Low Share Turnover, Little-Known Shares Do Best!

Wednesday, Mar 25 2015 by
8

I came across this great seekingalpha article today, looking at the work of noted stock market historian Roger Ibbotson. 

The thesis is simple: that Popular stocks perform least well, while little-traded, "unpopular" stocks perform best over the long-term.

This is a great chart from the above article that illustrates the outperformance neatly:

5512a5f066da1saupload_3239749_thumb1.jpg

Source: Victor Wendl

Extending this concept to the UK stock market, which stocks are least "popular", as judged by average yearly share turnover?

UK stocks out of the FTSE All-Share index that come up as having the lowest proportion of their market cap. traded over the last 12 months include:

Euromoney Institutional Investor (LON:ERM)

Town Centre Securities (LON:TCSC)

Daejan Holdings (LON:DJAN)

NMC Health (LON:NMC)

Goodwin (LON:GDWN)

SThree (LON:STHR)

Laura Ashley Holdings (LON:ALY)

Mountview Estates (LON:MTVW)

A.G.Barr (LON:BAG)

Management Consulting (LON:MMC)

Interestingly, these names also overlap with another well-known stock market outperformance phenomenon, that of the outperformance of companies with large founder or family shareholdings.


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Disclaimer:  

My opinions only, not investment recommendations: Please Do Your Own Research

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Euromoney Institutional Investor PLC is an investment holding company. The Company is a business-to-business media company, which is focused on the asset management, banking and commodities sectors. Its segments include Asset management; Pricing, data and market intelligence; Banking and finance, and Commodity events. Asset management and pricing, data and market intelligence consist primarily of subscription revenue. Asset management includes the brands and businesses that serve the asset management industry across the world. Banking and finance consists of both sponsorship income and delegates revenue. It provides market intelligence, news, training and conferences to the finance industry across the world. Commodity events consists primarily of delegates revenue. It consists of various conferences in the metals, agriculture, energy and wine sectors. The Company provides economic and investment research and data under brands, including BCA Research and Ned Davis Research. more »

LSE Price
1424p
Change
0.9%
Mkt Cap (£m)
1,543
P/E (fwd)
17.3
Yield (fwd)
2.4

Town Centre Securities PLC (TCS) is a Leeds, Manchester, Glasgow and London based property investment and car parking operator. The Company has a portfolio around the United Kingdom which includes over 360,000 square feet of prime office space and over 900,000 square feet of retail accommodation. The Company has properties in various locations, including single asset, the Merrion Centre mixed used scheme in Leeds, Urban Exchange retail park (Manchester), Abingdon Street Market (Blackpool) and Vicar Lane (Leeds). In addition, offices within the portfolio include the Cube (Leeds), Carver's Warehouse (Manchester), Merrion House (Leeds) and Town Centre House (Leeds). The Company's properties Eider House, Brownsfield Mill, Whitehall Road and The Arena Quarter continue to experience further development and investment, with it offering car parking services through its CitiPark operation. more »

LSE Price
200p
Change
7.5%
Mkt Cap (£m)
98.9
P/E (fwd)
15.1
Yield (fwd)
6.4

Daejan Holdings Plc, through its subsidiary companies, is engaged in the business of investment in commercial, industrial and residential properties in the United Kingdom and also on the eastern seaboard of the United States. The Company holds its properties for the long term in order to generate rental income and capital appreciation. The Company's segments include UK and USA. Its category of residential properties in the United Kingdom includes residential apartments and houses, and its commercial properties include office units, retail units, industrial units, leisure and service units, and land and development. The Company's category of residential properties in the United States includes residential apartments and unsold co-operative residential apartments, and commercial properties include commercial offices and retail units. It owns Chalet Court in Tampa, Florida, which is a garden apartment complex comprising a total of over 240 residential units. more »

LSE Price
4965p
Change
-0.5%
Mkt Cap (£m)
813.1
P/E (fwd)
n/a
Yield (fwd)
n/a



  Is LON:ERM fundamentally strong or weak? Find out More »


7 Posts on this Thread show/hide all

billytk 25th Mar '15 1 of 7
1

Daejan Holdings (LON:DJAN) is on my watch list. It was trading sideways last year in a tight range and I was waiting for a pullback for a decent entry point. £50 was always a tough hurdle for the SP but look how quickly it broke out to the upside and kept going. Oh well.

Interesting article though, I will take a look at some of the others,

Thanks

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Cisk 25th Mar '15 2 of 7
2

It must be a self-fulling prophecy as if a larger % of a company's shares are held by family then of course there's a smaller free float hence the shares will be traded less (assuming the family shareholdings are stable).

What would be more interesting (and challenging to discover) is to map the frequency of appearance in social media (specifically blogs & BBs, e.g. ADVFN) against share price performance (although won't be able to go back to the 70s as blogs / BBs didn't exist then..).

Re: Daejan Holdings (LON:DJAN) - might be at its peak if you think London property values are way overpriced? Walking around central London (including Africa house which I think is a large redevelopment by £DJAN) there's a significant amount of empty office space around. Purely unscientific observation of course.

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Sniggolb 10th Aug '16 3 of 7

Daejan is a great share: solid and conservatively run by a well established and vey rich family. .

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VegPatch 10th Aug '16 4 of 7

Re Mountview
Please see my previous posts on Mountview (£MTVW) this remains significantly undervalued even if London residential prices are too dear. Also it is run for the long term, not today, tomorrow or next week. Rather the next 10 years. The primary reason for the lack of short termism is the the Sinclair family concert party, which owns over 50% of the shares outstanding. The company has been trading for over 79 years. DM Sinclair is the son of the founder. He will not mortgage the company's future for a quick buck. Also given the family shareholding, they can't buy / sell shares as they are over 30%, so naturally it will have a much lower turnover that say Land Securities, which is rented, rather than owned by many fund managers.

http://www.stockopedia.com/content/mountview-strong-results-and-firmly-undervalued-113040/

http://www.stockopedia.com/content/mountview-estates-technical-index-selling-creates-buying-opportunity-134774/

One of my largest long term positions.




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iwright7 11th Aug '16 5 of 7
1

Edward,

I see that the FSTE list is over a year old. Is it possible for you to update it, (maybe the list remains similar), or suggest a screen to update?

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FREng Wed 10:15am 6 of 7

£TCSC (Town Centre Securities) was recently added to John Lee's portfolio ("very substantial discount to assets, 6.4% yield, carefully stewarded" according to his FT article).

But the recent Final results state that the dividend is fully covered, whereas the StockReport says dividend cover is negative.

Can anyone here explain the discrepancy?

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hayashi22 Wed 10:39am 7 of 7
1

Interesting..though Laura Ashley has not been very successful.

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