As has become clear, my portfolio has undergone a major change from a collection of low price/tangible book, low earning companies to a growing collection of low price/book companies with far better earnings histories.
Using my new approach to valuation (which as ever is mostly stolen from the giants whose shoulders I am trying to stand upon), I found that most of what I owned was already 'overvalued'.
The list of the departed and their annual gains is as follows, some of which I've mentioned before:
| Company | Profit/Loss | Holding Days |
| J. Smart & Co. (Contractors) Plc (LON:SMJ) | 5.2% | 403 |
| MJ Gleeson Group Plc (LON:GLE) | 34.2% | 541 |
| French Connection Group (LON:FCCN) | 15.7% | 639 |
| 600 Group (LON:SIXH) | 4.2% | 682 |
| Northamber (LON:NAR) | 31.2% | 757 |
| Mallett (LON:MAE) | -8.9% | 785 |
| Titon Hldgs (LON:TON) | 47.7% | 812 |
| Averages | 18.5% | 660 |
Even though I've ended up selling these companies outside of my original system (which was to sell when the price/book ratio reached one, or after five years) I am happy, or perhaps lucky, with the average returns.
Currently my valuation method is in a bit of a flux, and there may be some movement beyond what I mentioned before. The basics remain the use of historic ROE and price/book, but the ROE factor it is likely to be some combination of ROE10, 5, 3 and 1, all handily provided by sharelockholmes.
The companies above were re-valued either with ROE10 alone or the averages of the above averages (making averages of averages seems to be a compulsion of mine). Taking the average of the averages gives around a 40% weighting to the current ROE, with gradually less for the prior years. It makes some sense to me and in combination with less strict price/book entry criteria (I will now buy…
