SIF July review: Morses Club, TRIG & Anglo Pacific

Tuesday, Jul 30 2019 by
SIF July review Morses Club TRIG  Anglo Pacific

Despite political uncertainty at home and dramatic events in the Strait of Hormuz, it’s been an inconclusive month for markets. In contrast to the sharp gains seen in June, the FTSE All-Share was up by about 1% in July at the time of writing.

Valued as a whole, the UK market looks reasonably priced to me. The FTSE All-Share is trading on a forecast P/E of 13.1 with a dividend yield of 4.1%, according to Stockopedia data. This is the index I use as a benchmark for my rules-based SIF Fund.

However, this middling valuation conceals a very wide range of underlying company valuations. Domestic stocks continue to look depressed, in many cases. More defensive firms are still enjoying premium valuations.

Canny stock pickers should be able to gain an edge. I’m not sure if that description will include me this year. The SIF folio’s lead over the market has shrunk in recent months, although it still remains ahead of the market by about 20% since its inception in April 2016.

As it’s the end of the month, it’s time to review the portfolio to see if any stocks must face the chop.

Stocks for the chop?

Three stocks are up for review this month, having been in the portfolio for at least nine months:

  • Morses Club (LON:MCL) - Shares in this sub-prime lender have slumped over the last few months. Is this a sign of problems to come or a buying opportunity?

  • Renewables Infrastructure Group (LON:TRIG) - this renewables investment trust has proved a surprising performer, delivering capital gains as well as a high yield. But it could be time to take profits.

  • Anglo Pacific (LON:APF) - this mining royalty group survived June’s portfolio review. Will it do the same again in July?

Here’s how these companies have performed during their time in the SIF folio:


Morses Club (LON:MCL)

(Original coverage 16/10/2018)

This sub-prime lender has a significant share of the home collect market. It’s also expanding its online business, through the Dot Dot Loans brand. Performance has been good since the 2016 IPO. Morses was also able to profit from the self-inflicted problems faced by larger rival Provident Financial in 2017/18.

However, the shares have come off the boil since March, falling by nearly 30% from an all-time high of 186p.

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Morses Club PLC is a United Kingdom-based home collected credit (HCC) lender. The Company is a consumer finance business focused on the home collected credit market. The Company operates under the Morses Club brand and provides unsecured loans to customers over 20-78 week periods, which are repayable on a weekly basis. It provides a range of loan products through a combination of traditional and online marketing channels. The Company's main country of operation is the United Kingdom. more »

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The Renewables Infrastructure Group Limited is a closed-ended investment company, investing in and managing a portfolio of investments in renewable energy infrastructure project companies. Its objectives are to provide shareholders with an attractive long-term income-based return with a positive correlation to inflation by focusing on strong cash generation across a diversified portfolio of predominantly operating projects; to maintain prudent financial management in terms of the approach to cost control, cash management, dividend cover, financing arrangements and foreign exchange and interest rate hedging, and to diversify its investment portfolio to enhance spreading of risk, increase share liquidity and obtain further scale efficiencies, while seeking to enhance Net Asset Value (NAV) per share for investors. Its portfolio comprises 55 investments in the United Kingdom, Republic of Ireland and France. InfraRed Capital Partners Limited is the investment manager of the Company. more »

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Anglo Pacific Group PLC (Anglo Pacific) is a United Kingdom-based company, which focuses on royalties connected with the mining of natural resources. The Company's producing royalties include Kestrel, Narrabri, Maracas Menchen, El Valle- Boinas/Carles (EVBC) and Four Mile. The Company's development royalties include Salamanca, Groundhog, and Amapa & Tucano. The Company's early-stage royalties include Pilbara, Ring of Fire and Dugbe 1. Kestrel is an underground coal mine located in the Bowen Basin, Queensland, Australia. The Company holds interests in the Narrabri coal project, which is located in New South Wales, Australia. The Narrabri royalty includes the Narrabri mine, and the Narrabri South project. The Maracas Menchen project is located in approximately 250 kilometers south-west of the city of Salvador, the capital of Bahia State, Brazil. EVBC is located in the Rio Narcea Gold Belt of northern Spain. The Salamanca uranium project is located in Spain. more »

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

6 Comments on this Article show/hide all

Jamesweston 30th Jul 1 of 6

As ever, great analysis concisely presented. I have been tempted by Morses Club and decision now is clear. 

Many Thanks


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Thornabian 30th Jul 2 of 6

I agree with the notion that TRIG is fully valued but the premium to NAV is largely down to the new projects coming online and the high margins which will be realised as they do. Under IFRS 15, these will only be recognized in their statements at that point.

Considering this, I think it is worth the premium as the future cashflows still look very attractive in a largely uncompetitive market.

The yield is still also good and management still expect the dividend to continue increasing.

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Rhubarbcrumble 30th Jul 3 of 6

Whilst I agree with your analysis, might not the present share weakness in MCL be due in large part to the sale of a large volume of stock by Woodford? I am a holder at present for IHT reasons.

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krtpforever 30th Jul 4 of 6

MCL 11 July 19 Woodford Holding now >5%

16 JUly 19 AIM Rule 26 now no mention of Woodford Holding.Hay Wain Group Ltd has 36.74% and indications are they are looking to exit slowly of course.

J O Hambro Asset Management have 6.93% another indication its viewed as a Special Situation.

At current levels 128/130 a buy

My reasons for holding are IHT planning

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Roland Head 30th Jul 5 of 6

In reply to post #498731


Thanks for flagging this up. I agree that cash flow and yield remain attractive, albeit less so than previously in the case of yield.

Cheers, Roland

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Roland Head 30th Jul 6 of 6

In reply to post #498781

Rhubarbcrumble & krtpforever,

I agree that the Woodford sale may have been one factor causing weakness in the Morses Club (LON:MCL) share price. I should probably have mentioned this in the piece. However, I'm no longer convinced that Woodford selling is the only cause of the weakness we've seen. I think it's possible that growth will slow over the coming year.

Having said that, I still have a broadly positive view of this business and would be happy to hold the shares in a long-term portfolio, such as for IHT reasons.

Everyone's situation is different. My commentary here reflects my opinion and the approach I'm using for the SIF folio. This is based on a set of rules and built around a minimum nine-month holding period.

My decisions are not intended to be advice and won't necessarily be appropriate for other investors.


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 Are LON:MCL's fundamentals sound as an investment? Find out More »

About Roland Head

Roland Head

I'm a private investor, analyst and writer on stock markets, with a particular fondness for free cash flow, dividends and value. My main interests are UK and US stocks. I also have an interest in (profitable) commodity stocks.  I have passed the CFA Level 1 exam and 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 and quantitative 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 very large and now defunct Canadian telecoms firm.  more »


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