Fantasy Fund : Technology Trend

Monday, Mar 11 2019 by
26

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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20 Posts on this Thread show/hide all

Carey Blunt 11th Mar 1 of 20
3

Todays buys...... today I added Electronic Arts and Upwork to the fund. In each case I bought my normal 50k starter amount.
Why?
In the case of £EA its a momentum play based around the performance and hype around their Apex Legend title. Today my 10 year old son declared to me that "Fortnite was dead and Apex Legends is the thing everyone is playing" and that was good enough for me to start a holding in the Technology Trend portfolio (and also in my own real world portfolio). Of course a company like £EA shouldn't really move on a single title but Apex Legends now has 50 million players after only 2 weeks since it was released. It took Fortnite 4 months to reach the same number. The media hype is likely to increase and i think that will drag up the SP. I will sell if I think the momentum is beginning to drop off, either the share price momentum or the media hype momentum.

In the case of £UPWK , I only just realized that this company had IPO'ed. A Motley Fool newsletter alerted me today to the fact that it had and come to the market in November 2018 and I had somehow missed it.
I have been a user of Upwork for many years now and I really like the way the site works and the general gig economy story around the stock, I feel it has great potential. For those who are not aware, Upwork is the "Uber of Freelance work", you can use it to hire just about anyone to do freelance work for you like website design or graphic design or voiceovers or illustrations or coding or 100 other things.

That doesn't of course mean its a great investment but it doesn't seem too expensive and i'm willing to buy some and see how it plays out. Again, I expect to add this to my real world portfolio in the coming week.

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seismo101a 11th Mar 2 of 20
3

Hi Carey, excellent post, and look forward to reading updates as to how the fantasy fund is fairing (the good, the bad, and the ugly). Are you screening or primarily basing buys and sells based on where you feel you have some sort of discretionary edge?

For example why is Frontier Developments in your portfolio (I'm partly playing devils advocate here, as I think they are a great company, and did hold them for a quite well, and will likely hold them again once they have a better Share Price trend that I feel more confident about).

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gus 1065 12th Mar 3 of 20
2

Hi Carey.

Thanks for the post. This is a sector I’m interested in but have no particular affinity for. One of the portfolios I monitor is a group of 20 investment trusts that I’ve held since a February 2017. Of these 20 the two best performers (by far) have been Allianz Technology Trust (LON:ATT) and Polar Capital Technology Trust (LON:PCT) with returns of 60 and 40% respectively suggesting on a wider scale that Technology as a sector has done well recently. Look forward to future posts.

Gus.

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ricky65 12th Mar 4 of 20
1

In reply to post #456853

Thanks for the post Carey. I consider you Fantasy Fund one of the best on here so I look forward to your future posts on buys and sells.

P.S Thanks for bringing $UPWK to my attention.

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Carey Blunt 12th Mar 5 of 20
1

In reply to post #456838

Hi Seismo,
Ideas come to me from a variety of sources, some from my everyday job, some from screens, some from newsletters and online forums and I then do a deeper level of research on individual shares.
I don't feel I have a specific edge apart from the fact that maybe I understand the technology and potential impact of some companies better than someone who doesn't work in the IT arena.

In the case of Frontier Developments this is a share that I have tracked right from IPO and I have historically been very skeptical of. I'm old enough to be one of the first players of the original "Elite" game on BBC Micro back around 1984 and it was my favorite game growing up. Although I love the game I had very high doubts given the previous attempts over the past 30 years that the Elite concept could be brought back to life in a way that made any serious money. Given competition like the "X" franchise I didn't hold out much hope that "Elite: Dangerous" was going to have any longevity. So I tracked the share just due to Nostalgia but with the thought that it was probably a bad investment.

Sure enough it did exactly what I thought it would and went up a lot based on hype and then fell as reality sank in. I guess I could have tried to trade it but I considered the risk to be too high.
However, I recently decided that Frontier Developments (LON:FDEV) now have enough depth in the range of franchise titles that they have delivered and I have enough confidence in their ability to deliver to dip a toe in the water. Its not a massive conviction buy for me, it forms a smaller percentage of my real world portfolio than it does in the Fantasy Fund.
I now consider that the upside potential is now worth considering and the downside is (hopefully) now limited.
cheers
Carey

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Carey Blunt 12th Mar 6 of 20

In reply to post #456853

Hi Gus,
Thanks for your post, I wasn't aware of those investment trusts but its striking how their 2 year charts match the 2 year chart of my Fund. I will certainly have a look at them and see what their top investments are.
In many cases, trusts like that go for the tech superpowers like Apple, Facebook and Alphabet which are stocks I try to avoid mostly due to them being a bit boring compared to looking for new things.

Perhaps those trusts are a good way for people to get quality exposure to tech shares with less risk than individual picks.
cheers
Carey

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DaveGJones 14th Mar 7 of 20

Your fund performance is inspiring. I think you’re on the right track linking your post to fund performance as I tend to ignore verbose in-depth post if the authors fantasy fund performance doesn’t indicate special insight.
Will follow...
Continued success.
Dave

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Carey Blunt 18th Mar 8 of 20
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 20

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 20

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 20

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 20

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 20

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 20

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 20
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 20

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 20
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 20

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 20
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 Tue 11:26am 20 of 20

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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