Monevator share write-ups review

I have written about several specific company’s shares here on Monevator over the past few months, and I thought it would be interesting to see what’s happened to them.

To do this properly, one would compare not only the price when I looked at them with the price today, but also the market move over that time.

It would also be good to look at the company newsflow and any financial results in the interim.

I don’t intend to do that. This is my personal blog, that doesn’t pay, and I’ve M&S sticky toffee pudding to tuck into.

These then are just my quick impressions of how accurate or otherwise my initial thoughts turned out, and an indication of how I traded them where applicable.

Important points:

• Most of my stock market money is in index tracker funds, and yours probably should be to.
• The shares discussed on Monevator are only a subset of the stocks I invest in or reject.
• In real-life (i.e. not the world of blogging articles) it can be better to ignore your portfolio for months at a time.
• I’ve not re-read the original posts, so apologies for inconsistencies. (All originals are linked to below).
• My write-ups are not share tips, they are meant for your interest and entertainment and my own amusement.
• I definitely do not undertake to track anything I write about, or to tell you when I buy or sell – please read my disclaimer. Think of these reports like articles about a football game, not as investment advice! They are also out-of-date the moment they’re published.

Okay, enough of all that. How have they fared?

Clapham House Group (CPH)

I looked into Clapham House Group in November 2008 and was worried about debt facilities that needed to be renewed.

After the bank facilities were rolled over, the shares moved sharply upwards (partly on takeover speculation, too) and I bought Clapham House in December, paying, as I said at the time, a heady 93p a share.

That turned out to be a high point for the shares.

The bid rumours fizzled away and the company wrote down the value of its acquired Tootsies restaurants by £20-odd million. Somewhere along the way I averaged down, paying about 76p from memory.

The shares are now 68p. I remain a big fan of the Gourmet Burger Kitchen (GBK) franchise, and believe that if the management hadn’t mucked about with all these other brands the company would be in a much better place.

Mentally I’d set a Tootsies’ sale against Clapham’s debt, but with the writedown that prospect has probably gone.

I should probably sell, or at least split the holding into Carluccio’s, another restaurant brand I like very much that has net cash. But I continue to believe GBK has legs, and that at least new GBK sites must be easier to find now.

Blinkx (BLNX)

This video search specialist is a spin-off of FTSE 100 listed Autonomy, a company I greatly admire and wish everyone else loathed so I could get it cheap.

But Blinx is a very different kettle of chips. Autonomy sells software to corporations. Blinkx is trying to monetize video search.

I thought Blinkx shares looked unattractive at 19.25p in November. The shares did indeed fall below 10p, before some partnerships puffed the shares back up above 20p for a few hours days.

They’re now 13.5p. Note I haven’t properly looked at the company since my initial write-up.

Prodesse (PRD)

I bought shares in the Prodesse investment trust that invests in high-quality U.S. mortgage backed securities before publishing my post, paying 275p a share.

They promptly fell to 235p.

An even bigger bargain! I bought some more, as per my update to my original post judging the markdown was due to them being dropped by index funds.

Investing in mortgages sounded crazy, but the U.S. government had effectively underwritten the AAA market Prodesse invested in, so barring Armageddon I saw this as fear overwhelming common sense.

Happily, the shares moved steadily back up above my buying prices.

I sold the lot at the end of April for 371p and rolled the money back into my core FTSE 100 ETF.

That sounds good but they went as high as 485p!

They’ve since dropped back to 415p. I don’t know why, as I haven’t followed them since.

RIT Capital Partners (RCP)

When I wrote-up in January 2009 my investment in the Rothschilds’ investment vehicle, RIT Capital Partners, I particularly stressed the diversification aspects of this long-term performer.

I also liked investing with an old wealthy family, compared to the likes of Madoff, who was then in the news.

My buying prices have ranged between £8-10. Currently the overall position is showing a small loss, though last week I was in profit.

I’m fairly happy with my RCP investment, but I do wonder if I’ve done the classic thing of investing in a stable performer after the horse has bolted. I think the FTSE 100 ETF would probably have outperformed, and RCP has been selling down its government bonds anyway.

I still think it’s a decent addition to the portfolio though, if only as a target to try to beat! It’s also trading at a discount to net assets, which is unusual for this fund. The underlying NAV picture is better than the share price’s performance.

T Clarke (CTO)

I wrote about T Clarke, the electrical contractor, in February, having bought the shares in January.

I was attracted by its cautious but confident management, its big contract wins for high-profile ventures like the Olympics, its huge c. 10% dividend yield, and net cash that amounted to half its market capitalization.

My buying price was 113p a share.

Things initially went pretty boringly, but then the shares headed up towards 140p in the smallcap bounce of early 2009.

Unfortunately a profit warning a few weeks ago undermined the fact that CTO was different; instead, I saw a risk that it was just a late-stage construction play that would soon reap what construction companies closer to the start of building projects had already reported.

CTO’s net cash has indeed protected the share price, and the directors have said they will hold the dividend and even do buybacks to support the price.

But that was my cash anyway (or my portion was, as a shareholder), so I don’t see it as hugely attractive sticking around for them to return it to me while making the company less stable.

I sold out at 120p for a modest profit.

Rights and Issues Trust (RIII)

I already held shares in the Rights and Issues Trust when I wrote them up in late March, having paid 700p in September 2008. Too much, too early.

However I increased my position as detailed in that note when the price to buy fell as low as 246p a share.

The discount was huge – something like 30% – due to the terror in the market at the time making these shares utterly illiquid.

They eventually recovered with the market, and I bought again at about 395p.

Rights and Issues Income shares are currently priced at 350p.

The trust’s managers see conditions as remaining choppy for some time, but they also see value in current valuations. If it wasn’t for the almost criminal spread, I’d probably buy more of these as I think they’re a good way of getting exposure to a punchy, value-orientated smaller cap portfolio at a discount.

Barclays (BARC)

When I wondered if it was too late to buy Barclays shares, they cost over £2 a share.

I concluded that it was too risky to pay that price for them. They now cost over £3 a share.

Enough about Barclays shares!

Lloyds (LLOY)

I bought Lloyds Banking Group shares earlier this month, and wrote about my move a day or two later.

I paid 72p a share for my holding in Lloyds. The price swiftly fell to 63p a share, but then rallied to over 85p.

Lloyds is currently priced at 81p.

It’s clearly very early days for this investment, but I don’t intend to hold forever. The government breaks even at around 120p a share, and I’ll maybe look to sell at around that price before the government does – unless fears about Lloyds being broken up evaporate in the months or years ahead.

I consider this a risky share and I suppose I should hold on for a bigger gain accordingly. But if the gain comes quickly, I’ll take it and pass the regulatory risk on – remembering the time value of money means a gain in the hand is worth two in some future bush!

Final note: Remember, it’s extremely hard to beat the market with share picks. These days I only do it with a fraction of my index-based portfolio and I don’t *expect* to win. Check out the Yale portfolio model if you don’t know where to start with asset allocation.