Can the Stocko Community beat the NAPS portfolio?

26th Dec '21 by Albertos

13 comments 1330 reads

Edit 30/12/21

OK, seemed like a good idea, but its not going to happen given significantly less than 20 selections.

Thanks to those that gave their ideas.

Happy New year - and a prosperous 2022 investing.

Phil

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Hiding from left-over turkey and chocolates, the idea for this experiment occurred to me but will only be successful if others in the community are interested to be involved - otherwise it will just die a death.

Can active stock picking, involving both information on Stockopedia and elsewhere, and both quantitative and qualitative information, beat the NAPS portfolio selection process?

This is in no way meant to be disrespectful of the NAPS but I've always felt, rightly or wrongly, that taking into account information not on Stockopedia should improve results.

RULES:-

Only UK shares as per NAPS.

If you want to put forward a share write a brief comment on why. If your share is already there, do not reply to the comment or expand on it, simply give it a "like".

If you strongly disagree with a selection reply with a brief comment but only if you would be the first to reply. If you strongly disagree and a disagreeing reply is already there , do not reply to the comment or expand on it, simply give it a "like".

(The point is the positive "likes" less the disagree "likes" will give a ranking to all the shares put forward)

Top 20 will be the portfolio and will be equally bought at their closing price on 31st December 2021, for comparison to the NAPS bought in the same way.

To start things off I'll put forward what I consider to be a solid share from my portfolio which I consider may do well in 2022. Then its over to you all.

This is simply for interest but if you see anything you think is interesting for investing in, as always DYOR.

Regards

Phil

EDIT: A stock can be in the NAPS portfolio and this one - at the moment it is not known what will be in NAPS, the selection process for the alternative portfolio should be without this knowledge or in anticipation of it.

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Albertos

26th Dec '21

Central Asia Metals (LON:CAML)

Central Asia Mining has a copper tailings operation in Kazackstan and a zinc/lead mine in in Northern Macedonia.

Further background is usefully given by Roland:-

https://www.stockopedia.com/co...

Current price seems to be depressed minor production problems in 2021 and potentially from a historic tailings dam spill into the local river in Northern Macedonia (which they cleaned up fast and handled extremely well IMO).

Market seems to be ignoring the strength of the copper price and many forecasts showing deficits in 2023 onwards due to increased demand (green agenda) and constrained supply (historic underinvestment leading few new mines coming on stream and non-mining friendly governments appearing in South America etc, etc).

Zinc is currently extremely buoyant.

Risk seems to be to the upside here.

ADM123

27th Dec '21

Why only uk stocks?

Caper4

because Naps is and the objective is to outperform Naps

Effortless Cool

Macfarlane (LON:MACF) for the reasons set out here:

A textbook example of a successful buy and build strategy.

I reckon current consensus is materially too low and value the share on my analysis at over 50% higher than current levels.

jonno

A sparkling idea and interesting 'experiment'. My pick for 2022 is £SUP. I feel that this owner managed manufacturer and distributor of non-discretionary fast moving goods is underappreciated, despite the recent share price rise. It is a top 5 holding for me, so I am talking my own book.

Several positive features:

Minimal debt
Entrepreneurial CEO owns 57% of the equity (although I appreciate some may not see this as positively as I do).
Economies of scale via vertically integrated UK manufacturing and distribution facilities that supply the large retail discounters, convenience stores and some major supermarkets. Contract with HM Prison Service to supply vaping products with potential to supply the NHS
Lean cost base with overheads well controlled
Runway for growth especially in wellness and sports nutrition category by adding more product lines to the existing manufacturing base.
Investment metrics are sensible at the current market price. Estimated 3% dividend yield for this year rising to 3.4% next year.

On he downside one of the most significant risks is that of key person. Sandy Chadha, the CEO, is the entrepreneurial driving force. His absence would in my view scupper the investment case.

A lesser consideration is potential regulatory risk relating to vaping products. However given the NHS is consulting on a proposal to offer vaping products to smokers in an attempt to wean them off tobacco, such risk appears somewhat diminished.

I don't necessarily see Supreme (LON:SUP) as shooting the lights out, but it is a business that can be readily understood run by a CEO with plenty of skin in the game and entrepreneurial flair. It certainly ticks my investment criteria.

Happy New Year to All

illiswilgig

Great idea.

I will contribute my largest holding - on the basis that I may as well put my mouth where my money is. Or I would have done, but Macfarlane (LON:MACF) is currently my largest holding and has quite rightly been picked by EC. So I'll go with my second largest holding

Ms International (LON:MSI)

which is a tiny, illiquid micro-conglomerate metal-basher. Essentially family owned and managed firm based in Doncaster with a market cap of £35m.

With net cash of around £15.5m at H1 the enterprise value is significantly less. It's trading on 10.8x trailing 12months earnings - there are no broker figures - by my forecasts its trading on around 6.8x current year to 31st March22 as I expect a big H2 due to significant deliveries on a contract to the US DOD. But anything can happen and probably will.

Although stocko has it as a Super Stock and stockrank 86 - I think its currently undervalued and neglected because of the lack of forecasts.

cheers

Mark

doctor dave

28th Dec '21

Centrica (CNA); should benefit from the smaller energy providers going bust. Growing its customer base again and able to dictate terms once more.

Rusty2

Centrica (LON:CNA) is a reasonable choice but it maybe included in NAPS 2022 anyway. Not sure if there are any rules about this selection.

To beat NAPS don't we need to select stocks that are not included in NAPS?

Boon

Why can't Stocko publish a table, with the shares with the highest % buys in December, based on the Stockopedia Community rating?

That would accurately reflect what companies, the community is positioning itself for 2022?

But that does not relate to actual buys and I don’t think it’s very accurate. One stock a while ago had over 90% community holding. Some tin pot penny mining stock had over 60% at one time, I think some of these high % holding are because members put them on a watchlist because they have been discussed recently. Boohoo (LON:BOO) was the most popular stock in last year challenge. I have found popular stocks don’t do so well, same for the previous year.

LeopoldAlcocks

29th Dec '21

A good choice, Edward. A top 5 holding for me. The caml share prices doesn’t seem to have reacted to increased metals prices as I would have expected, and l think it has some catching up to do!

Richard Goodwin

All 3 of the UK quoted palm oil producers have interesting stories. The quality pick is M P Evans (LON:MPE) the value pick is Anglo-eastern Plantations (LON:AEP) the recovery pick is R E A Holdings (LON:RE.) but how about putting in Dekel Agri-vision (LON:DKL) ?

A long term under performer as they built, commissioned and got a palm oil processing plant and now a cashew plant up and running. Mkt Cap £25m, EV £49m ie plenty of capex funded by debt,

The bull case is that palm oil prices are near record highs and DKL will achieve 2021 EBITA of £5m+ AND

A] local palm oil plants (some of which were originally grown in Dekel's own nurseries) are now maturing, which should increase yield, which makes a huge difference to profit margins.

B] new cashew nut processing facility is undergoing commissioning ie capex already spent. Cashews are a much less competitive market and the cashew business has the potential to be twice the size and much higher margin than palm oil processing.

On a 1 year timescale cashews should drive sales and EBITDA upwards, with net profit catching up over a year or two as profits increase sufficiently to offset the increased depreciation.

And for those worried about the environment, Dekel are on the journey to RSPO certification!

I hold Dekel, Anglo Eastern and REA prefs.

doug2500

My most recent purchase which may provide some sector diversification from the previous suggestions is Polar Capital Holdings (LON:POLR) an asset management company. They are best known for their biggest IT Polar Capital Technology Trust (LON:PCT) but they have more in the stable and are launching new funds in different, on trend areas.

20% of mcap is cash
Yield of 5.8% while you wait for capital appreciation
March 22 forecast EPS is 58p
March 23 EPS is 70p
Share price is 795p today
Operating margin of 30%+
ROCE of 40%+

This means it is both undervalued IMO on both absolute terms and relative to it's highly regarded peers like Liontrust and Impax, with some better metrics.

The only real negative for me is that, like all asset managers, their fortunes are geared to the underlying markets. But then generally, in the long term, they go up too.

Can the Stocko Community beat the NAPS portfolio?

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Albertos

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