SIF Folio 2024 review + changes for 2025

2024 was a mixed year for the UK market. While the first six months were broadly positive, the second half of the year was weaker as external concerns weighed on investor sentiment.

My rules-based SIF (Stock in Focus) portfolio continued to trade throughout the year, adding stocks when my screen offered buying opportunities – and shifting more heavily into cash at other times. (Subscribers can see a fuller explanation of how the portfolio works here.)

When markets closed on 31 December, I’m happy to report SIF was comfortably ahead for the year, maintaining its long-term record of outperforming the wider UK market.

SIF 2024 performance review

SIF gained 12.5% in 2024, versus a 5.6% gain for its benchmark, the FTSE All Share index. This portfolio return includes estimated costs but excludes dividends.

Taking a longer view, SIF has now risen by 98% since inception in April 2016. That’s equivalent to an annualised return of 8.2%, again excluding dividends.

Including dividends, I estimate SIF has generated a total return of 134%, or 10.3% annualised since April 2016.

The consistent additional return generated by dividend income is one reason why we’ve decided to skew SIF more heavily towards income from 2025. More on this below.

Winners outnumbered losers in 2024

In total I closed 20 positions during the year, with 13 winners and seven losers:

You can find full details of the portfolio’s trades during the first nine months of the year in my previous quarterly updates – Q1, Q2 and Q3.

Let’s move on and take a look at changes to the portfolio during the final quarter of 2024.

SIF Q4 portfolio review

I added six new stocks to SIF and sold six during the final quarter of 2024.

This left SIF with 16 open positions at the end of December, unchanged from the end of Q3 and in line with my target number of holdings.

Here’s a snapshot of the SIF portfolio after markets closed on 31 December 2024:

Stocks sold in Q4

In this section I’ve included a short summary of each of the stocks sold from the portfolio during the final quarter of 2024.

Hunting (LON:HTG)

Market cap: £483m

I sold Hunting after just seven months, when the company triggered one of my sale rules by issuing a profit warning. Paul covered that news here.

Despite this downgrade, earnings momentum still seems positive. Brokers are forecasting a 53% increase in earnings per share for 2025.

The stock’s valuation remains temptingly modest, but our research suggests a period of underperformance often follows an initial profit warning.

Hunting shares have remained range bound since the October’s profit warning. I expect the company’s January trading update to provide more of a steer on the outlook for the year ahead.

Bought: 300p on 6 March 24

Sold: 310p on 22 October 24

Total return (inc dividends & costs): +5.6%

easyJet (LON:EZJ)

Market cap: £4.3bn

Keelan covered the latest results from budget airline easyJet in November. In short, the airline seems to be trading well and benefiting from the strong growth of its package holiday business.

I sold SIF’s easyJet shares in October after my default nine-month holding period, when the stock failed to pass my screening test for forecast earnings growth.

Airlines can be tricky investments, with heavy macro exposure and high fixed costs. But the StockRanks remain broadly positive and I would not bet against further progress.

Bought: 503p on 2 January 24

Sold: 520p on 29 October 24

Total return (inc dividends & costs): 3.8%

Atalaya Mining (LON:ATYM)

Market cap: £494m

I closed SIF’s position in the copper/gold miner after a default nine-month holding period. At the time, the stock failed to pass my screening rules for forecast earnings and dividend growth.

The analyst consensus trend chart shows us that forecasts have been cut this year, but a substantial improvement in earnings is expected in 2025.

I don’t have a particular view on this business. But with the stock trading on seven times 2025 forecast earnings, Atalaya could still be worthy of further research.

Bought: 339p on 9 January 24

Sold: 371.5p on 29 October 24

Total return (inc dividends & costs): 10.9%

Serco (LON:SRP)

Market cap: £1.6bn

Serco was sold following a profit warning in November, which was prompted by the loss of a major contract with the Australian government.

However, an update earlier in December received a positive reception from investors and was covered by Graham here. He was impressed by the way that Serco has bounced back “to produce a good result for the year”, with a strong pipeline of new business.

The StockRanks are ambivalent, but suggest Serco could be a Contrarian opportunity:

Bought: 184p on 9 April 24

Sold: 156.8p on 14 November 24

Total return (inc dividends & costs): -13.4%

Card Factory (LON:CARD)

Market cap: £333m

This discount giftware retailer issued a somewhat downbeat outlook statement with September’s interim results. This prompted a sharp sell-off, despite the company’s decision to maintain its full-year guidance.

A more recent trading update in December left full-year expectations unchanged once again and has seen the stock regain some ground.

Stockopedia’s algorithms view this as a Contrarian situation with high Quality and Value scores.

There could be an opportunity here, in my view. But investors will need to do their own research to decide whether the potential for improved trading can offset cost pressures from wages and tax rises next year.

CARD shares were the portfolio’s biggest loser last year, triggering a sale when they traded persistently below my 25% stop-loss level.

Bought: 110p on 23 July 24

Sold: 80.3p on 20 November 24

Total return (inc dividends & costs): -26.4%

GSK (LON:GSK)

Market cap: £55.6bn

Megan covered this FTSE 100 pharma group in a recent in-depth piece, “Why I am unable to shrug off my disappointment in GSK”. I’d recommend taking a look if you’re interested in the pharma sector, as she covers both company-specific issues and some broader topics relevant to all pharma stocks.

I have certainly been disappointed with GSK over the years and have remained so in 2024. Although the risks attached to Zantac litigation appear to be receding, other headwinds appear to remain.

I sold GSK after nine months, when the shares failed to pass most of the momentum rules in my stock screen.

Bought: 1,642p on 13 February 24

Sold: 1,346.5p on 26 November 24

Total return (inc dividends & costs): -14.8%

New stocks added in Q4

I added the following companies to SIF over the last three months, selecting from shares that qualified for my buying screen. All financial data as of 28 December 2024.

Yu (LON:YU.)

Market cap: £303m

This fast-growing business energy supplier boasts Super Stock styling and a high StockRank of 97.

While I can see risks relating to bad debt if the economy slows, the shares do not seem expensive to me.

I also take comfort from the 52% shareholding of CEO Bobby Kalar. This suggests to me that he’s likely to maintain good financial controls and take a disciplined approach to growth.

I took a more in-depth look at Yu in November, when I looked at six popular momentum stocks.

I added YU to SIF at 1,535p on 2 October 24.

Imperial Brands (LON:IMB)

Market cap: £21.5bn

Tobacco stocks are not a good fit in all portfolios, but I think Imperial is in good shape and performing well at the moment. This company is also my preferred choice from the big two UK tobacco groups and scores very highly with the StockRanks at present:

The 6.4% dividend yield looks safe to me but further progress may depend on the contents of March’s five-year strategy update.

I added IMB to SIF at 2,271p on 15 October 24.

Petershill Partners (LON:PHLL)

Market cap: £2.7bn

I added this private equity-focused investment trust to SIF in October, shortly after interim results that showcased a 38% rise in adjusted pre-tax profit.

At the time, the stock was trading at a 35% discount to book value with a prospective 5.9% yield. That discount has closed a little since then, helped by an upbeat Q3 update, some positive news on realisations and a 17.5 cent per share special dividend.

Consensus forecasts now suggest the total yield for 2024 could be more than 9%, albeit falling to c.5% for 2025.

I added PHLL to SIF at 219p on 22 October 24.

Coats (LON:COA)

Market cap: £1.5bn

This venerable thread and yarn business can trace its history back more than 250 years.

Coats has been a mixed investment over the last decade, but a substantial pension liability has now been “derisked” and trading appears healthy.

November’s third-quarter update reported double-digit Q3 sales growth and reiterated full-year guidance. City analysts appear increasingly bullish about the near-term outlook:

I added COA to SIF at 95.9p on 13 November 24.

Synectics (LON:SNX)

Market cap: £62m

This small-cap security systems specialist appears to be enjoying a run of strong momentum. When I added the shares to SIF they had already doubled in the year, making it a tough purchase for me psychologically.

High Flyer styling highlights the risk of a de-rating if results disappoint. But newsflow since I added the shares has been positive and SIF’s position is in the black – so far.

The valuation is no longer obviously cheap, but I don’t think it’s unreasonable either if performance continues to improve.

I added SNX to SIF at 306p on 3 December 24.

City of London Investment (LON:CLIG)

Market cap: £195m

This niche asset manager specialises investing in investment trusts trading at a discount to book value. It was already a holding in my main personal portfolio, giving me familiarity with the business and some confidence that momentum may be improving.

CLIG’s main attraction right now is its 8.6% dividend yield – but if newly-invigorated management can achieve a return to AUM growth, then I think the shares could potentially benefit from a re-rating as well.

The StockRanks have turned very positive on CLIG over the last year, hopefully providing a useful sanity check for my optimism:

I added CLIG to SIF at 388p on 10 December 24

Changes for 2025: a tilt to income

Stockopedia’s model portfolio offering is being widened in 2025 to serve a broader range of investor interests. As part of this shift, we have decided to increase the income focus of the SIF portfolio.

In reality, this is not such a big change as it might first appear. Although the portfolio’s emphasis has been on affordable growth – value and momentum – the screen I use to select stocks has always required a minimum dividend yield of 1.5%.

In practice, the income provided by the portfolio since its inception in April 2016 has been significantly greater than this.

My records show dividends paid by SIF stocks have generated an annualised income of 3.3% since the portfolio’s inception. That’s equivalent to a £320k return on the portfolio’s original virtual capital of £1m.

The portfolio’s yield has also improved over the last year or so, reflecting wider market conditions.

At the time of writing, the average forecast yield of the stocks in the portfolio is 4.7%, helped by some high yielders such as Harbour Energy and CLIG.

Changes to my screening rules

My approach to making changes to SIF has always been cautious and incremental. I intend to continue in this vein.

To satisfy the new income remit I would like to achieve a portfolio yield of around 5%. I feel this is an attractive level, relative to the risk-free rates available on cash and government bonds.

However, I’m not going to rush into major changes in order to achieve this. All current SIF holdings will remain in the portfolio until they rotate out in line with my normal trading rules.

I still intend to pursue a total return strategy built around a mix of capital gains and income – not a pure high-yield income approach. But new purchases made from 1 January will be selected using a modified set of screening rules.

I’ve highlighted the changes I’ve made to my screening rules below. Broadly, these are intended to increase the portfolio’s weighting to value. My hope is that this will increase the portfolio’s income yield without sacrificing too much growth and momentum.

Further changes may be needed over time, but this will be my starting point for the first half of 2025:

Change #1: Rolling P/E min: 5 (previously 7)

Change #2: Rolling 1y dividend yield: minimum 3% (previously 1.5%)

You can see the live SIF buy screen here.

Performance tracking & portfolio management

Since the portfolio’s inception, the primary Stockopedia folio I use to track SIF has not recorded dividend income. To keep track of income, I have maintained a mirror copy of the portfolio with dividends added.

Going forward, I will start adding dividend income to the main folio and will retire the duplicate.

I do not plan to change my policy of equal sizing with one initial purchase, and no top ups or top slicing.

However, as dividend income accumulates, I may need to make more regular adjustments to position sizing than in the past in order to ensure I’m reinvesting dividends – a key element of compound growth.

Depending on how the composition of the portfolio changes, it might also become logical to extend my default holding period beyond its current nine-month minimum.

I will address these issues and others as they arise, in future updates.

For now, all that remains is to thank you for following SIF’s progress for another year and wish you success in the markets in 2025 – and a Happy New Year!

Disclosure: Roland owned all shares listed in the SIF folio at the time of publication except Cairn Homes.