SIF Folio: T Clarke and Ashmore compete for my cash

Tuesday, May 14 2019 by
SIF Folio T Clarke and Ashmore compete for my cash

In my recent piece looking at the SIF portfolio’s biggest losers, I found that three out of the nine businesses I looked at were contracting or construction-type businesses.

That seems more than a coincidence to me, and many of you suggested that I should simply avoid this sector altogether, in order to avoid future losses.

I’ve decided not to impose an complete ban on such stocks, but I’m already facing the temptation to buy one again. This time my screen has picked out a small firm I rate as a quality operator in its sector -- building services group T Clarke (LON:CTO).

The other choice provided by my screening system is emerging markets asset manager Ashmore (LON:ASHM).

Shares in both firms have performed strongly this year. In the remainder of this piece I’ll explain what I’m going to do and why.

Mello London

I’ll be at Mello in Chiswick this week, where I hope to be able to meet up with many of you.

I see that T Clarke’s CEO Mark Lawrence and FD Trevor Mitchell will be manning a stand on Thursday and also giving a presentation on the day. I’ll be attending this session to find out more about this business.

Character Group, another SIF stock, will also be presenting (on Friday), so I’ll be attending that one too.

You can see a full list of of exhibitors and presenters here.

T Clarke: right stock, wrong time?

Building services contractor T Clarke has a 130-year history of installing wiring and related infrastructure in buildings. These days, its work focuses on commercial projects such as office blocks, hospitals, rail projects and schools.

I share Paul’s view that the combination of complex projects, low margins and cyclical risk is a potential concern. Having said that, my impression is that this is a fairly high quality business. One metric that’s caught my eye is that more than 80% of custom is repeat.

Recent trading commentary was upbeat and the group’s order book and margins are continuing to expand. However, I added brickmaker Michelmersh to the SIF folio last week and already have broader cyclical exposure through Bilby, Staffline and Lookers.

While none of these firms are directly comparable to T Clarke, I’m keen to find a way to…

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TClarke plc is a United Kingdom-based building services company, which delivers electrical, mechanical, and information and communications technology (ICT) services. The Company provides electrical and mechanical contracting and related services to the construction industry and end users. Its geographical segments include London and South East, Central and South West, the North and Scotland. The Company's businesses include Intelligent Buildings Green Technologies, Facilities Management, Transport, Mission Critical, Manufacturing Services, Residential & Hotels, M&E Contracting and Design & Build. The Company within its M&E contracting business has capabilities in sectors, including commercial offices, retail, education, healthcare, financial services and media. Its Manufacturing Services business includes in-house precision prefabrication and engineering services. Its projects include Beckley Court, Chiswick Park, Kettering Hospital, Project Nova, Mitie Care Home and Rathbone Square. more »

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Ashmore Group plc is a United Kingdom-based company, which operates as a specialist emerging markets asset manager. The Company offers a range of investment themes, such as external debt, local currency, corporate debt, blended debt, equities, alternatives, multi-strategy and overlay/liquidity. Its geographical segments include United Kingdom, United States and Others. The external debt theme invests in debt instruments issued by sovereigns (governments) and quasi-sovereigns (government-sponsored). The local currency theme invests in local currency-denominated instruments issued by sovereign, quasi-sovereign and corporate issuers. The corporate debt theme invests in debt instruments issued by public and private sector companies. The Company's products are available in a range of fund structures, covering the liquidity spectrum from daily-dealing pooled funds through to multi-year locked-up partnerships. more »

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  Is LON:CTO fundamentally strong or weak? Find out More »

1 Comment on this Article show/hide all

andrea34l 21st May 1 of 1

I recently bought a holding in T Clarke (LON:CTO) as they seem to be making significant improvements in performance, especially in the margin; the rating still seems incredibly low.

I don't share a positive view in Ashmore (LON:ASHM) with interim EBITDA only up 8%. Q3 AUM results were more positive (though without any mention of profit), but I am rather put off by the recent, significant sale by the wife of the CFO.

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About Roland Head

Roland Head

I'm a private investor and writer on stock markets, with a particular fondness for free cash flow, dividends and value. I also have an interest in (profitable) commodity stocks.  I hold the CFA UK Investment Management Certificate (IMC). One of my investment interests is developing rules-based strategies such as my Stock in Focus portfolio. This reflects a significant part of my personal portfolio and is the subject of my weekly column here at Stockopedia. In earlier life, I worked as an engineer in telecoms and IT. The rules-based approach required for this kind of work undoubtedly influenced my investing style. I also learned a lot from seeing the tech bubble deflate in 2000-1, when I was working for a large and now defunct Canadian firm.  more »


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