SIF September review: Bonmarché, Motorpoint and a bid for Jardine Lloyd Thompson

Tuesday, Sep 25 2018 by
8
SIF September review Bonmarcheacute Motorpoint and a bid for Jardine Lloyd Thompson

Last week came to a profitable end for the SIF folio, when specialist insurance broker Jardine Lloyds Thompson received a takeover bid from US heavyweight Marsh & Mclennan. This week I’ll take a look at this news and explain what I’m going to do next.

As it’s the end of the month, I’ll also review any stocks which have been in the folio for at least nine months. Checking back through my trading records, I can see that two stocks were added in December 2017, so must be considered for eviction this month:

  • Motorpoint: I’ve become something of a reluctant convert to the attractions of this business. The stock’s performance has been good during its time in the portfolio, but does it still pass all of my screening tests?

  • Bonmarché Holdings: This small-cap womenswear retailer has the credentials I tend to look for in value investments. Low valuation, strong balance sheet and a high yield. Performance so far has been promising, but I think there’s more to come.

Here’s a snapshot of how these holdings have performed so far. Both positions are in profit and have also paid dividends (not shown here). I’ve also included Jardine Lloyd Thompson in this screen grab so we can see the effect of last week’s bid on the SIF holding:

5baa07e92ec28S1.png

Bonmarché Holdings

Original coverage 13/12/2017

When I added Bonmarché Holdings to the SIF fund in December 2017, I was particularly keen on the stock’s value credentials. This is something Graham and Paul have also commented on in their coverage.

I think it’s worth revisiting this and seeing how the situation has evolved since then:

5baa0807ec825S2.png

Most of these value ratios remain similar to when I bought the stock. They certainly still look attractive to me, when combined with a StockRank of 96.

The only exception is the shares’ price/free cash flow ratio. A sharp increase from 6.1 to 24 suggests that cash flow has markedly worsened. However, I don’t think this situation is as bad as these numbers suggest.

Last year, H1 free cash flow was boosted by a £1.3m reduction in inventories and a £2m increase in trade creditors (payables), combined with a big increase in half-year profit:

5baa081c1ed65S3.png

Source:…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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Bonmarche Holdings plc is a multi-channel retailer of womenswear and accessories. The Company offers clothing and accessories in a range of sizes for women through its own store portfolio, Website, mail order catalogues and through the Ideal World TV shopping channel. The Company's subsidiaries include Bluebird UK Topco, Bluebird UK Holdco and Bonmarch Limited. The Company has approximately 310 stores across the United Kingdom. more »

LSE Price
8.5p
Change
 
Mkt Cap (£m)
4.3
P/E (fwd)
7.7
Yield (fwd)
18.2

Jardine Lloyd Thompson Group plc (JLT) is a provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services. The Company operates through three segments: Risk & Insurance, Employee Benefits, and Head Office & Other operations. The Risk & Insurance segment consists of JLT's global specialist, wholesale, reinsurance broking, personal lines, and small and medium-sized enterprises (SME) activities. The Employee Benefits segment consists of pension administration, outsourcing and employee benefits consultancy, healthcare and wealth management activities. The Head Office & Other segment consists mainly of holding companies, central administration functions and investments in associates. It provides a range of services to clients and insurance market counterparties in areas, such as captive management, claims management and administration, and capital raising and corporate insurance advice. more »

LSE Price
1914p
Change
 
Mkt Cap (£m)
n/a
P/E (fwd)
n/a
Yield (fwd)
n/a

Motorpoint Group plc is an independent vehicle retailer in the United Kingdom. The Company's principal business is the sale of vehicles, of which are approximately two years old and which have covered over 15,000 miles. The Company sells vehicles from brands representing vehicle sales in the United Kingdom, with models from Ford, Vauxhall, Volkswagen, Nissan, Hyundai, Audi and BMW. The Company operates from over 10 retail sites across the United Kingdom. The Company has a national contact-center dealing with online enquiries. In addition to sales of vehicles, the Company operates Auction4Cars.com, a business to business online auction platform for vehicles. The Company also offers ancillary products to customers, including customer finance packages, vehicle guarantees, insurance products and vehicle protection treatments. more »

LSE Price
218p
Change
-2.7%
Mkt Cap (£m)
205.3
P/E (fwd)
11.0
Yield (fwd)
3.6



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


3 Comments on this Article show/hide all

herbie47 25th Sep '18 1 of 3
1

Rod, that's a good point about Fantasy funds can't handle delisted shares, they can't handle share splits either so if know about one I would sell and then buyback after the split is complete, I had a 1 for 3 share split, complete mess, went from 35% profit to 55% loss.

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sharmvr 25th Sep '18 2 of 3

In reply to post #401719

True, but every cloud.
My Fastjet (LON:FJET) shares went from 99% loss to 1000% gain!
Was painful adjusting on sale to say I received -xx for the shares.
Still got those warrants though so sure I will make it all back!
It's easyJet for Africa after all!

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sharmvr 25th Sep '18 3 of 3

Nice write up on bonmarche. Thanks Roland.
Been considering adding to the holding especially now that online is meaningful to total sales, and as an accountant, I tend to quite like when CFOs move to CEO (less salesmanship and better balance sheet management) both of which are helpful for a contrarian pick

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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 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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