Magic Hat Portfolio March 2015: FLYB + PRES in, IRV out

Another month for the Magic Hat portfolio (http://www.stockopedia.com/fantasy-funds/magic-hat-463/), so it’s time for another selection of shares. There’s been a considerable style drift in the fund since inception. It started out investing in quality, then moved to the Greenblatt screen last year, but as from this year is transitioning to deeper value.

I was not happy with the shares that the Greenblatt screen produced, so I decided to switch strategies.

Ejected from the portfolio is IRV (Interserve), that has been there for a year. I don’t have any real objections to IRV, it has a a Stockopedia value rank of 81, and a momentum rank of 76. The shares reacted well to the finals that it issued on 26 Feb, which is a good sign. The dividend yield is 4%, and there was an increase in the full-year dividend announced in the finals by 7%, so it should be attractive to dividend seekers. The shares returned -4.1% over 1 year, compared with the ASX (All-Share) of -2.2%. So IRV underperformed slightly, and didn’t provide much in the way of excitement.

FLYB (Flybe) is the first share into the portfolio. Paul Scott had a write-up on it today (http://is.gd/Do9kFo):

I suspected that a catalyst for a recovery in the share price here would be news of the surplus planes being disposed of, or otherwise occupied. So today’s announcement that two surplus planes are to be used for new routes from Cardiff, is encouraging.

He has also been tweeting that he had averaged down his position. Prompted by that, I actually bought some shares in it yesterday. So it was an incredible piece of luck on my part to see the news today. It doesn’t always work out that way, of course, as I have had occasion to buy shares only to see them be hammered the day after. RWD (Robert Wiseman Dairies) was one of them. I don’t encourage people to average down, or buy on other people’s tweets, but FLYB was definitely something on my radar. Sometimes I’ll think about a share, hem and har about it, but then do nothing. A comment by someone else might then nudge me in a particular direction.

FLYB has been a kind of on-off recovery share. As you can see from the chart below, its shares tooks a dive late January, and then flatlined. We were discussing flatlining shares the other day, and how they can be more interesting than you think. I was also mindful of Stockopedia’s article on shares that have bombed. I will discuss that at some future date.

54f83928c7d57FLYB

FLYB has a value rank of 74, and a momentum of 7. It has a fair amount of cash. The fear was that it would all be soaked up by planes sitting on the tarmac. FLYB seems to be making progress on this front, so it should be less of a concern.

PRES (Pressure Technologies) is the second share added to the portfolio. It is in the sector of “industrial machinery”, describing itself as providing “engineeering solutions for high pressure markets”. I have shown the chart for the last year below. As you can see, it’s a bit of a mess momentum-wise. It has a value rank of 91, and a momentum rank of 11. It also has net cash, and the gearing and liquidity ratios on Stockopedia are all green. So hopefully the market is sufficiently peeved with the company, and sufficient value is available for this to make a healthy rebound. As ever, we shall see.

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That’s enough magic for this month. I’ll catch you next next month. Until then, happy investing.

Update 04-Jun-2015: I have updated my thoughts on PRES. Link

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About mcturra2000

Computer programmer living in Scotland.
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