LON:VLX | Paul Scott - Top 10 Personal Shareholdings - End May 2021

27th May '21 by Paul Scott

59 comments 11076 reads

My top 10 personal holdings

It was interesting to see readers spontaneously swap your top 10 holdings the other day, in the comments section of the SCVR. I often do the same with some investor friends, as it’s a good way of coming up with new ideas of things to research. Although if people do list their top 10 holdings, I think it’s very helpful to include a short explanation of why you think each position is good, and what risk:reward looks like to you, at that point in time.

People have been asking me to update my portfolio holdings for a while, so here goes.

First the obvious disclaimers - these are categorically NOT recommendations. It’s my money, and I’ve chosen to invest it in these things, and you can obviously do whatever you want with your money. Please always Do Your Own Research, and do not rely on my views or research, as I might have missed something, or just be plain wrong. I have no plans to sell any of these holdings for the foreseeable future. Although obviously if they were to double in price or something like that, then I reserve the right to sell any time I want, but have no intention to sell anything at this point in time. Each holding is also subject to me being happy with future trading updates, and macro conditions. These are all long-term investments, not trades, and a lot of them will require patience.

Please don’t chase the prices up, because you’ll end up over-paying, and then blaming me when it comes back down again, and I’d prefer not to have the grief.

You’ll note that I don’t record my buy prices, because it’s irrelevant what I paid for the shares. All that matters is what the future potential is from today. Obviously given buoyant market conditions, most positions are however in profit, some of them substantially, the last year has been very good for many of us.

Boohoo (LON:BOO) (13.1% of my portfolio) - my price target: £10+ long-term much more

I’ve been buying more recently, as I think the valuation looks very appealing. I reckon next year 2022/3 could see 15p+ EPS (see Zeus note). That puts this share on a forward PER of just over 20 - that’s nuts for such a strong growth company - way too cheap, taking a…

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samanddee

31st May '21

Fab - I particularly like the hold forever comments aka coffee can investments. Thanks Paul!

Brookeda

Quiet day so heres my top 5 - After that there's quite a long tail

£BOTB - 11.8% - Held since 200 days and have top sliced a couple of times but enjoy the dividends and growth. Will be interesting seeing their forecast for next year - always a risk of gabling laws changing

£TRMR - 3.8% Was not a big holding for me originally but has shot up in the last 12 months. Love the growth story and the potential US listing. Risk is a sharp correction if growth slows

£MWE - 3.5% Been a long term holding of mine. I like the diversity of the businesses they are in (5G, Water technology) and the steady improvement in results over the last few years.

£IPO - 3.5% They have a great portfolio of investments which I think have a great chance of significantly increasing the NAV - downside it they don't have a great exiting history in recent years

£BPM - 3.3% Undervalued compared to NAV and at some point they will cash out on some of their investments - downside its been undervalued forever this is one for the very patient.

PatrickF

1st Jun '21

Just a couple of thoughts regarding Boohoo.

Seems that the overriding consensus on this forum is that Boohoo is a sure fire winner that is temporarily undervalued due to ESG concerns. This may be true but I think there may be other concerns that are depressing the valuation.

Namely, what will Boohoo’s margins look like when they are buying all their stock from suppliers in the U.K. that pay their workers the minimum wage? One of Next’s top execs claimed a couple of years ago that if an online retailer sells a dress made in the U.K. for £12 then it is impossible that the company making that dress pays its workers the legal minimum wage. If this is the case, will Boohoo have to pay higher prices to “legal” UK suppliers for fast fashion items and suffer a hit to margins. If they choose to source more from abroad will they lose their speed to market advantage?

I also think the market is waiting to see how successfully, or otherwise, Boohoo digests the significant number of recent acquisitions it has made. It could also be that lockdowns have flattered Boohoo’s rate of revenue growth. The market may be waiting to see what happens when life becomes more “normal”.

Fundamentally, it could be that Boohoo’s business model was so successful because it was also dodgy. If that’s the case then fixing it may mean a less financially successful business.

Will S

2nd Jun '21

I really enjoyed reading that Paul, interesting to see your thinking and the aims of the investments. I'd be really interested in 11-20 next please.

Tortoise investor

Thanks for sharing your investments too! I'm interested in your thinking about why Easyjet (LON:EZJ) is a COVID value play. When adding in the increased share count this looks like it is currently priced above mid 2019 levels when all their planes were in the sky! Isn't the risk in next 12 months all to the downside if there's another lockdown or significant delay in travel as countries vaccinate themselves / fear spread of variants? The recovery looks fully priced in with maybe only another 10-20% upside if that in the best case scenario?

Thanks Paul. Really great that you're so open and transparent and gives us readers ideas of shares to look at.

I am having a smashing year so far, up 37% (in helpful market conditions of course), so thanks for all your commentary which has been incredibly informative in my own decisions to date.

My top ten are below. First four account for almost half my portfolio - I have a rule of investing max 15% of my overall portfolio in a stock (but happy to let it run beyond 15% through growth).

1) Belvoir (LON:BLV) - lettings agency. Has been a fantastic performer for a number of years now and I think broker estimates still underestimate its potential performance this year. Nice dividend as well. I think there is still upside to 300p in next year and I see this as a long-term hold although I might trim it at some point. Main downside is if the housing and letting market tanks.

2) Redde Northgate (LON:REDD) - again has performed well this year boosted by second hand sales and van hire. I think this has further to run given second hand sales prices still high, its accident management business should now increase revenue, and I am targeting 450p. I see this as more of a trade but will see how the business is performing in 6-12 months time.

3) City Of London Investment (LON:CLIG) - investment manager which merged with a similar US investment manager last year. It is very conservatively run with decent cash. I think the market has not realised the potential earnings of the merger here (not least because the US company's profits funded its old CEO's salary) and my price target is 715p. Very large dividend of 6.7%. Long-term hold for me because of the dividend which is very safe due to company's cash balances. They are beautifully transparent to shareholders too - funds under management published monthly.

4) Best Of The Best (LON:BOTB) - needs no introduction. Results due shortly when we should hopefully get a sense of how early FY22 is doing. The big Q is whether COVID drove a lot of unique business. My view is that it might have done BUT their customer database & social media following is now much bigger and the costs of entering the competition are cheaper - so I am cautiously optimistic we won't see a significant fall in revenue now and maybe even more growth?! Remember every £1 in revenue feeds almost entirely to the bottom line.

5) Tritax Eurobox (LON:EBOX) - European logistics warehouses. Won't set my portfolio on fire but decent dividend and trading at a lower level compared to its sister company £BBOX. I bought in recent placing which usually forms a base. I think a premium of 10% to NAV is deserved in short-term (which would make this 113p). Long-term hold for dividend and 'safe' growth. Main risk is if any companies it warehouses goes bust but that looks unlikely - it's big internet-focused companies including Amazon.

6) Boohoo (LON:BOO)

7) Cenkos Securities (LON:CNKS) - broker. Benefiting from good markets and fundraisings. Tbh I am not sure this has much further to run but holding on for the divi and might sell 90-100p. I see this as a share you dip in and out of when there are big share price drops.

8) Marks And Spencer (LON:MKS) - I might top-up here. Looks undervalued by market. Great growth from Ocado where Marks And Spencer (LON:MKS) is increasing its capacity by a further 50%. Food generally growing. The drag is high margin clothes and home performance but great online growth here during pandemic. Management have guided for what I make to be 12-15p EPS for FY22 which is still impacted by COVID and it could be an underestimate with Ocado and clothing and home online growth. The main downside is risk of another lockdown and whether too many of its new initiatives are low margin (e.g. third party clothing brands).

9) Electra Private Equity (LON:ELTA) - case outlined by Paul

10) Appreciate (LON:APP) - this doesn't seem to have gone up with everything else yet. Gift vouchers company affected by shops being closed. I see price target here as c.60p+ (assumes 12x PE if return to 5p EPS in FY23 when shops fully reopened). New management. Didn't fundraise during pandemic. Potential for further upside from recent Paypoint initiative (see RNS') and if it can grow online offering. The 'bonus' might be if interest rates go up as it holds a large amount of customer cash at any one time so a small increase in the base rate can increase profits significantly - so it is also a hedge against high interest rates. I might top up here too actually.

Tim Deller

3rd Jun '21

I’m new to Stockopaedia so hopefully this is the right place to ask my question. What are your thoughts Paul ( or anyone) on the Glass Lewis recommend not to re elect Carol Kane to the board of Boohoo (LON:BOO)? I’m not sure what a proxy advisor is or if they are relevant or potentially damaging.

Investment4Adam

Really enjoyable read Paul. I am too much of a contrarian to buy what others hold, but really enjoy the rationale for each choice so you can apply them to your own ideas. I hold 3 of your top 7 but 2 were before i knew you held (in particular RNO which was also covered by Dave Thornton on GCI). Would love to see the 11 to 20 list - more for the rationale & thought process as find these really useful to learn as I go. Thanks!

Hi. This is the closest list to mind I have read with 6 of your top 7 being in my top 15 holdings! Only BLV not in mine and that is one i was too greedy on a pull back or I would have had a full match! VLX & G4M also ones I was greedy on. Never heard of ELTA so if you and Paul both have it I will have to put that on the research list.... Thanks

Totally agree Pedro. I trialled it at Christmas, to be honest to get the top 20 NAPS portfolio. But having read Paul’s write ups I have become a dedicated subscriber and look forward to reading Paul and Jack’s write ups (credit Jack too - i like it that he has a different style to Paul). For me its about applying the thoughts to your own ideas - I like finding one before it is out there - I was so excited when Paul covered RNO on stock slam (but kicking myself I hadn’t built my position quicker!

mwjackson

4th Jun '21

Hi Patrick, correct, the placing was a dilution of 15% so looking at a best case PT of about 1200p, which would give a return of about 50% in 12-18 months - not to be sneezed it. I think there's going to be a lot of water under the bridge between now and the end of the year wrt to vaccination programmes, green list countries etc etc. The first sniff of normality returning to the industry (or signs for 2022) and I suspect will see the price approaching pre-covid levels and will close the position at the first opportunity.

doctor dave

5th Jun '21

Brilliant to see someone put their mouth where their money is, so to speak!! It’s an honour for us to be gifted this information. Thank you so much for your openness. I’m really intrigued that you have so much in “Falling Star” Boohoo….

Caper4

don’t be. It will soon be a rising star and Paul,like me,has no intention of selling for the foreseeable future . In fact I buy on weakness and it’s now over 28% of my portfolio. However, I should mention that I have another larger portfolio ,managed by a professional. I love it that I regularly outperform him though :)

Roger Baron

5th Jul '21

I know it isn't advice, I don't blame you for the ones that have gone down, but I do say a big thanks for the money you have made me last 18 mths Paul.

Woody82

Hi Paul,

You mentioned acquiring CBOX last week on dips, it has dropped 7% today, what sort of drops do you look for when you spot one for the watchlist?

Jon

Rusty2

Cake Box Holdings (LON:CBOX) only down 2.15%, it has a wide spread and Stockopedia goes on the last trade, so if it’s a sale it look as though it’s gone down a lot, not keen on this method as prices are up and down all the time.

Momoko Miyamoto

My top holdings:

Ip (LON:IPO) -tech/biotech venture capital /private equity firm giving exposure to imminent UK listing of Oxford Nanopore Technologies. ONT has been well covered in the media, but IMO could be the most significant UK listing of the decade. I’m still furious at management for selling portfolio winners Ceres Power Holdings (LON:CWR) & Avacta (LON:AVCT) far too early, they’d better not stuff it again with ONT. price is near NAV.

Airtel Africa (LON:AAF) -FTSE 250 mobile phone, data and payments provider in several African countries in particular Nigeria. Cheap valuation with attractive growth prospects. High debt, currency/political risk, illiquid and volatile for a FTSE 250 share.

Urban Logistics Reit (LON:SHED) -Specialist REIT focussed on UK last mile urban logistics warehouses. Skilled and experienced management tend to buy off market and also trade properties for capital gains in addition to the often index linked rents. Good inflation hedge IMO. Price recently rose to small premium to NAV, currently raising capital (inc on PrimaryBid) to invest in further earmarked pipeline. Expects to move from AIM to main.

H & T (LON:HAT) -largest pawnbroking chain in UK, also jewellery/watch sales (inc online) gold buying, FX, western union.Trades under NTAV, profitable, pays dividend, exposure to rising gold price, good counter-cyclical hedge IMO. Much of the sub-prime credit sector has vanished in recent years which I reckon will help H & T (LON:HAT) . Illiquid, big spread, ongoing FCA investigation into legacy unsecured loans (relatively a small part of the business).

Eco Animal Health (LON:EAH) -owns IP and manufactures antibiotics for pork and poultry markets globally, inc China, USA, S America. Sales fell last few years due to African swine fever pandemic in pigs, now recovering. Product pricing is also linked to meat prices. Further possible upside from animal vaccine R&D. Valuation not cheap based on recent sales. Illiquid, big spread.

Mti Wireless Edge (LON:MWE) - interesting Israeli antennae company supplying 5G, military, water management and other markets requiring specialist radio frequency antennae. 5G sales growth may be the near term catalyst for SP. Recently invested in Indian manufacturing to improve margins and to scale up. Valuation no longer cheap after being noticed by IC’s Simon Thompson. big spread.

Opg Power Ventures (LON:OPG) -owns and runs coal powered power station in Southern India, supplies commercial and industry customers in Chennai, an industrial manufacturing base. EV is far below replacement cost of assets. Rapidly deleveraging debt (10% coupon), very cash generative. Profitable. Rising coal price negatively affects margins short term as energy tariffs are fixed in advance, does forward buy coal to mitigate. Has to spend c. $15m capex by 2024 to meet emissions laws. Illiquid volatile and big spread.

Sylvania Platinum (LON:SLP) - thoroughly covered by others on stockoP, I halved my position recently to take profits after fall in rhodium price.

Allergy Therapeutics (LON:AGY) - Glaxosmithkline (LON:GSK) spin-off sells allergy immunotherapy treatments, mostly in Europe, profits have been rising but have largely been reinvested in developing allergy vaccines for grass and peanut. If these treatments successfully complete trials the payoff could be huge. If they fail there’s still a profitable company left and the IP may still have value i.e. SP won’t go to zero.

Johnsy

Thanks for all your interesting pages of analysis.

Regarding BooHoo, are they still using factories in Pakistan and/or Bangladesh? If so, coronavirus has taken a hold there and this could impact the company.

Also, reportedly it has issues regarding treatment of its workforce, so I would feel uneasy profiting from it

https://www.theguardian.com/bu...

£ASOS has many clothes made in Bangladesh as well. Is it better to have them made in the UK or Asia? £ASOS also has issues with working conditions in the U.K. but seems not to attract the same media coverage

6th Jul '21

ASOS appears to have concern about working conditions in the UK:

https://metro.co.uk/2020/07/07...

Coronavirus is essentially out of control across areas of Asia at present. Any warehouse workers feeling tired, overworked and underpaid are likely to have weakened immune systems, so will be more at risk of becoming very sick from it. Oxygen supplies are precarious. Worst case scenario: warehouse shutdowns, especially if black fungus takes hold!

https://www.dawn.com/news/1625...

The UK situation is more complex. In Leicester, where BooHoo has a factory, coronavirus cases in the seven days to 30th June were 169 per 100,000 people. Still low, but we are in unknown territory with the new Let It Rip government policy towards the virus.

Paul Scott - Top 10 personal shareholdings - end May 2021

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