Market Outlook | Stockopedia 2020 Challenge - ENTER Before Midnight 31st December.

26th Dec '19 by Gromley

101 comments 9111 reads

Hopefully I am not acting out of turn by posting this, but official communications on this subject seem to me to be somewhat sub-optimal.

Stockopedia are running and excellent share-picking competition for 2020 , with entries closing at midnight New Year's Eve.

Some may have seen the original blog-post on the subject about a week ago which was subsequently redacted. Others may have seen the more recent email from Ed advertising the competition. However I suspect there are some that don't read the emails and who may have missed the original blog-post (or not noted the link to the entry form when it was originally posted).

So in case you have missed it, let me sign post what looks like a really fun competition with a not insubstantial prize of a long weekend for two in New York. A particularly good prize I think for subscribers who do not actually live in New York - if you're an NY resident I'll wager there might be some scope for substitution should you win ;-).

The competition itself can be found here

It is of course entirely illogical of me to advertise a competition that I intend to enter (& if luck is with me, to win) to attract additional competitors. I guess we will just have to call this Christmas Spirit, or perhaps it is gratitude to the richly diverse community that populates the Stockopedia message boards. At the time of writing there are over 1,200 entries in the competition, but I think this is a small fraction of the subscriber base so hopefully we can improve on that number.

There is nothing to lose but your credibility - and I'll certainly be putting mine on the line with my 'ludicrous' potential selections.

Seasons greetings to one and all.

Regards,

Gromley

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Rusty2

11th Jan '20

Don't you now have 6 Galliford Try Holdings (LON:GFRD) shares + 1/6 of 0.574 of 1 Vistry (LON:VTY) share for each share of GFRD you held on the 1st January? VTY share is now 1264/6 = 210.67 x 0.574 = 121p, so you have 158 + 121p = 279p. Or have I misunderstood this?

Nice one Nick - I was busy writing my epic ramble on the subject when you summed it up in 3 short points!!

We both came to the same basic conclusion - it just took me longer. ;-)

And Herbie - yes I think you have misunderstood (unless Nick & I have).

You had one "old" Galliford share, you now have one "new" Gallford share and 0.574 of a Vistry share.

I can't see where you are getting the x6 , /6 from?

Why are people making out the Galliford Try Holdings (LON:GFRD) shares have gone up so much? Stockopedia share price shows a 75% gain.

If the share price has fallen from 866p to 144p why is Stockopedia showing the share price as 90p before this sale? Some brokers are showing a drop from 866 to 144, which is 1/6. I can't see any other brokers showing figures the same as Stockopedia. HL are showing the price as around 156p, all very confusing.

Roy Edwards

12th Jan '20

I have been fascinated by this thread you have created and thank you for starting the whole debate about the competition. There is somewhat of a similarity that I have with the fact that you do own some stocks from your picks. For my part, I had been creating a portfolio to take into the new year start and have built my real world positions in my chosen 5 stocks for January. Whilst the competition spans a year, my holding periods do tend to be much longer so am more in it to monitor my real world holdings for this year and beyond. AS I had bought into my last positions in December and now have the required shares in each holding, it will be interesting to see how they do especially after watching the presentation by Ed this week around the overall competition. Good luck to all.

Edward Croft

@sharw - re. "cobbled together in a rush" comment.

To be honest I do think that part of the comment is fair - but it's not to say "without thought about dealing with corporate actions". We did put it together quickly - but we handle corporate actions correctly. I don't think you will find any system that automates corporate actions on all 50,000 global stocks to the level you are wishing for. We don't receive all corporate action data - especially not for complex corporate actions like GFRD - but we do receive the vast majority of split and consolidation data. There is always a little manual intervention.

Yes the RENN issue needs sorted out. We haven't received the consolidation data yet in our system - but we will sort this out manually if we don't. To be honest, everyone should relax. You will see the odd valuation anomaly due to splits/consolidations, but we do pick them up. It might take a few days for us to sort them out, but they do get sorted out.

The GFRD calculations are correct. All picks were allocated an additional ~0.57 Vistry shares at the correct price. All the picks are backed by "Fantasy Funds". They use a nominal £1m and have a phantom number of shares purchased backing them.

Yes GFRD in the competition now look about right to me now I understand how it was allocated, what I don't understand is Stockopedia repricing of the shares prior to the sale to Vistry, why does it show about a 77% rise on the day, should it not show about 83% fall? Why are the shares around 90p and not 866p?

sharw

Ed - thanks for your reply. Apologies for the harshness of the comment and I appreciate that corporate actions come in many forms, GFRD and RENN showing two different types.

Re RENN I see that the chart on the Stock Report page is now in line with the NASDAQ one that I linked to showing a close on 31/12 of $2.49.

what I don't understand is Stockopedia repricing of the shares prior to the sale to Vistry, why does it show about a 77% rise on the day, should it not show about 83% fall? Why are the shares around 90p and not 866p?

Herbie, it is actually quite common practise to rebase or adjust historic prices when there is a substantial capital event.

Most common is where there are share splits or share consolidations; if for example there is a 10 for 1 consolidation - the actual "printed" share price will go up 10 fold on the day it happens, but shareholders have gained nothing so an historic share price chart showing such an apparent leap would be total nonsense.

It is also though routinely done in the case of "spin offs" / "de-mergers". These are probably more common than my previous example would suggest. Back in 2001 BT span off O2 and as a result the printed share price fell, reflecting the fact that shareholder now owned shares in both BT Group & "MMO2" (as they were then). I can't recall the degree of the drop (could possibly find it in my archives as I was a shareholder at the time) - but you won't find the drop anywhere in "all time" charts, because the historic prices were adjusted.

So this was not a Stocko decision as such, but more a convention.

In fact I think you said somewhere that some of the sources you looked at were showing the original historic prices (I would imagine they will probably change) and some were showing the same figures as Stocko.

If the last part of that sentence is actually true - then it demonstrates that this was not a Stocko decision, but one from their data providers (Thompson-Reuters?). As the calculation performed thus far I believe is incorrect.

On 2-Jan-20 Galliford Shares closed at £8.86 but overnight each "old" Galliford share converted to 1 "new" Galliford share and 0.574.... VTY (ex-bovis) shares.

Bovis had closed at 1330 meaning shareholders received c. £7.63 of VTY share, meaning the rump of Galliford was worth a notional c. £1.23.

I thought I had worked out where the adjusted 2-jan close of 93.37p quoted by Stocko came from, but I realise that was just circular maths. Unless I am missing something it is just wrong,

I understand shares splits but I don’t understand this adjustment. In the competition which Ed says is correct GFRD is up about 3%, so this adjustment does not make any sense to me. My broker HL has a totally different adjustment but is more inline with the 3% gain. So in NAPS what is the gain?

13th Jan '20

The way the competition is treating the data, mirrors the real life situation (as Ed told us above they are using the fantasy funds engine to run the comp).
Competitors are showing the ~80% capital loss on GFRD based on the actual printed prices, but are holdig 0.57x VTY shares with a purchase price of zero.

The only minor issue with this approach is that the VTY positions are showing as 0% gain when looked at individually when in fact the gain is effectively infinite. This doesn't impact the overall portfolio result though as that is based on summing the absolute gains and losses.

14th Jan '20

Somewhat tangential to the competition itself, but continuing the view on the adjusted historical prices for Galliford Try Holdings (LON:GFRD) used by Stockopedia (and others, Bloomberg for example), I said :

Unless I am missing something it is just wrong

Well, I WAS missing something, so I now understand the adjusted figure and it is not "just wrong" although as I will explain I don't agree that it is wholly correct either .

As noted above I used a 2-Jan closing price for Vistry (LON:VTY) of 1330p (from the stock report) meaning that the "rump" of a GFRD share having received 0.574.... VTY shares was deemed to be worth

= 886 - 0.574 * 1330 = 123p

Whereas the Stocko figures using 1381 give

886 - 0.574 * 1381 = 93p

Until checking back to my own data, I hadn’t realised that the actual 2-Jan close for VTY was 1381 hence my original puzzlement.

So the VTY price history has been adjusted too. Why?

Because , there was an issue of “bonus shares” to existing shareholders in lieu of a special dividend that was due to be paid. The bonus shares also effectively transacted over-night 2nd/3rd Jan.

The adjustment from 1381 (actual close) to 1330 adjusted simply reflects the dilution of issuing the bonus shares for “free”. Looked at another way you can say that 1381 reflects the cum-rights price and 1330 the ex-rights price.

At the very least I would say this sequence of events is extremely unusual - perhaps even unprecedented (?) so issues about correct adjustments probably should not be that surprising.

So which figure is “correct”?

Conventionally you would make an adjustment for an event based on the actual closing price immediately before the event. This is what Stocko and others have done, so it looks correct.

However, although the issue of the bonus shares to existing holders and the acquisition shares to GFRD shareholders effectively happened simultaneously, there is actually a precedence.

Effectively the bonus shares were issued before the acquisition shares, or put another way the 0.574.. x shares received by GFRD were “ex-rights” so “worth” 1330 and not 1381.

So personally I am still of the view that the idea that GFRD are up from 93p to 157p since before the disposal is misleading and that 123p to 157p is nearer to the mark. In fact even my lower 28% dramatically overstates the real life impact.

Owners of GFRD on the 2^nd of Jan had a value of 886p per share

They now have GFRD at 157.7p plus 0.574 VTY shares worth 737.6p for a total of 895.3p (a 1% gain)

It is “interesting”(*) to look at what has actually happened

[* Other definitions of “interesting” are available.]

Here is a comparison of performance of the Adjusted GFRD share price (using my view of the 2^nd Jan position) [the blue line] and the “real money” position of owning 0.574 Vistry (LON:VTY) shares per Galliford Try Holdings (LON:GFRD) share post completion [the stacked area chart].

The “adjusted share-price” (even on my calculation) paints a more positive picture than the reality experienced by Galliford Try Holdings (LON:GFRD) shareholders.

Aside from a small wobble, the gap occurred at the time of the transaction itself, so there was no real opportunity to avoid this by selling the Vistry (LON:VTY) shares and reinvesting in Galliford Try Holdings (LON:GFRD) .

The following might be total nonsense, but

I’m trying to understand what this "means" (possibly nothing).

The 3^rd Jan closing price for GFRD of 165.86p compared with 886p on 2^nd Jan and the implied adjust GFRD price for 2-Jan implies (I think) that the market is judging that GFRD received c. 5% more for the business disposed of than it was worth. In reality GFRD shareholders have not benefited from this so far because their payment was in shares of the company that "overpaid".

With hindsight this should probably not be a surprise. Unless buying distressed assets, acquirers always overpay vs. the stand-alone value of the business acquired. This does not necessarily make it a ‘bad’ acquisition – the real question is how the amount “paid” for the acquisition compares with the value added to the business post integration and synergies.

It will be interesting [* same caveat applies) to see how this pans out through the year.

I actually have little interest in either share at the moment, so may well forget; but if there is anyone that had the stamina to make it this far through the post that would like to see the comparison revisited – please feel free to prompt me a quarter (or even month) ends.

Ed told me that he “hadn’t been as deep in the weeds on this situation as I had” – I think I have gone way beyond the weeds, to the extent that I now have no idea which continent I’m on – given the above paragraph I have to conclude that I have invented an entirely new OCD-niche.

Thank you and good night.

Effortless Cool

Omitting dividends from the returns makes this competition a bit of a nonsense in my view.

This opinions is definitely not affected by the fact that I currently find myself in 1,921st place.

Gromley -

Well done for producing such a comprehensive dissertation on the Galliford Try Holdings (LON:GFRD) situation.

At least it wasn't made even worse by a share consolidation. I have held Whitbread (LON:WTB) through many disposals including pubs and David Lloyd Leisure and each time there was a return to shareholders and shares were adjusted to make graphs look continuous. My shares, which started with a standard nominal value now have one of 76 and 122/153 rds p. At the end of the day it makes no difference to me - I do a simple "total return" a/c based on bid price x number of shares minus broker's fee plus dividends minus purchase price. Only when it is a competition do we get so excited about % to be used as a comparison.

On which subject, the leaders for the first week had all chosen Lekoil (LON:LEK) . Now you could not make this up: on the 2nd the company announced a funding deal causing the massive rise in share price. Today, following a brief suspension, it announced:

"....the loan agreement announced on 2 January 2020 by the Company, purportedly with the Qatar Investment Authority ("QIA") (the "Facility Agreement" or the "Transaction") seems to have been entered into by the Company with individuals who have constructed a complex facade in order to masquerade as representatives of the QIA (the "Counterparties")."

see https://www.stockopedia.com/sh...

Can you imagine the outcry if the first announcement had been made just before the end of the competition and the second after the announcement of the winner, who had include this share!

I have discovered that entries are updated in the evening regarding share price but overnight regarding position so 5th place allen Walkey' is shown as --0.8% year to date (+30.1% as of the last close) because Lekoil is now -46.2%.

So what is now propping up the leaders?
https://www.stockopedia.com/sh... up 142.4%
https://www.stockopedia.com/sh... up 160.9%
and our old friend $RENN which Ed acknowledged was wrong - corrected on stock report but not here.

I have lost the will to investigate Hcell and Trillium - will leave that to someone else.

kelper

15th Jan '20

So ... my picks page shows a 1.6% gain ... but, if I go to the leaderboard and look at the 1.6'ers ... my 'folio name doesn't appear. To save endless searching ... would it not be possible to have your current rank shown on your portfolio page?

Thats a good suggestion, I think it shows the % at the last close, not sure when that is seems to be after midnight and before 8am. The current % is the latest share price, not sure if thats bid or last trade or what, probably 20 minute delay as well. The annoying thing with Stockopedia prices is it says up or down, even if the share price has not changed, because they are based on the last trade. My position at the moment seems correct.

Another suggestion is on the Top picks to have % gain or loss since inception of the competition and maybe the daily % gain/loss.

michael peters

16th Jan '20

I signed up for it. Where do I find the current placings etc? Or indeed any information on it? Thanks

There is a link near the top of this article but you can try this one: https://www.stockopedia.com/challenge/

17th Jan '20

Thanks herbie47

jonesj

23rd Jan '20

How do I unpin this ? Might be fun to check up in 6 and 12 months.

HumourMe

17th Mar '20

If you have a positive % to date, you currently get into the top 50. As most picks have been adversely affected by Corona, after examination, I suspect the current leader may be a beneficiary.

2101 entries are currently suffering under the Bear.

Stockopedia 2020 challenge - ENTER before midnight 31st December.

The competition itself can be found here

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