Before I get started on this week’s stock review, I want to give you advanced notice of a special feature I’m planning for next week.

The Stock in Focus (SIF) folio has beaten the market by 25% over the last two years, so progress has been good so far. But I know from reader comments that many of you have questions about how this rules-based strategy works.

In the hope that I can answer as many of these questions as possible, my aim next week will be to explain what I do, how I do it and why I do it. To help make this as useful as possible, I’d be very grateful if you could message me any questions you might have, so I can include them.


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High returns from support services?

My Stock in Focus screen continues to throw up surprises. This week’s it’s small-cap building services group Bilby. This £50m firm provides gas, electrical and building services to social housing landlords in London and the South East.

It’s a growing market and Stockopedia’s computers appear to rate Bilby’s contribution highly. They’ve awarded it a StockRank of 93.

This company also qualifies for the Tiny Titans guru screen, which I rate highly. This screen is based on the small-cap momentum strategy used by US fund manager James O’Shaughnessy. It’s delivered an annualised return of 23.5% since its inception at the end of 2011. I’ve often found this screen to be a good source of ideas for further research.

What could go wrong? Bilby is a support services firm with a policy of expanding through acquisitions. This combination has a reputation for delivering slim profit margins, and for the destruction of shareholder value.

In fairness, there’s no sign yet that this applies to Bilby. Since its flotation in March 2015, management have kept its balance sheet in good shape and tripled the group’s revenues. Shareholders who picked up stock at 58p in March 2015 have now doubled their money.

Although these gains haven’t been achieved without some drama, Bilby’s performance…

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