Share Sleuth: why I'm buying more of this stock

With spare cash to invest, Richard Beddard explains why he is investing further in a holding in the portfolio.

Owing to high valuations across the board and because, despite frantic efforts, I have dug up no new companies to invest in, there were only two high-scoring additions to the Share Sleuth portfolio open to me this month, both existing members that are underrepresented (See Share Watch for an explanation of how I score shares). They were Victrex, which accounted for just 2.2% of the portfolio, and Anpario, which is a slightly smaller holding.

Other high-scoring companies are ineligible for additional investment for one of two reasons. Either I have traded them recently, an example being PZ Cussons (see my column from the February issue of Money Observer), or Share Sleuth already has a substantial allocation, for instance to XP Power.

Surge of power

A surge in the share price of XP Power has made it the second-biggest Share Sleuth holding at 8.1% of the portfolio’s total value, sufficient to consider taking some profits, but its high score suggests it is still undervalued, so I would have been a very reluctant seller. If I were to reduce the size of a holding, Games Workshop would have been first up against the wall. A score of 6.4 is average for the portfolio, but it is the biggest holding, accounting for 8.4%. To maintain diversification, it should probably be cut down to size.

That decision can wait, though, because Share Sleuth has spare cash, and my preference is to keep the portfolio fully invested. This month, I elected to invest a further 2.5% in Victrex, which makes PEEK – a light, durable and valuable polymer that is used, often in fairly small quantities, to replace metal components where performance is critical. It’s hidden in many products we take for granted, including smartphone speakers and spinal implants.

Why Victrex and not Anpario? I score Victrex more highly, and I have also evaluated it more recently, less than a month ago. Victrex is the world leader in PEEK production, with over 60% of the industry’s capacity, and it’s the only PEEK producer actively developing new applications for the material.

Partnering with manufacturers, or acquiring them, to develop products and supply the proof of superior performance takes time, but I think we can afford to be patient. Not only is Victrex highly profitable and financially strong, but the market for existing applications of PEEK should grow over the long term.

On 27 January, I added 173 more Victrex shares to the portfolio at a price of just under £22.96. The total transaction, including £10 in lieu of broker fees and just under £20 in lieu of stamp duty, cost £4,001, leaving the portfolio with a cash balance of £1,758. Victrex now accounts for 4.6% of Share Sleuth.

This month, I also re-evaluated Dewhurst, a manufacturer and distributor of lift components, and a Share Sleuth portfolio holding of more than 10 years’ standing. It is one of my favourite kind of shares: somewhat under the radar, probably because it doesn’t do much to sell itself to investors.

Having sold off Thames Valley Controls, a maker of lift control and monitoring systems, it is continuing its expansion in bread-and-butter  components by adopting some of the products and policies of A&A, a highly regarded distributor it acquired in 2018, across many of its subsidiaries around the world. I gave the company a score of 6.9, which puts it on the cusp of good value. The Share Sleuth portfolio, though, is already fully invested.

- For a fuller analysis of Victrex, see here. For Dewhurst see here.

Sleuth continues to power ahead

Share Sleuth graph showing performance YTD

 

Rich valuations mean little choice

Portfolio     Cost (£) Value (£) Return (%)
Cash       1,758  
Shares       157,658  
Since 9 September 2009     30,000 159,416 431
           
Companies   Shares Cost (£) Value (£) Return (%)
ALU Alumasc 938 999 1,055 6
ANP Anpario 937 3,168 2,811 -11
AVON Avon Rubber 192 2,510 5,021 100
BMY Bloomsbury 1,256 3,274 3,642 11
CGS Castings 1,109 3,110 4,735 52
CHH Churchill China 341 3,751 6,786 81
CHRT Cohort 1,600 3,747 11,088 196
DTG Dart 456 250 7,930 3,072
DWHT Dewhurst 735 2,244 8,159 264
GAW Games Workshop 198 568 13,464 2,271
GDWN Goodwin 266 6,646 9,044 36
HWDN Howden Joinery 748 3,228 5,236 62
JDG Judges Scientific 159 3,825 8,618 125
NXT Next 45 2,199 3,143 43
PMP Portmeirion 349 3,212 2,548 -21
PZC PZ Cussons 1,870 3,878 3,661 -6
QTX Quartix 1,085 2,798 4,416 58
RM. RM 1,275 3,038 3,602 19
RSW Renishaw 92 1,739 3,663 111
SOLI Solid State 1,546 4,523 9,276 105
TET Treatt 1,222 1,734 6,648 283
TFW Thorpe (F W) 2,000 2,207 6,500 195
TRI Trifast 2,261 3,357 4,364 30
TSTL Tristel 750 268 2,963 1,004
VCT Victrex 323 6,254 7,319 17
XPP XP Power 339 6,287 11,967 90

Notes: Holding increased 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 £159,416 today. £30,000 invested in FTSE All-Share index tracker accumulation units would be worth £68,633 today. Objective: To beat the index tracker handsomely over five-year periods. Source: SharePad, 5 February 2019.

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