOGY HARDWARE AN 1.88
 TOBACCO 2.96
 TRAVEL AND LEISURE 2.19
 --- GROUP: Sector , STAT: PBV ---
 AEROSPACE AND DEFENCE 3.47
 ALTERNATIVE ENERGY 3.13
 AUTOMOBILES AND PARTS 3.64
 BANKS 1.10
 BEVERAGES 3.84
 CHEMICALS 3.81
 CONSTRUCTION AND MATER 2.08
 ELECTRICITY 2.29
 ELECTRONIC AND ELECTRI 4.29
 EQUITY INVESTMENT INST 0.95
 FINANCIAL SERVICES 2.70
 FIXED LINE TELECOMMUNI 4.86
 FOOD AND DRUG RETAILER 2.30
 FOOD PRODUCERS 2.65
 FORESTRY AND PAPER 1.77
 GAS WATER AND MULTIUTI 3.20
 GENERAL INDUSTRIALS 2.33
 GENERAL RETAILERS 2.99
 HEALTH CARE EQUIPMENT 2.51
 HOUSEHOLD GOODS AND HO 2.02
 INDUSTRIAL ENGINEERING 2.85
 INDUSTRIAL METALS AND 0.60
 INDUSTRIAL TRANSPORTAT 1.72
 LEISURE GOODS 4.04
 LIFE INSURANCE 1.38
 MEDIA 3.92
 MINING 1.27
 MOBILE TELECOMMUNICATI 3.38
 NONLIFE INSURANCE 1.64
 OIL AND GAS PRODUCERS 1.37
 OIL EQUIPMENT SERVICES 2.85
 PERSONAL GOODS 6.09
 PHARMACEUTICALS AND BI 4.81
 REAL ESTATE INVESTMENT 1.20
 REAL ESTATE INVESTMENT 1.28
 SOFTWARE AND COMPUTER 4.37
 SUPPORT SERVICES 3.33
 TECHNOLOGY HARDWARE AN 3.29
 TOBACCO 6.83
 TRAVEL AND LEISURE 2.61

 --- GROUP: Sub_Sector , STAT: PER ---
 AEROSPACE 15.09
 AIRLINES 17.27
 ALTERNATIVE ELECTRICIT 31.94
 APPAREL RETAILERS 23.03
 ASSET MANAGERS 17.86
 AUTO PARTS 13.91
 BANKS 11.66
 BIOTECHNOLOGY 3.26
 BREWERS 20.47
 BROADCASTING AND ENTER 16.56
 BROADLINE RETAILERS 17.84
 BUILDING MATERIALS AND 22.98
 BUSINESS SUPPORT SERVI 16.40
 BUSINESS TRAINING AND 24.26
 CLOTHING AND ACCESSORI 26.00
 COAL -5.49
 COMPUTER HARDWARE 33.35
 COMPUTER SERVICES 17.22
 CONSUMER FINANCE 15.76
 CONTAINERS AND PACKAGI 14.93
 CONVENTIONAL ELECTRICI 19.06
 DEFENCE 14.21
 DELIVERY SERVICES 18.26
 DIAMONDS AND GEMSTONES 16.42
 DISTILLERS AND VINTNER 22.53
 DIVERSIFIED INDUSTRIAL 13.43
 DIVERSIFIED REITS 18.82
 DRUG RETAILERS 19.77
 DURABLE HOUSEHOLD PROD 20.49
 ELECTRICAL COMPONENTS 16.86
 ELECTRONIC EQUIPMENT 20.57
 EQUITY INVESTMENT INST 17.07
 EXPLORATION AND PRODUC 5.43
 FARMING AND FISHING 14.11
 FINANCIAL ADMINISTRATI 25.30
 FIXED LINE TELECOMMUNI 24.23
 FOOD PRODUCTS 18.34
 FOOD RETAILERS AND WHO 13.93
 FULL LINE INSURANCE 13.14
 FURNISHINGS 19.86
 GAMBLING 15.52
 GAS DISTRIBUTION 12.32
 GENERAL MINING 13.45
 GOLD MINING 10.78
 HEALTH CARE PROVIDERS 19.42
 HEAVY CONSTRUCTION 14.64
 HOME CONSTRUCTION 15.54
 HOME IMPROVEMENT RETAI 21.41
 HOTELS 9.23
 INDUSTRIAL AND OFFICE 23.69
 INDUSTRIAL MACHINERY 19.48
 INDUSTRIAL SUPPLIERS 20.52
 INSURANCE BROKERS 18.46
 INTEGRATED OIL AND GAS 11.10
 INTERNET 2.00
 INVESTMENT SERVICES 15.18
 IRON AND STEEL 0.67
 LIFE INSURANCE 12.39
 MEDIA AGENCIES 16.09
 MEDICAL EQUIPMENT 18.10
 MEDICAL SUPPLIES 20.85
 MOBILE TELECOMMUNICATI 3.50
 MULTIUTILITIES 16.05
 NONDURABLE HOUSEHOLD P 15.72
 OIL EQUIPMENT AND SERV 13.24
 PAPER 13.21
 PERSONAL PRODUCTS 19.27
 PHARMACEUTICALS 19.95
 PLATINUM AND PRECIOUS -0.99
 PROPERTY AND CASUALTY 11.14
 PUBLISHING 12.88
 REAL ESTATE HOLDING AN 18.80
 REAL ESTATE SERVICES 19.88
 RECREATIONAL PRODUCTS 28.57
 RECREATIONAL SERVICES 18.63
 RENEWABLE ENERGY EQUIP 26.48
 RESTAURANTS AND BARS 19.15
 RETAIL REITS 22.07
 SEMICONDUCTORS 10.46
 SOFT DRINKS 21.88
 SOFTWARE 20.52
 SPECIALIZED CONSUMER S 18.32
 SPECIALTY CHEMICALS 19.43
 SPECIALTY FINANCE 11.70
 SPECIALTY REITS 27.74
 SPECIALTY RETAILERS 16.46
 TELECOMMUNICATIONS EQU 22.14
 TOBACCO 13.45
 TOYS 12.25
 TRANSPORTATION SERVICE 22.28
 TRAVEL AND TOURISM 15.25
 WASTE AND DISPOSAL SER 20.37
 WATER 18.51


 --- GROUP: Sub_Sector , STAT: EV_Sales ---
 AEROSPACE 1.88
 AIRLINES 0.62
 ALTERNATIVE ELECTRICIT 14.59
 APPAREL RETAILERS 2.31
 ASSET MANAGERS 4.33
 AUTO PARTS 1.01
 BANKS NO DATA
 BIOTECHNOLOGY 8.21
 BREWERS 3.86
 BROADCASTING AND ENTER 2.55
 BROADLINE RETAILERS 0.43
 BUILDING MATERIALS AND 1.33
 BUSINESS SUPPORT SERVI 1.39
 BUSINESS TRAINING AND 0.52
 CLOTHING AND ACCESSORI 3.00
 COAL 1.13
 COMPUTER HARDWARE 6.73
 COMPUTER SERVICES 4.14
 CONSUMER FINANCE 3.63
 CONTAINERS AND PACKAGI 1.03
 CONVENTIONAL ELECTRICI 4.26
 DEFENCE 1.19
 DELIVERY SERVICES 0.72
 DIAMONDS AND GEMSTONES 3.24
 DISTILLERS AND VINTNER 2.42
 DIVERSIFIED INDUSTRIAL 0.96
 DIVERSIFIED REITS 26.23
 DRUG RETAILERS 1.98
 DURABLE HOUSEHOLD PROD 0.44
 ELECTRICAL COMPONENTS 2.18
 ELECTRONIC EQUIPMENT 3.71
 EQUITY INVESTMENT INST 7.82
 EXPLORATION AND PRODUC 3.37
 FARMING AND FISHING 1.49
 FINANCIAL ADMINISTRATI 3.58
 FIXED LINE TELECOMMUNI 1.84
 FOOD PRODUCTS 1.54
 FOOD RETAILERS AND WHO 0.52
 FULL LINE INSURANCE NO DATA
 FURNISHINGS 1.14
 GAMBLING 2.33
 GAS DISTRIBUTION 0.82
 GENERAL MINING 2.41
 GOLD MINING 1.86
 HEALTH CARE PROVIDERS 2.69
 HEAVY CONSTRUCTION 0.54
 HOME CONSTRUCTION 1.96
 HOME IMPROVEMENT RETAI 0.90
 HOTELS 2.66
 INDUSTRIAL AND OFFICE 16.53
 INDUSTRIAL MACHINERY 1.89
 INDUSTRIAL SUPPLIERS 1.04
 INSURANCE BROKERS 2.69
 INTEGRATED OIL AND GAS 2.21
 INTERNET 20.70
 INVESTMENT SERVICES 2.83
 IRON AND STEEL 1.00
 LIFE INSURANCE NO DATA
 MEDIA AGENCIES 1.70
 MEDICAL EQUIPMENT 2.79
 MEDICAL SUPPLIES 3.37
 MOBILE TELECOMMUNICATI 10.88
 MULTIUTILITIES 3.64
 NONDURABLE HOUSEHOLD P 2.06
 OIL EQUIPMENT AND SERV 0.80
 PAPER 1.00
 PERSONAL PRODUCTS 1.85
 PHARMACEUTICALS 3.86
 PLATINUM AND PRECIOUS 2.18
 PROPERTY AND CASUALTY NO DATA
 PUBLISHING 2.24
 REAL ESTATE HOLDING AN 9.00
 REAL ESTATE SERVICES 2.26
 RECREATIONAL PRODUCTS 2.26
 RECREATIONAL SERVICES 3.22
 RENEWABLE ENERGY EQUIP 1.77
 RESTAURANTS AND BARS 2.50
 RETAIL REITS 19.60
 SEMICONDUCTORS 3.56
 SOFT DRINKS 2.26
 SOFTWARE 3.79
 SPECIALIZED CONSUMER S 3.12
 SPECIALTY CHEMICALS 1.97
 SPECIALTY FINANCE 1.63
 SPECIALTY REITS 14.36
 SPECIALTY RETAILERS 0.97
 TELECOMMUNICATIONS EQU 1.79
 TOBACCO 2.96
 TOYS 1.14
 TRANSPORTATION SERVICE 1.53
 TRAVEL AND TOURISM 0.46
 WASTE AND DISPOSAL SER 1.15
 WATER 4.72


 --- GROUP: Sub_Sector , STAT: PBV ---
 AEROSPACE 3.29
 AIRLINES 2.70
 ALTERNATIVE ELECTRICIT 2.71
 APPAREL RETAILERS 3.55
 ASSET MANAGERS 3.68
 AUTO PARTS 3.64
 BANKS 1.10
 BIOTECHNOLOGY 4.81
 BREWERS 3.09
 BROADCASTING AND ENTER 3.11
 BROADLINE RETAILERS 2.14
 BUILDING MATERIALS AND 2.10
 BUSINESS SUPPORT SERVI 2.91
 BUSINESS TRAINING AND 4.50
 CLOTHING AND ACCESSORI 6.09
 COAL 0.67
 COMPUTER HARDWARE 10.86
 COMPUTER SERVICES 4.14
 CONSUMER FINANCE 3.33
 CONTAINERS AND PACKAGI 2.59
 CONVENTIONAL ELECTRICI 2.29
 DEFENCE 3.81
 DELIVERY SERVICES 3.87
 DIAMONDS AND GEMSTONES 1.44
 DISTILLERS AND VINTNER 2.14
 DIVERSIFIED INDUSTRIAL 1.36
 DIVERSIFIED REITS 1.28
 DRUG RETAILERS 4.92
 DURABLE HOUSEHOLD PROD 0.97
 ELECTRICAL COMPONENTS 2.85
 ELECTRONIC EQUIPMENT 4.83
 EQUITY INVESTMENT INST 0.95
 EXPLORATION AND PRODUC 1.42
 FARMING AND FISHING 1.28
 FINANCIAL ADMINISTRATI 8.01
 FIXED LINE TELECOMMUNI 4.86
 FOOD PRODUCTS 4.46
 FOOD RETAILERS AND WHO 2.15
 FULL LINE INSURANCE 1.91
 FURNISHINGS 3.58
 GAMBLING 2.75
 GAS DISTRIBUTION 3.20
 GENERAL MINING 1.25
 GOLD MINING 1.34
 HEALTH CARE PROVIDERS 2.38
 HEAVY CONSTRUCTION 2.01
 HOME CONSTRUCTION 1.85
 HOME IMPROVEMENT RETAI 3.72
 HOTELS 0.57
 INDUSTRIAL AND OFFICE 1.27
 INDUSTRIAL MACHINERY 2.85
 INDUSTRIAL SUPPLIERS 3.42
 INSURANCE BROKERS 6.35
 INTEGRATED OIL AND GAS 1.31
 INTERNET 7.25
 INVESTMENT SERVICES 3.03
 IRON AND STEEL 0.60
 LIFE INSURANCE 1.38
 MEDIA AGENCIES 4.60
 MEDICAL EQUIPMENT 2.21
 MEDICAL SUPPLIES 2.75
 MOBILE TELECOMMUNICATI 3.38
 MULTIUTILITIES 2.76
 NONDURABLE HOUSEHOLD P 3.82
 OIL EQUIPMENT AND SERV 2.85
 PAPER 1.77
 PERSONAL PRODUCTS 3.26
 PHARMACEUTICALS 4.93
 PLATINUM AND PRECIOUS 1.15
 PROPERTY AND CASUALTY 1.44
 PUBLISHING 3.92
 REAL ESTATE HOLDING AN 1.08
 REAL ESTATE SERVICES 3.94
 RECREATIONAL PRODUCTS 5.00
 RECREATIONAL SERVICES 3.10
 RENEWABLE ENERGY EQUIP 3.13
 RESTAURANTS AND BARS 1.86
 RETAIL REITS 1.09
 SEMICONDUCTORS 2.67
 SOFT DRINKS 5.72
 SOFTWARE 3.92
 SPECIALIZED CONSUMER S 12.56
 SPECIALTY CHEMICALS 3.81
 SPECIALTY FINANCE 1.35
 SPECIALTY REITS 1.33
 SPECIALTY RETAILERS 2.51
 TELECOMMUNICATIONS EQU 3.29
 TOBACCO 6.83
 TOYS 3.08
 TRANSPORTATION SERVICE 1.65
 TRAVEL AND TOURISM 5.09
 WASTE AND DISPOSAL SER 1.60
 WATER 3.27

Make of that what you will. A Citywire has quoted that the PE of the FTSE250
is 22.88, whilst the FTSE 100 is 12.72. As a cross-check, I took a cap-weighted
mean of the FTSE 100, and came up with a figure of 17.7, which is in line with
my median of 16.7. It’s threrefore unclear to me how he obtained the number
12.7. One of us must be seriously mistaken.

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