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Paul Scott
Small Cap Value Report - MKS, SHOE, HEAD

Good morning, it's Paul here with Monday's SCVR.

Please see the article header for the companies I'll be reviewing today, which have issued trading updates or results.

Hammerson (LON:HMSO)

Share price: 58.3p (down 9% today, at 10:45)
No. shares: 766.3m
Market cap: £446.8m

Ed Croft
Top Stocks for 2020 - on doubling your money in five years

It's quite surprising that it's already been 5 years since the start of the NAPS Portfolio. I remember being in Australia at the time of its inception and, as ever, feeling really anxious that markets were a bit hairy and had already had a good run. Well now, 5 years later, they've continued to have a good run and I'm still feeling anxious. I guess anxiety is a good thing - bull markets are built on walls of worry after all.

Well I'm delighted to report that the NAPS Portfolio has doubled over this time period - a 102% return at the close, which is 15% annualised. To be fair, I haven't factored in transaction costs, but the average dividend yield over this period has been about 3.5% which more than covers stamp duty (<0.5%), bid-ask spreads (<2%) and platform & dealing fees.

It's been a bit of a bumpy ride over the last couple of years, and I'll go into this in a bit more detail shortly, but you can see the five year performance of the NAPS (in blue) versus the FTSE All Share Index (in grey) which managed only 20% over the same time period.

Ben Hobson
A strategy for finding high quality companies in the stock market

Owning shares in high quality companies with the power to protect their valuable cashflows from competition is an investment strategy that intuitively makes sense. It’s an approach that has the fingerprints of successful investors like Terry Smith and Nick Train all over it. But how do you find these shares, and can they offer any protection from the kind of wild volatility we’ve seen this year?

Quality is an all-weather factor that crops up in strategies of all stripes. Value investors, for instance, often rely on company quality as the catalyst that will sooner-or-later trigger a price re-rating. Momentum investors, meanwhile, often view

Jack Brumby
Hunting for compounders - Sopheon

Buffett calls the distinction between value and growth ‘fuzzy thinking’ because expected growth is a component of value.

If you think of a stock’s intrinsic value as its future cash flows discounted back to the present day at an appropriate rate - tricky to do in practice, but conceptually sound - then some cash-generative, high ROI stocks on a forecast PE of 50x are in fact cheap and undervalued.

It’s just that much of the value resides in future cash flows driven by present day investment. This future growth is hard to account for but that creates opportunities. Things seem expensive when they are in fact cheap.

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Paul Scott and Jack Brumby write The Small Cap Value Report on Stockopedia
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Ed Croft

Stockopedia Founder and creator of the StockRanks & popular, factor-driven NAPS model portfolio. Ed was an Oxford Scholar, graduating with first class honours before going on to work as an asset manager and private client broker at Goldman Sachs.

Ben Hobson

Editor with 20 years of experience of writing on all areas of investment, ranging from strategies to portfolio management and investor psychology. He's interviewed some of the most influential investors in the world.

Paul Scott

Co-author of the popular daily Small Cap Value Report. Paul trained as an accountant and was an FD before devoting all his time to the stock market in 2002. His investing journey has been a huge inspiration to many others and his market commentary is a must-read.

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Investment Writer and CFA Level 2 Candidate. Jack writes about stocks, strategies and markets, and how investors can find an edge by ignoring market noise and taking a data-driven approach to equity investing.

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