Magic Hat Portfolio: ERM in, BATS out

Tuesday, Jan 08 2019 by

Time for a MHP (Magic Hat Portfolio) update. British American Tobacco (LON:BATS) gets kick out of the portfolio by rotation, and Euromoney Institutional Investor (LON:ERM) enters.

BATS has been a disaster for the portfolio, falling 40% in a year. I hold it personally, and IIRC at least one of the regular contributors to this site does, too. I am going to stick to the rules of the MHP, which is to buy stocks on the Greenblatt Screen with a StockRank of at least 90. It is a system that works well, and has beaten the FTSE350 over an extended period.

That's why BATS leaves, and ERM enters.

I see that the FTSE350 is up a mere 2.6% in 5 years. Hardly racy. The FTSE100 is below the peak it achieved in 1999. The 250 is almost higher. Valuations for the 100 and 250 are about the same. So, elephants don't gallop. As I have said on many occasions before, unless there are gross valuation distortions between the 100 and 250, investors are likely to do better by buying companies in the latter index.

Valuations look below historical averages, and we had a down year for the markets last year. So I continue to hold the view that we a more likely to have an up year than down year.

Stay safe out there.

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British American Tobacco p.l.c. is a tobacco and next generation products company. The Company's tobacco product range includes cigarettes, fine cut (roll-your-own and make-your-own tobacco) and Swedish-style snus. Its segments include Asia-Pacific, Americas, Western Europe, and Eastern Europe, Middle East and Africa (EEMEA). The Asia-Pacific segment includes its operations in various countries, including Australia, Pakistan, Malaysia, Vietnam, Japan, South Korea, Indonesia, New Zealand and Bangladesh. The Americas segment includes its operations in various countries, including Brazil, Mexico, Canada, Colombia, Argentina, Chile and Venezuela. The Western Europe segment includes its operations in various countries, including Germany, Denmark, Switzerland, Belgium, France, the United Kingdom, Romania, Spain, Italy, Poland and Croatia/Balkans. The EEMEA segment includes its operations in various countries, including Russia, Ukraine, South Africa, Turkey, Egypt, Nigeria and Algeria. more »

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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 »

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

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