6-month checkup

Review of what I was saying in March 2012. Performance figures are over 6 months

ASX +0.4%

CPP -83.9%
I had cut my losses, which was correct decision (saved myself a bomb). Interesting quote from ADVN: “when there is uncertainty … stay away. Every time I have held shares where I averaged down AFTER suspension, I get burned” CPP is now on an EV/EBITDA of 0.15, 9.78p. It now has a market cap of 16.8m. In last interims, operating cashflow was 509k, down from 15.5m in comparables. That’s an amazing deterioration in cashflows. Although interest cover is reported as 34.79, interest at interim stage was 432k, against comparable of 204k. So, operating cashflow has reduced, interest has doubled, and now viability of the company is in question unless it can restore cashflow. A very very interesting situation. The company has since entered into a solvent voluntary scheme of arrangement with the FSA over consumer compensation. The EV/EBITDA looks enticing, but the company looks even riskier now than it did before. No directors buys. The share price could be anywhere in 6 months time, so what will be more interesting is to follow the story.

PZC +1.0%
I said that the PER 20 was too high. It has outperformed the index a little, though.

AV. -5.3%
I noted that over the last 5 years, AV had paid more dividends than it earned. AV has underperformed ASX, and now stands on a PBV of 0.79. Decade median is 1.4. AV has substantially underperformed index over last 5 years, and is about in-line over 1 year. Like CPP, weak stocks seem inherently unpredictable, and liable to disappoint.

PIC +106.9%
Wow! I put it “on probation”, and I said that it could slowly go down the pan. Prospects seemed to have improved of late, and I continue to hold. A very tricksy company though.

ENQ -9.3%
I’m surprised by the weakness of this company. I had noted “If only I had more of this stuff, rather than Pace or CPP”. Actually, I had sold out in April 2010 at 124p. It’s now at 114.8p. So, I dunno, it’s all just a guess, isn’t it? It is currently on a PFCF of 4.04, and EV/EBITDA of 2.03. Predictions are hard, especially about the future.

DTY +12.1%
I said it looked over-indebted. It still does. Interest cover is below 3, which I think is insufficient. Has amazing ROE, though.

SHG -6.5%

Analysts had been over-ambitious on its earnings target, and I no longer think it is as compelling as I thought originally. So I’m not unhappy I’m out. I could be wrong, though, as I think it’s got a lot of gold to mine.

DPLM +10.8%
Good company, now trading at 465.3p, and I had sold at 461p just after recent trading update. I didn’t think it had potential to outperform the market. EV/EBITDA is 11.55, which is at its high end.

AND -22.0%
I actually noted this one by Giles Hargreave, which he thinks looked cheap. it’s on a PE of 20. Interims on 7 June showed good growth, but the thing that clobbered the shares was “two major OEM customers in the Americas did not achieve forecast sales which resulted in a £3.0m shortfall in orders … it looks unlikely that this deficit will be absorbed in the short term and as a result we now expect the second half performance will be less than originally projected”.

DLAR +11.7%
Still no renewed bid, but a good 6 m performance. Don’t wait for bids!

LLOY +16.2%
Valuestockinquisition’s idea.

BEG +11.5%
Suggested by ExpectingValue. I said it was a value trap. I was wrong. Not only has in beaten the index this 6m, it also had outperformed over the prior 6m – rising 68%. So EV got it especially right!

TPT +22.7%
Another one suggested by EV. Like BEG, it also outperfromed over the prior 6 m.

SQS +13.7%

I had smelt a rat. Wrong.

IQE -10.3%
Hey ho. I continue to hold. I still think this one has potential.

GRG -3.2%
I said it looked good value. It’s now on an EV/EBITDA of 5.90. Even better value!

Geoff Gannon
He offered this piece of advice: All you need to do is find a company you: understand, are comfortable with, like, see a clear future for, can buy at a reasonable price. When I started investing, I never calculated intrinsic values

DQE -8.0%
Still continues to be fishy.

Hunting for growth
Well, this is interesting. I went through the techMARK Focus Index, looking for a combination of reasonable size, not on AIM, ROE >=15%, revenue growth >=10% and a decent balance sheet. I wanted a PER less than 16, but only came up with a very restricted list. So I dropped the PER requirement, and came up with NCC, OPTS, RSW, SHP, TCP. If you had invested in thsoe companies, you would be up 4.8%. I had noted that ostensible growth companies on low PERs often turn out to be traps. Well – looky here! OPTS has the only company on a low PER – at 10.9. It was the worst performer, at -17.4%. If you had excluded it, you would be up 10.3%. Very interesting, I think. Outperformance of this little mini-portfolio could be due to the market becoming more growth-oriented over the course of the year. It’s still noteworthy that a relatively high-PE approach can outperform the index.

Happy investing to you all.

About mcturra2000

Computer programmer living in Scotland.
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1 Response to 6-month checkup

  1. An EPIC read. Unfortunately, I don’t know half of them.

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