Two days ago I said (http://is.gd/vQjAjv) that I had bought some Flybe (LON:FLYB) , and adjusted my Magic Hat fantasy fund on Stockopedia (http://is.gd/ySBRN6) with another Magic Formula stock. I’m pleased to say that FLY has been rocketing since I bought it, and long may it continue. But I digress …
My Fantasy Fund is an attempt to beat both the All-Share and Stockopedia’s Greenblatt Magic Formula portfolio. There is some slight evidence to suggest that my fund is beating the benchmark index, but not much. Over a 2-year timeframe, the portfolio is ahead of the index by about 7%. Nothing to get excited about. It should also be noted that sometimes there can be performance quirks that mean that the results can look a bit skewed from what I would normally expect. I’m not suggesting that that’s anything to do with Stockopedia – just that the market behaves in odd ways sometimes. I think my performance is somewhat flattered by the fact that the FTSE350 has had a nasty last couple of weeks, whereas my portfolio has weathered the storm rather better.
As I reported previously, I decided to sell restaurant chain $RTN.L (Restaurant Group). It more than doubled during the holding period, and it certainly fitted well when I was running the fund as a defensive portfolio. RTN had good growth and quality characteristics, so perhaps we shouldn’t be too surprised that the share price had a very respectable run. Stockopedia reports that it has a PE of 20, which seems to me to be “somewhat toppy” given the type of company it is. Good company, though.
The sale of RTN was to make way for oil exploration and production company $DGO.L (Dragon Oil). According to Stockopedia, It has a ROC of 46.0%, and an EY (Earnings Yield) of 27.5%. Cash balances at 31 Dec 2013 was US$1.9b (£1.2b), according to the company. It looks like that includes $2.1b in “short term investments”, which appear to be term deposits. Considering that DGO has a market cap of £2.9b, that’s a lot of cash. Stockopedia reports that it has an EV/EBITDA of 2.8, perhaps not surprising given the amount of cash it has. The EV/EBITDA is very low compared with the sector in general, and the market as a whole. The sector media is 7.8, so I would hope…
