Stockopedia is running a stockpicking challenge this year, so I thought I’d have a go at it. There’s a lot of entries: 606 at the time of counting. There will undoubtedly be more. The stocks I chose were: BATS (Brit Amer Tobacco), NXR (Norcros), RCH (Reach), RDW (Redrow), SLP (Sylvannia Platinum). I personally hold RCH and SLP.
My stock selection was a breeze. I went to Stockopedia’s Screen Of Screens, and chose 5 of those with StockRanks (TM) in the 90’s. I wanted them to have decent divvies, too. What could be simpler?
It will be interesting to see how well a dirt-simple quantitative selection performs. There’s no way I will actually win the challenge – in some ways that’s not my point – but if I appear in the top quartile, I’ll be a happy man.
So far, the portfolio with the lowest aggregate StockRank is Alexios1201. The average rank of his stocks is 7. He chose 4 “sucker stocks” and a “momentum trap”. Um, OK. At least it will be interesting to see how he does. I’m suspecting “not well” will be answer. Time will tell, of course.
RCH (up 46%) and SLP (up 101%) has been good picks for me, so far. I bought RCH late last month, and it went up almost immediately. A great performance like that over such a short holding period is a rarity for me. It happens the other way, of course: buying a stock only to see the bottom fall out of it from the get-go. I bought RCH because it was a Stockopedia Cornerstone Growth stock, with a StockRank of 99, and a 7% yield. Cornerstone Growth is a famous screen popularised by James O’Shagnessy in What Works on Wall Street.
If memory serves, there is a little backstory behind the screen, too. Given the backtested results of Cornerstone Growth and Cornerstone Value, funds were set up to follow the strategy. They went on to perform abysmally over a subsequent three-year period. This was probably during the late 90’s, when the more value-oriented stocks faltered, and everyone was chasing over-hyped tech stocks. Due to the funds’ poor performance, the owners sold off the fund. Inevitably, that was exactly the time that they were poised to skyrocket. Joel Greenblatt occasionally mentions these funds as a cautionary tale that even solid strategies can underperform seriously on a three-, and even five- year horizon.
SLP was a pretty straight-forward pick. It was trading on a P/FCF less than 10, had net cash, and a StockRank of 99 at the time. Nothing is infallible, but it seemed like a good “Bruce Berkowitz” type pick. You put a few stocks like that together, and you’re likely to get a good result.
DPLM is the best-performing fund currently held in my personal portfolio, up 181% since I bought it in December 2015. I admired it for being a good-quality company, and it has certainly delivered. I had held it on a previous occasion, but sold it because “the price was too high”. I can’t remember if it went up or down after my sale. Anyway, I figured in 2015 that it was worth a buy, which indeed it turned out to be.
CARD is the worst-performing fund in my portfolio, down 19% since I bought it in May of this year. It had a good divvie, the debt level was acceptable and it had momentum behind it. Despite this, performance has been disappointing for me.
As I have said in previous posts, I am more of a quantitative investor now. Stockopedia has been an invaluable source for me. I could possibly do better by making my own selections, but I find the process “too exciting”, and there’s a risk that I’ll overtrade. Using a quantitative approach allows me to kick back and experiment with microcontrollers and programming.
The Santa rally seems well underway, aided by the recent Tory win at the elections. If Corbyn were elected, then I’m sure christmas would be cancelled for me. Cold baked beans rather than heated-up ones.
Anyhoo, that’s all for now. A merry christmas to you all, and a happy new year. Stay safe out there.
Postscript: I have a Twitter account, but I don’t use it anymore. So direct messages to Twitter won’t get through to me. You can leave a message on this blog, though. I tried the “one month without Twitter” challenge awhile back. I was about to rejoin it, but then I read that Paul Scott over at Stockopedia had abandoned it. This got me to thinking that too much social media (which basically means FaceBook and Twitter) is not good. I had abandoned FaceBook much earlier in the year and I am keen to keep away from that, too. Although there is some excellent on FaceBook, I am unhappy about the privacy issues on there. And Twitter, well, that just does my head in. It’s all too easy to get into arguments. So, FaceBook for pouting teenage attention-seeking girls, Twitter for left-wing insanity. I think I’ll avoid both, thanks.