Monthly Archives: January 2014

I have been a bit late in documenting my portfolio updates, though I try to keep the static pages (in the portfolio tab above) up to date. The core portfolio page is a bit off, as I’m due to write a bit of code for better reporting than the horrible copy-pasting from the FT site I’ve been doing up to now.

With no further ado, let’s review the updates to the Stamp Collection since my last post on it.

API Group: an erroneous wander

I’ve sold API Group, which hasn’t moved much since I bought it. While it’s the sort of business I like for the core portfolio, it was a bit duplicate at an aggregate level, and I was convinced partly by a “catalyst” story about some land they own. I now think this was an error: I don’t really want to chase relatively small side gigs  that way, as they may take years to realise and are hard work to follow. It’s nice to have on the side of a business I’d like without it, but I will try to avoid pure catalyst situations in the future. Also they tried to sell themselves last year, under instruction from a major shareholder, and failed, which doesn’t inspire confidence, if nobody in the business sees much value over the current share price.

GW Pharmaceuticals trimmed on doubling

I bought this amusing cannabinoids pharmaceutical company partly for the entertainment value, and because it looked relatively cheap in 2012. It’s got an extra listing on NASDAQ with an associated fundraising last year, which combined with moderate fundamental news flow (new countries for their existing approved meds, new clinical trials for others) and a bubbly environment in US biotechnology has lead to the price multiplying. I cut down when the weight doubled away from my target (which is more than notional doubling as the target weight increases with the market, and UK small caps have been doing very well lately).

It’s progressed further since, with a secondary US fundraising a few days ago, which makes it look pretty expensive in enterprise value terms (as the enlarged cash pile is effectively at a premium) so I may exit when the momentum looks like it’s stopped, or at least trim down if it doubles again.

Avanti Communications: too fashionable and indebted

Another stock that was probably an error, sold at a partial loss. It’s a satellite operator — a notoriously accident prone sector — which is a darling of spread betters and blue sky story chasers. The balance sheet weakened with a large debt rescheduling at a high rate. It’s just now too expensive, too leveraged and too fashionable for me to keep it.

Sweett: back to basics

A construction consultancy, surveying and property management business that seems to keep customers pleased on a modest valuation, is more fitting in the portfolio. It should be a good long term holding.

Wolfson Semi: the sound of music

Audio chip manufacturer Wolfson Semiconductors has great products and an accident prone past (managing to lose Apple as a client through poor execution) but seems fair value at the moment and aware of its past failings. This provide a bit of technology diversification from the dull Industrials I tend to buy.

Anite: network testing and travel software

Another technology company and an apparent leader in their field, a somewhat curious mix of mobile phone network testing and travel software, having experienced difficulty in a time of low capital expenditure from their large telco customers, seems likely to benefit from economic recovery and seems a reasonably steady business merely priced to plod along.

Interbulk: dry bulk

A cheap-looking if somewhat indebted purveyor of containerised tanks and “dry bulk” containers. They provide a niche solution and focus on that, suffered from the euro and general repercussions of the financial crisis. Now with a new CEO they seem well placed to both regain their footing and benefit from a possible economic recovery.

They have relatively high debt but are conscious of it and doing something about it. It’s a relatively steady business which should be easy to (re)finance cheaply at the moment. Some of the balance sheet risk is mitigated by strategic holders (larger Chinese and French transportation groups) that will probably back the company should the lenders get cold feet. There’s a bit of “closely held” risk, but the plurality of strategic holders and their nature mitigates some of it. The price doesn’t really include much growth so it should do pretty well if both the operations and the economy improve. And on my boring metrics it’s hard to beat

Elektron top up

I’ve also topped up Elektron Technology, a previous acquisition whose price has more than halved. It’s basically a recovery situation for an established small electronic components group, which had been sleepy for many years, similar to Volex in the main portfolio. The valuation is very low, and sentiment on bulletin boards very negative. The whole equity costs the price of a posh house in London for a generally profitable business with 1000+ employees. I’m happy to wait for a recovery, several years if need be, these things take time.

This should be the one and only top up though, as I try to employ a “committed capital per idea” risk management metric: the money put into a single idea shouldn’t exceed (much) the target weight for similar ideas. This avoids throwing too much good money after bad just to maintain target weight. I had entered relatively modestly, which has allowed a sizeable top up.

Bodycote sold

This stock dates from the early days when I collected leftovers from the main strategy, so it’s a FTSE250 stock that I liked but didn’t pass the core portfolio criteria. It’s done well, possibly a bit expensive now, and in any case doesn’t fit in the current philosophy of the Stamps Collection, and my general possible overweight in that style of company, so was sold as a tidy up exercise.

Seeing machine: a retail placing

In sideways news, Seeing Machines, an existing portfolio holding, which is also becoming perhaps a bit too fashionable for my taste, is doing a complementary placing following an institutional fundraising a couple of months ago. Retail investors are offered to participate at the same price as the institutions, which now looks like free money because the price has gone up considerably since the original institutional placing. It’s a nice touch for long term small shareholders, so kudos to the management. I’ve applied for a fair chunk as a short term trade to exploit the difference between the offer price (5p) and the current price (9p+). I plan to sell whatever allocation I get — which i expect to be trimmed as the max fundraising is £1m and the conditions are so favourable — because keeping it would make it too large for my risk budget.


That’s it for now, a little more than I recalled! While it’s several months’ worth of catch up, maybe I’ve been trading this portfolio a bit too much (although some of the 2013 trading is explained by allocating more funds to the strategy, which is okay).