2021 Review – Initial Top Five

Introduction

In this first part of my 2021 review I look at the different measures of stock picking / trading performance through the year, before comparing them and then doing a deep dive into what were my initial top 5 positions at the start of the year as well as a couple I didn’t carry forward from 2020 to 2021.

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2020 Review (pt2) – Stockopedia Challenge

Introduction

This article is part of a series as follows:

  • Part 1 – Benchmarks
  • Part 2 (this post) – Stockopedia Challenge: BKS, CRL, UPGS, VLX, WEY

Coming soon:

  • Part 3 – BOKU, GAW, SOM, THRU, UCG
  • Part 4 – TBD

The Challenge

At the end of 2019 Stockopedia set up an open Stock Picking Challenge to last the length of 2020 based on a five-stock equally-weighted portfolio. No trading is allowed and dividends are ignored. The main purpose of this was presumably to confirm that Stockopedia subscribers outperform non-subscribers (which I don’t doubt) and imply a causal relationship between paying your fees and getting better returns.

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7:59 cut – CRL

Creightons – H1 Results

Creightons is particularly fun for investors because they have no broker forecasts and guidance is generally limited to the content of their excellent results and other presentations held during the year. Furthermore, the share price often increases after such presentations where the manifest strength of the management team and focus of their vision are a sight to behold.

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7:59 cut – BON, VNET, CRL

Bonmarché (BON) – Trading Update

Due to worsening trading and a potential qualification of the accounts by their auditor, the company now recommends shareholders accept the cash offer of 11.445p from Spectre Holdings Limited / Phillip Day, noting that Spectre need to give 14 days notice before closing the offer.

There is a small risk of Spectre invoking a Material Adverse Change (MAC) clause due to the downturn in trading. Additionally some shareholders might not want to wait for the offer to complete before receiving the money. These factors may push the bid price below 11.445p this morning.

I was foolish enough to hold these once, but smart enough to sell out on the day of the March profits warning.

Vianet (VNET) – AGM Trading Update

These look like strong figures, slightly ahead, however be aware that the company has been consuming cash of late and the rollout of new connections is may require further working capital.

I hold (large-sized position) and will be monitoring price this morning with a view to adding.

Creightons (CRL) – FY Results

This is a quick initial look.

Although I have not been able to find any official forecasts, today’s figures confirm the growth seen in H1 and expectations of larger private investors. A higher run-rate [edit: at least in profits] is likely to bake in further yoy growth for H1 2020, as is the recent acquisition and the outlook is positive.

While they are benefiting from capacity investments made earlier, as I noted at the time elsewhere, this only resulted in modest capacity improvements and further investment will be required imminently. If their products were to fall out of favour with customers or retailers then this investment would not be recouped. Furthermore, growth has and will continue to lead to increased inventories which both consumes working capital and increases exposure to potential write-downs. On the other hand, payables have grown remarkably slowly (probably reflecting the high gross margins) – if this is sustainable then this will support capital-light growth

I note that cash has fallen (before the small acquisition announced yesterday) while debt has been steady – the dividend hike may prove imprudent.

I hold (mid-sized position) and will be monitoring price this morning with a view to either adding or reducing. Note: Full market, not AIM.

[Edit: Good coverage of yesterday’s acquisition on today’s SCVP, some good stuff especially from Wimbledonsprinter in the comments, with more likely to come in the main section later today. To attend live webinar at 2pm email creightons@piworld.co.uk]