QVM Portfolio Update - A New All-time High And Alliance Pharma Out

15th Jan by Edward Croft

15 comments 3813 reads

Well January has kicked off with a bang, and it’s about to get busier. A tsunami of trading statements is upon us until the end of January, before full year reporting season hots up in late February. Already, we’ve seen several announcements from NAPS portfolio holdings, and one takeover bid now needs decisive action. So let’s dive in.

As I shared in the New Year piece, we’re taking a new direction with this more active version of the NAPS - working title the “QVM Portfolio”. It’s going to respond dynamically to company and market events. Will it outperform the “do-nothing” NAPS? Only time will tell. As of now, the portfolios are the same - but today they diverge.

And what a good start to the year!

The portfolio hits a new high

Alliance Pharma received a takeover bid at a 40.9% premium, the gold miners surged 10-15% and good news from other companies have pushed the valuation higher by 5% since January 1st. This is a new record high valuation, finally breaking out of a drawdown that’s lasted since September 2021.

Company Updates - what’s been happening?

The team on the daily stock market report have been doing an outstanding job, but here’s a little more colour from me on some of the holdings.

Currys (LON:CURY) - profit ahead of expectations

Trading statement positive

Curry’s was the dog of the portfolio, down 13% on continued retail depression post Reeves budget, but has saved itself with an excellent announcement today. They are guiding profit “ahead of expectations” which we always like and talking more automation and cost savings. They are guiding profit up from £140m to £145-155m for the full year. It’s close to its 1 year high, which is remarkable given the retail climate.

Journeo (LON:JNEO) - contract win and small beat

Contract win & Trading statement positive

Last week, Journeo secured a contract for the Stoke-on-Trent Bus Service Improvement Plan (BSIP), worth £1.4 million. While not hugely significant in the grand scheme of things, it’s a significant portion of the overall £10 million allocated by Stoke to the plan. The BSIP is a national initiative with £1.2 billion of government funding, so Journeo taking a 14% share of this Stoke contract quite promising. There's a nice regulatory tailwind here.

Beyond…

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Funderstruck

15th Jan

Thanks Ed for the comprehensive up date; i certainly prefer the Active approach and in the words of Dr, David Paul's mantra 'to get & stay wealthy it is imperative to minimise losses'

Wheeler1

Thanks Ed - will review. Started my NAPS a couple of weeks ago. Hybrid approach to SLs. Using them for unfamiliar (to me) more speculative sectors such as gold miners but not for rest.

Robert Didymus

Thanks Ed, for the NAPs advice today, keeping me on the straight and narrow, although it took a great deal of mental anguish parting company with my recently beloved shareholding in high ranking BXP declared by you a no-no in place of Alliance Pharma. However, closer inspection of institutional shareholder information, soon showed me that you and Graham in his report, were not alone in thinking SPI the much better long term bet. Things do seem to be progressing well for your list of favourites lately, well done.

davidallen77

16th Jan

I probably would of gone with Spire Healthcare (LON:SPI) but SR is not high enough for naps

Andy Sav

I'm liking this new approach and have high hopes on its performance. Just wondering, you mention sell rules, and I'm guessing I'm jumping the gun here; do you think the sell rules will be similar to what you have mentioned before i.e a drop in stock rank to below 80 with a % drop depending on Risk Rating of Stock i,e Speculative etc (something like that, from memory). Thanks

Steve Watson

Thanks for the update Ed, really interesting. Please forgive me if I have missed them, but have you published a full list of the rules that you will be managing this new portfolio to, or will they develop over time, similar to the way the NAPs portfolio changed its SR to VM and QM components over the years?

Edward Croft

Regarding the sell rules-I am not ready to disclose them fully. We are doing quite a lot of work and research into the news. I am seeking to develop news based triggers - let's just say that some are in the research phase.

There are obvious ones. For example in this article selling on a recommended takeover bid. On a hostile bid, more discretion may be required, I read somewhere that 17% of takeover bids receive another offer. But that's more likely in a hostile bid situation.

Another one from our research is selling immediately on a profit warning.
But there are other more subtle cues.

There is also the question of more market based sell rules. Stop losses and market timing overlays. There is lots to do and to back up with data.

Steve - no I haven't published the new rules. They are going to organically evolve based on research. To be clear - it will still be a highly "factor exposed" portfolio (i.e. high ranked, good, cheap, strong stocks), but I'm keen to introduce more tactical rules based on market events.

If the research I'm doing is anything to go by, then it's likely to include a more opportunistic element based upon significant "ahead of expectations" announcements in high-ranking stocks. I also anticipate that some holdings may end up being held longer term.

The goal I'm setting myself is to minimise discretionary action. I've a codename for this alternative portfolio as the "RIPS" portfolio. The "rank inflection point system". I was originally anticipating it would be based upon large StockRank jumps, but my unfinished research on that was inconclusive that jumps added any extra value.

Now, with all the text analysis tools out there, I believe that news analysis holds the key. That's ironic, as it's what all the serious investors do out there anyway. But what I'm seeking is a rules-based solution that actually doesn't rely on me reading the news. I am quite hopeful that our platform development will get us there over time.

17th Jan

Thank Ed

John Doonan

The loss of David continues to be a real blow to us VV orphans!

Jeff Hunter

18th Jan

That is very sad news I didnt know he had passed a really nice guy

Paul Walton

3rd Feb

A month in my NAPS active portfolio with a bias towards best trend, has performed a credible 9.32% since 05/01/2025 with Tpximpact Holdings (LON:TPX) having to be sold this week. Good Energy (LON:GOOD) will have to be replaced also

The 'leave alone' NAPS has performed admirably (2.81% gain) with the replacement for Alliance Pharma (LON:APH) Hikma Pharmaceuticals (LON:HIK) increasing 13% in the meantime

Tim Boucher

19th Feb

Any insights on Journeo (LON:JNEO)? SP down 10%+ this year, and has continued the slide since start Jan despite the ahead of expectations RNS on Jan 14. Looks to be relentless sell pressure (several RNSs on large holders reducing stakes), or is there something more fundamentally wrong that I'm missing?

I have JNEO down 6.5% YTD - which seems pretty normal - though underperforming the FTSE significantly. I don't have any more insight on JNEO than in the last update in this article.

JNEO isn't a terrifically exciting company, Graham/Roland don't love it - as they think there aren't strong growth opportunities. But it does have a nice solid, tailwind of government subsidies in its sector - do look at the BSIP and ZEBRA schemes.

It's small, illiquid and prone to swings in price. 25% of the market cap is in cash. Strip that out and it's a cheap stock.

I may be writing a piece on stop losses for the QVM portfolio, as at some point one of the ailing positions will nudge towards my "half annualised volatility" rule of thumb there. JNEO annualised volatility is almost 50%. So it's far away from any stop loss trigger at the mo.

Thanks for the reply Ed - that annualised volatility rule is an interesting line of thought, I'll look forward to the piece!

QVM Portfolio Update - a new all-time high and Alliance Pharma out

The portfolio hits a new high

Company Updates - what’s been happening?

Currys (LON:CURY) - profit ahead of expectations

Journeo (LON:JNEO) - contract win and small beat

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Edward Croft

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