Tuesday, May 31, 2005
Artfully Dodging at +22% year-to-date
The results are in and at the close of May my portfolio is showing a 22% gain on the year so far. That's another 3% advance since April's reckoning. The progress is thanks to strong performances from Chaucer and Mayborn in particular, two shares which have pushed to new highs since my purchase. My latest buy, SVB, has also put in a spurt in the last week and now stands 3% above my buy price. Disappointments have come in the form of Dana Petroleum and Fayrewood, my two largest holdings have slipped back this month.
Chaucer Holdings, 06/10/03 at 42.88p (57p)
Chaucer Holdings, 06/04/2004 at 54.75p (57p)
Dana Petroleum, 20/11/03 at 223.75p (513p)
Mayborn Group, 15/03/04 at 282p (433p)
SVB, 12/04/05 at 24.12p (25p)
Fayrewood, 15/04/05 at 112.5p (109p)
+ cash holdings
My returns have been boosted further by dividends from Mayborn and Ben Bailey. A dividend is expected from Chaucer in July. The current weakness in the price of Fayrewood and Mayborn's recent strength has presented a very difficult challenge. Mayborn has moved closer to fair value whilst Fayrewood has drifted away. I thus expect returns from Fayrewood to exceed returns from Mayborn in the future. I'm still unsure how to proceed here. One possibility is to sell part of my Mayborn holding to buy more Fayrewood. Another is to sell all the Mayborn shares and recycle the lot into Fayrewood. A third option involves selling all the Mayborn, to buy some more Fayrewood and put some other cash aside for any future possibilities. The current price of Fayrewood shares looks like the sort of gross dislocation from value that never exists in the market for long. I feel I should move to take full advantage. But Mayborn is still a high quality company undervalued by the market. It is just that Mayborn is a lot less undervalued than Fayrewood. I'll have to continue to scratch my head over this one.
I invite any opinions from readers at this point.
The Artful Dodger
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Portfolio standing
Ben Bailey, 21/06/04 at 390p (442p)Chaucer Holdings, 06/10/03 at 42.88p (57p)
Chaucer Holdings, 06/04/2004 at 54.75p (57p)
Dana Petroleum, 20/11/03 at 223.75p (513p)
Mayborn Group, 15/03/04 at 282p (433p)
SVB, 12/04/05 at 24.12p (25p)
Fayrewood, 15/04/05 at 112.5p (109p)
+ cash holdings
My returns have been boosted further by dividends from Mayborn and Ben Bailey. A dividend is expected from Chaucer in July. The current weakness in the price of Fayrewood and Mayborn's recent strength has presented a very difficult challenge. Mayborn has moved closer to fair value whilst Fayrewood has drifted away. I thus expect returns from Fayrewood to exceed returns from Mayborn in the future. I'm still unsure how to proceed here. One possibility is to sell part of my Mayborn holding to buy more Fayrewood. Another is to sell all the Mayborn shares and recycle the lot into Fayrewood. A third option involves selling all the Mayborn, to buy some more Fayrewood and put some other cash aside for any future possibilities. The current price of Fayrewood shares looks like the sort of gross dislocation from value that never exists in the market for long. I feel I should move to take full advantage. But Mayborn is still a high quality company undervalued by the market. It is just that Mayborn is a lot less undervalued than Fayrewood. I'll have to continue to scratch my head over this one.
I invite any opinions from readers at this point.
The Artful Dodger
Monday, May 30, 2005
Fayrewood impresses me but not the market
Fayrewood's AGM statement came off the newswires on Friday at 7 a.m. The statement read well to me but the market hated it, marking the shares down by more than 6% prior to trading even beginning. The shares ended the day down 7% but still above my buy price of 112.5p.
I liked the trading statement. Despite recent whining from Fayrewood's peers, warning of reduced profitability, Fayrewood re-stated that trading was continuing in-line:
Over the last two or three years we have experienced particularly strong sales in the final quarter of the financial year, especially within our major continental operations. We see no circumstances currently on the horizon that lead us to believe that this trend will not continue in the current year but we remain watchful for any trading downturn.
I later attended the company's AGM in London and got the chance to meet and quiz the management. This was the first time I have attended an AGM of one of my holdings. I'd definitely repeat the exercise for another share. The Fayrewood confab provided company and industry insight that will assist the ongoing assesment of the shares' value.
Some investors believe the mention of possible downturn is what spooked the market into lopping so much from Fayrewood's price. I think the fall was wholly unwarranted and just plain incorrect. But the irrationality of the market is what produces opportunities for investors. The market isn't like a set of butcher's scales. It can't just sample the inputs and immediately report what the price should be. The market is more like a very slow chess player that could require days or even months to fathom out the correct response.
If Mayborn's recent high price continues to prevail and the Fayrewood falls continue, I'll be selling shares in the baby products company to increase my stake in Fayrewood. But I expect Fayrewood shares to recover over the next week, rendering that point entirely hypothetical.
The Artful Dodger
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I liked the trading statement. Despite recent whining from Fayrewood's peers, warning of reduced profitability, Fayrewood re-stated that trading was continuing in-line:
Over the last two or three years we have experienced particularly strong sales in the final quarter of the financial year, especially within our major continental operations. We see no circumstances currently on the horizon that lead us to believe that this trend will not continue in the current year but we remain watchful for any trading downturn.
I later attended the company's AGM in London and got the chance to meet and quiz the management. This was the first time I have attended an AGM of one of my holdings. I'd definitely repeat the exercise for another share. The Fayrewood confab provided company and industry insight that will assist the ongoing assesment of the shares' value.
Some investors believe the mention of possible downturn is what spooked the market into lopping so much from Fayrewood's price. I think the fall was wholly unwarranted and just plain incorrect. But the irrationality of the market is what produces opportunities for investors. The market isn't like a set of butcher's scales. It can't just sample the inputs and immediately report what the price should be. The market is more like a very slow chess player that could require days or even months to fathom out the correct response.
If Mayborn's recent high price continues to prevail and the Fayrewood falls continue, I'll be selling shares in the baby products company to increase my stake in Fayrewood. But I expect Fayrewood shares to recover over the next week, rendering that point entirely hypothetical.
The Artful Dodger
Thursday, May 26, 2005
Week of comebacks
In the last blog I lamented the lack of progress in the portfolio since the start of April. But the change in fortunes I've enjoyed in the last week have blown away my fears of a May malaise.
Progress has been broad and significant right across the portfolio.
That's your lot! I'll be up early tomorrow for the Fayrewood announcement.
The Artful Dodger
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Progress has been broad and significant right across the portfolio.
Chaucer
Chaucer advanced yesterday to 57p to sell, the highest point since my first purchase in October 2003. That's a 33% return in just over 18 months, not even counting dividends, which probably come in at another 4.5%. Chaucer cheered the market further today with an encouraging AGM statement. If Chaucer can maintain profitability in a declining premium environment there could be a lot more to come from this stock.Dana Petroleum
Dana has got it's head back above water following recent conniptions. The future direction of the shares depends heavily on drilling in Mauritania, which still looks no closer to happening. The company announced today the acquisition of drilling rights offshore Morocco. But drilling rights are a lot different to drilling.Ben Bailey
Not much to say, but the long-awaited apocalyptic house price crash still hasn't happened. Similar to Chaucer, a cooler business climate could herald a sharp increase in the company's shareprice if they continue to report healthy operating profits in a more testing environment.Mayborn
The real star. The shares have advanced over 15% to an all time high of 446p. The shares have enjoyed the investors dream a 're-rating' where the market combatants experience a collective Damascene enlightenment, decide the shares should be priced much higher and force a re-adjustment to fair value. This re-rating has been sparked by the mooted price being paid for rival company Canon Avent. A takeover bid was made at around 18 times earnings while Mayborn sells on the stock market for 11 times. You can read the media's mention of the matter here.Fayrewood
AGM tomorrow with trading statement expected at 7 a.m. Anything positive should see the shares rise from current depressed levels.SVB
Slight advance closer to fair value. I think the shares will continue to creep higher as the interim results date approaches for as long as there is no further comment on the reserving issue the crucified the shares in 2004.That's your lot! I'll be up early tomorrow for the Fayrewood announcement.
The Artful Dodger
Sunday, May 22, 2005
Ben Bailey and Dana falls trim returns
I'd previously reported 19% gains year to date. However, losses on key holdings in the last fortnight have taken a substantial amount of my returns away.
This is always the risk when holding such large positions. Falling oil prices and concerns over the ingerity of a sector peer have hit Dana shares hard. Any losses corresponding to the sector losing favour were compounded further with the news that drilling the Kenya acreage has been delayed further. Concerns abound the investment community the Dana doesn't drill often enough to deserve being rated and priced as an oil explorer. I share these concerns. Dana just doesn't drill often enough. Consider the Mauritanian acreage. This hasn't been drilled since the failed Pelican well in November 2003. Dana has performed brilliantly in increasing production from the North Sea but to sustain production more oil has to be found and they won't find any unless they get to work with the drill bit. My wallet is aching after seeing a 14% fall in a share that comprised 30% of my portfolio.
Ben Bailey has fallen back to amid fears of a housing market slowdown. The company continues to report positive trading however and we'll just have to wait for the interim results before a new appraisal is required. The shares have fallen almost 50p, or 10% so far this month.
Some sunshine came from the advance of Fayrewood. If you remember, I sold a huge portion of my Ben Bailey holding to buy Fayrewood shares at 112.5p in April. An impressive advance on Friday took the shares to 122p to buy, an 8% increase in value since purchase.
Opportunities remain in the market but cash to take advantage is in short supply. I think SVB, the insurer that currently occupies around a tenth of my portfolio is still worth investing in. If the price remains at its current level I will be investing further. Also, SOCO, the oil explorer, could advance significantly in the coming weeks as its Vietnam oil discovery is appraised further.
May looks like it will be my first down month of 2005. Let's hope not.
The Artful Dodger
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This is always the risk when holding such large positions. Falling oil prices and concerns over the ingerity of a sector peer have hit Dana shares hard. Any losses corresponding to the sector losing favour were compounded further with the news that drilling the Kenya acreage has been delayed further. Concerns abound the investment community the Dana doesn't drill often enough to deserve being rated and priced as an oil explorer. I share these concerns. Dana just doesn't drill often enough. Consider the Mauritanian acreage. This hasn't been drilled since the failed Pelican well in November 2003. Dana has performed brilliantly in increasing production from the North Sea but to sustain production more oil has to be found and they won't find any unless they get to work with the drill bit. My wallet is aching after seeing a 14% fall in a share that comprised 30% of my portfolio.
Ben Bailey has fallen back to amid fears of a housing market slowdown. The company continues to report positive trading however and we'll just have to wait for the interim results before a new appraisal is required. The shares have fallen almost 50p, or 10% so far this month.
Some sunshine came from the advance of Fayrewood. If you remember, I sold a huge portion of my Ben Bailey holding to buy Fayrewood shares at 112.5p in April. An impressive advance on Friday took the shares to 122p to buy, an 8% increase in value since purchase.
Opportunities remain in the market but cash to take advantage is in short supply. I think SVB, the insurer that currently occupies around a tenth of my portfolio is still worth investing in. If the price remains at its current level I will be investing further. Also, SOCO, the oil explorer, could advance significantly in the coming weeks as its Vietnam oil discovery is appraised further.
May looks like it will be my first down month of 2005. Let's hope not.
The Artful Dodger
Sunday, May 08, 2005
Mayborn and Ben Bailey: on course
Recently Mayborn and Ben Bailey reported on trading at their AGMs. I hold shares in both companies.
On April 29th, Ben Bailey reported confidence on prospects in the year ahead.
national monetary policy decisions have had the effect of dampening the level of price increases. In our area of operations we have not seen any significant impact on either demand or prices. However, in common with other housebuilders, the Company is offering limited incentives to potential buyers in order to complete the sale. On 2005 reservations, our average selling price per square foot is 4% higher than that achieved in 2004 with forward reservations 17% up on the same period as in 2004, which represents nearly 75% of our budgeted output for 2005.
Bailey's announcement confirms the end of the boom enjoyed for the last five years. As always investors must focus on the future. Bailey's management appear to be doing likewise and have taken on more corporate debt to finance land purchases:
the Company will significantly increase its land bank during 2005 with a number of planned and agreed acquisitions. To finance this expenditure the Company has recently re-negotiated an increase in its borrowing facilities to £71.5 million
Debt in itself is always bad news for a company. It leaves them more vulnerable to a downturn and restricted in it's financial planning. This isn't debt for debt's sake however. Bailey is planning to use the debt to purchase more land for building. Though the debt on the balance sheet is a negative, the increase in tangible assets that will result helps offset some concern.
Encouragingly, the board finishes with a closing line very similar to that made at 2004's AGM:
All of these factors give the Board confidence that we can deliver another set of good results in 2005.
Mayborn is a company that doesn't suffer from the same volume of negative sentiment Bailey is currently struggling against. At the Mayborn AGM last Thursday the company announced:
In the Preliminary Announcement of 15 March 2005, I stated that trading in 2005 had started strongly. This strong start has continued to date. The Baby and Child Division, the larger of the two, is benefiting from a mixture of good organic growth, as in 2004, and a pleasing initial contribution from the March 2005 acquisition of Tube Plastics, the UK market leader in high quality children's outdoor play equipment. Sales in the Household Products Division are flat apart from the February 2004 acquisition, Impex, a specialist in the distribution of art and craft accessories to the retail trade, which continues to experience growth
That's a bit of a mouthful. They are all very dry these company trading statements - it's vital an investor quickly gets to the pertinent information. For Mayborn, this is the strong implication that profits will advance further in 2005. For a start, 2005 will comprise a full year's contribution from the advancing Impex subsidiary. The Baby and Child division is progressing, Household Products is maintaining it's level of profitability and the new Tube Plastics acquisition is adding even more to the company's bottom line. Without going into a detailed analysis, Mayborn still remains cheap, a fact not missed by Friday's Independent newspaper:
Lavish spending on baby products makes Mayborn a worthwhile buy
..A trading update yesterday said the year had started well, indicating that results this year would beat the impressive 2004 figures...the company has record of growth in its baby products division, which makes bottles, cups etc under the Tommee Pippee[sic] brand. Mayborn says that while this market is growing at 5 per cent a year, it also benefits from product innovation here.
..At 382.5p, the shares trade on a modest multiple of 11, making Mayborn a buy.
The shares duly responded with a 1% rise to finish the week at 383p to buy.
Elsewhere, Fayrewood put in a near 3% rise to 117p, easily clear of my recent purchase at 112.5p. Chaucer saw a huge amount of it's stock traded at 57p as the bid-offer spread moved to 56-59p. I'm looking forward to Monday's trading in these two companies and expect rises.
The Artful Dodger
(0) comments
On April 29th, Ben Bailey reported confidence on prospects in the year ahead.
national monetary policy decisions have had the effect of dampening the level of price increases. In our area of operations we have not seen any significant impact on either demand or prices. However, in common with other housebuilders, the Company is offering limited incentives to potential buyers in order to complete the sale. On 2005 reservations, our average selling price per square foot is 4% higher than that achieved in 2004 with forward reservations 17% up on the same period as in 2004, which represents nearly 75% of our budgeted output for 2005.
Bailey's announcement confirms the end of the boom enjoyed for the last five years. As always investors must focus on the future. Bailey's management appear to be doing likewise and have taken on more corporate debt to finance land purchases:
the Company will significantly increase its land bank during 2005 with a number of planned and agreed acquisitions. To finance this expenditure the Company has recently re-negotiated an increase in its borrowing facilities to £71.5 million
Debt in itself is always bad news for a company. It leaves them more vulnerable to a downturn and restricted in it's financial planning. This isn't debt for debt's sake however. Bailey is planning to use the debt to purchase more land for building. Though the debt on the balance sheet is a negative, the increase in tangible assets that will result helps offset some concern.
Encouragingly, the board finishes with a closing line very similar to that made at 2004's AGM:
All of these factors give the Board confidence that we can deliver another set of good results in 2005.
Mayborn is a company that doesn't suffer from the same volume of negative sentiment Bailey is currently struggling against. At the Mayborn AGM last Thursday the company announced:
In the Preliminary Announcement of 15 March 2005, I stated that trading in 2005 had started strongly. This strong start has continued to date. The Baby and Child Division, the larger of the two, is benefiting from a mixture of good organic growth, as in 2004, and a pleasing initial contribution from the March 2005 acquisition of Tube Plastics, the UK market leader in high quality children's outdoor play equipment. Sales in the Household Products Division are flat apart from the February 2004 acquisition, Impex, a specialist in the distribution of art and craft accessories to the retail trade, which continues to experience growth
That's a bit of a mouthful. They are all very dry these company trading statements - it's vital an investor quickly gets to the pertinent information. For Mayborn, this is the strong implication that profits will advance further in 2005. For a start, 2005 will comprise a full year's contribution from the advancing Impex subsidiary. The Baby and Child division is progressing, Household Products is maintaining it's level of profitability and the new Tube Plastics acquisition is adding even more to the company's bottom line. Without going into a detailed analysis, Mayborn still remains cheap, a fact not missed by Friday's Independent newspaper:
Lavish spending on baby products makes Mayborn a worthwhile buy
..A trading update yesterday said the year had started well, indicating that results this year would beat the impressive 2004 figures...the company has record of growth in its baby products division, which makes bottles, cups etc under the Tommee Pippee[sic] brand. Mayborn says that while this market is growing at 5 per cent a year, it also benefits from product innovation here.
..At 382.5p, the shares trade on a modest multiple of 11, making Mayborn a buy.
The shares duly responded with a 1% rise to finish the week at 383p to buy.
Elsewhere, Fayrewood put in a near 3% rise to 117p, easily clear of my recent purchase at 112.5p. Chaucer saw a huge amount of it's stock traded at 57p as the bid-offer spread moved to 56-59p. I'm looking forward to Monday's trading in these two companies and expect rises.
The Artful Dodger
Monday, May 02, 2005
Portfolio review: +19% year to date
+19% year to date. Sound familiar? Despite the comings and goings in my portfolio (Ben Bailey out, Fayrewood, SVB + more cash in) the portfolio made no headway whatsoever in April.
My remaining Ben Bailey shareholding lost almost 10% and Dana and Mayborn slipped back. Chaucer made up some ground, emerging from the doldrums of March.
Fayrewood and SVB ended the month more 2% down on my purchase price. The two remain seriously inexpensive, funds and prices permitting, I'd be buying more soon.
So keep watching, I expect May to be a very profitable month. Uncertainty over the general election will evaporate as the electorate goes to the polls on Thursday. Mayborn will be reporting on trading the same day at their AGM and I've a portfolio with some very cheap shares still in there with plenty of headroom to grow into. Over the next month the dividends will start to roll in. This cashflow should add at least another percentage point to my return thus far in 2005.
The Artful Dodger
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My remaining Ben Bailey shareholding lost almost 10% and Dana and Mayborn slipped back. Chaucer made up some ground, emerging from the doldrums of March.
Fayrewood and SVB ended the month more 2% down on my purchase price. The two remain seriously inexpensive, funds and prices permitting, I'd be buying more soon.
So keep watching, I expect May to be a very profitable month. Uncertainty over the general election will evaporate as the electorate goes to the polls on Thursday. Mayborn will be reporting on trading the same day at their AGM and I've a portfolio with some very cheap shares still in there with plenty of headroom to grow into. Over the next month the dividends will start to roll in. This cashflow should add at least another percentage point to my return thus far in 2005.
The Artful Dodger
