It’s nearly the end of March, so this week I want to carry out my regular review of stocks that have been in the SIF folio for nine months or more.

I don’t normally comment on newsflow from portfolio companies during their time in the portfolio, but I do want to make an exception for building services group Bilby (LON:BILB), which has been a complete car crash of an investment so far.

Stocks for review

In June last year, I only added one stock to the SIF folio, small-cap asset manager Miton (LON:MGR). This well-regarded firm is now the portfolio’s oldest holding, and the only one that satisfies my minimum holding period of nine months.

As a result, I need to check whether these shares still pass all of my screening tests. If not, then the stock may have to be sold this week.

Miton (LON:MGR)

Original coverage 05/06/2018

It’s worth noting that this is Miton’s second stint in the SIF fund. The first ended profitably with a 46% total return. The stock is showing a more modest profit this time round, but even that’s a relief after some big losses recently.

Miton’s 2018 results appear to have given investors the injection of confidence needed to buy a few more shares. The share price rose by more than 10% on the day and has maintained that gain so far.

Big inflows: It’s not hard to see why Miton’s results were well received. While big cap asset managers like Standard Life Aberdeen are suffering hefty net outflows, investors are still queuing up to deposit cash with Miton. Assets under management rose by 14% to £4,376m last year, despite a £466m negative return from the group’s investments.

Short-term dips like this are inevitable for an asset manager. You cannot deliver absolute positive returns in all circumstances. Although percentage of Miton funds in the first or second quartile for performance fell from 87% to 81% last year, I remain confident that the group’s long-term results are likely to be above average.

Miton’s business performance has certainly been strong. The group’s operating margin rose from 22.2% to 24.3% last year. Return on equity rose from 8.3% to 11.6%.

Risks? The credibility of investment boss and small-cap specialist Gervais Williams plays a…

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