May 2019 Portfolio Update

Unlike April I've had a rather busy month on all fronts in May - so much for sell and go away. To a large degree this activity was stimulated the investor events that I attended. The key one of these was Mello London in Chiswick where I spent a happy two days listening to company presentations and learning from keynote speakers. As usual there was more happening than you could possibly take in (which is a big plus) but I enjoyed catching up with a number of interesting companies and posing questions directly to management - these are often more revealing than the presentations. On top of this Mello had some excellent speakers in the main hall with these ones being the highlight for me: Stephen English - Swiss Army Knife Investing, Judith MacKenzie - Importance of Corporate Governance, Richard Bernstein - Activism and Mark Crossman - Understanding Market Makers. Most of these will have been filmed by piworld and I recommend viewing when they're available.All in all Mello is a top-class event that's only getting better as it matures. I heartily recommend it to any private investor who fancies meeting like-minded individuals that won't fall asleep when you mention a P/E ratio.

Also this month I finally managed to attend the Financial Statements Seminar put on by Graham Neary. While I know my way around a balance sheet I decided to sign up because it's always useful to have a refresher and there are definitely gaps in my knowledge from learning this stuff piecemeal. Let me just say upfront that this was a great decision! It's clear that Graham has put an awful lot of work into this course in order to take you from the absolute basics to some quite sophisticated concepts. For me the really useful part was seeing how different sections in the accounts are interdependent and can only change in a balanced manner. Usefully the course contains lots of examples that you have to work through and this is far more useful than watching slide after slide. Suffice to say I think that this is a great investment and it should definitely pay for itself in the long run (and I'm not even being paid by Graham to say these nice things!).

Now Robbie Burns is not someone that I follow closely but it's hard to avoid the Naked Trader as a well known figure on the investing scene. So when I was given a free copy of his investing book I took the chance to see what he had to say. Now because the book is aimed at absolute novices there's a a fair amount of preamble that is interesting rather than essential. More useful is gaining an insight into his process which is, to me, astonishingly light on analysis and yet undeniably successful. The key seems to be having a strict stop-loss policy, along with the stomach to run winners, which caps his downside exposure while allowing for large gains. This is a key takeaway for me. The other useful chapter is where he goes over 20 different trading strategies. There's no way that anyone should follow all of these but it's useful to be reminded of the different ways in which money can be made - or lost. Definitely worth a read if you get the chance.

A useful tool that Robbie uses is his Naked Trader traffic light system and I'm not ashamed to steal his valuable idea! The principle is that when reading trading updates or financial reports you should highlight positive/negative/neutral words in different colours. The big win here isn't so much that you know where the key paragraphs are located, although that's useful, it's more that you get a very good overall feel for the tone of the commentary when skimming over the text. If there's lots of red then there are problems galore while a sea of green indicates positive things happening in all parts of the business. While Robbie uses ADVFN to do this I've gone with a different tool - a chrome plugin called Highlight This!. It's very easy to add word lists which get flagged in different colours and I'm finding that I find new word variations to add with almost every RNS.


Burford Capital Bought at 1637p - May 19

While Burford hasn't put out any more news since its final results in March I've noticed (it's pretty obvious really) that the share price has been very range-bound. For most of the year the price has oscillated between 1550-1650 up to 1860 and back again. In my view this suggests that investors are waiting for a catalyst to force the price upwards, before buying heavily, while also trying not to get caught out and thus buying at the low points. Since I believe that the long-term picture for Burford is positive I decided to increase my position at somewhere around the bottom of the channel. In doing this I've taken advantage of the bearish research note put out by Canaccord recently where this lays into the company's ROIC calculations and ability to fund cases in full without further capital raising. I have some sympathy with the note but don't believe that the investment proposition is damaged as a result - it's just slightly more clear that we'll see volatility in revenue/profit and that's been known for a while.

Beeks Financial Bought at 106p - May 19

I've held Beeks for the best part of a year now and I suppose that it's been a somewhat frustrating investment. The main reason for this is that back in February the FY forecast was reduced due to increased IT investment and an unexpected lengthening in the sales cycle with Tier 1 clients. At the time I took the view that these were essentially growth/timing problems rather than anything more sinister although an H2 weighting is always a worry. So I was keen to see Gordon McArthur, CEO, present at Mello in Chiswick. I wasn't expecting to hear new, price-sensitive information (since this a legal no-no) but I did want to see his body language and how he presented their situation at the moment. Happily he seemed confident that they would pick up another Tier 1 client soon and that their services remain in demand (hence ongoing expansion). It was also useful to know that they've replaced their Tier 1 salesman with someone more effective which bodes well for the future. So I've doubled my position to reflect my confidence here.

Craneware Bought at 2998p - May 19

I've been interested in this healthcare software company for quite a while (recognising its amazing quality metrics) but it's always been so highly rated. However when the shares fell back to £21.50 in January I figured that I was about to get my entry point - if only the price could dip just a little more to £20. Of course it didn't and I took my eye off of the ball. Bit silly really with the shares now at £30. Anyway I saw a post the other day suggesting that Craneware might be about to break out and while I'm no chartist I can recognise a build up of momentum when I see it. In addition I know that Keith Ashworth-Lord's Buffettology fund is a large holder (it's their 6th largest position) and he's dealing with massive inflows at the moment - which makes him a likely buyer on any falls. As a result I swallowed my pride and took a starter position today. Better late than never.

Strix Group Bought at 158p - May 19

Floated recently, in August 2017, I shied away from investing here due to low growth forecasts for the next two years. However Strix has remained on my radar and I've taken the time to read the IPO prospectus (and reports since then) in some depth. This has revealed, I think, that management are taking the opportunity to grow the business now that they're free of their private equity yoke and its demand on cash-flow. One element of this is that they've started the process of constructing a new factory to expand operations - which suggests to me that directors are confident about future demand. Actually this is a key trigger which Robbie Burns looks at so I've learnt something from his book! In addition they've just appointed Harry Kyriacou, as Chief Commercial Officer, with a remit to focus on global growth and development. Finally there's the move into water filtration, with HaloSource and Aqua Optima, which feels complementary to the kettle sector. Add on high margins, cash generation and yield to a recovering share price and I see a good medium-term opportunity here.

IG Design: Bought at 584p - May 19

Following their FY trading update in April I've been meaning to replicate an interesting "back of the envelope" calculation performed by fellow investor Stock Whittler. If you look for IGR in his blog you'll see how he's been tracking public statements on sales and how he concludes that analyst estimates are behind the curve. This style of analysis is not something that I've done before but I'm aware of the limitations of historical numbers and the principle of trying to look ahead makes a lot of sense to me. So I've taken the time to replicate his working out and broadly speaking I agree with his numbers - except that I see IGR heading towards FY revenue of almost £449m which is 5.5% above the consensus forecast. In addition profit margins are improving which suggests to me that the company could beat expectations when they report on June 11th. Hence, with the price a little weak (5% down) after hitting an ATH of 613p earlier this month, I've gone for a cheeky purchase to make this a medium size holding.

Things I thought about buying (but didn't)

ZOO Digital:

First thing on Thursday, at Mello, I managed to catch Stuart Green in action. The bulk of his presentation centred on dubbing and subbing which makes sense given that they are ZOO's technical edge. From the software angle they're continuing to perfect their solution and are confident enough in the output that they will pay for studio dubbing and challenge potential customers to determine which is which. There's also no doubt that the amount of content put out by studios continues to mushroom and they are looking for a quick turnaround (which is much more important than price). However these studios are fully in control and they determine exactly which vendors will get their business and there's plenty of competition here for ZOO. So I'm concerned that it's going to take longer than expected for ZOO to gain traction (and become sustainably profitable) and that they are going to be subject to lumpy earnings for quite some time. For this reason I'm happy to stay out of ZOO while they spend a few years maturing.


This has always seemed like a quality business with solid earnings growth for a number of years. However it's amply rated, on a P/E ratio above 30, and so I've never been tempted to take a position. Nevertheless the presentation at Mello showed me one good reason for future confidence: the board have been investing heavily, for a number of years, in new plant sufficient to grow capacity 60% by 2020. In addition some of this capacity is in the US and Poland which means that they'll both avoid potential tariffs and cut high shipping costs. With a focus on their high-margin, high-performance product and a reduction in capex they could be on the verge of explosive earnings growth. On the other hand they have a different product, MuCell, which is something of a problem child in that it should produce profits in the long run (given a 10-12 year royalty agreement) but this day never quite arrives. As a result I remain impressed by Zotefoams but the rating is just too rich for me.

Judges Scientific:

Buy and build companies have something of a bad reputation with investors as merger accounting can hide a vast range of sins being committed by poor management. However done well sector consolidation can be an excellent way to grow a business and David Cicurel, CEO, has proved adept in this regard at Judges. The reason for this, I believe, is his unwavering focus on buying good businesses at a reasonable multiple (3-6x EV/EBITDA) where they have EBITDA margins up to 25% and good cash generation. By sticking to this formula he's managed to pay off debt quickly, maintain ROCE (due to low capital use) and create an awful lot of shareholder value (which makes sense given that he owns ~12% of the company). However it's fair to say that David is no spring chicken, being almost 70, and while he has no plans to retire I do wonder what will happen without his leadership. There are some internal candidates to take over and the arrival of a newish COO from Halma (which is a much bigger buy and build outfit) is obviously a good thing. The only problem is that Judges does run into problems every few years and it feels sensible to wait until everyone is pessimistic rather than jumping in at the current peak of optimism!

Anexo Group:

I hadn't planned on seeing Anexo at Mello but I was at a loose end and their Stockopedia report looked surprisingly attractive. Now this is a new float (less than a year) and the business model is somewhat unusual. The group is a credit hire and legal services affair but, more specifically, they provide replacement vehicles to people after a no-fault accident and look to reclaim their fees from insurers. They do almost no personal injury, which is a good thing, but they do only take on impecunious clients - which means those drivers who can barely afford a car and certainly can't afford to fix it and hire a replacement. The reason for this is that insurers for the accident-causing driver usually pay up because there's no point in going to court against someone with no money. Apparently this happens 99.5% of the time! The only problem is that this process takes an average of 550 days although Anexo have only had to pay for the garage costs - the bulk of their average claim for £10800 comes from hire fees (which is also why they actually receive only £6000 on average in settlement). On top of this cash-flow constraint Anexo have to maintain a fleet of cars and motorbikes/mopeds although only the latter are owned outright as the cars are all on contract. One can imagine that these vehicles take a beating and so I hope that the depreciation rates here are very aggressive! Anyway the business sounds like it could be cash-cow in the long run but I'm not interested due to the short track-record and risk of the company running out of cash if insurers start to dig their heels in.

The Panoply:

Another company which I'd never have seen, were it not for Mello, is The Panoply given that they only floated in December. Nevertheless as a buy and build operation (another one!) in the technology sector my interest was piqued enough to give them some time. In CEO Neal Ghandi's words this is an innovation and digitally native services company working to transform a wide range of organisations. What this means is that they are partnering or acquiring other technology firms and then collaborating with them to win clients. Curiously these smaller firms are left to operate independently with no focus on combining them or looking for synergy benefits (which I find a little strange). However Neal seems to think that they'll act something like a murmuration of swallows with each company naturally coordinating with everyone else despite there being no controlling mind. I must admit that I find this all a bit blue sky for my tastes, and I find it hard to see how The Panoply are going to change the world, but what do I know. Apparently Neal has a very successful track-record in this area, and it's possible that they'll live up to their corporate values of being creative, entrepreneurial, ego-free and conscious, but I'm afraid that they'll have to do it without me.

Water Intelligence:

The final company that I saw at Mello was Water Intelligence on the basis that this might be another US company somewhat over-looked on AIM (like Somero Enterprises) but no - the forward P/E is over 30. Still, as slickly explained by CEO Patrick DeSouza, they're a fast growing company in a very large market space. The key to their growth is that they help clients to identify and fix leaks in both water and sewage pipes without a lot of expensive disruption. This is doubly attractive in that huge amounts of water (and waste) are lost every day due to dodgy piping and fixing these leaks is highly destructive. Around this core service Patrick described their efforts to build a platform offering end-to-end solutions from the point of detection to cleaning contaminated water. The theory here is that once you've captured your client (the expensive part) then it's easy to retain them by offering multiple attractive services. Listening to Patrick it's clear that they're expanding globally, taking on business at a rate of knots and providing a number of unique products (whether in partnership or through acquisition). However I couldn't help feeling sold to in this presentation (which may be down to the lack of hard numbers) and there's something niggling at me about whether this is too good to be true. There's nothing that I can put my finger on though and I'm probably just being over-cautious. Still I think that I'll stay out of this opportunity.

Shoe Zone:

This specialist, discount retailer has been on my radar as a quality company for some time. However with their HY results today I think that I've had a lucky escape. In fact I became quite tempted by them at Mello but terrible liquidity meant that I couldn't purchase in any meaningful size. Looking at the interims I can see why investors are a little disappointed. Profits are essentially flat, despite an improvement in gross margin, due to a fall in sales and the dividend is flat. Also online sales growth is low at 5% although these sales provided £1.5m of profits to offset the loss from high street stores. Still Shoe Zone never makes much money in H1 and the second-half is where the business needs to do well (although I don't understand this seasonality at all). It sounds as though the board are expanding sensibly and managing costs but the fact remains that analyst forecasts are for an 8% drop in EPS to 17.6p and right now the business is only trading in-line with these expectations. I'll need to see much more positive trading to overcome my dislike of the low free float here.


Focusrite: Sold at 508p - May 19 - 45.4% gain

From the get go I should say that I rate Focusrite as a high quality business with a dependable niche in high-end audio equipment. However this seems to be common knowledge amongst investors since the shares are on a high P/E rating of ~27 despite single-digit growth forecast for the next few years. That said the company has historically surprised on the upside compared to expectations and that was enough to keep me invested - until now. With Donald Trump's recent tweets stoking the trade war with China, promising a 25% tariff across the board, I was reminded of Focusrite's recent results and the damage that lower tariffs have already had. Essentially US sales went backwards and margins were artificially boosted by early price increases. While the board have some plans to move production out of China this is all at an early stage and thus I see them as particularly vulnerable right now. Combined with the difficulty that I had liquidating even my moderate position I feel that I'd rather be on the sidelines right now while the politics works itself out.

Portmeirion Group: Sold at 914p - May 19 - 22.8% loss

In general my practice is to sell shares when they warn on profits unless there's a specific reason holding back profits in the short-term. Unfortunately with Portmeirion today that doesn't appear to be the case. It's not clear what's gone so wrong that profits will be significantly below market expectations and so I don't know what needs to be fixed. Unfortunately there's not a lot of liquidity in this share and the price dropped hugely in just the few minutes after the market opened. Even so I liquidated my position and the share will have to get a whole lot cheaper before I'll be inclined to re-invest. One point to note is that having listened to Mark Crossman at Mello I now have a better understanding of how market makers behave when a profit warning happens - which is that they'll keep dropping the price until the first buyer arrives and then they'll try and balance supply and demand. So in future I won't be selling early doors but will try and wait until the afternoon when the price should have settled down.

Bloomsbury: Sold at 228p - May 19 - 4.8% loss

After skimming over Bloomsbury's recent results, and having my antennae tweaked by earnings adjustments which I deemed suspect, I spent a bit of time reviewing the investment case. Looking back to last year the key attractions for me were decent quality metrics, reasonable value and a trading statement indicating that results for FY19 would be well ahead of expectations. Well the latter bit came true, if you take the adjusted value, and current forecasts point to a 10% rise in EPS this year. However I don't think that the quality of these earnings is all that I thought it might be with ROCE sitting at ~8% and a single-digit operating margin. So I've taken the opportunity to re-invest these funds in a higher-quality company.

XP Power: Sold at 2350p - May 19 - 8.9% gain

As mentioned earlier I've been replicating some of StockWhittler's analysis and his notes on XPP have motivated me to check the investment case. The key point is that XPP provide quarterly sales figures and back in 2017 these demonstrated healthy sales growth of 20-40% while in 2018 this fell back to 15-20% despite contributions from a couple of acquisitions (Comdel and Glassman). Sadly this trend has continued into Q1 this year with total sales flat and down almost 6% if you exclude acquisitions. Management remain confident of hitting analyst expectations for the year but I'm not so sure. These require XPP to do £204m in total sales but if you take off the £47m made in Q1 that leaves each successive quarter needing to bring in well over £51m - which is quite some jump. So, like StockWhittler, I see potential for trouble as the trade wars rumble on. In addition I had real trouble selling my slightly overweight holding here and couldn't obtain an online quote for love nor money. So I put on a limit trade instead and watched the price go precisely nowhere for a few days before it jumped just above my price, last thing on Friday, before immediately falling back. Quite strange but perhaps a market maker needed to balance his books?

Things I thought about selling (but didn't)



Palace Capital: This has been in my portfolio, as an income stock, for many years and recently the board have stepped up their activity level. For example, not that long ago they acquired the Warren portfolio and this came with a number of residential units; these have largely been sold on. Then there's the large Hudson Quarter development in York which is in progress; Palace have secured a £26.5m facility on very competitive terms which puts the project on a firm footing. Finally this is all happening with conservative gearing of only 33%; this means that they retain scope to take advantage of opportunities that may arise. Despite this the share price is at a hefty 33% discount to the NAV of ~421p which, to me, seems disproportionate to the risk of regional, non-residential property collapsing in the near future. The only negative is that profits for the year will be slightly less than forecast as they've held back on letting some vacant space but if they can add meaningful value by this action then I'm happy to go along with their decision. (Update)

Portmeirion Group: Kicker of an update here with mixed performance across all international markets. South Korea is singled out as being particularly poor but this isn't the whole picture. The reason I say this is that both the UK and US (the largest markets) are up and South Korea provides less than 10% of sales. So it's just not possible for this territory to reduce total sales by ~10% and ensure that PBT will be significantly below expectations. Something else is going on here and the board aren't telling us what. In addition the board mention that dividend payments are safe for the current year but what about the future? I really don't like the lack of information in this update and, as a result, have sold out. (Update)

3i Group: Good results from this private equity investment fund with NAV per share up 12.5% to 815p. What's interesting is that PE and infrastructure investments remain in high demand and so 3i were net sellers over the year with a number of assets sold at attractive valuations. This buoyancy is a double-edged sword though as the company is finding it hard to locate new investments at a reasonable price. Still I'd rather have the board remain disciplined than the reverse and I'm happy with them retaining fire-power for future opportunities. Looking at the remaining holdings Action, the largest, grew EBITDA by 16% despite supply chain issues and challenges in the retail sector. Also impressive was the return from 3iN, the listed infrastructure fund, where the share price rose 29% to 275p. Here again management have been active as they move away from assets with higher regulatory risk and realise solid gains. Looking forwards the 2019 environment looks much like 2018 with ongoing macro uncertainty and demand for private assets as a safe haven. Given how well management have navigated these waters so far I'm sure that they'll continue to steer a sensible path. (Results)

Softcat: This leading UK provider of IT infrastructure products and services has been on a roll this year with a number of excellent trading updates. First came "materially ahead" in January, then "marginally ahead" in March and now we have "slightly ahead". Perhaps this is the polar opposite of getting three profit warnings? Either way the company has seen strong growth across all income and profit measures and is performing well in all business areas. You can see why the shares have risen over 50% this year in anticipation for excellent FY results. There's some well-founded optimism here. (Update)

Bloomsbury Publishing: With these FY results there's something of a mismatch between the numbers and the narrative. Looking at the analyst expectations these were for sales of £162.6m, net profit of £11m and EPS of 14.3p. In fact while the top-line was spot on we have profits undershooting at £9.2m and 12.3p. That's a pretty sizeable gap (almost 15%) and I'm quite surprised that the shares only fell 3% today. The reason for this difference is that adjustments for amortisation of intangible assets (£1.7m) and other costs (£0.6m) boosted earnings by £2.3m. While I can accept the intangible adjustment the latter just happens to improve earnings by 5% which is enough to go from a marginal miss to an ahead of expectations result! Be that as it may the business is going pretty well with non-consumer sales up 7% and consumer sales marginally down by a few percent (after a strong Harry Potter performance in 2018). On the whole I think that the business is moving in the right direction (especially with their digital resource strategy) but I do question whether the overall performance is good enough to deserve a £2.3m bonus for management (unchanged from 2018). This is a hefty chunk of profits and deserves investigation. (Results)

Watkin Jones: I see these construction specialists as a very steady earner given that they pre-sell so much of their development and thus have an easily modelled sales profile. So it's a bit of a surprise to see analysts forecasting a meagre 2% rise in profits for FY19, from sales up 8%, when the HY income profile is so different. In these results revenue growth is flat while profit is up a healthy 8% to £26m (or an EPS of 8.1p). The main reason for this is that gross margin is up to 23.7% (from 21.8%) due to an increase in premium student accommodation under development along with Build to Rent (BtR) margin being ahead of expectations. I'm certainly happy with the diversification that Watkin Jones is undertaking and it seems that transaction volumes in BtR are ramping up at the moment. In addition I think that the board really delivered in bringing the new CEO, Richard Simpson, on board as his background with Unite is an excellent fit. While there's an exceptional charge of £2.6m required to compensate him for lost incentives I'm glad that this didn't act to block the deal. It'll be interesting to see where he takes the company next. (Results)

Henry Boot: Expectations for Henry Boot are pretty muted with a rise of just 2% in EPS forecast for the year. So it's pleasing that the board expect to make these numbers (albeit they're only 5 months into the year). More usefully their strategic land business is trading nicely with land sales and planning permissions running along nicely. At the same time their development arm is due to hand over The Event Complex Aberdeen (a large project) both on time and within the cost plan this year. While Boot may not be the most exciting company the way I look at it is that they're a well-run, low-debt, diversified developer on a P/E multiple of less than 9 which pays a decent dividend. I've seen worse situations. (Update)

Strix: Recent purchase here and this in-line AGM statement is just fine. As expected they've moving forward on their new factory by signing a land purchase agreement. To my mind this suggests that the board are very optimistic about future growth. Quite possibly their previous PE owners were holding back growth by sucking too much cash out of the company and without this constraint the directors are very motivated to drive expansion? Let's hope so. (Update)

Hollywood Bowl: Entering the portfolio last May I see Hollywood Bowl as a high-quality play on the tendency of people to seek lower-cost, local entertainment as the economy stumbles along. With these interims this theory seems to be playing out with centres being opened, and refurbished, together with a small move into mini-golf. At the same time debt has reduced by a quarter to a negligible £5.3m which suggests the BOWL is entirely able to support its capex programme while reducing leverage and paying a decent dividend. Looking at earnings a 5.3% increase in sales translated into EPS up 13.6% with the difference down to a 1.6% improvement in PBT margin to 24.5% (as costs have remained well controlled). The results have also been well received by investors with the share price just breaking out to a new ATH. Feels pretty positive to me. (Results)

NewRiver REIT: The share price action leading into these results suggested that they could be pretty dire and honestly they're not that great. The EPRA NAV has fallen 6.4% to 261p with the discount to NAV reducing from 26% to 17%. While this is still a fair gap it does mean that NRR is just, on an asset basis, somewhat cheap rather than very cheap. At the same time various measures of cash-flow (or Funds From Operations) are down by around 10% to the 18.5p level which means that the dividend of 21.6p is uncovered. Still this does make the current yield around 10% and I think that this (along with already negative expectations) is the reason why the share price hasn't fallen much. Set against all of this is the operational skill of the management in that they have created a portfolio that isn't exposed to department stores or casual dining while, at the same time, refinancing the debt load last year such that it is now entirely unsecured. There are the forward-thinking actions of management operating in a challenging sector. So I am faced with a dilemma here. I think that the retail sector will remain weak in the short-term, although we must be heading towards the nadir surely, and catalysts for a share price rise will remain elusive. At the same time I rate the management, a 10% yield is attractive and in the long term I see them as a sector winner. I could be talking myself into topping up! (Results)

Bodycote: Here's another one of those long-term, high-quality companies that I see as temporarily pausing for breath as it grows. At the moment trading is a story of two halves. On one hand aerospace and defence revenues have grown 15%, over the first 4 months, while automotive sales have retraced 4% as lower production volumes in Europe have reduced demand. General industrial sales are also down 6% as developed markets suffer from soft customer optimism. Definitely a mixed update but the company has £31m cash on the balance sheet and enough confidence to pay a 20p special dividend shortly; both suggest that Bodycote is in robust shape and ready to benefit from any one of their markets putting in a recovery. Unsurprisingly the overall update remains in-line with expectations (for flat profits compared to 2018) but it'll be interesting to see how this develops over the year. (Update)

End of month summary

It feels as though it's been a very choppy month with geopolitics pushing stock markets all over the place. Not that this makes any difference to my investing approach, of course, but it does add a lot of background noise to my portfolio valuation. By the looks of it SimplyBiz has been very much in favour, after announcing its acquisition of Defaqto, while Keywords, PPH and Robert Walters are all recovering from recent share price weakness. On the downside it's no surprise that the property REITs are down again, along with Henry Boot, but I'm surprised to see Bodycote falling almost 10%. Perhaps investors are worried about Brexit or US tariffs hitting exports? Just a guess though as I generally don't try and second-guess what other people are thinking.

Winning positions for the month: SBIZ 19%, KWS 10%, PPH 10%, RWA 9%, GAMA 9%, GAW 7%, ADT 6%, RM 5%, HAT 5%, BPM 5%, SOM 3%, BUR 2%

Losing positions for the month: DOTD -1%, RFX -1%, III -2%, FDM -2%, LTG -2%, IGR -3%, WJG -4%, BOWL -4%, PAGE -5%, K3C -8%, NRR -8%, BOY -9%, PCA -10%, BOOT -13%

It's no surprise to see my return being 1.3% for the month, and 17.0% for the year so far, given the balance of winners and losers. With luck this sort of steady progress will continue but who really knows - there are more than enough economic and political problems around which could derail stock markets that's for sure. In light of this uncertainty I'm now up to around 15% cash and plan to increase this up to ~20% over the next few months. This feels rather prudent given my healthy performance to date and a general sense that other investors are feeling rather optimistic at the moment.

Disclaimer: the author holds, or used to hold, all of the shares discussed here

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