May 2018 Portfolio Update

Wednesday, Jun 06 2018 by
43

After the market volatility of Spring, closely matched by uncertain weather, this month felt like a welcome relief as the sun shone on my portfolio. Very little trading took place but there were plenty of announcements to consider - including a humdinger of a profit warning from Photo-Me International right when I was enjoying a half-term break. So much for getting away from the portfolio!

Purchases

Games Workshop Bought 2444p - May 18

With a decent trading update in the bag I had another look at the analyst forecasts and came to a couple of conclusions. Firstly I believe the forecasts are behind the curve and that earnings are unlikely to drop by 20% in 2019; the new focus of the company has been warmly welcomed by players and I believe that upwards momentum will continue. At the same time there's a disconnect between earnings increasing by ~96% and a forecast P/E of 13. The company is just too cheap and this is why it's ranking at the top of my quality and value screens - with the combined score putting it at the top of my list of shares worth buying. Obviously it's had a strong run over the last couple of years, with the share price quintupling, and I can see why people are banking their gains but I'm happy to take shares off of their hands.

Hollywood Bowl Bought 224p - May 18

Listed for just over 18 months Hollywood Bowl is the kind of private-equity IPO that I normally avoid. However in this case the group wasn't saddled with too much debt, around £30m, and wasn't listed at the peak of the market. Instead BOWL is capitalising on the trend towards experiential spending, debt is being rapidly paid down from cash-flow and refurbishment/extension activities are driving revenue growth. There's also the fact that quality metrics, such as ROCE, are improving rapidly and the directors own a decent chunk of the business; all of these factors make it my kind of share. So I was surprised at the muted reaction to today's interim results since earnings are up by 18%, debt is down by 47% and KPIs (such as game volume and spend per game) are all on an improving trend. Combine this with Phil Oakley's solid analysis of the company and I couldn't help but take a starter position.

Sales

RWS Holdings …

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Games Workshop Group PLC designs, manufactures and sells fantasy miniatures and related products. The Company's segments include Sales channels, Product and supply, Central costs, Service centre costs and Royalties. The Sales channels segment includes Trade, which sells to independent retailers and includes magazine newsstand business and distributor sales from its publishing business (Black Library); Retail, which includes sales through retail stores, its visitor center and global exhibitions, and Mail order, which includes sales through its Web stores and digital sales. The Product and supply segment designs and manufactures products and incorporates production facility in the United Kingdom. The Central costs segment includes its overheads, head office site costs and costs of running Games Workshop Academy. The Service centre costs segment provides support services and undertakes strategic projects. The Royalties segment includes royalty income earned from third-party licensees. more »

LSE Price
4922.3p
Change
2.7%
Mkt Cap (£m)
1,558
P/E (fwd)
23.2
Yield (fwd)
2.9

Hollywood Bowl Group plc is a bowling entertainment operator in the United Kingdom. The Company is engaged in the operation of ten-pin bowling centers, as well as the development of new centers and other associated activities. It has a portfolio of approximately 50 centers operating across the United Kingdom. The Company's centers are located in multi-use leisure parks, and each center offers approximately 20 bowling lanes, on-site dining, licensed bars and family games arcades. Its brands include Hollywood Bowl, Bowlplex and AMF Bowling. Its Hollywood Bowl brand has over 30 centers situated in prime locations at leisure parks. Its Bowlplex brand has approximately 10 centers in prime locations at leisure parks. Its AMF Bowling has over 10 centers in non-prime locations. The Company's family-focused arcades offer games, such as air hockey and basketball hoops, games with prizes and video games. The Company's licensed bars offer a range of soft and alcoholic drinks. more »

LSE Price
227p
Change
-1.3%
Mkt Cap (£m)
345
P/E (fwd)
16.0
Yield (fwd)
3.5

RWS Holdings plc is a holding company, which provides intellectual property support services (patent translations, international patent filing solutions and searches), in life sciences translations and linguistic validation. The Company provides specialist language service in other technical areas. The Company has four operating segments: RWS Patent Translation & Filing division which provides patent translation and filing services: RWS Patent Information division which provides a range of patent search, retrieval and monitoring services as well as a comprehensive patent database service accessible; RWS Life Sciences division which provides technical translations and linguistic validation to the medical and pharmaceutical sector. This division includes the LUZ, Inc, and RWS Language Solutions division, which provide non-patent or non-life science technical translations. more »

LSE Price
620p
Change
-1.3%
Mkt Cap (£m)
1,718
P/E (fwd)
28.0
Yield (fwd)
1.5



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


5 Posts on this Thread show/hide all

Timmytrump 7th Jun '18 1 of 5
4

Damian

I always look forward to reading your monthly summary. I find it very cogent and sensible.

Please keep writing.

| Link | Share | 1 reply
matylda 7th Jun '18 2 of 5
2

Great update as always, much appreciated, thanks Damian.

Blog: Briefed Up
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Damian Cannon 8th Jun '18 3 of 5
2

In reply to post #371294

Thanks guys. I'll certainly do my best to keep posting!

Blog: Ambling Randomly
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egdikbury 9th Jun '18 4 of 5

To admit that RWS is a very solid company and then sell out a month before results "to watch from the sidelines" appears to be rash and impatient.
Your 'report' of 2015 is surely out of date and an in depth review might be expedient.

| Link | Share | 1 reply
Damian Cannon 10th Jun '18 5 of 5
3

In reply to post #371884

Quite possibly. However I've learnt, to my cost, that giving companies the benefit of the doubt when they put out a warning has cost me dear. So I prefer to take advantage of my ability to exit a position quickly rather than leave myself exposed to known trading difficulties.

I probably could update the RWS Holdings (LON:RWS) report but there's no point doing this until the annual report for this year comes out (after the final results). Only then will we get the meat of how the company is really performing following the Moravia acquisition.

Blog: Ambling Randomly
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