Sold my DTG (Dart Group) shares

I decided to sell my shares in DTG today. It could possibly have a big retrace. I dislike share price crashes when the market releases results; such as we saw. Ideally I would have sold out straight away rather than hanging on. It seems like there could be a lot of competition ahead.

So those were my two principle reasons.

However, I have no problem with anyone who thinks this is a hold or buy. It may have a lot of room for growth and be a much bigger company in a decade’s time. We shall see.



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Whitehills annual gala (#rnlimacduffselfie)

Whitehills had its annual gala day today. A contingent from RNLI Macduff was there, along with the Lydia MacDonald lifeboat. All the RNLI volunteers deserve our praise for the selfless, noble and brave work that they do.


The lads of RNLI Macduff in high spirits.


A different viewpoint.


The lifeboat on display.


Some members of the Banff Castle Pipe Band


A view of the sea from Whitehills




He shoots …


Photogenic guy


Another one. He gave permission for me to shoot these pictures, although I think he was a little surprised that someone wanted to take them

All pictures are released into the public domain. Original digitals are available on request.

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RPC – my own thoughts

Sharescope’s Phil Oakley released an article today, outlining his thoughts on RPC (RPC Group).

The first thing that struck me was the worrying chart:


Encountering resistance at the 50dMA was a disconcerting development. The chart is making lower highs and lower lows: a definite bearish indicator.

Although it is trading at a PE of only 11, there are two things that I am particularly concerned about:

  1. the debt is too high. It made a PBT of £155m against net debt of £1087m
  2. the average ROCE for the company has never seemed to be particularly high, but Stockopedia reports the latest figure at 5.24%, which makes it unattractive.

The company issued a positive outlook when it reported on 7 June 2017, but it did contain a lot of management-speak.

According to Sharescope, the company has increased its dividends 24 years in a row. It also appears to be acquisition-hungy, which is rarely a good sign. The company has also raised substantial amounts of money over the last three years using a combination of debt and equity. Given that the company is on a PE of 11, it seems that the market is becoming fatigued by its eagerness for capital.

And therein lies the trap. I have seen this many times before: just because a company has raised its dividends X years in the past, it doesn’t necessarily mean that it is safe. The huge debt pile, coupled with low ROCE means that it could face a huge smackdown if something goes wrong.

I would not like to buy into this company, as there are too many risks for my liking. It’s nearly impossible to say when (or indeed if) the wheels will come off the wagon, but when they do, it will be a mess. I think a lot will depend the market’s appetite for risk. If the capital markets dry up (bearing in mind that I can’t offer a timescale for this), then RPC might be subject to a visit from the Reality Adjustment Bureau.

Let’s see if, in a year’s time, my bearish view was justified.





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CLLN – Carillion – down 34.6%

CLLN issued a Trading Statement today, sending shares down 34.6% to 126p. An extract is as follows:

Deterioration in cash flows on construction contracts, combined with a working capital outflow due to a higher than normal number of construction contracts completing and not being replaced by new contract starts

It gets worse, as it looks like  a fund-raising is on the cards:

The Board announces today that it is undertaking a comprehensive review of the business and the capital structure, with all options to optimise value for the benefit of shareholders under consideration.

The chart looks appalling, and this is a clear case where the market was signalling disappointment:


Stockopedia gives it a value score of 95, and a momentum score of 27. Curiously, it does not classify it as a value trap. The algorithm missed a trick. It happens.

A data source that I used showed PBT of £146m, and net debt of £218m. That is within my limits of 3X, so I would not have been concerned based on those numbers. So it was me who missed a trick this time, as the mention of “capital structure” suggests that something is wrong with those numbers.

The cashflows reported by Stockopedia perhaps tells a more truthful story:

2017-07-10 14_00_17-CARILLION Cash Flow Statement _ LON_CLLN _ Stockopedia.png

We see that the cash from operating activities is significantly below net income for the last 5 years.

Also worth mentioning is that the dividend yield is reported as 9.7%: a strong sign that the Market thinks performance will worsen, and that the dividend will be cut.

I had invested in CLLN a few years ago, but got bored with it. This company reminds me of IRV (Interserve); a company that is sluggish and has a hard time going anywhere.

My commiserations to any holders out there.


Update 10-Jul-2017: Now that I have had a chance to look at the bulletin boards, it is apparent that many investors and analysts saw this coming. I rate this company as “avoid”. Let me follow up in 6 months time and see how good my prediction is. I just don’t see the shares going anywhere. The prospect of a rights issue will squash all expectations. As ever, we shall see.

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Magic Hat – LSL in, MCGN out

The MHP (Magic Hat Portfolio) on Stockopedia ( is an experiment by me to see if a human can improve on a mechanical Greeblatt Magic Formula screen. I am trying to weed out “mistakes” that I feel the screening commits: unseasoned companies, scams, foreign companies (particularly Chinese), fishy accounting, and statistical quirks. Apart from that, I am agnostic as to the sector the company operates in, although I will try to avoid heavy concentration in any one sector. I will mostly apply “Strategic Ignorance”, by which I mean that I wont try to be clever in my stockpicking. My picking will be mostly mechanical. A summary of most of my Magic Hat articles can be found on the web page This will allow you to see, at a glance, what shares have been bought and sold in the past, as well as what shares have been rejected from consideration and why.

MCGN is ejected from the portfolio by rotation. It gained 185% during its two years there. That is, obviously, pleasing.

Real estate services company LSL.L (LSL Property Services) is added to the portfolio.

The portfolio has had a fantastic 6-month performance, being up 19%. Performance has slackened off since June, however. The portfolio climbed a steep hill during the first half of the year. It looks like it it making an equally sharp descent. We shall see, in the fullness of time, just how much of a retrace it makes.

That’s it for the Magic Hat portfolio this month. See you in a month’s time.

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NXT (Next) and DEB (Debenhams) 6 months on

Six months ago, I wrote about NXT and DEB with a view to updating the subsequent progress of the shares today.

On 4 Jan, NXT dropped 11.5% to 4222p on the back of its trading statement. My standard procedure in those cases would be to sell. I noted that the shares were in value territory, but that may be a trap.

How well would you have done by selling? The chart gives the answer:


Although the share price eventually recovered above the initial sell point, the shares subsequently declined below that figure. I claim this as “mostly” a victory on my part, because you would not have necessarily known when to sell. You might also have assumed that the share price was in recovery, only to have been disappointed.

NXT currently has a StockRank of 56, and a Value score of 79. It is described as a “balanced contrarian” share. It also passes the Richard Beddard’s Nifty Thrifty screen, which has been quite successful at picking winners.

NXT has a PE of 9.8, a dividend yield of 4.7%, and an EV/EBITDA of 6.9. So there’s something to be said for investing in it. I do not own any shares in NXT, though, and I am not eager to buy in. I would look to see if the Value score edged higher. NXT reported an 8.1% decline in full retail sales looks bad for the future of the shares.

I said back in Jan that internet retailers were doing well, and it looks like it was at the expense of the high street.

So on balance my opinion is: stay clear, it could get worse, and there may not be enough value in the shares to justify the dangers. That’s just my opinion, of course. I would be interested in following this up in 6 months time.


I had also commented about DEB in my Jan post. Stockopedia describes it as “adventurous contrarian”, with a Stock Rank of 63, and a Value score of 98. It has an EV/EBITDA of 3.4, which is amazingly cheap.

DEB issued a trading update on 27 Jun. They said:

Having announced our new strategy, Debenhams Redesigned, in April 2017, we are making good progress putting in place our plans to drive growth through Social Shopping and our shorter term “Fix the Basics” plan.

Personally, I think their whole “Social Shopping” idea smacks of desperation on management’s part. In my opinion, they are clutching at straws.

On balance, as with NXT, I would rather be out than in.

However, rather than pontificate on that too much, I am really happy about how my technical reading of the chart turned out.


My reading of the chart was as follows: the downward trend (1) was disturbing. The gap down (2) confirmed this, and was a signal that if you were long, you were wrong, and should probably sell. There followed a period of consolidation (3), which I considered to be “marking time” ahead of the next move, which would be in the direction of the preceding trend.

This turned out to be spot on, as the current share price (4) shows. You cannot always get it right, of course, but I am growing in confidence that the chart pattern I mentioned is reasonably reliable.


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$GMD.L – Game digital – down 30%

GMD (Game digital) published its trading update today, sending the shares down 30% at the time of writing.

The RNS contained positives:

The Board is pleased with the progress achieved on the Group’s key growth initiatives.

and negatives:

we expected the challenging trading environment  faced in the UK retail market in the first half to continue into the second half of the financial year.


positive momentum would be highly dependent on stock availability of Nintendo Switch

A funding is on the cards:

we continue to be encouraged by the initial performance of our new in-store gaming arenas …  As a result, the Group is exploring new funding arrangements to enable an acceleration of the roll-out of this new initiative.

GMD is a share owned by Woodford’s Equity Income Fund. The fund also had some disappointing news from UTW (Utilitywise) yesterday, causing the shares to fall c. 30% yesterday.

Woodford’s speculative punt shares often seem to go awry. Investors should take that as a warning: just because it’s good enough for Woodford, doesn’t mean that it’s good enough for you.

Investors may recall that GMD actually went bust once, but were able to affect something of a turnaround and refloat the company. The chart since flotation shows a sorry tale:


Frankly, I have always been puzzled as to what Woodford saw in this company. The shares peaked at over 325p, which was a figure that I could not fathom at the time. The subsequent share price action bore out my scepticism.

GMD has a Stockopedia Value score of 99 (very cheap), and a momentum score of 7 (lots of negative sentiment). Stockopedia describes it as a speculative contrarian share.

Personally, I think the company has no future. It must surely be one of the worst bricks-and-mortar retailing concepts out there. The business has already been bust once, and I see no reason for it to exist. You can easily obtains games and consoles online, and tech such as Valve will squeeze it even more.

According to Stockopedia. its TTM ROCE is 0.35%. GMD is looking to raise money. So basically, it is likely that the company will not be able to earn a return above its cost of capital, which is a recipe for shareholder value destruction.

Maybe it can stage some kind of temporary turnaround and send the shares higher from this level, I don’t know. Personally, I wouldn’t touch this one, though.


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