SIF August Review: Gold Fails To Glitter (TAM, RWA, POLY)

24th Aug '21 by Roland Head

3 comments 4063 reads

August has been another benign month for the stock market and for my SIF systematic portfolio. I’m writing this monthly review a week earlier than usual due to next week’s bank holiday. But barring any nasty shocks over the next four days, both SIF and the wider UK market look set to end the month with modest gains.

As usual, this review will cover all the stocks that have been in the portfolio for my minimum period of nine months (or longer). Three stocks satisfy this criteria this month. Two have already been held over from previous months, while one has reached its first review date.

Polymetal International (LON:POLY) - this Russia-based gold miner has delivered a stable operating performance but growth seems to have stalled.
Tatton Asset Management (LON:TAM) - this financial advisor platform provider has been a big winner so far for SIF. Can I keep holding?
Robert Walters (LON:RWA) - recruiters are performing well at the moment and momentum looks strong.

I’ll take a look at each of these stocks in a moment, to see whether they still satisfy my screening criteria. But first, let’s take a quick look at the portfolio itself.

SIF Folio: August performance update

Regular readers will know that I try to avoid making predictions about the direction of the market or macro-economic trends. My system is to let my rules control the makeup and cash weighting of the SIF (Stock In Focus) portfolio.

As a natural pessimist (realist?), I expect a reality check at some point. But for now I’m happy to report that SIF has continued to outperform the market in August.

According to the Stocko charts, the SIF folio rose by 3.2% during the month to 23 August. This compares to a 2.7% gain for the FTSE All Share Index, which I use as a benchmark.

Note that I’m using the excellent new time-weighted return performance view on these charts. This adjusts out the impact of any cash inflows and outflows, providing a true view of portfolio investment performance versus the benchmark.

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Over the year to date, the portfolio has doubled the return of the wider market:

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Finally, since the portfolio’s inception in April 2016, it’s…

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KevinS1

25th Aug '21

Hi Roland,

Ive just taken a look at what is sat in your buying screen today (see below).

At what point do you review these companies and then look to add them to the PF. I note that there are curently only 4 or 5 of the stocks in the buy screen held within your PF. I appreciate you cannot chop and change each week/month, but at what point do you review the buy screen and decide one of them (or more) need to be promoted to the SIF.

Thanks for the ongoing write-ups. Really interesting as usual.

Roland Head

Hi Kevin,

I review the screen results for potential buys in most weeks (except when I do this monthly roundup).

I sort the stocks by StockRank (descending) and look for a new company that doesn't overlap too much with any of the existing stocks in the portfolio. If I find something, then I'll review it and decide whether to add it to the PF. Here's the latest buy:

https://www.stockopedia.com/co...

Looking at the screening results in your comment, for example, I would not consider £TW because SIF already holds Persimmon (LON:PSN) (disclosure: I hold). I'd be unlikely to buy Morgan Sindall (LON:MGNS) and Tyman (LON:TYMN) for similar reasons.

In general, I also reject overseas stocks (e.g. Steppe Cement (LON:STCM) and Hon Hai Precision Industry Co (LON:HHPD) above). They may be excellent companies, but they don't fit within the risk profile I target for this portfolio.

Occasionally, I may also reject companies for cyclical reasons - e.g. Anglo American (LON:AAL) recently:

Finally, there are some companies I won't buy because there's something I dislike about the business that doesn't show up in my screening. One example might be a monster pension deficit, or some aspect of the accounting that I mistrust.

I hope this makes sense. My screen is a starting point for building the portfolio, but I only add shares selectively. I aim to create a diversified portfolio I'm happy to own myself.

Regards,

Roland

Thanks Roland. Thats really useful. I am getting a good feel for what you are doing now and will be looking keenly to see if there is anything I can replicate. I'd ,ike to get a bit more structure to my investments and I like the idea of having some rules to guide me, rather than my haphazard approach as it is now.

Can you remind me (Ive probably asked or seen this before), do you have historic performance data for how your PF has performed over each year?

Thanks very much.

Regards

Kevin

SIF August review: Gold fails to glitter (TAM, RWA, POLY)

SIF Folio: August performance update

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Roland Head

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