Screening strategies that hunt down growth shares at reasonable prices were by far and away the best performers of all 60 of Stockopedia’s GuruModel screens during the third quarter of this year. With the quarterly rebalancing of those models due this weekend, we’ve been reviewing the 3-month returns, and while it’s clear that growth strategies have been the big winners, there were also a few other surprising successes along the way.
Our GuruModel screens were last rebalanced in mid-June, shortly before some sharp falls in the value of the FTSE. Since then those declines have been clawed back and the index is currently up by around 11.6% so far this year (6,588 points at the time of writing). Perhaps the biggest news of the quarter was the rule change at the start of August that means investors can now buy AIM-quoted shares using tax-efficient ISAs. Unsurprisingly, this has had a major impact on the junior market , with the AIM-100 currently trading up by 7.7% since then (and up by 12.7% for the year). While impressive, that performance is still way off the pace of the FTSE Smallcap index, which has risen by a remarkable 22.4% in 2013.
After the rollercoaster for equity prices early in Q3, the summer turned out to be comparatively quiet but that didn’t stop many of our screens from producing some exceptional results. Overall, the composite performance of the GuruModels during the past three months has been an 11.0% return against a modest 4.6% for the FTSE. Click here to see how the screens stacked up.
Taking top honours was our pure Growth at a Reasonable Price (GARP) screen, which returned a stunning 25.2% during the quarter. The GARP screen looks for companies with a medium-term track record of earnings growth, robust return on capital, improving margins, share price strength and a reasonable valuation versus the sector. We couldn’t resist having a closer look at that performance recently (read about it here), which has been driven by a number of shares that have enjoyed some spectacular price rises. Among them is Scottish TV production and broadcasting company STV (LON:STVG), which has produced an 82% gain for the GARP portfolio since it was bought in June.
Another high flying stock in the portfolio (and a number of other…