April was also a very busy month. As it represents both the end (5th April) and the beginning (6th April) of a tax year there is some work to do in both years in ensuring the best tax efficiency.
It is also a quarter end with a lot of companies reporting their results to March. In volatile times like these large moves can and did occur and I like buying on both good results or what I consider to be market mispricings following these results.
On top of these I have been revaluing almost everything I own, just to recheck the thesis and reset my valuation points. I have also spent some time listening to Aswath Damodoran and considering what I need to change in my approach in light of his education.
Sales during the month were;
Air Partner - This was a forced sale on a takeover. I think the buyers got a bargain, but I made about 47% for not a long holding. I had been in AIR before and had sold as management seemed to be getting way too diverse. But the key businesses had been developing well, and the peripherals dropping down the priority so I had rebought. Sadly this gain was in the last tax year, which I had hoped to avoid.
$Denison - A Uranium miner that I thought was well run, but really did not know well enough. I had to face the reality that it was only being held as a lithium play and that $URNM did this just as well. This with hindsight may not have been my best idea as $URNM has now been restricted from adding for UK investors if held via IG. Gain on DNN was circa 26%
RELX - I did nicely out of RELX (38% gain) but felt it had got to fair value. Plus it was a company where far too many of the numbers are “adjusted” or “underlying” or “EBITDA”. Which are all management’s speak for do not look at what we actually did, look over here at these nicer numbers. So I had lost some confidence in the management. So it was sold as soon as the tax year started.
RQIH - It has a takeover bid in, from a major shareholder. Company had overextended its balance sheet, which is not great for a company in the insurance business. And you have to wonder if there is one mistake, maybe there are two. With over a year till completion I decided to sell and redeploy the cash now. Loss 9%.
Serica - I have done very nicely out of SQZ. (60% gain) However it does seem to be doing a lot of things that mean it will continue to be redeploying cash into the business, rather than too shareholders. Given I prefer FCF to profits I did not see this as being significantly undervalued and sold on results.
Tharisa - A company that on paper should be generating more cash. Increasingly unsure about the management with the results being published and a new tax year having started I took the opportunity to sell. Gain 30%
Treat - Disposed of a third of my holding. Gains in excess of 574% (excl dividends) and I think the company is now overvalued. Rather caught between Pabrai with his run the winners and Damodoran and Klarman with sell once you have the value you perceive.
Zinwald - Small rump holding that go spun out of BCN and needed to go once the gain (25%) was in this tax year.
New Buys - Probably worth mentioning that I prefer EPV over a long term DCF and a large pile of unvalued assets over both of these. Also that I will come back to an existing position and add on new news.
AJOT - Got suggested this Fund on Twitter. Like it a lot. Though it has not been very successful over the last few years in improving its share price. Still it buys into Japanese companies with generally large surplus cash positions with strong positions in decent, usually growing markets. So potential decent upside with low downside. Only an opening (sub 1%) holding at present. Buy price 116.075p
Holders - Again a Twitter suggestion this business is run and controlled by its founder, who is not in the first flush of youth. Looks to be undervalued and I have taken a small holding as I do further research. 112p
JSE - The company has come out with results for last year and a company presentation. Either I do not understand the presentation, or management is lying, or this company is hugely undervalued. Bought at 95.5p
Quarto - A new holding. I think it’s well below valuation and the major shareholder is buying. So I know you should almost never buy on a hope for a takeover, but it does add support to the base investment case. Average in (took a number of buys so this is v illiquid) 174p
Renold - A company that has come back from the pandemic with a decent level of business. Again it seems undervalued to me and I have bought a small holding whilst I do more work. Buy at 27.3p
Riverfront Global - In some ways this is a slightly speculative buy. It looks to be undervalued but the results are out soon so the information is largely out of date. The recent TU was positive but vague. Depending on the results which I hope to see in May this may be a quick in and out if management are not delivering. That being said this is a micro cap and I do like micro caps if management is responsive to shareholders. 1.15p
Adds to existing holdings
Aviva - A small add to an existing holding. More for the future dividend than anything terribly clever. Plus with the recpitalisation occurring next month I will get a chunk of my capital back and still want a decent sized position going forward. Avg in now 377.6p
BATS - Added to the existing holding. Strong dividend and sufficient capital upside to make it interesting. 2911.3p
Capital Drilling - Great results and an investor update where the CEO just kept on coming back to the fact that the current demand was very strong. The main concern about the business seems to continue to be that it is very gold focussed and the current positive cycle will end. The second concern is that it is both both a rig hire co and an investment fund and this dilutes focus. I have written on this before and am persuaded that at the moment these concerns whilst not invalid are not immediate issues. An existing holding I added. Average in 83p
Glencore - GLEN has been prepared to buy into areas that other big miners want to get out of. A buyer with a keen seller often does well. Also I looked at the results and felt that the company remains undervalued so I added. That being said GLEN has done a big loop in the last 10 years and delivered almost no capital gains for shareholders over that time. It needs to be realised that as fund managers greenwash there can be a lack of liquidity for even large well run “non-green” businesses. In the end tobacco stocks had to deliver succulent dividends for years to get back on the capital gains trail. Average in 430.8p
$GOOGL - The Q1 results were in my opinion, quite decent. The bottom line loss was more due to revaluation of investments than any other factor. Clearly not everything is perfect but I felt the big falls on results were overdone so I added to my holding. Average in now $1104.66
$Hallmark Financial - Hallmark remains signifcantly under its NAV. The results for last year show that the company still has much to do but it still has a lot of surplus to do it with. Also this was a small holding and I like on results to either add to small holdings or sell. This given the surplus NAV became an add. Avg in $3.66
IDHC - Had a great year as it benefitted from Covid. Trying to strip Covid out to normalise is not easy. Again results being out puts me wanting to add or reduce as the holding was below 1%. I do like the business model and I do think that once you can offer people a better standard of health care they are reluctant to go back to something less. As such it should retain customers. So I added to my existing holding. Avg in $1.27
$Meta - I started buying Meta in March. Added more before the good results and more after. There is some political risk, but if the business was to be split into its parts it might even benefit in the short term. Avg in now $208.2
$MSFT - Great Q1 results. I added Avg in now $202.91
AU$Pilbara Minerals - It is a lithium play. In a legal market. Not controlled by the Chinese.I am impressed by how management are saying what they are going to do and are then doing it. And there are a number of things they are doing, including setting up product auctions and a JV with POSCO, that could deliver strong future value. I added Avg in now AUD $2.9206
TekCapital - This was an add to an existing holding as the portfolio companies news remains strongly positive and I feel not fully reflected in Tek’s valuation. Sum of the parts does seem to suggest a very decent upside. 27.7p
How this all pans out as to size is shown on the portfolio breakdown in current holdings tab.