Small Cap Value Report (5 Sep 2016) - CAMB, VTU, SDY, KOOV, BLV, CARR, REDS | Paul Scott

5th Sep '16 by Paul Scott

66 comments 29609 reads

Good morning!

This morning's report comes to you from an alley on a side street in Corfu old town!

I'm flying back to the UK on Weds. So there will be a normal report today & tomorrow, but Weds will be late I'm afraid, as I don't get back home until about 3pm. I'll still do a report, but it will be late afternoon/early evening on Weds. Sorry about that.

My experiences of fund management

EDIT: Clarification - Fundamental Asset Management

I seem to have accidentally caused some confusion, for which I apologise. Fundamental Asset Management has asked me to clarify that the only part of their business I was involved in was a minor portfolio service called the Small Cap Value Portfolio.

So the SCVP had nothing to do with FAM's core business of IHT portfolio management, which is of course continuing completely as normal! (and is an excellent, well-run, strongly performing service).

One reader apparently misunderstood, and thought that FAM was shutting down, which obviously it isn't! This has caused a few red faces, for which I profusely apologise.

Over the last 3 years, I helped to run a portfolio management service, called the Small Cap Value Portfolio, through an excellent FCA-regulated firm called Fundamental Asset Management (who are specialists in IHT planning portfolios). Working with FAM has been terrific - they're really genuine, decent people, and have a wealth of experience in AIM stocks.

I've not mentioned it here before, as it could have been seen as a conflict of interest (i.e. being seen to drum up new clients by mentioning it here), so Stockopedia asked me not to refer to it here in the past. I did however declare all positions held, within my usual disclosures here, as if I held them personally (which I did in nearly all stocks anyway).

However, seeing as we're winding down the very small SCVP service (due to failing to reach critical mass to make it cost-effective), I thought it would be worth a mention, to pass on some snippets on what I've learned from 3 year's work, helping to (as part of a regulated team) manage other peoples' money.

NB. This has no effect on FAM's main activities, as noted above.

Firstly, it's incredibly stressful! If you lose your own money on a share that goes wrong, it's annoying, but you learn the lessons (if there are any - sometimes it's things you could never…

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Philip Wigg

6th Sep '16

Hi Paul,

Thanks for the report. Hope you've enjoyed your hols.

Any views on the Half Yearly Report from SDM this morning?

cig

This problem can probably be solved in software: split the load among the (many) cells so that they each remain close to their optimal cycle regardless of usage patterns at the whole-car level.

Brilliant Leader

Where/How do you follow Lord Lee Herbie?

MichaelFBS

Hi Paul

On an inflation adjusted basis US$100,000 is now $998,535.27. See

http://www.usinflationcalculator.com/

However using the S & P as a proxy for stock prices it opened at 16.66 in 1950 and now stands at 2,183. So up 131 times as opposed to inflation's 10 times. Which shows what a good hedge against inflation stocks are.

I think it is correct to say "$100,000 in 1950 is equivalent to about $1 million today." But that is just my opinion.

Kind regards
Michael

Rusty2

Well it started about 1 year ago he had all his holdings in one article since then I just look up his registered interests on his House of Lords profile. There were several articles about him and interviews last year, his trading seems to have settled down since January.

I think the point about the 100 bagger idea is that if you can find a 100 bagger (let a lone two) in an investing life it can change the returns of your portfolio as it did for Ben Graham. Asos has is currently a 263 bagger but would you have spotted and stayed with it? It is not about finding a stock that is going to perform averagely it is finding the next ASOS or Coke or Nike or Amazon. The list is huge.

People who run small businesses do that all the time. The start a business with a small amount of money and after 20 years end up with something incredibly more valuable.

I think one has to think very long term at least 20 years and probably more like 30 or 40 years. But if you put £20k into a business and stick with it..... I think it is the patience to stick with a stock that prevents more people from having multi baggers. Certainly my best performers have been those where I have held through thick and thin for three or four years.

A current example is Boohoo.Com (LON:BOO) this is now up 237% since i purchased in November and represents 18% of my portfolio. I intend to hold. Even if the stock halves I am still well ahead of where I would have been with any other stock that has come across my radar but if it manages say £5 by 2020 then it will transform my portfolio returns. I am prepared to take that risk.

I recently read a book 100 Baggers which I found informative

https://www.amazon.co.uk/100-Baggers-Stocks-100---1-ebook/dp/1621291650/ref=sr_1_1?s=books&ie=UTF8&qid=1473186035&sr=1-1&keywords=100+baggers

May be the above shows some naivety as a relative newbie.

Interesting, the FT100 since 1978 is up about x15 and inflation is 5.6x. However as we knew the FT100 has not gone in the last 16 years. Although if you include dividends it's probably ahead of inflation. Ashtead (LON:AHT) has gone up about 30x in last 7.5 years, if you hold for another 10 years you could well have a x100. Also I remember when Stagecoach (LON:SGC) fell to 10p wish I had topped up but did not want anymore exposure, then they went to over 400p before falling back to 200p. Timing is the key with many shares.

Have you read the Naked Trader's book?

warmerjo

7th Sep '16

Constellation Healthcare - I have googled the history of the CEO, he is indeed a colourful character (as someone mentioned on this site), indeed somewhat too colourful to my liking. I decided to sell my shares to avoid feeling uncomfortable.

rhomboid1

http://bigcatrescue.org/paul-parmar-a-man-of-the-world/

He's not short of self confidence is he?

He reminds me of a certain Mr Terry, CEO of spectacularly failed Quindell.
Own interest at heart, not shareholders interest, IMO.

Thanks Herbie

Paul Scott

8th Sep '16

Hi Michael,

Oh well, I stand corrected.

It still doesn't feel right to me though, whatever the statistics apparently say.

Regards, Paul.

Hi Paul

I know what you mean but if it was the UK the £100k in 1950 is the equivalent of £3.2m. So maybe that's why it doesn't feel right!

http://www.thisismoney.co.uk/money/bills/article-1633409/Historic-inflation-calculator-value-money-changed-1900.html

Enjoy you duvet day today.

rjmahan

Problem with multi baggers is they become your portfolio.

If Boohoo triples again you have all your wealth in boohoo - therefore for portfolio management purposes you are better selling down - even though it reduces your return it dramatically reduces your risk.

It's true if you only have one. Looking at ASOS (LON:ASC) that crashed down so I think it is a good idea to take some profits along the way. I don't think Boohoo.Com (LON:BOO) will do as well as ASOS (LON:ASC) because it is already £1bn, ASOS (LON:ASC) is £4bn but has gone up over 200x.

Yes, that's the reality with multibaggers - the prudent thing is to top slice along the way for portfolio/risk management purposes. It is a fine line between that and running your winners.

Hi Herbie

Were you replying to me?

Michael

Well currently if Boohoo.Com (LON:BOO) triples and in the same period (the period does not matter) the rest of the portfolio increases 30% then Boohoo.Com (LON:BOO) almost exactly 33% of my portfolio and 66% in my other 17 holdings. I am talking just equities not inc cash, property or my business (which preBrexit had a value!:-)).

It may not triple or double from here but I am just trying to explain my thinking.

On the £ASC v Boohoo.Com (LON:BOO) argument I will have to do some more studying of their comparative merits.

Yes I quite like MC2 but doubt I will join but Brooks Macdonald (LON:BRK) was in the $90's in the 70's and in 1982 it was in the $500 to $800 range, which makes me question the veracity of the article.

TMFMayn

9th Sep '16

While I do like Microcap's punchy, optimistic articles, I do have a nagging doubt about Mr Cassel.

He has been asked about his own returns from the strategy he articulates, but has admitted he does not calculate his returns -- let alone publish them. I'd have thought if he's enjoyed several immense winners from his 5-7 share portfolio, he'd be more than happy to write about them for his site.

Instead, he and his contributors cover impressive big winners that none of them own and generally would only have been bought using a fair bit of hindsight.

Small Cap Value Report (5 Sep 2016) - CAMB, VTU, SDY, KOOV, BLV, CARR, REDS

My experiences of fund management

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Paul Scott

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