Fantasy Fund : Technology Trend

Monday, Mar 11 2019 by
29

One of the features I have always loved about Stockopedia is the Fantasy Funds capability. I know that you can run fantasy portfolios on lots of sites but I think Stockopedia does them particularly well although its surprising to me sometimes how underused they are.
I personally find the insight into how other people are investing and trading in their portfolios (real or not) to be useful to me. It helps me to generate ideas and I can see how different strategies work in different market conditions. In my view, if I can see what is working or not working for other people then that information may well be useful to me.
I’m working on the assumption that the same principle will apply if I share my thinking behind the Technology Trend portfolio, maybe others will look at the choices being made and get some use out of them. I plan to update this article with details of which shares I am buying and selling into the fund and why. It won’t be as detailed an analysis as you might find in Stockopedia’s own articles or from many of the other excellent contributions from subscribers but I hope it will still be useful to someone.

I have been running my Fantasy Fund (Technology Trend: https://www.stockopedia.com/fa... ) for over 2 years now and March 2019 marks the one year anniversary of me “rebranding” the fund and giving it the more specific Technology Trend purpose. Up until March 2018 I had been pursuing a general investing strategy loosely based on the principles in Naked Trader’s books but with tweaks of my own. When you look at the chart up until March 2018, it looks like the strategy was working really well – the returns are great but consider that those returns took place against the backdrop of one of the “easiest” periods of time to make money in the Stockmarket that I have ever seen. You could have bought a US Index tracker and done incredibly well, you could have bought just about anything and done very well, or at least it feels like that looking back.

So, in March 2018 I was arrogant enough to think “This is too easy! I started to consider what would happen if I tried pursuing a more niche strategy. Would my returns get better or worse if I…

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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27 Posts on this Thread show/hide all

Carey Blunt 18th Mar 8 of 27
1

Today I added Atlassian ( £TEAM ) to the fantasy portfolio. Its a stock that I have wanted to buy for a while but have never manged to pull the trigger just because the eye watering PE scared the life out of me. Currently the 12 month rolling PE Ratio sits at 115 according to the stock report ! In the meantime, while I have been waiting the stock is up over 100% in the last year.

In all honestly it will probably still be part of the 20 to 30% of the portfolio that I don't immediately buy in my real money portfolio. I maybe need the fantasy portfolio to show me a green number to get over the mental hurdle. I know that makes no sense but sometimes you have to help yourself "manage the monkey".

For those of you who are not aware, Atlassian produce software development tools, specifically those related to Agile Software development methodologies. Their most famous product is called JIRA which is a tool you use to develop software in an Agile way. Basically you use JIRA to set up your software development project, assign work to developers and track progress.
The reason I started looking at Atlassian is that their software is particularly sticky and Agile is a growing area.
I recently talked to some software developers about if they would move from JIRA to the SDLC module of ServiceNow and they were very resistant, even where the functionality is the same or very similar.
Basically, if you use JIRA and Confluence and BitBucket then you love them and you don't ever want to give them up, they are fast becoming the standard for the management of software development life cycles. If you know how to use them then your skills are very transferable to other software development companies.

So that's why we have such a very high PE, its popular, growing and sticky in a huge market. So i've bought my normal 50k chunk in the Fantasy portfolio and will follow up with my own money when I am comfortable.

I'm now fully invested and arguably overweight in US stocks. However, that's where the tech trend opportunities are.
Happy investing all. Cheers.

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Carey Blunt 25th Mar 9 of 27

Two sales from the Fund today. I sold my entire holdings of:

Elektron Technology (LON:EKT) - I managed to buy this at 45p a share which seems to have been the high point. There was an inline with market expectations update on Feb 5th but in recent weeks the SP has been heading steadily south. Potentially its a buying opportunity to average down as I still like the company but in this case, given that potentially the markets are about to wobble again I'm going to cut my losses (a 22.2% loss). I also don't have any spare cash in the fund to average down with. Maybe I will buy in again once I feel it has bottomed out.

Sopheon (LON:SPE) - Another company that I like and would ideally keep but I am about 20% down having bought at 1201.75p. It has a stockrank of 83 and the recent update last week didn't seem bad but i'm not going to try to fight momentum and so it's a sell. Again I will see where it goes and potentially buy back in later.

cheers
Carey

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Carey Blunt 12th Apr 10 of 27

I’ve spent the past 2 days in meetings with people from ServiceNow and I am going to meet some of their executive team in the last few days of April.
I really can’t say enough good things about them as a company and their technology strategy. That doesn’t always make a company a good investment but in this case I think they really have a bright future.
I can’t buy much more of this stock in the fund without Breaking the “no more than 25% of the portfolio in any one share” rule. However, I am buying more of this personally outside the fund.
Servicenow’s big yearly conference is between the 6th and 9th of May. Expect news volume and share price to go up between now and then, peaking at the end of the conference.
Could be a trade for people or a good opportunity to get in for a longer term investment and feel good about the immediate direction of travel.

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herbie47 12th Apr 11 of 27

In reply to post #468856

Hi Carey, your fund is doing really well. I do have a small holding in ServiceNow. I also did hold TradeDesk until recently, thinking of buying back in if there is a pullback. Another one in that sector I hold is ZS (Zscaler).

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Carey Blunt 17th Apr 12 of 27

In reply to post #468996

Hi Herbie,
Thanks, I will check out zScaler. I’m vaguely aware of them but don’t know them in depth so will check them out.
Cheers
Carey

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andrea34l 17th Apr 13 of 27

I think you were right to sell Sopheon (LON:SPE) as I feel recent updates are showing rather pedestrian progress now compared to what the rating expects. You timed GB (LON:GBG) well, especially after today's update. I am extremely wary of £D4T4 after being previously bitten and the CFO leaving doesn't give me any confidence.

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mercury61 18th Apr 14 of 27

In reply to post #456853

Hi Gus
Interested in the Investment Trusts screen and wonder if you would share your criteria for selections?
Thanks in advance

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gus 1065 18th Apr 15 of 27
1

Hi mercury61.

Not sure if I can link a portfolio to a thread but if it works here is the full portfolio. (My original post referred to 20 positions; it was actually only 15 although I have subsequently purchased other ITs not included here).

https://www.stockopedia.com/portfolio/672409/

I made the original selections in Feb 2017 when I consolidated my various pensions into a single SIPP and wanted to put some of the core into a range of investment trusts across sectors and different predominantly equity based markets. Part of this was to benchmark the performance of IT’s against ETFs, active funds and passive trackers (as well as my own stock picks in my investment portfolio).

Most of the research was done using Morningstar and Fidelity data bases and selection tools. I was basically looking for reasonable quality (both Morningstar and Fidelity have their own rating systems) and strong performance over the previous five years, relatively low ongoing charges, a decent discount to NAV if possible and a general theme of getting some exposure to different sectors or geographic markets such as technology, property or venture capital that I wouldn’t be too comfortable/confident investing in directly. Woodford Patient Capital Trust (LON:WPCT) was a punt (so far not too successful) on Neil Woodford’s track record and an allocation into a market (VC type start ups) not otherwise readily available to the retail PI.

Generally satisfied with the results. The losers have been bearable (c.12% down the worst to date) and there have been one or two strong gains. Overall, it’s up about 22% over the two years which is comparable to the performance of the ETFs, beats my active and passive funds and (sadly!) also my own stock picks.

Gus.

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mercury61 18th Apr 16 of 27

In reply to post #470341

Gus
Thank you for your reply. I'm afraid the link doesn't work for me.
I too use Morningstar and will add Fidelity as a new reference.
Enjoy the good weather!

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gus 1065 19th Apr 17 of 27
2

In reply to post #470441

Hi mercury61.

Sorry the link to the portfolio doesn't work (i've had that problem with Stocko before). Here's a couple of static screen shots to show you what's in it.


Good weekend to you too.

Gus.


5cb990f4e7fd8it_stock_1.PNG


5cb99150d8b62it_stock_2.PNG


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mercury61 23rd Apr 18 of 27

Thanks Gus Got it using screen shot of picture. Very interesting area.
All the best

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Carey Blunt 9th May 19 of 27
2

A bit of a kick to the fund performance today. A 4.6% drop on the day largely driven by a 16% drop in Tradedesk.

Tradedesk managed to only grow by 41.2% in its traditionally weakest quarter of the year rather than the 56% growth it posted last quarter! (This is still ahead of the 35% it targeted btw).

This has taken 16% off the share price and that’s the way it goes with US based high growth tech stocks on a PE in the high 70’s !

Maybe the next few days will provide an opportunity to buy some more.

I’m keeping an eye on Etsy and Upwork, both of which haven’t gone in the right direction so far. The general drop in US stocks based on Trumps trade war rumblings with China haven’t helped.
I’m pleased to still be over the mental 100% gain in the portfolio value since inception. Every time I’ve been more than 100% up previously a market correction has wiped a chunk off the fund value again.

Cheers
Carey

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Carey Blunt 21st May 20 of 27

Today I sold Upwork. I like the company, I think it has a great future but the SP is trending in the wrong direction and i’m More than 20% down so as a notional stop loss approach i’m Selling. It will likely end up being at the exact bottom but I’m not prepared to risk losing more.
Sometimes they just don’t work out and you have to kill them off and start again.

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Carey Blunt 17th Jun 21 of 27
2


Good news on SciSys getting a bid offer at 254.15p. This gives me a more than 60% gain for the fund. For the purposes of the Fund I have sold out in order to release the capital (meaning I only get 246p or so) but the ones I own in my real money portfolio I will hold until the sale (hopefully) goes through.

I’m keeping an eye on electronic arts as the initial buy thesis (see previous posts) hasn’t really held up. Probably I will keep it until the next earnings release on 30th July and make a judgement then. Only 4.1% down at the moment,

The fund seems to have developed a weird data error somewhere. Evolution Gaming is now showing a 70% loss because the system is showing an average buy price of SEK587.51 whereas the current share price is around SEK182.
I’m 99.9% sure that something has gone wrong here. The share price has never ever been as high as 587 so I can’t see how I could ever have bought any shares at that price. I’m almost certain that the fund was showing a healthy profit one day and then a 70% loss the next day.
I’ve not logged a support ticket with Stockopedia as it’s just a fantasy fund but I am pretty sure there is an error here.
I can’t see any stock splits or anything that could have caused this, anyone any clues or seen anything similar in their fantasy funds?

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herbie47 17th Jun 22 of 27
2

Fantasy funds can't cope with share splits, I had problems with one of mine. Seems EVO did a share split in May, 2019, " each existing share is divided into five shares (5:1)"

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Carey Blunt 18th Jun 23 of 27

In reply to post #484249

Thanks Herbie, that answers the question then!

In other news....

Nice little bump to the Fund today from Frontier Developments (LON:FDEV) , happy to continue to hold that for a while (in the fund and personally).

I also bought Instem (LON:INS) for the Fund the other day and personally. I like the business, its only small and its not growing at any steller rate but I like the move to a SaaS platform which I think will help it keep growing and innovating with its customers in the medium term.


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Carey Blunt 9th Jul 24 of 27
1

My thanks to whoever at Stockopedia fixed the stock split issue for Evolution Gaming. The Fund is now showing the correct 58% gain rather than the 70% loss it was showing before.

Other changes to the fund from the last week.....I sold Craneware (LON:CRW) after their update last week. The stock dropped 32% due to a RNS saying that H2 sales had been slower and lower than expected. Initially I carried on holding after the update as I didn't think the update was that bad that it deserved a 32% drop. I expected a bit of a bounce, I still like the company and I think the issues might mostly be related to timing more than anything else.
However, the share continued to drift lower and so I sold out for an 11% loss (I think from memory, it was last week!)

Today I bought CyberArk the security software company. They make Privileged Access Management (PAM) software which, for those who might be unaware, is used to control who (or what) is accessing computer systems using accounts with high levels of access rights. I've massively simplified that hopefully you get the idea.
The reason I bought it is that I see lots of people asking for and about this software at my work. It seems to have great industry momentum and industry growth which should translate into continued company and SP momentum and growth.
I opened up my normal 50k starter position in the fund, I will also probably buy personally but I need to redo my W8BEN form and I haven't quite got round to doing that yet.

cheers
Carey

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Carey Blunt 16th Jul 25 of 27

One buy for today - TIETO Oyj the Finnish IT Services company. I only had £23500 of spare cash in the fund to spend on this so that is all I have bought.

In some ways its a trade, buy close as possible to 24 Euros and sell as close to 27 euros as I can. I would take a 10% gain on this and get out again unless I thought there was some significant change in the companies prospects.

The reasons I wanted to buy it is that I recently met some people from Tieto and they seemed very smart and driven people. Combine that with the fact that they recently bought a smaller competitor at what looks to be a pretty good price and that their larger competitors don't seem to be very on the ball at the moment and I think there are opportunities for this company.

I doubt my broker will let me buy it in my personal account but I will see what is possible.
July is holiday month in Finland so i'm pretty sure no one in Finland is currently watching this share and volumes will likely be low.
Cheers
Carey

p.s. the dividend is pretty good as well.

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Carey Blunt 19th Jul 26 of 27
1

Today I sold Electronic Arts from the fund. My thesis on the hype around their latest game doesn't seem to be holding and so I'm selling for roughly an 8% loss.

However, recent buys Instem (LON:INS) and CyberArk have made great starts. I bought more Instem (LON:INS) personally but didn't have the funds in the fantasy fund to buy any more here.

Slack continues to disappoint and I may have to sell it and wait for a better entry point or maybe average down (I will only ever do this once). Something to think about next week.
Cheers
Carey

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Carey Blunt 22nd Jul 27 of 27
2

For those of you interested in or operating your own Fantasy Fund, the Fantasy Funds are not yet available in the New Mobile Stockopedia site. 

The links in this discussion thread to the Fantasy Funds will not work if using the new site format.

If you want to view any Fantasy Fund then you will need to switch back to the "Classic" interface (which is now technology companies refer to the old interface when they don't want to say old or Legacy)  :-)

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