LRD – Laird – recent director purchases do not impress me

A couple of RNS’s were released today, stating that directors of LRD (Laird) had made purchases to the tune of about £51k in total. Given that the purchases are relatively small, they look like a PR exercise to me, rather than a conviction that the shares offer genuine value.

On that basis, I still intend to carry out my plan to sell my shares in LRD.

Stay safe out there.

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So what does work, then?

In my previous post, I lamented my holding in LRD. Two shares that are working out well for me are investment trusts: BRWM (Black Rock World Mining) and JRS (JPMorgan Russian Securities). BRWM is up 33% since I bought it in Mar 2016, and JRS is up 34% since I bought it in Dec 2015.

So what went right? My answer is: they were value investments based on sector bets; albeit Russia is an entire nation. I was looking for groups that had been smashed, rather than individual companies. My thinking is that although individual companies may be “cheap”, the cheapness may be justified, but if whole sectors have been smashed, then that’s likely to be caused by either cyclical factors or poor investor sentiment.

Russia is the cheapest country by CAPE. (Source: . I keep an eye on this page!). There’s a good (negative) correlation between CAPE and subsequent returns. Current CAPE levels of Russia suggests that there is still plenty of returns to be had in Russia, and I plan to increase my holdings there. I might not pick JRS, though.

Resources are another area that have taken a battering, and worthy of consideration.

You must pick cyclical sectors, though, not ones in long-term decline, like Polaroid or Eastman Kodak.

Here’s my suggestion for investing in value sectors: look at relative strength by sectors over 5 years. Concentrate on the worst performing sector(s) to buy. I work with median figures, rather than means. Eliminate AIM companies, as they are likely to be just trash. Stick to those companies that have acceptable balance sheets: pre-tax profits less than 3X net debt. Leverage works both ways, of course, but you risk being the nasty recipient of a rights issue. You also want to look for evidence of a turnaround in sentiment: look for a positive relative strength of 1 year against the market (not sector) index.

What should you be looking at currently? Industrial metals and mining has an RS5y (Relative Stringth over 5 years) of -80%, so that would be a good place to start. Mining, oil producers and distributors are also in the dog house, as is electricity. No surprises there, then. Tech hardware and equipment is down 31%, so you might want to take a look at that. To a lesser extent, banks are down 15%.

So I think there are still plenty of gains to be made out of Russia and resources, and I plan to stick with those investments for now.

Stay safe out there.

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LRD – Laird – my major blunder

LRD (Laird) announced its Q3 trading update today, sending its price down 48% to 161p. Highlights from its announcement:

After a disappointing first half … we have experienced increased margin pressure … Management are taking actions to stabilise and improve the financial performance of the PM division with a considerable focus on managing costs and cash across the Group. We expect year end net debt to EBITDA to be within covenant limits of 3.5x

In other words, the wheels are coming off the wagon. The combination of deteriorating trading and and worrying debt levels seems to have really spooked the market. I assume that the dividend is now under threat.

The company appears on 2 Stockopedia shorting screens, which is not a good sign. In the latest set of accounts, pre-tax profits were less than 3 times debt, another sign that it is too indebted. Admittedly, there was a hefty exceptional charge. However, going back a year further, pretax profit was still less than 3 times debt.

According to Stockopedia, the average ROCE for LRD over 5 years was 4.8%. LRD is not a quality company.

I bought some LRD in Jan 2016 at 355p, which turned out to be a costly mistake. I did it because it passed the Stockopedia “Winning Income and Growth”, and I wanted to invest mechanically. The upshot of this is that I am having the worst relative performance to the index since my records began.

I am going to need to switch to a Plan B.

My intention is to jettison LRD at my earliest convenience. I figure that the shares are oversold at the moment. I realise that this is a highly dangerous argument, of course. When I see that argument brought out on bulletin boards, I tend to take it as a sign that everyone should head for the exit.


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Magic Hat portfolio: CCT stays in

No change to the magic hat portfolio is this month. CCT (Character Group) was due to be ejected, but it is still a Magic Formula stock, so stays in.

Please note that my posts are very brief as I have severe internet connectivity problems.

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Beginning exercises at 51

I became interested in my health a couple of weeks ago when I heard about the “b(l)eep test”. The beep test is a progressive running exercise, where your pace is timed by audible beeps, typically from a CD recording. I downloaded one from Youtube.

The beep test is designed to measure your VO2max, which is the maximum volume of oxygen that your body can use. Basically, it’s a test of cardiovascular fitness.

The beep test has a score, consisting of a stage and a level within a stage. Tables exist to look up the VO2max from the score. There are many online. UK firefigthers, for example, require a score of at least 8-8, corresponding to a VO2max of 42ml/kg/min.

What was my score? 3-3, which is a VO2max of 23.8 ml/kg/min, and considered a very poor rating even for my age. I figured that I should do something about it.

The plan was to run through a cycle of exercises: push ups, pull ups, planks and running. The first three should give me all-round strength and endurance, and the running should give me plenty of “cardio” (aerobic exercise).

The push ups are relatively OK. I can do about 30 of them. I have progressed to doing reverse-hand push ups as the next step towards one-handed push ups. So my push ups are not so bad.

The pull ups are not so bad, either. I can do 5 of those. It doesn’t sound a lot, but it can be 5 more than some. I am actually alternating between pulls ups, where the palms are facing outwards, and chin ups, where the palms are facing inwards. Chin ups are a little easier to do than pull ups, and work a few different muscles into the bargain. So I see them as a way of progressing my pulls ups and making sure I’m hitting as many muscles as possible.

I can plank for at least 3 minutes. This is a pretty decent figure, and the most that anyone really needs to do.

I have a major problem, though. My form is not very good, meaning that I am not engaging my abs and core properly. I am therefore not getting the proper benefits from the exercise.

There seem to be two problems that I am having: an anterior tilted pelvis, and weak neck muscles. These are fairly common problems, and are the likely result of a sedentary lifestyle sitting at a desk all day.

An anterior tilted pelvis is one that it tilted too far forward. This results in a lower back that curves too much inwards, with back muscles and hip flexors that are too taught, and glutes and abs that are too weak.

Weak neck muscles result in a chin that juts foward and down. I am now doing daily exercises just for my neck muscles, as the other exercises don’t really address this issue.

My greatest difficulty is in the aerobics. I chose running for aerboic exercise. It went OK for a couple of occasions, but then I experienced knee pains.

I decided to switch to a free aerobics video that I saw on Youtube, figuring that it would be less harsh on the knees.

I have only run through the video once. I found that, the next day, my calves were very very tight.

The tightness seems to be the cause of my knee problems. My walking is  painful for my knees. My body seems ot be compensating for the tightness by hammering the knees. When I performed some calf stretching exercise, I notices that my walk was much less painful.

This means that, although I would like to do more aerobics, I am going to have to dial back my ambitions a lot. This is a pity, because it’s something I likely need the most. Hopefully, with time, I will loosen up, become stronger, and I will be able to do it more frequently. Until then, I am only going to become injured if I do it whilst not in a fit state.

I have also taken to walking around the house barefoot, as I read that footwear can interfere with the biomechanics of the feet; a problem that then feeds its way up throughout the whole musculature system.

So, in summary, I’m a bit of a mess. My neck needs strengthening, I need to sort out my lower back, and my legs probably need some conditioning so that I can perform aerobics without hurting myself.

I am not 25 anymore.

02-Oct-2016 Update: I had done some aerobics on Thursday, and felt some pain whilst doing so. On Saturday night I inspected my calves, and found that they were swollen to twice their usual circumference. I telephoned 111 on Sunday morning, as I was rather alarmed. They said to visit the local A&E that day, which I did. One of their concerns was DVT (deep vein thrombosis), but the doctor ruled it out when he examined me. He diagnosed myositis and myalgia of the gastroconemius. Myositis means “inflammation and degeneration of muscle tissue”, whilst myalgia means muscle pain. The gastrocnemius is the muscle in the upper half and back of the leg; it is a calf muscle.

In other words, all that running and aerobics had caused the problem. He suggested taking it easy, and do about 5 minutes at a time.

I also told him of my ATP (anterior tilting pelvis). He emailed my doctor, who should refer me to the local physiotherapist. So thanks go to Andy for suggesting the physiotherapist. I feel sure that they will be able to sort out my aches and pains.


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FCCN – vaguely interesting at 15p

FCCN (French Connection) is a share that I had invested in a few years ago, with disasterous consequences. My mistake was to buy on news of the recovery, after the price went up. The recovery subsequently proved short-lived, the shares tanked, and I sold out at a lost. I should have played it the other way around.

Since then, FCCN seems to have been yo-yoing around.

It issued its H1 report today, sending the shares down 8.3%. Revenues were down, LFL was up, though. Closing net cash was £7.7m, down from £15.0m a year before. The RNS highlgihts “Continued strong performance in the first six weeks of the second half”. The market does not seem to be assuaged by that.

Paul Scott wrote about it today. As far as I know he owns some shares in FCCN and is happy about his position. He describes it as a special situation, where the expiry of its leases should be good news. It would allow FCCN to sell clothes online at a profit, rather than shops, at a loss.

Over the last decade, FCCN has reported losses in about 5 years, which is hardly good. The special situation seems to be taking a long time to play out, too. Paul is a smarter investor, and definitely richer, than me, so my views are pretty meaningless next to his.

However, I am not happy to see the company’s cash position keep going down. At this stage, I might (which would likely to prove to be code for “not really”) be prepared to pay for the net cash on the balance sheet. There was £14m on their finals, so 15p per share.

15p is likely to be unrealistic target, however. The shares did dip to around 20p in 2012, so anything is possible, I guess.

This is not one I’m intending to buy in the foreseeable future. In the meantime, it’s back to the lounger for me, soaking up the Scottish sunshine whilst I still can.

Stay safe out there.




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$CRAW.L – share price sent into the grinder

CRAW (Crawshaw) is a chain of butchers. It was a company that I was interested in, but never invested in. I sat by jealously as I knew that many highly respected investors were making a mint out of this company.

The shares plunged 44% on the 15 Sep to 41.5p at the close, on the back of a trading update. Obviously there was disappointing news:

suppressed footfall patterns caused by a combination of the international football, adverse weather and Brexit.

My initial reaction to this is: “baloney”. I know that we’re a footy-obsessed nation, but I find it hard to believe that “international football” stops people from buying meat. The same goes for adverse weather. And “Brexit” is just invoking the bogeyman. Plenty of economically-sensitive businesses are reporting that they are doing just fine despite Brexit. Frankly, I’m having difficulty fathoming out which excuse of theirs is the least plausible.

Paul Scott, at Stockopedia, made his own comments:

Crawshaws seems eligible for an award for maximum number of excuses given for disappointing performance. … The only one that rings true to me, is the last one [Supermarkets very recently launching some aggressive meat promotions]. I’ve always maintained that competition from supermarkets is the big risk with this share. They’re not going to sit back and let a smaller competitor eat their lunch. It’s inevitable that the supermarkets will put the squeeze on emerging competition, if it takes away too much of their market share, as they are now doing.

He concludes:

I think the valuation here got well ahead of reality. Having said that, the price has now reset to a more sensible level, so personally if I held, I’d probably sit tight now.

I notice that, according to Stockopedia, CRAW has an average ROCE of 3.3%, which I consider quite low. There are many ways to invest, of course, and I am not advocating necessarily avoiding investing in companies just because they have low ROCE. LTBHs (Long Term Buy and Holds) do form part of my portfolio, and I would never consider this company for a long-term portfolio.

Stockopedia provides ranks for the company as follows: Quality 83, Value 40, Momentum 9, overall 36. My take on this is: given its low ROCE, I think the quality score needs to be treated with a pinch of salt, the value is not compelling as buy, and the momentum score really puts me off.

If I were looking for an LTBH, then quality would be paramount, value would be a consideration, and momentum would not concern me. However, this is not a LTBH for me. Neither does it pass any Stockopedia screens.

I am not necessarily saying it is a dreadful company (there are plenty of AIM nightmares to choose from if you want to know what a truly dreadful company looks like), but I have no intention of buying into the share in the foreseeable future. It does not even have a decent divvie.

Stay safe out there.



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