Portfolio Update

Saturday, Sep 07 2013 by
8

I've made quite a few changes in my portfolio recently so thought I'd better do an update to keep track of my thoughts. Here's my portfolio as it currently stands:

 
Here's a list of each of portfolio actions since my last update and an explanation:
 
Sold out of KENZ
 

I started top slicing KENZ as the price rose for portfolio balancing reasons, with sales at £4.10 and £4.48, but I sold out of my holding at £5.84 entirely after they disclosed that a few bid offers had been turned down. Looking back over my (short) investment history, I realised I'd repeatedly made the wrong decision in potential bid situations (CHG and LCG come to mind). To combat this, I've come up with a new heuristic for dealing with them - I imagine that there's no bid, then take whatever action I would do anyway had the price just risen to that market price regardless. That generally means that at least top slicing is necessary, but in this case I felt that KENZ was close enough to what I'd consider fair value such that I sold out completely to invest elsewhere. Given a ~50% rise from my average cost for KENZ, this investment played out well.

 
Bought in to RNWH
 
I actually attended an investor presentation by RNWH back in March 2012 and decided against investing in them at 75p. At the time they were lowly rated relative to their profits but I was concerned by the quality of earnings - there was a large exceptional cost in the final results and the cash flow generated was pretty poor relative to profits. 
 

However, I changed my mind and bought in at 115p after taking a second look recently. Their interim results were impressive, with profits continuing to grow, only a small exceptional charge and FCF above reported earnings. Combined with this, the order book was up 19% year on year, continuing the impressive growth management have made in engineering services. The nature of the work they do (essential maintenance & renewal) gives me more confidence that profits will be less cyclical and their margins are high given the sector, confirming higher than normal barriers to entry from other firms bidding…

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Renew Holdings plc operates as a contractor in engineering services and specialist building. The Company's activities are carried out in the United Kingdom with some development activities in the United States. The Company's segments include Engineering Services, which comprises the engineering activities, which are characterized by the use of the Company's engineering workforce, supplemented by specialist subcontractors where appropriate, in a range of civil, mechanical and electrical engineering applications and; Specialist Building, which comprises the building activities, which are characterized by the use of a supply chain of subcontractors to carry out building works under the control of the Company as principal contractor, and Central activities, which include the sale of land for development, the leasing and sub-leasing of some United Kingdom properties and the provision of central services to the operating subsidiaries. more »

LSE Price
416p
Change
-2.1%
Mkt Cap (£m)
313.4
P/E (fwd)
10.3
Yield (fwd)
2.8

Zanaga Iron Ore Company Limited is an investment holding company. The Company is an iron ore exploration and development company. The Company holds investment in the project held through Jumelles Limited. The Company's Zanaga Iron Ore Project is an iron ore deposit in Africa. The Zanaga Iron Ore Project is located in the south west of the Republic of Congo, close to the border with Gabon, and approximately 300 kilometers northeast of the port city of Pointe Noire and over 250 kilometers northwest of the capital Brazzaville. more »

LSE Price
6.47p
Change
-0.2%
Mkt Cap (£m)
18.3
P/E (fwd)
n/a
Yield (fwd)
n/a



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


5 Comments on this Article show/hide all

fek47 12th Sep '13 1 of 5

Hi CEV,

I sold out of Kentz (LON:KENZ) last week after the bid announcement. Now that KENTZ have fallen back to earth this morning after AMEC announced they are withdrawing, maybe a good opportunity to dip a toe back in the water?

Francis

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CantEatValue 12th Sep '13 2 of 5
1

Francis,

Kentz (LON:KENZ) are indeed much cheaper now than when I got out at although they are still significantly ahead of when I thought they were very attractively priced around 380p. At the current market price they still look cheap to me, but I view everything in terms of opportunity costs - comparing each investment to the others available to me. Currently I'm researching two companies both trading below the net cash on their balance sheets (one of which I think is trading at about 15% of my conservative liquidation value... so cheap I have to be dreaming!) which have otherwise caught my attention so I'm probably going to pass on reinvesting in Kentz (LON:KENZ) in favour of other choices I can find which I believe are cheaper. That being said, I still think Kentz (LON:KENZ) is a decent investment from here (and still has the potential for a larger bid to come out the woodwork from someone else) but I'm going to pass for now.

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fek47 12th Sep '13 3 of 5

Fair point re opportunity cost of which companies to invest in - it's always a question of balancing opportunity and risk.

I'm intrigued (if you're willing to share your discovery at this stage): who is trading at 15% of break-up value?  <Loads up Gekko scene from Wall Street>

 

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CantEatValue 12th Sep '13 4 of 5

In reply to post #77176

I'll be sharing it soon once I've done a write up on it - I don't want to share just yet as it's a very tiny, illiquid stock and I'm concerned there's a small chance a bit of exposure might move the price before I've had a chance to buy in. It'll be on my blog shortly though...

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roddy10 17th May '14 5 of 5

Just started looking at Argo:
(1) Not clear to me what impact the Ukrainian / Russian situation has made - I believe their real estate fund (AREOF) had an investment in the Ukraine
(2) Not clear to me what the issues with a contractor re a site where AREOF's assets went into a voluntary arrangement led to (see 11 Nov 2013 Statement Re: ERA Shopping Park Oradea )
(3) I believe a couple of funds have merged into SSF but can't quite work out any web links to SSF (any help appreciated)
(4) From the company website can't work out who all the shareholders are or even indeed the number of shares outstanding - the numbers don't all seem to compute (http://www.argogrouplimited.com/Regulatory-Share-Information.php )

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About CantEatValue

CantEatValue

Part-time private investor predominantly in micro-cap UK equities or anywhere I can find inefficiencies.

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