Share Sleuth: there’s no escaping the impact of coronavirus

Richard Beddard explains how the coronavirus crash has hit him harder than the credit crunch, or the dotcom crash, but that he still sees reasons to be optimistic.

Earlier today, I found my wallet in a drawer. The contents: a fiver, an old receipt, an English Heritage membership, and a card with ink-stamps from Waterstones’ cafe nearly entitling me to a free cup of coffee, seemed like relics from a bygone era. It’s been weeks since I used any of these things.

I am writing this month’s column in early April, and there’s a danger that by the time you read it, my words will be quaint anachronisms too - such is the speed of events. Take last month’s Share Sleuth, drafted in a cafe. The pandemic had yet to be declared, face masks seemed ludicrous, and I was nervous about adding shares in Hollywood Bowl to the Share Sleuth portfolio.

It felt slightly crazy to buy shares in a business that requires people to gather, but I deemed a small investment worthwhile because unease about coronavirus had finally reduced the share price to an affordable level. By the time Money Observer hit newsstands, we had all but been confined to our homes. Restaurants, cinemas, and many shops were closing, and so too were bowling alleys.

This crisis has hit me harder than the credit crunch, or the dotcom crash. I don’t track the value of my investments routinely, so much of the time these earlier crashes felt like they were happening to other people. But there’s no getting away from the impact of the virus. Stuck at home, it is easy to dwell on questions we cannot answer: how long this will last and what the impact will be.

Twilight zone

Running a public portfolio presents challenges. Plotting the chart on this page draws my attention to Share Sleuth’s performance; correspondence ­– always welcome ­– from readers has taken an anxious turn; and we are in a kind of twilight zone in which analysing and writing about companies sometimes feels absurd. During the financial crisis, bad businesses went bust, and good businesses slowed down. This time good businesses have ceased operating, and we do not know when they will start up again.

As I age, the value of my pension savings is taking on more significance. A friend and mentor old enough to remember investing during the Cuban missile crisis in 1962 is experiencing a reduction in the dividend income that helps support him. How much his portfolio might be worth in 10 or more years’ time – the timescale of those of us still growing our assets – is less important than what happens sooner. He is more vulnerable to the disease; but as always he is utterly indefatigable, which is why he is a source of inspiration to me.

The Share Sleuth portfolio has a very modest amount of cash, enough to fund a single trade, but I haven’t made one. My mind has been anxious as we adjust to the lockdown, and I have lacked the mental bandwidth to make decisions beyond those thrust on us by new circumstances.

As for reducing holdings, it goes against the grain. I didn’t predict a pandemic, but favoured resilient businesses with strong finances, run and operated by good people, companies that should ride out any scenario short of the end of capitalism as we know it. Maybe years of good returns softened me up, so I intend to introduce more rigour into my judgements of companies, but there won’t be knee-jerk expulsions from the portfolio.

To be a long-term investor is to be an optimist and, as the fog lifts, I see a large number of decent businesses trading at relatively low valuations. Although I have no valuable insights on the progression of the pandemic, or how traders will respond, I believe in people. I believe we will find better ways of coping with this virus and perhaps even stamp it out, and I believe that good businesses will adapt, get back to work and ultimately prosper.

No knee-jerk explusions

Portfolio     Cost (£) Value (£) Return (%)
Cash       4,755  
Shares       109,488  
Since 9 September 2009     30,000 114,244 281
           
Companies   Shares Cost (£) Value (£) Return (%)
ALU Alumasc 938 999 586 -41
ANP Anpario 937 3,168 3,233 2
AVON Avon Rubber 192 2,510 4,771 90
BMY Bloomsbury 1,256 3,274 2,499 -24
BOWL Hollywood Bowl 1,615 3,628 2,616 -28
CGS Castings 1,109 3,110 3,316 7
CHH Churchill China 341 3,751 4,143 10
CHRT Cohort 1,600 3,747 7,840 109
DTG Dart 456 250 2,538 915
DWHT Dewhurst 735 2,244 6,799 203
GAW Games Workshop 113 324 5,132 1,484
GDWN Goodwin 266 6,646 5,227 -21
HWDN Howden Joinery 748 3,228 4,009 24
JDG Judges Scientific 159 3,825 6,781 77
NXT Next 45 2,199 1,700 -23
PMP Portmeirion 349 3,212 1,099 -66
PZC PZ Cussons 1,870 3,878 3,403 -12
QTX Quartix 1,085 2,798 2,658 -5
RM. RM 1,275 3,038 1,721 -43
RSW Renishaw 92 1,739 2,681 54
SOLI Solid State 1,546 4,523 5,921 31
TET Treatt 1,222 1,734 5,132 196
TFW Thorpe (F W) 2,000 2,207 5,360 143
TRI Trifast 2,261 3,357 2,198 -35
TSTL Tristel 750 268 3,135 1,069
VCT Victrex 323 6,254 6,072 -3
XPP XP Power 339 6,287 8,916 42

Notes: No transactions. Transaction costs include £10 broker fee, and 0.5% stamp duty where appropriate. Cash earns no interest. Dividends and sale proceeds are credited to the cash balance. £30,000 invested on 9 September 2009 would be worth £114,244 today. £30,000 invested in FTSE All-Share index tracker accumulation units would be worth £51,197 today. Objective: To beat the index tracker handsomely over five-year periods. Source: SharePad, 6 April 2019.

Share Sleuth over 10 years

Share Sleuth performance over 10 years

 

 

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