Stock Picks | Boon's Fund Recap - Jul & Aug 2022

9th Sep '22 by Boon

6 comments 1248 reads

See all the previous Monthly Recaps here.

July Performance +0.81% vs FTSE All-Share benchmark +4.2%

Aug Performance –0.45% vs FTSE All-Share benchmark –2.4%

YTD Performance +1.4% vs FTSE All-Share benchmark –4.8%

(Part Time) Fund Manager’s Report

Firstly, apologies for not getting out a July report. I, like many others, succumbed to the traditional August slowdown, enjoying as much as I could the glorious weather in London on the weekends. Sadly, there was none of the normal chilly, dizzly weekends or evenings to spend indoors, huddled over my laptop.

This is reflected in my trading activity over the summer; with just one new buy, three exits, and a top-up which I detail in a later section.

The markets really struggled for direction over summer, not knowing whether the worst was already priced in, or more pain to come. I therefore decided to sit on the sidelines for a bit longer, happy with my existing holdings. It was towards the end of August that I grew increasingly worried by the macro environment and offloaded three holdings in Zytronic (LON:ZYT) , Saga (LON:SAGA) , and Rio Tinto (LON:RIO) . I started July with 33% cash, and ended August with 41% cash, taking some risk off the table.

At this moment, I have five guiding principles driving my decisions:

Discretionary products and services will suffer over the next 6 months, whether B2C or B2B. How I’d love to buy some bargain valuation shares like Seraphine (LON:BUMP) or Topps Tiles (LON:TPT) or On Beach group (LON:OTB) . But the truth is discretionary income will tighten for many households over the next few months. Even if Truss pulls off the great energy price freeze.
Avoid companies with weak balance sheets. We have just seen Cineworld (LON:CINE) file for bankruptcy protection in the USA. The leniency of lenders that we have seen over the past decade, is now over. With rates rising, and lenders jittery about bad debt, there will come a point where some lenders will think it is better to get ahead and possess now and sell for 30c on the dollar, rather than wait for the bonfire when they will only get only 10c on the dollar. Shares like McBride (LON:MCB) which I would have bought if this was 2019, I am avoiding now as…

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Boon

9th Sep '22

Appendix: current holdings

Small (0-5% of portfolio) , Medium (5-10% of portfolio), Large (10%+ of portfolio)

ISA - Changes	Name	Size ↓
No Change	Begbies Traynor (LON:BEG)	M
No Change	Medica (LON:MGP)	M
No Change	Appreciate (LON:APP)	S
Sold All	Zytronic (LON:ZYT)	-
Topped Up	Yu (LON:YU.)	S
No Change	Spaceandpeople (LON:SAL)	S
No Change	Intercede (LON:IGP)	S
No Change	Time Finance (LON:TIME)	S
No Change	Fulcrum Utility Services (LON:FCRM)	S
No Change	Oxford Biodynamics (LON:OBD)	S

SIPP - Changes	Name	Size ↓
No Change	£XSPS	L
No Change	Phoenix Group (LON:PHNX)	M
No Change	Spectra Systems (LON:SPSY)	M
Sold All	Saga (LON:SAGA)	-
Sold All	Rio Tinto (LON:RIO)	-
No Change	Itv (LON:ITV)	S
New	Chapel Down (OFEX:CDGP)	S

KevinS1

Hi Boon, thanks very much for the update. It's great to hear others views and I agree with much of what you have said.

I need to focus more on my watchlist to sort out the "best" opportunities as it currently is too large. I'll try and do this over the weekend and maybe add an update to here to share with others.

I agree that we haven't see the worst yet - another good bounce it appears on the energy news this week, but I don't believe the real squeeze on costs has happened yet - it might not happen for a few months, with maybe Christmas being the tipping point as people cut back with less spend on presents, Christmas itself and socialising.

I reckon that we have another few legs down yet, but will be on the watch out for opportunities as I don't believe any of us can truly time/judge the bottom of the market and a few % lost in buying now won't mean much in the next 3-5 years I hope.

Best wishes. Kevin

10th Sep '22

It is an interesting question; how many is too many for a watchlist?

I have two types of watchlists; one is with buy pricing targets, where I have done quite a bit of research, to the point of maintaining a research doc, as well as calculated a buy price. I have about 30 on that list.

The second is a longer watchlist. No doc, no price target, but I think it is high quality but the current pricing is just too high to warrant doing all that analysis for now. I am mainly tracking them so I get alerts when there is new news. On here, I think I have another 20-30 shares.

On a macro level, the FTSE 100, FTSE 250, and AIM 100 have all pulled back to 2018 valuations (when looked through TTM PE, Price/Book, or dividend yield), which I remember as being also quite depressed at the time (due to poor sentiment related to Brexit). However, my view of interest rates means that I think the market should have a lower valuation than in 2018, so I also agree with you that the markets as a whole probably still have further to fall.

2nd Oct '22

Sep update will be coming out next weekend, 9/10 Oct!

A number of trades, more than the usual. And while Sep was a loss overall, I've now hit my yearly target of outperforming the benchmark (FTSE All-Share) by 10%, and hope to keep it there for the final quarter.

Mark B1

4th Oct '22

Great article, well done, many thanks and much appreciated

Boon's Fund Recap - Jul & Aug 2022

(Part Time) Fund Manager’s Report

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Boon

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Appendix: current holdings

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