Risers: TEP 15%, UPGS 9%, BOTB 5%, CMCL 5%, CCC 5%, CER 4%, CAML 1%

Fallers: SPSY -1%, SDG -3%, GAW -3%, SCT -5%, KNOS -6%, GAMA -6%, CLG -7%, TM17 -7%, CAPD -7%, LUCE -7%, FXPO -7%, AFX -8%, DRV -8%, RWA -9%, BOO -9%, BLV -9%, MNZS -9%, CLX -14%, DX. -14%, GMR -16%, STAF -17%, VLX -19%, SLP -21%, G4M -24%, GAN -30%

Purchases

Spectra Systems Bought at 150p

On the face of it Spectra has a lot going for it as an investment. Over the last five years sales and profits have risen consistently along with the operating margin (over 30% now) and the return on capital (heading towards 20%). It generates very significant FCF, always has net cash on the balance sheet and pays a generous dividend equivalent to a yield of 4-5%. The CEO and founder Nabil Lawandy holds around 5% of the company and is happy to talk to shareholders about commercial progress. On this front forecasts only include already won contracts rather than projections of possible wins. This is why the October announcement of a larger than expected order from a long-term central bank customer now means that profits will exceed market expectations. And yet the share price has continued to remain weak - perhaps because there is no analyst coverage and so no one to raise the forecasts. With all of this in mind I've bumped up my holding by 25% to leave it just outside my top 5.

Central Asia Metals Bought at 235p

Recently I was reviewing my portfolio and noticed that Central Asia Metals was by far my smallest position. This is the natural consequence of taking a starter position in May and then having prolonged share price weakness grind it down into an even smaller position. In this scenario a decision needs to be made. Either dump the tiny holding or increase it to a more meaningful level. Looking back over the last six months production levels have been somewhat disappointing with the Sasa mine suffering from ground support issues and a mill shutdown while Kounrad faced a change in its leach blocks that impacted performance. As a result lead production for the year will be below guidance, zinc will come in at the lower end of the guidance range while copper should hit the top end. A mixed bag operationally but not disastrous. On the flipside the spot prices of all three metals remain very strong and CAML is generating a large amount of free-cash flow. So much so that they are now basically debt free and have funds available for acquisition or special dividends. This puts them in a solid position and since I want to retain exposure to a low-risk miner I've doubled my position at what seems like a reasonable price.

K3 Capital Bought at 331p

Last month I sold my entire holding in K3 Capital, before their results announcement, but purely for account management purposes. However I was half hoping that the results would be no more than in-line and that I'd get the chance to re-establish my position. Curiously I was given the opportunity even though the results and outlook are very good. Still there's no point looking a gift horse in the mouth. I was able to get back in a few percent below my selling price and hope to hold the shares for a good while longer.

Sales

Sylvania Platinum Sold at 106p - 63.4% gain

On the face of it Sylvania is very cheap and cash generative with the potential to deliver very sizeable dividends. At the same time it has grown to quite a decent position in my portfolio and I've become nervous about it being able to hit its production target for the year. So, with the ex-dividend date behind me, I have halved my stake in the business to bring it in-line with my other holdings. This feels like sensible risk management since I'll still benefit from any further upside but any further hit (if metal prices fall let's say) will be much less painful.

Announcements

K3 Capital

What a great set of results showcasing the transformation of K3 Capital over the last year. In that period five acquisitions were completed with two of them adding brand-new service lines. Now bear in mind that the core business of K3C before now was M&A and business consultancy. So you'd expect management here to be experts in both finding excellent businesses at a good price and in integrating them once acquired. Fortunately the results look good. Quantuma added a restructuring division which has gained market share during a period when the insolvency rate is low and is materially expanding its international operations. The purchase of randd created a tax division that benefits from high-margins and multi-year contracts. This segment is seeing steady growth and real benefits from the cross-selling opportunity now available as part of a larger group. Remarkably all divisions performed ahead of forecasts and the new year has started well with record levels of buyer activity in the M&A space and a tick up in insolvency volumes as Government support reduces. Beyond this management have executed a number of bolt-on deals to fill gaps in their service offering and improve their sector specialism. This is all very sensible but it does make the group more complex and challenging to manage - which is something that the CEO, John Rigby, is looking to alleviate by broadening the team. He recognises that he doesn't have a background in running a £250m company, let along one four times the size, and this is part of the growth process. I appreciate the lack of ego here and right now K3C looks well positioned for further growth. (Results)

UP Global Sourcing

To deliver such an excellent set of results in the toughest year ever faced by the business is quite some achievement. That'll be why the shares have rebounded so strongly from their pre-result doldrums. Despite issues with stock availability, that held back online sales, total revenue increased 18% to £136m. This growth broadly translated into PBT rising 14% although underlying EPS actually increased 34% to 10.6p if you reverse out the costs of the Salter acquisition. On this front the Salter brand has been fully integrated and is expected to be significantly earnings enhancing in FY22. This is excellent news and is indeed one of the reasons why I bought back in to UPGS. At the same time management are refreshing and relaunching the Petra brand in Germany. This is important because European sales were relatively weak last year, with many retailers being forced to close, and an injection of activity is required to get it growing again. An interesting point here is that UPGS are going straight in at the supermarket level, rather than leading with the discounters, which shows that their brands/products are resonating with the right customers which can only be positive for margins. Currently trading is in-line with expectations (which is for 33% growth in the bottom-line) despite the ongoing challenges of shipping availability and cost. This is a key statement for a company so exposed to cost inflation, manufacturing restrictions and container availability. They are clearly working their socks off to get product delivered which puts them ahead of competitors (even if they can't quite achieve the excellent record of prior years). In my view the management here know their sector inside-out and are leveraging all of their experience to make UPGS a go-to supplier in their difficult times. (Results)

Gaming Realms

This is a decent update with the company remaining confident of meeting its full year targets. This is important because after many years of losses Gaming Realms is forecast to become profitable this year with a big jump in profitability in 2022. Actually this has already happened with the interim results, up to 30th June, posting just under 0.3p of EPS compared to the full-year forecast of 0.9p, but there's a lot riding on H2. Anyway content licensing revenue increased 35% in Q3 and the company now has full licenses to operate in New Jersey, Michigan and Pennsylvania. Right now everything is going the right way and online gaming in the US is only going to get bigger. (Update)

DX Group

With these results unavoidably delayed by issues at the auditor there was some concern that they'd uncovered a material issue. Fortunately a previous announcement put this concern to bed and the full-year results are excellent. At the top-line sales rose 16% to £382m, which is fine, but the big wins are lower down with the turnaround in the freight division turning a net loss in £12m of profit. The adjusted EPS of 2.0p is materially higher than the 1.67p forecast and not far from the 2022 consensus of 2.2p. This is exactly the turnaround that we were promised and management remain confident of further progress. On that front they've announced a new £20-25m investment programme to improve and increase the depot network which suggests that their plan to increase market share is on track. It's worth noting that these results were produced despite DX Express suffering badly from coronavirus restrictions with legal and high-street volumes falling sharply. Still this is behind us now and Exchange members are now getting a much improved service which is encouraging users to renew their subscription for another year. On the freight side of the group margins improved to 10.3% due to higher volumes and efficiency improvements. This is the upside of operational leverage and solid customer service (plus additional depots) should ensure further growth on this front. There are headwinds, principally from driver shortages and global supply chain disruptions, but you can be sure that customers will be working their butt off to get goods delivered before Christmas and DX stands ready to support them. I'm very happy with how things are playing out here and while the share price may be weak the business certainly isn't. (Results)

Best of the Best

This is an update but that's about as good as it gets. Without mentioning any numbers whatsoever it seems that the performance is in-line with expectations. That's a positive and both customer acquisition costs and player engagement levels have stabilised. So there is a business here and it's not going to the wall. However if the cost of bringing in new customers remains elevated (making this the new normal) then margins will be hit hard and the quality metrics will decline. This is probably all in the price given the way it's been hammered but I won't be adding to my position without some cold, hard numbers. (Update)

Caledonia Mining

We received the excellent Q3 operations update last month with the news that production guidance had been narrowed to the top end of the previous range. The Central Shaft really is a hit with increased production (up 42%) far more than off-setting a 7% drop in the gold price to boost revenues by 32% year-on-year. An extra benefit is that the all-in sustaining cost per ounce is down a hefty 19%, to $909, due to fixed costs being spread over more production ounces and reduced sustaining capex. I'm very happy with these numbers and the direction of travel. All we need now is for the gold price to break out of its downtrend. (Update)

Volex

There are some pretty eye-popping numbers in these half-year results with sales up 45% and underlying PBT up 22%. Sadly the bottom-line EPS figure is only just up compared to last year because this year a $2m tax charge was incurred while last year saw the benefit of a $1m tax credit. I don't quite understand the reason for the swing, given a fair level of deferred tax assets, but I suspect it's due to earnings being in one region and the tax credit in another. Either way $3m is material enough to drag down the EPS by 15%. More usefully all sectors are seeing high customer demand and the company is managing inflationary cost pressures and extended global supply chains. The former is handled by pushing through price rises (which are contractual) while the latter involves close attention and component substitution where practical. The stand-out sector was Electric Vehicles with 210% growth year-on-year while Consumer Electricals remained buoyant with DE-KA adding a chunk of sales. There may be a slow-down in the consumer market as pandemic buying winds down but right now it's performing well. This is also true of the Medical sector, where hospital access is improving, while data centre demand is high but moderating following a strong 2020. Still margins have taken a hit in this H1 with gross margin down almost 4% and underlying operating margin falling from 10.3% to 9.3%. Clearly it's been a tough period all round and H2 may not be much easier if you take a look at the news. That said the analyst forecasts are undemanding for the second-half with no sales growth required so it won't take much to beat them. On this basis I'm happy to stick with Volex. (Results)

GAN

On the face of it these Q3 results are underwhelming with a continued focus on jam being delivered tomorrow. It's also notable that following the Coolbet acquisition around 2/3 of revenues are B2C derived which moves GAN away from being a simple "picks & shovels" platform for other gaming operators. Instead it's exposed to the impact of betting results with these sometimes favouring the operator and at other times favouring the customer. On the other hand Q3 is generally the weakest quarter while Q4 and Q1 are much stronger with trading so far looking good. GAN is now live in 9 states nationwide with another 3/4 states likely in coming months (up from 3 states a year ago) which is a big leap in performance. This is allowing the $125-135m range to be reiterated with a target for $225-250M in 2023 and $500-600M in 2026 at an EBITDA margin target of 30-35% (was 7% in Q3). There's an assumption that more states will open up to iGaming but still that is some serious growth on the table. On the B2C front active customers rose 6% (reaching an ATH in October) but a quieter sports calendar and local reopening impacted revenues somewhat. Also marketing spend increased with cost per acquisition up from $30 to $45; I wonder if this is down to the Apple privacy changes hitting the efficacy of adverts? On other fronts the new offerings of GAN Sports and Super RGS offer additional growth as operators want this content and the negotiation is around how much they're willing to pay. Nothing is included in the guidance for these additional avenues and it sounds as though they can be ramped up quickly (even before the contract is finalised). Finally GAN have signed up Red Rock Resorts to their full sports offering (online, mobile and kiosk based) after doing simulated gaming for 4 years. This is a big opportunity in a key regulated location and with a key retail casino operator which proves the GAN technology. So while Q3 was a bit meh I really can't see a reason to back out of GAN at the moment. In fact it's offering a pretty compelling buying opportunity at current levels. (Results)

Kainos Group

In recent years Kainos has delivered excellent growth through its Digital Services and Workday Practice arms. Last year was particularly strong as the public sector rushed to digitise which makes for some tough comparative numbers this year. Still these H1 results, to the end of September, are pretty decent with revenue up 33% to £142m, bookings up 81% to £187m and the contracted backlog now an impressive £250m (a 38% rise). These revenues are decently diversified across sectors with the split being 42% Commercial, 37% Public Sector and 21% Healthcare. However the period saw a real swing back to the business world with Commercial revenues up 51% while Public Sector sales improved only 6% but from a high base. At the bottom-line adjusted PBT rose only 12% to £29m with one factor being the large 20% increase in staff numbers over the period. The impact on margin here comes from an increased use of contract staff, who are naturally more expensive, and salary inflation as recruitment remains challenging. In addition non-recurring cost savings have reversed pushing profit margins back to their long-term level. This is reflected in the forecasts for single-digit earnings growth, which makes the shares look expensive, but equally this jump in headcount suggests that Kainos almost have more work than they can handle. This bodes well for future growth so long as they continue to keep their customers happy. (Results)

Gear4music

The board at Gear4music have consistently indicated that trading in this year would not match the knock-out results achieved in 2020. This out-performance was driven by the initial lockdowns driving volume growth at increased prices along with reduced costs and only one quarter impacted by Brexit. The clarity of this guidance was most welcome and at the start of 2021 it seemed that they had planned well for Brexit with a scaled-up hub infrastructure in Europe. At the mid-point of the year trading still looked good, after a strong Q1, and the board updated expectations for FY22. However the board are probably wishing that they'd held back because with these interim results they are taking the expectations back to just above where they started. In other words they warned on profits and the shares dropped 20% (having already come off 20% from the ATH). The problem is Europe and the lack of hubs and stock in Southern Europe. Clearly management were banking on this being resolved by now and underestimated the long-term impact of Brexit. Still the new hubs should be fully functional by Q4 although that is after the key Christmas period. So the next update in late January will be a key marker of progress. As for these HY results they are as anticipated with margins falling back due to lower own-brand sales, higher marketing costs and increased freight costs. Operationally management are taking the right steps to improve matters (if later than necessary) and have a decent roadmap of additional sales opportunities. So while disappointed I'm happy to stick with Gear4music as it rediscovers its mojo. (Results)

Cerillion

These are excellent results with sales growth of 25% translating into earnings more than doubling with and without adjustments. That's the beauty of operational gearing when it works in your favour. Significantly this top-line growth is more than twice that seen in the last 3-4 years and appears to represent a step-change for the business. The back-order book of £42.1m is at a record level and the largest ever contract won in March is encouraging other customers to hand big contracts to Cerillion. So the market backdrop is positive and Cerillion are taking advantage of these tailwinds which explains the double-digit growth rates forecast for 2022 and 2023. If these numbers come to pass then the forward P/E of 20-30 does not look expensive. One reason for believing this is that last year saw strong demand from existing customers (up 105% to £19.2m which is 73% of total turnover) which is partly down to these customers being larger with broader requirements. This isn't exactly recurring revenue but these customers have bought into the Cerillion platform and they're not going to move to another supplier without a lot of effort. Remarkably operating costs rose only 3% during the year with personnel costs flat. That's quite an achievement and may be down to the Indian office helping to keep a lid on wage inflation along with selling a platform that doesn't require customisation. Right now then things are looking good for Cerillion and with luck we'll see another update before the H1 update scheduled in April. (Results)

Telecom Plus

Being a recent purchase I was eager to see these H1 results. Not so much for how the business traded in the period but more for a sign of how the future looks given the collapse in the UK energy supplier market. This implosion has been a long time coming, with a steady stream of the weakest suppliers failing during recent years, but now the day of reckoning has arrived. This is great news for Telecom Plus because once again their energy offering will be competitive now that they're no longer being undercut by businesses going for volume over profits. The impact of this ludicrous approach can be seen in these results with revenue edging up 6% from 2020 and adjusted profits falling 5% following an increase in the provision for a historical issue with Ofgem. Looking at the historic numbers this has broadly been the pattern for the last seven years, since Ofgem deregulated the market, but analyst forecasts suggest that this is about to change in 2023 and 2024 (this year not so much as growth builds in H2). An additional tailwind is that inflation, and the emerging cost of living crisis, is driving increasing numbers of people to look for additional income and being a Utility Warehouse partner is one way to achieve this goal. Management have recently restructured the package to pay out more quickly and it seems that potential partners value the opportunity on offer. As Telecom Plus depend on these partners to fuel growth then more partners selling a more competitive product can only be a positive force as customers looks to save money on their utility bills. Clearly I'm not the only investor seeing promise here as the shares have appreciated materially since the summer low near £10 and look set to break through the £15 ceiling that has capped the shares for the last three years. (Results)

Calnex Solutions

It's nice to see a recent IPO do well with the trading update last month indicating that revenue and profits for the full year will be materially ahead of previous expectations. Not a lot has changed in the month since then but demand for testing equipment remains strong and the semiconductor shortage hasn't had an impact since then. Well saying that the big change is that the shares have taken a dive back down to support at 120p after dallying above 150p so something has spooked investors. It could be the fact that while sales are up 20% we have profits reporting flat and EPS down by 18% due to the comparison between pre-IPO and post-IPO numbers. With the adjusted EPS coming in at 2p there does seem to be a lot of ground to make up in H2 to reach the 5p+ level achieved in FY21. On the other hand planned recruitment has been bought forward to meet the customer demand which is both positive and increases costs before these new staff become profitable. This means that administration costs have risen by 43% (from £2.3m to £3.3m) with this rise knocking back profits and reducing the margin from 30% to 25%. This should rebound but travel costs are likely to rise as unlocking continues so perhaps the steady-state margin will be somewhere in the middle. Ultimately Calnex is providing the products that customers want and this will drive bottom-line growth in the end despite increases in the weighted share count. (Results)

Softcat

An in-line trading update with good growth from both mid-market and enterprise corporate customers as well as the public sector. The hardware supply situation is stable, which is a current concern, and we have year-on-year growth in revenue, gross profit and operating profit. This is basically the same as the last five Q1 statements in that the tone is positive but measured. So why are the shares down 20% since their peak a few months ago? I'm guessing market sentiment and potential interest rate changes hitting valuations because there's nothing wrong with the company. (Update)

John Menzies

Given all of the uncertainty around Omicron it was nice to see Menzies so positive. Apparently trading for the full year is to be at least in line with market expectations after stronger than expected trading in recent months. The air cargo market remains robust with the cargo forwarding business having a record year as they benefit from the continuing expansion of the e-commerce market. Usefully operational gearing is becoming a benefit as ground and fuel services recover while the cost base remains fixed with Q4 in particular seeing higher volume levels. At the same time less than 10% of their business relates to long haul passenger flights so they're hardly reliant on countries opening up for tourism. In this light the shares look strikingly cheap on a P/E of 12 falling to 7 next year as profits rebound which is somewhat below the historical average of around 10 times earnings. Clearly Menzies has never been seen as a quality business but I do wonder if the current board, with Philipp Joeinig as Executive Chairman, can change this perception after a few years of ongoing management changes. He has a solid background in the industry and with £7m invested in the company (bought rather than gifted at higher prices) certainly has skin in the game. There remain risks (principally from the debt load) but with a FY update due early next year we'll soon learn if the recovery continues to gain momentum. (Update)

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

Anyway I was happy to be asked to be part of the Mello BASH team on 11th October where I talked about Robert Walters and Cerillion. As noted below I topped up my holdings in both companies this month and I think that they have a lot more in the tank. I also hosted the sixth StockSlam of the year where nine intrepid investors came together to talk about their current ideas. I pitched Driver Group on the back of a trading update which indicates that business momentum picked up sharply in Q4 which bodes well for the coming year.

In the portfolio it was a more balanced month at last with risers and fallers evenly balanced. As a result my portfolio made +0.8% this month taking me to +5.3% for the year so far. This so-so result hides a more dramatic story which is that in the first two weeks almost all of my gains for the year evaporated. A very sinking feeling. Fortunately this was a correction, rather than a new bear market, and I bounced back almost 5% in the last fortnight. You really do need a strong stomach to invest directly in shares.

Pleasingly my biggest winner was Driver Group with Calnex a close second as investors digested their excellent trading statement. The rest of the risers seem to have been blessed with investors buying back after the sharp falls of September and early October. Sadly no one is taking a chance on Boohoo and its share price is below the depths plumbed in March 2020. No wonder it has a Momentum Rank of 1 with the rolling over of analyst forecasts really twisting the knife. Unhappy times for fast fashion. I think that UP Global Sourcing and DX have also dropped on concerns around shipping, transit costs and wage inflation in the transport industry. We'll know pretty soon whether the concerns are over-blown as both are due to report in November. Hopefully decent management will be able to alleviate these pressures.

Risers: DRV 28%, CLX 22%, SLP 18%, LUCE 16%, RWA 12%, GMR 11%, CAML 11%, BLV 6%, KNOS 5%, AFX 5%, VLX 3%, STAF 3%, CMCL 3%, TEP 3%, BOTB 1%

Fallers: GAMA -1%, CCC -1%, SPSY -2%, CLG -2%, MNZS -4%, SCT -4%, G4M -4%, FXPO -5%, GAN -5%, GAW -6%, TM17 -7%, SDG -8%, DX. -8%, UPGS -12%, BOO -16%

Purchases

Robert Walters Bought at 776p

Following my initial purchase last month I was happy to see an excellent Q3 update this month. There's not much to say except that the share price is now knocking on the door of its ATH and that this could be the catalyst for a break-out. Operationally I'm very happy with the business and its high exposure to the Asia Pacific region. It's fair to say that other recruiters are also benefiting from the buoyant market and that there's an argument for buying them instead. That's true but I've invested in Robert Walters before and have found the management (including the eponymous founder) to be transparent and trustworthy. These are qualities that I value and they make up for a valuation that is predicated on the economic recovery continuing.

Cerillion Bought at 799p

These guys have been flying over the last six months with some very large contracts being won. This has delivered a sequence of positive trading updates along with a record back order book. Management are pretty conservative and so it's reasonable to assume that these orders will turn into sales in due course. The shares aren't cheap on current forecasts for 2022 and 2023 but these don't look right given that they have sales rising and profits falling. This seems at odds with the order momentum as customers invest heavily in the 5G upgrade and expanding their fibre networks - along with the fact that term licence sales are driving higher rather than lower margins. So Cerillion is now a median holding in my portfolio.

Calnex Solutions Bought at 123p

Another company benefiting from telecoms investment, along with hyper-scale data centres, is Calnex. They had a bit of a wobble earlier in the year when they said that last year's results were boosted by sales being brought forward. The implication being that the current year would be comparably softer. However now the board believe that sales and profits will be materially ahead of previous expectations; possibly an easy target to beat given the available forecast but still welcome news. More intriguingly the CEO Tommy Cook notes that this year will exceed the results of the prior record year which, possibly, is not yet reflected in the broker forecasts. It's possible that he is adjusting for the "bought forward" sales in making this statement but maybe he isn't. Either way Calnex is doing well and it's also now a full holding.

Capital Limited Bought at 81p

I have a smattering of holdings in the mining sector, with exposure to the gold price through Caledonia Mining, but I don't own a "picks & shovels" outfit. It's not essential to own one but from what I've read elsewhere (see Private Punter and Small Caps Live) Capital is a solid operator in this space. They provide support services, principally drilling, over the entire mine life-cycle with a side-line in laboratory analysis. They have long-established clients around the globe but have a particular focus on West Africa and the gold mining operations in that region. With the gold price remaining high companies are generating a lot of free-cashflow that they are reinvesting in development and exploration. This means that demand for Capital's services is growing and should continue to grow as miners expand their exploration efforts - which is particularly beneficial as their exploration rigs are currently under-utilised. So why buy now? Well the company put out a Q3 update a few weeks ago containing a raft of good news and lifting revenue guidance for the year. The shares reacted well before falling back into the 77p-84p trading range seen since May. This seems strange given the continued positive news flow and upside on offer as fleet utilisation improves.

Sanderson Design Group Bought at 169p

Lately I've been trying to be more active in cutting back shares where I have concerns and recycling these funds into more attractive opportunities. Sanderson Design falls into the latter camp as both the shares and the company have performed very well this year. The new management have a detailed and sensible strategic plan to refresh the business which is benefiting from a tailwind as customers move away from the minimalist aesthetic. The recent H1 results confirmed that trading is in-line with expectations with some cost and supply chain issues (which is the same for all manufacturers). Despite this the share price has been weak with a retracement back to levels seen before their previous update in July. Given that this announcement raised expectations I believe that this 25%+ fall from the September high of 233p has gone far enough and that we now have an excellent opportunity to top-up. With October and November key selling months for Sanderson's we'll soon know whether this optimism is well placed.

Sales

RWS Holdings Sold at 603p - 11.3% loss
Burford Capital Sold at 789p - 25.1% loss

I've been steadily reducing these non-performing holdings over time to the point at which they became less than a 1% positions. As things stand sentiment is against these companies and they are hardly blowing the doors off with their results. In the long run I'm sure that they will do well but right now I have a better use for these funds. So both shares have now exited my portfolio.

Tandem Group Sold at 592p - 11.2% gain

There's a lot to like about Tandem. It's cheap, growing and has an engaged management team. At the same time it's subject to price inflation, supply chain pressures and post-lockdown behaviour changes. I remain positive that Tandem will do well in the long-term but it's one of the few shares that I own which is directly exposed to these issues and could struggle to convert its order book into sales. So I've taken advantage of the resilient share price to sell my position and put Tandem back on the watch-list.

Best of the Best Sold at 622p - 61.7% loss

I could write an entire post about how I've fucked up this particular investment and maybe I will. Possibly some good will come from throwing away a year's salary. In short I made two key errors and in combination they've proved toxic. The first is that I believed that management were competent and that other investors were over-pessimistic about the post-lockdown challenges facing the company. As a result I believed that trading would bounce back more strongly than forecast. Now that it's becoming clear that privacy changes have fundamentally altered the Facebook model, lifting the CAC for new customers dramatically, this seems much less likely. In retrospect it seems that the board were just very lucky last year. Secondly none of this would have mattered if I'd top-sliced my position as the price rose dramatically and it became over-weight. This would have locked in some of the gains when they were available but I never pulled the trigger. Anyway why sell half of my holding now? Well it's never too late to sell and if BOTB turns out better than expected I can always buy back in. Painful lesson though.

K3 Capital Sold at 339p - 126.1% gain

This was unfortunately a forced sale which is always a risk when you're fully invested. The problem was that I bought these shares through the PrimaryBid placing last year. This turned out to be a great decision but you can't use ISA or SIPP funds with PrimaryBid - you can only use money outside of a tax shelter. This meant that the shares ended up in a trading account that I don't use for any other purpose and rarely look at. Anyhow with some holiday related bills falling due I decided to liquidate this position. I hope to buy back into K3 Capital but with results due out next week I'm going to wait to see how they are received. Ironically I'd like the outlook to be rather cautious even though I have high hopes for K3 Capital in the long run.

Announcements

Cerillion

Following on from the £4.3m contract extension announced last week this update tells us that strong trading has continued throughout H2. In this period two of the largest ever contracts were secured and both orders and the order book are at record levels. As a result turnover will be slightly higher than expected while adjusted PBT should be significantly higher than market expectations. This is excellent news as the strong share price, and high P/E rating, is predicated on the company doing better than expected. Apparently the company is well positioned for the new year and we'll learn more when the results come out in November. (Update)

Robert Walters

As mentioned with my maiden purchase last month it seemed to me that the market wasn't recognising the strong trading at Robert Walters. The recruitment market is red-hot at the moment and the group had put out a string of positive trading updates with little impact on the share price. This update continues the trend with FY profits now expected to be comfortably ahead of the HY results guidance. The big driver here is Asia Pacific with net fee income up a remarkable 54% despite continuing lockdowns in the region. This segment now accounts for almost half of the total group gross profit and there's no sign of growth slowing. Elsewhere Europe and the UK are both growing at double-digit rates, with client demand high, while the Americas and Middle East still look a bit sick. With a bit of luck this update will propel the shares through the psychological barrier at £8 and we'll be away. (Update)

Central Asia Metals

One of the highlights from the interim results last month was that Central Asia Metals planned to accelerate its debt repayments. This is happening and the corporate debt facility should be reduced to zero by next August (while I think that right now net debt is effectively zero). This is testament to the high cash-flows being generated as a result of high metal prices. In this quarter copper production was an excellent 4,146 tonnes which is a big improvement over previous quarters. At this rate they will hit the top-end of guidance (13,500 tonnes) and may even exceed it. Unfortunately the Sasa mine wasn't so fortunate and it looks like lead production will fall short by ~5% from previous guidance. This is a bit of a pain but the operational issues appear temporary rather than anything more serious. The real key to future growth is to find a solid acquisition opportunity and the balance sheet will certainly support a purchase if the board can locate a decent target. (Update)

Spectra Systems

This one has been a slow burner in my portfolio for a good few years now. Over that period it's continued to progress steadily but investors have really lost interest in the last two years. So it's pleasing to see one of their long-time central bank customers place another large order. In a sense these banks provide the recurring revenues for Spectra although with limited visibility. That much is clear from the fact that this order means that the company will beat market expectations for the year. That said the CEO is very conservative and only includes definite revenues in his forecasting which means that earnings surprises are almost all to the upside. Given that the shares have barely reacted to this news there's probably a buying opportunity here. (Update)

Calnex Solutions

Earlier in the year there was some concern that customers had pulled forward their orders and that this financial year would suffer as a consequence. Well this update assuages such concerns. Strong trading has continued in H1 and it seems that this trend will persist in H2. That's great news as now sales and profits will be materially ahead of expectations. That said these forecasts had profits dropping 20-30% from the peak last year so in a sense they were primed to be exceeded. Even now, with the brokers moving from 3.8p to 4.9p of earnings, this is still a drop from last year's 5.6p. Still customers have returned to their pre-pandemic spending patterns and Calnex haven't been impacted by the global semiconductor shortage. This is important as Calnex really needs to ship their top-end hardware to hit their targets. On this front the company has bought forward their investment in the team, which bodes well, and later in the update the CEO states that sales and profits will exceed the prior year. This is quite a statement as last year was knockout with earnings more than doubling. Interesting. (Update)

Caledonia Mining

This is an excellent operational update that bodes well for the full-year. In Q3 a record 18,965 ounces of gold were produced which is up 25% on Q3 2020 and a significant increase on all quarters since then. This is exactly the step-change that we've been looking for since the new Central Shaft enabled increased production capacity. As a result FY guidance has been narrowed to 65-67,000 ounces and with 48,872 ounces already mined it's plausible that the company will beat this target. Additionally the gold price has now stabilised at around £1300/oz which means that Caledonia is generating a lot of cash with few opportunities to spend it. On this front the company has acquired the Maligreen project in Zimbabwe for $4m which offers them a substantial brownfield exploration opportunity. It's going to take a few years to determine the potential opportunity but this board surely knows how to exploit a mine like this in Zimbabwe. (Update)

Gear4music

The board at Gear4music have played a blinder by consistently and accurately stating that sales in FY21 H1 were supernormal as a result of the initial lockdown. This has set investors expectations appropriately and allowed the company to indicate the longer-term trend. That said total sales were only down 8% with the UK remaining robust and Europe suffering as a result of post-Brexit challenges. These tariff changes have clearly made Gear4music less competitive which is why they've opened two European distribution centres. These are now operational and will greatly improve their delivery proposition within Europe. At the same time gross margins remain strong and inventory levels have been beefed up ready for the peak trading period. This is an excellent example of a company making all of the right decisions and accurately communicating the state of the business to shareholders. Given the headwinds facing Gear4music I remain impressed by how well the management continue to navigate these challenges. (Update)

Sanderson Design Group

Sanderson's was very badly impacted by the initial pandemic lockdown but over the past year trading has continued to improve. Last Autumn, a key selling period, was strong and since then we have had a sequence of "ahead of expectations" updates. As a result the share price has roughly doubled as the group has lived up to its "recovery stock" label. These H1 results support this conclusion with sales back to pre-pandemic levels and profits much improved due to efficiency and inventory savings. This process is set to continue with further reductions in product range (dropping the dead wood) and investment in a new digital printer at one of the manufacturing locations. These initiatives have reduced overhead costs although a rise in distribution costs has offset some of the gains (although these have stabilised in recent months). In fact cost pressures cast a shadow over the outlook statement with this being merely in-line due to supply chain and other issues. This is a change to the recent trend but if the key selling weeks of October and November prove buoyant then the next update could be more positive. The fact that the manufacturing order book is at record levels could be a leading indicator here. From a strategic perspective I think that management are pulling the right levers with a focus on growth, optimisation and improving brand recognition. They have key milestones out until 2024 with the USA as a core growth market, marketing focused on strong digital branding and the means to bump up licensing income (which goes straight to the bottom line). So I can see why the share price has dropped 25% from its September peak, as people lock in profits, but I think that the recovery trajectory is clear. The business has been financially fixed and has a wonderful store of IP to work with in the future. Right now looks like a buying opportunity. Note this results webcast is worth watching. (Results)

K3 Capital Group

This is a slightly understated RNS as it includes an update on previous and current trading. It seems that revenue and adjusted EBITDA will be ahead of the figures given in the June update. We're not looking at a material beat but it's still positive news. In the current year momentum remains strong and the group is trading in-line with the market consensus. This currently has sales and profits increasing by more than 20% which makes the shares look good value at their current rating. NB this recent interview with the boss is worth watching. (Update)

Driver Group

While this is just an in-line update, that mentions a healthy cash position, the sub-text is perhaps more significant. The business has really struggled with lockdowns around the globe but activity levels have materially improved in Q4. This suggests that contractors are finally getting to grips with the repercussions of the pandemic which means more work for Driver's fee earners. In addition the troublesome Middle East and APAC regions have returned to profitability which means that they're not acting as an anchor for the wider group. To gain a better appreciation of the changes taking place I recommend watching this investor presentation. With all of the regional heads presenting and taking questions it's a great example of investor engagement. (Update)

Luceco

Investors in Luceco have endured a turbulent few months as the potential for supply-chain issues took centre stage. Fortunately this Q3 update steadies the ship with growth remaining strong compared to 2020 and 2019. The absolute level has declined somewhat compared to abnormally high demand following the initial lockdown but it's still solid growth. Multiple cost pressures remain unfortunately with shipping rates up along with supplier lead times. This means that margin compression will continue into the next half-year before prices rises take effect in H2 2022. So the environment is tough but the management team is keeping focused on overhead control while delivering good customer service. In the longer term Luceco will continue to prosper with their vertically-integrated model but the next six months could be volatile. From an investment perspective I don't think I need to rush any top-ups right now but at least the shares seem to have formed a base. (Update)

Sylvania Platinum

This is a so-so start to the year for Sylvania Platinum. Operations at Lesedi remain suspended after issues arose with the tailings dam during August 2021. You definitely don't want a dam failure and, with a new tailings disposal facility expected to be commissioned by the end of the year, production was halted with the expectation of a resumption by the end of September. This date has now been pushed back to the end of Q2 which is a bit disappointing. At the same time PGM prices have fallen back which has additionally knocked back net revenues. This came in at $29.8m which is rather less than the $41.5m of last year but comparable to the $31.2m earned the year before. Since production is down 12% and 24% respectively clearly high PGM prices are still a tailwind which has helped cash balances to reach $132.7m. This is almost £100m which is a third of the capitalisation of the entire company and a good reason to expect another special dividend. On the upside PGM prices are recovering and management still believe that they'll hit their 70,000oz production target for the year. This is a plausible outcome given improvements being made elsewhere but it'll be a challenge. Still this new research note from Edison is very positive on the basis that demand for Rhodium will soon bounce back and that Sylvania will be able to produce at current levels for many years to come. If they're right then Sylvania shares are very, very cheap. (Update)

Softcat

Another solid set of results from this provider of IT infrastructure products and services. On 17% growth in gross invoiced income profits rose an excellent 27% with strong cash conversion allowing for a hefty special dividend. With analysts forecasting an EPS of 47.2p this is a slight beat with 48.4p being reported (including no adjustments). There's no need to get too excited though as a drop in travel and events costs boosted the bottom-line last year and will act as something of a headwind in the current year. This doesn't concern me since more business travel means more client meetings while a resumption of events will help to maintain staff morale. Outside of this effect the company is also hiring more staff (headcount is up 11%) which will pay dividends in the long run even if costs are incurred before sales increase. All in all this means that operating profits are likely to remain flat in 2022 even as gross profit grows at a double-digit rate. On the other hand Softcat is successfully squeezing more money out of existing clients (average gross profit per customer is up 14.6%) and this is part of the process that has delivered sixty-four consecutive quarters (i.e. 16 years) of organic growth. This is one heck of a record and helps to explain why the shares are on such a high rating. In reading the results narrative the reason for this continued success is clear. Softcat aim to understand market drivers, such as a move to the cloud and a need to beef up security, and to leverage this knowledge when providing the best possible solutions for clients. This is why customers use an intermediary, rather than trying to source hardware/software themselves, and why 95% of the gross profit came from existing customers. This culture is the moat for Softcat and while this remains the business will be successful. That works for me. (Results)

Computacenter

A nice Q3 update which finished marginally above board expectations. This is not enough to raise those expectations yet but the board is very comfortable with its current expectations for the full year. This should deliver record revenues and profits with a pretty good chance of Q4 being strong enough to beat analyst forecasts. Supply shortages are not a big problem but they are delaying the completion of some orders and encouraging other customers to order in advance. This will all come out in the wash but I've no idea what the impact will be in the short-term. However consider this: on both 10th December 2019 and 2020 Computacenter released an unscheduled trading update raising expectations for the year. There are no guarantees, of course, but historically the days after this update have provided a good entry point. (Update)

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

Over half of my portfolio holdings provide services that are technical or digital with no requirement to make or ship anything. This doesn't insulate them from wage inflation, or market sentiment as a whole, but otherwise issues in the physical world make little difference to them. So you might well ask why Gamma Communications has fallen over 20% from its ATH in September? The selling volume is elevated (obviously!) which is at odds with the strong HY results and positive outlook. Equally Belvoir has dropped a similar amount despite having a decent level of earnings resilience from its lettings and financial services segments. For sure the house sale market will cool from its currently elevated levels but the decline looks relatively controlled and Belvoir is more than a simple estate agent.

Still a number of my companies are directly exposed to transport issues as they're fighting for limited volume, paying extortionate shipping rates and suffering extensive delays. I'd say that Boohoo, Luceco, Tandem and UPGS represent my greatest exposure here with all of them reporting issues around container availability and input cost inflation. Fortunately these account for only 10% of my portfolio so the risk is contained while upside potential is retained (particularly so with Boohoo). On the flipside I believe that the logistics operators (DX, Menzies and Clipper Logistics) will benefit from the current transport disruption as customers seek additional help and online shopping remains powerfully attractive. There could easily be some short-term pain, from additional fuel and staff costs, but longer term they are in an attractive space.

Finally about 7% of my portfolio is directly exposed to commodities and that's been a real drag this year. Falling demand from China, ongoing shortages of computer chips and weak sentiment has weighed heavily on this sector for months. Even so metal prices remain high, despite recent falls, and these miners are generating an awful lot of cash. With limited opportunity to re-invest these funds they're choosing to pay this excess cash out to shareholders. This is why Central Asia Metals, Ferrexpo and Sylvania Platinum are effectively on 7-8% yields at the moment which is quite remarkable. It won't last for ever but with miners also offering some inflation protection (in theory at least) I'm happy to place some of my funds in the sector.

Anyway here's the bad news: my portfolio dropped a scarcely believable 9.2% during September wiping out most of my gains for this year. As a result my YTD performance has been slashed to +4.5%. Volatility sucks.

Risers: AFX 11%, VLX 5%, CLX 3%

Fallers: SDG -1%, TND -1%, SPSY -2%, CMCL -2%, K3C -3%, RWS -4%, CER -4%, SCT -4%, KNOS -4%, TM17 -4%, MNZS -5%, G4M -5%, BOTB -7%, GMR -7%, DRV -7%, CCC -7%, SLP -9%, BUR -10%, CLG -11%, GAW -11%, CAML -11%, GAN -12%, DX. -13%, FXPO -14%, UPGS -16%, STAF -16%, GAMA -20%, BLV -21%, BOO -23%, LUCE -38%

Purchases

Robert Walters Bought at 695p

I picked Robert Walters to present to the September Stock Slam without having more than a suspicion that it was a recruiter in a good place to do well. A little more analysis revealed that the company has put out a sequence of positive trading updates this year but with little impact on the share price. I think the reason for this is that the current price is approaching the ATH of ~800p last reached three years ago. This means that there are a lot of stale holders out there who are happy just to get out at break-even. I can understand their thinking but at the same time Robert Walters has survived the pandemic and is now benefitting from a strong tailwind as economies get back to business. Add on a tight labour market along with wage inflation and you're looking at the perfect conditions for a recruitment firm. I expect the coming Q3 trading update to be very positive.

For more background take a look at this Capital Markets Day Presentation.

Telecom Plus Bought at 1179p

Like many others I've been caught up in the energy crisis as my household supplier has gone bust. Fortunately the regulator has found me a supplier of last resort but you can be sure that my fuel bills are on the way up. This is why I took a hard look at switching to the Utility Warehouse. Unlike other energy suppliers UW has a 20-year wholesale agreement with EON which means that they are entirely hedged against commodity price volatility. As a result they're ready to accept new customers. In fact they've been waiting for exactly this moment for quite a while and are ready to move from 650,000 customers now to over 1 million. That's quite a jump and yet the share price is 15% below where it started the year after a slow start. Fortunately that leaves a decent opportunity for the private investor to take advantage before the HY results in November.

Sales

Luceco Sold at 384p - 60.9% gain

I was pretty happy with the HY results this month but other investors were less sanguine. There are clear short-term cost pressures, which is the case for any manufacturing company that relies on container transport, but the board here are competent and have a decent track record. In the medium-term I am positive that Luceco will continue to do well with their exposure to both the trade and DIY segments. That said my exposure to Luceco was reasonably sizeable and so I took the decision to halve my position. By doing this I retain upside exposure, which I want, while protecting some of the gains that I've made with this investment. This seems a more attractive proposition than either selling out entirely or strapping in for what could be a turbulent ride.

Announcements

Alpha FX

These are excellent H1 results with remarkable growth seen in all divisions. Overall revenues surged 90% to £34m with reported PBT up 225% to £15m with this equating to a margin of 45%. Incredible numbers but it's worth not getting too excited as the margin benefitted from short-term lower travel, hiring and entertainment expenses. Still the basic EPS of 27.6p is more than 58% of the current 47.1p forecast and traditionally AFX does better in H2 simply because it's growing so quickly. I can see no change on this front given that the Group's trading has continued to be strong, driven by a healthy demand for services from existing and new clients. In other words I fully expect the board to upgrade expectations when they next report in October. A driver behind this performance is the Alternative Banking division which expands the product offering beyond the core FX space. From a low base this has grown quickly to contribute £9.5m of sales (up from £1.4m) and continues to gain traction with customers. I remain impressed by the management team, led by Morgan Tillbrook (CEO), and their focus on a corporate culture that decentralises authority and gives staff the support that they need to work hard. Despite some large share sales last year (at much lower prices!) the CEO still holds over 16% of the group and is clearly aligned with other shareholders. I see scope for plenty more growth in the coming years. (Results)

Kainos Group

A decent trading update with FY revenue to be ahead of current consensus forecasts and adjusted profit to be in line with consensus forecasts. This suggests that margins have weakened slightly which is probably a result of heavy recruitment given that the headcount is up 19% to 2,409 in just the last five months. That is a remarkable step-change which suggests to me that management are responding to strong growth in Digital Services while Workday Practice continues to secure new contracts both nationally and internationally. It's really no surprise that the share price has been very strong over the last year with this backdrop and I have a feeling that the single-digit growth forecasts will be materially beaten. From this perspective the high forward P/E is perhaps a mirage that reflects caution when it comes to forecasting. (Update)

John Menzies

It's no great surprise that these interim results aren't fantastic, given how disrupted air travel remains, and yet there's a lot to like. Total revenues are down a few percent and yet the business generated an underlying PBT of £10.9m compared to a swingeing loss of £48.7m last year. This tells me that the board have continued to crack down on costs and favour higher-margin business. Even better this is an improvement on the £8.2m delivered in 2019 where sales were around 50% higher. Now substantial government support of £64.7m was received in the half-year, largely against labour and other costs, so it's too early to break out the champagne. Still this support is acting exactly as intended in allowing Menzies, along with other firms, to survive and resize. Looking forward the board expect rising revenues to offset the reduction in this support with a gradual improvement in margins. As it'll take time for passenger volumes to recover it's clear that ground service and refuelling revenues will also rebound slowly. This is why cargo services and handling are so important and profitable in this time where global shipping is so disrupted. There remain risks, since the group is exposed to travel restrictions around the globe, but management appear to have a clear view on how to manage these risks and where they want to expand the business. With analyst forecasts continuing to edge upwards, and the share price still a long way from its 750p highs, I'd say that a current price below 300p doesn't reflect the recovery potential. (Results)

Spectra Systems

It's not surprising that Spectra flies under the radar of most investors. It's a small (£60m market cap), US company operating in a secretive sector with no broker coverage. Hardly a household name. This is a shame because the business has steadily grown over the last 5 years with a ROCE heading towards 20% and excellent free cash generation. Broker forecasts, such as they are, imply around 10% growth in 2021 and yet these interim results suggest that the company is growing much more quickly. In this period revenue rose 23% to $8m while earnings rose 45% with EPS jumping from 4.6c to 6.7c. The FY forecast is for just 11.8c so H2 would meet this by delivering just 5.1c of earnings which seems pessimistic. Reasons for believing this are a new customer win in the high-margin K-cups segment, a new TruBrand customer and reaching a key milestone with their key central bank development contract. In reading through the results narrative I'm impressed by the breadth of technical expertise shown by the company which speaks to its academic heritage; it's this marriage of technical innovation with short/long term financial prospects that makes Spectra so appealing. At the same time the balance sheet is rock solid with $12m in cash; more than double the sum of all current and non-current liabilities. In short this is a conservatively operated company which makes sense given that the CEO Nabil Lawandy owns 5% of the shares. A slow burner perhaps but with unexpected upside potential. (Results)

Belvoir Group

Prior updates meant that these excellent H1 results were fully anticipated but the numbers bear repeating. Revenues rose an impressive 41% to £13.8m with 33% of this growth being organic. Within here Management Service Fees increased 26% while Financial Services revenues jumped 51% and property sales climbed an amazing 78%. As property transaction levels return to more normal levels clearly sales income will fall along with a decline in new mortgage business - although remortgaging remains active due to the very low interest rates on offer. Independently the lettings market remains buoyant and will likely return to providing over 60% of all revenues (which makes the group less exposed to volatility in the property sector). The upshot is that the FY results will be very good but then next year will be up against a tough comparative (hence forecasts showing a single-digit drop in profits). With 24 years of unbroken profit growth behind them it's clear that management want to maintain this trend and I suspect that they'll achieve this goal. More importantly the business has been through a number of property cycles in that time and now the group is more diversified than ever. This arrangement helped Belvoir perform far more profitably during the pandemic than anyone expected and the actions of the management throughout have been consistent with their strategy to grow the business on all fronts. The main risk that I see is one of slowdown with near-term growth being flat. Even though the P/E ratio is moderate at 16-17 it's plausible that some deflation may occur. (Results)

Sylvania Platinum

If you performed a simple filter to find the "cheapest" shares in the market I suspect that Sylvania would be near the top of the list with a P/E of 3-4. That's nice but it's not the whole story since a low P/E rating usually means that investors don't believe that earnings are sustainable. With Sylvania there is some merit to that argument as they cannot control their destiny in several key ways. The first, and largest, problem is that PGM (platinum-group metal) prices are very volatile as supply/demand waxes and wanes. For these results the average PGM basket price was up 83% to $3,690/ounce with rhodium being a huge factor in the increase. Lately the rhodium price has retraced and Sylvania isn't as profitable. At the same time the company uses waste dumps for processing and relies on other people to mine chrome ore and deliver fresh waste material. This didn't happen during the pandemic and so feed grades reduced (lifting costs). Finally these dumps have a finite life and they are all in South Africa. That's the bad news. The good news is that management are fully aware of these issues and, where possible, are working hard to mitigate them. This means using some of their $100m cash pile (and high cash-flow) to upgrade their processing operations, develop new projects and research the potential in reprocessing low-grade ore. So far the operational management have done a great job on these fronts and see themselves delivering at least 70,000 PGM ounces again this year with the potential for future growth. If you believe that metal prices will remain strong, as the automotive sector recovers, then Sylvania really are dirt cheap and offer high windfall dividends along with capital growth. (Results)

Gamma Communications

This has been a very steady performer for a number of years with earnings growth outstripping sales as the quality of these earnings has improved. So it was a bit of a surprise to see the share price drop by just over 10% on the day of the results. What could have spooked the horses? On the face of it the numbers look good with revenue up 23% and adjusted EPS up 30% to 30.6p. These numbers are almost exactly half of the FY forecast and H2 is generally as good as or better than H1. The outlook is also positive with sales activity back to normal while FY revenue is expected to be in the forecast range (£446.8m-£460.0m) with adjusted EPS being in the upper half of expectations (57.6p-63.1p). This suggests EPS of ~61.7p which is slightly less than the consensus of 62.1p just prior to the results. OK so the combination of a high P/E rating with a slight drop in analyst expectation seems to have done the damage. Fine. I've learnt not to sell quality companies when there's a bump in the road - especially when the bump is hard to see. Both the UK and Europe are growing with strong recurring revenue and acquisitions providing a boost. Sure I prefer organic growth but the board have remained consistent and focused with their purchases as they seek to replicate their success in Europe. Along with this geographic expansion the company is building out its product range to cover Micro, SME and Enterprise clients more effectively. The key insight is that simplicity is key for small businesses while larger ones need complexity to cover their product integration needs. With the long-term tailwind of migration to UCaaS products continuing I'm happy with where Gamma is right now. (Results)

Luceco

Investors love to argue whether technical or fundamental analysis is best while I favour a combination of both. I do wonder what chartists make of Luceco though with the price rising 25% in a week at the end of August (on no news) before immediately turning around and falling 25% both before and after excellent interim results. Should I have sold at the top? Should I buy more now? Who knows. What is clear is that a 50% rise in sales has led to a doubling of profits as margins have materially improved at the operating level (from 12.3% to 17.6%). Management ascribe this to good operating leverage from sales growth which compensates for the many challenges facing Luceco. Chief amongst these are significant cost inflation from raw materials and supply chain disruption with these expected to intensify before they abate (compressing the gross margin). It's probably this factor that has spooked investors and yet the board have handled such pressures before and the company is benefitting from its vertically integrated model. Their narrative on this front is admirably clear and spells out where the costs are coming from and how they plan to pass on these costs with some delay: the upshot is they'll hit the upgraded forecast of £39m in adjusted operating profit but additional upside (i.e. an earnings beat) may not happen in H2. That's a touch disappointing, and the share price may struggle in the short term, but Luceco are coming out of the pandemic stronger than when they entered it. A clearer picture of progress will be available in the October Q3 update and may provide a buying opportunity. For now I'll watch the price to see if an unmissable opportunity arises. (Results)

Computacenter

These are some cracking interim results that fully back up the confidence of management (as highlighted in their recent update pointing out how analysts were behind the curve with their forecasts). Total revenue improved just under 30% leading to earnings jumping almost 60% to 73.1p. The only adjustment applied is to reverse amortisation of acquired intangibles, which is quite acceptable, meaning that this is a "clean" earnings figure. As management have highlighted even a flat performance in H2 (which last year was 79.4p) would deliver 152.5p of earnings which is ahead of the analyst consensus. Across the group most regions displayed strong growth, and margin improvement, with North America being particularly strong due to acquired and organic growth. In contrast France struggled with an 8.5% drop in revenues pushing the segment from profit into loss. That's a bit disappointing but it's worth noting that the H1 PBT of £119m is greater than any FY profit made prior to 2019 and so would be the 3rd largest annual profit ever for Computacenter. Just let that sink in for a moment as it's a remarkable achievement. With June 2021 also being the most profitable month ever it's fair to say that the growth momentum persists. Still, as with other companies, product shortages persist with this resulting in some customers delaying orders to H2 and others bringing them forward into H1. Management don't say whether these effects balance out but they hope that things will ease by the end of the year which will release the working capital that has been used to build inventory. Until then this will remain the key issue for Computacenter with delayed delivery times holding back the timing of sales. The board have managed this situation very well so far and really you have to trust that they will remain focused on this issue. I believe that they will. (Results)

Gear4music

Last year was absolutely knockout for Gear4music and the board have consistently guided that this year cannot possibly match that pandemic boost. However Q1 was stronger than anticipated with growth returning in the UK over the summer months. This is excellent news. European sales are behind last year due to post-Brexit challenges that make Gear4music relatively less competitive. However distribution centres in Ireland and Spain will come on-line during H2 which should deal with these issues and lead to further growth. At the moment trading is in-line with expectations but clearly the company is doing well and on the hunt for sensible acquisitions - such as the purchase of AV Online with its exposure to the audio-visual market. This doesn't look too expensive and it adds another niche to the business offering. I like the way that things are going here. (Update)

Burford Capital

These results were well telegraphed in the business update a few weeks ago so I don't intend to cover them in depth again. Suffice to say that Burford continues to offer the potential for outstanding returns in the future; the problem is reaching that future glory. Right now this half-year saw record investment with new commitments up 334% to $503m and deployments up 229% to $398m. This takes the portfolio to a remarkable $4.8bn in size which is materially larger than the market cap of $3.2bn. The fly in the ointment is that realised profits were not much greater than zero depending on the adjustments that you allow. I understand that the pandemic has very much reduced the flow of cases reaching completion, and that these cases are merely delayed rather than lost, but it would nice to be positively surprised by Burford for once. Quite possibly that day is approaching but with sentiment so negative I suspect that we'll have plenty of time to take advantage when it happens. (Results)

Gaming Realms

Since the full-year results emerged in April, with a positive outlook, there has been no further statement on trading. Instead we've seen licenses being granted in Pennsylvania and Michigan, an agreement signed with International Game Technology and a £100,000 share purchase from a non-executive director. This all suggests that things are going well and indeed these results are excellent with licensing revenue up 73% and adjusted EBITDA more than doubling. The latter is really a fake metric - more usefully the half-year has swung from a £0.7m loss to a £0.8m profit with cash more than tripling. This move into profit is the investment case for Gaming Realms. It has a fixed operating cost base so any additional revenue falls to the bottom line. This is why current FY22 forecasts have profits doubling, and then rising another 50% in FY23, on a 30% rise in revenues as more licenses are sold in more US states. For now the board expect FY21 trading to be in-line with expectations as customer demand remains high and new Slingo games continue to be developed. An additional angle is that Ontario is looking to regulate iGaming and this market could be bigger then any regulated US state so far; although this is a longer-term prospect. The eagle-eyed among you will notice that £1.6m of development costs have been capitalised in the period, which is material compared to the reported profit, with £1.1m of these being amortised. However the net book value of these costs is just £4.7m suggesting that they are being amortised over a 4-year period which doesn't seem unreasonable for the games that they are creating. On the whole then things are looking good for H2. (Results)

Tandem Group

This developer/distributor of sports, leisure and mobility equipment had a great pandemic with profits rising a mighty 58%. Management sound confident that they can build on this success but plenty of other good companies have found it hard to repeat the gains of 2020. Fortunately Tandem Group is chugging along with sales up 14% and profits increasing a tasty 35% to 31.2p. This is less than the 40-odd pence made in the last H2 but Tandem's results are always biased to the second-half because this includes the Christmas period. So the numbers look good despite increased supplier and freight costs that could only partially be passed on to customers. Looking forward demand remains high with a current sales order book of ~£30m (compared to £12m in 2020) with some of this increase perhaps down to supply/shipping issues. Bikes and bike components remain hard to source with this segment alone generating over £20m of the order book. Other reporting segments such as Toys and Home & Garden are also strong with slightly less acute supply chain pressures while eMobility is growing like crazy as consumers go all-electric. The other thing that caught my eye is that the company spent £2.8m buying land adjacent to their existing site in April, which makes perfect sense, and that they are progressing towards the construction phase. Unfortunately the build cost has edged up to around £4m (from £3.5m) because of materials inflation and difficulty with sourcing. This won't break the bank but it does highlight where inflation is having an impact. Still trading looks strong for the second-half with profits anticipated to rise 20% year-on-year. (Results)

Team17 Group

Another company that had a good 2020 was Team17 with their computer games in high demand. Sales and profits both jumped by about a third making for a tough comparison this year. Still the analyst consensus is for a moderate rise in earnings from 16.8p up to 18.6-19.1p. These H1 results back up this optimism with a small rise in sales translating into a small rise in profits with high operating cash conversion. In some ways this "steady as she goes" outcome makes sense as the group now has over 500 digital revenue lines with lifecycle management extending to new platforms and adding new content on a continual basis. This avoids the boom-and-bust cycle seen by other games developers at the cost of smoothing revenue growth. Exactly the same approach will apply in H2 with the acquisition of StoryToys providing access to the edutainment vertical. I don't expect Team17 to shoot the lights out anytime soon but the board have managed the post-pandemic slowdown adeptly and continue to provide a safe pair of hands for our company. What they do say is that sales should be second-half weighted, due to the sales mix and addition of StoryToys, which feels both reasonable and promising. The backdrop for this is a video games market set to deliver flat revenues, compared to an exceptional 2020, with growth returning in future years. This, along with shortages of high-end hardware, may have less impact on Team17 due to their avoidance of AAA releases. On this basis I'm happy to hold Team17 for the foreseeable future. (Results)

Staffline Group

After a near-death experience over the past few years it's pleasing to see Staffline firmly on the road to recovery. It's not out of the woods yet but the substantial capital raise (and debt refinancing) in June has placed the group on a sound financial footing. This was key for two reasons. The first, obvious one, is that the group couldn't pay back the deferred VAT owed to HMRC and would have gone insolvent. The second, more subtle one, is that customers choose partners who aren't about to go bust and now Staffline is in that happy position. This means that the company can take advantage of the current buoyant recruitment market as the economy unlocks, in the UK and Ireland. More specifically Staffline UK handles blue-collar temporary roles in agriculture, supermarkets, driving, logistics and more with clients relying on Staffline to get these positions filled in a competitive market. At the same time PeoplePlus helps people to retrain and prepare themselves for working which is currently a hot topic with the Government as furlough comes to an end. There's a certain symmetry between these two parts of the business. In Ireland, which is emerging from a harder lockdown, the roles are more white-collar and permanent but still candidate demand remains high. In aggregate all three divisions are doing well and the group as a whole has returned to profit breakeven on sales that are marginally higher than in 2020. The key drivers here are tight cost control combined with higher-margin contracts and exposure to resilient growth sectors. For now Staffline is trading in-line with recently increased forecasts but I think that business momentum will lead to further upgrades. (Results)

Central Asia Metals

The investment case for Central Asia Metals rests upon it being a stable producer of copper, zinc and lead while these base metals remain in demand. This fact means that these metal prices should remain high (until sufficient supply comes on-line to swamp the market) with potential inflation an additional tailwind. An extra benefit is that elevated prices are generating a high-level of cash-flow which is allowing the company to pay down its debt rapidly and supports a high dividend payout. The H1 results illustrate these effects neatly with a declared dividend of 8p being equal to 40% of the FCF and a 3.5% yield at the current share price. At the same time $20m of debt was repaid with another $10m repaid early after the period end. This may well have left the company with no net debt at all which bodes well for shareholder returns. One concern that I did have prior to the results was that output of all three metals might not meet the full-year targets with that Sasa mine having some lower grade issues. However the board are guiding for Kounrad (copper) production at the upper end of guidance and for Sasa (lead and zinc) to be at the lower end. Looking forward the board are keen to locate another producing resource and reviewed 18 opportunities during the period with one site visit. None of these have been taken further but this is the route by which Central Asia Metals will materially increase production. For now the two facilities that they own are operating effectively with 70% of their production unhedged (the hedged 30% is in place to cover expansionary capex at Sasa). (Results)

Games Workshop

Apparently trading for the first quarter has been in line with the Board's expectations. Whatever those might be. Sales are growing, which is significant given the challenging comparative, but so are freight costs. Still the company must be able to pack a lot of plastic into each shipping container so the impact can't be too bad on a per-unit basis. (Update)

Boohoo Group

These results went down like a bucket of warm sick with the share price plummeting 20% to long-term support at 210p. The reason appears to be a "perfect storm" of events with slower growth compared to 2020, higher operational costs, higher capital investment and increased working capital demands. All of these have conspired to knock back margins reversing 20% sales growth to a 20% drop in profits at the bottom line. At the same time cash conversion has been weak and net cash is down to £98m. With just 3.8p of EPS delivered, against a FY forecast of 9.8p, the group needs a much higher second-half weighting than has ever been seen before to make up the lost ground. This is a big ask and a profit warning is plausible in H2 as costs remain stubbornly elevated. The problem is that higher freight and labour costs will continue to impact in H2, and into the following year, before falling back as shipping and air travel recovers. These costs are hard to pass on if you want to remain competitive. At the same time delivery times have stretched out, reducing demand outside of the UK, although this effect is reducing more quickly. It's not surprising that Boohoo are going to open a distribution centre in the US (finally!) with longer term plans for a centre in Europe. The latter is less important though as the EU market is nowhere near fully developed with France and Ireland being the key countries. Still demand has recovered strongly in August/September and the board are confident regarding H2 sales (if not profits perhaps). However if you watch the results presentation it's clear that the board remain ambitious with huge investments being made into the new brands, improving warehouse efficiency and building a single tech stack for the entire group. In addition Debenhams is getting a brand new website which is not even 50% filled out yet but should be fully operational before peak buying season. As a result their addressable market is now 16-50+, as opposed to 16-24 2 years ago, which makes Boohoo a much more complete retailer. So the longer term proposition remains compelling but expect short term pain as Boohoo digests its many acquisitions and deals with cost headwinds. Fortunately there is a very capable executive team in place although I have to say that Mahmud Kahmani looked disengaged during the results presentation with him sitting there on his phone and not even listening to analyst questions. I would not be surprised if he stepped back from his role in the near future. He can be proud of the business that he has created though and I fully expect Boohoo to continue being a British success story. (Results)

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

Fortunately, while the BOTB debacle has probably reduced my annual return by 6-8%, which is undeniably painful, the incident is far from terminal. A fair level of diversification and strong performances from many other holdings have allowed me to scrape a positive return of 2.3% for the month to leave me at 15.1% up YTD. Hopefully this strength across the board will continue in the Autumn as corporate investors return from their holidays and start gearing up for that Christmas bonus. After such a volatile year I could certainly do with a bonus to make the winter more bearable.

Risers: STAF 25%, VLX 17%, BUR 17%, RWS 14%, LUCE 14%, GAN 13%, CLX 13%, KNOS 12%, DX. 10%, AFX 9%, SCT 8%, GAMA 8%, UPGS 7%, SDG 6%, BOO 5%, CCC 5%, MNZS 5%, K3C 4%, DRV 4%, BLV 4%, SPSY 3%, G4M 2%, SLP 1%

Fallers: CAML -1%, GAW -1%, CMCL -2%, CER -2%, CLG -3%, TM17 -5%, GMR -6%, FXPO -21%, BOTB -57%

Purchases

None.

Sales

Belvoir Group Sold at 320p - 100.0% gain

This top-slice of my Belvoir position is simply a risk mitigation exercise. I happen to believe that this is a very well run company but any business can hit a speed-bump and it's unwise to become too exposed to any large position. This goes against the thesis of running your winners perhaps, and finding the next 100-bagger, but in every case where I've let a position become too large it has come back to bite me. Sure I'm a bit sore from Best of the Best but if nothing else I should learn from this painful experience. Hence I've cut back this holding by an eighth as the price remains very strong.

Announcements

Belvoir Group

As expected Belvoir has continued to trade very strongly (exceptionally even) due to the buoyant property market. This has driven high levels of growth in both the property and rental divisions with half-year revenue up over 40% compared to both 2020 and 2019 (on a like-for-like basis). The key concern is that this performance is unsustainable and in some respects that's true. The housing market needs to return to more normal transaction levels and it appears that this is happening in a controlled fashion as the stamp duty holiday is gradually removed. Off-setting this are the recent acquisitions of Nicholas Humphreys and the Nottingham Building Society mortgage business. Both of these fit neatly into the roll-up strategy being pursued at Belvoir and are immediately earnings accretive. As such the group continues to trade well ahead of expectations set at the start of the year. (Update)

Team17 Group

This is barely an update in that the group is trading in-line with expectations. The bigger question is whether someone will make a bid for the company given how hot the games development sector is at the moment. That would be a surprise but not wholly unexpected. (Update)

Ferrexpo

These H1 results are pretty impressive at first glance with revenue up 74% and profits up an immense 165% (from $250m to $661m). In fact they're pretty amazing at second glance with strong cash-flow putting the group into a net cash position of $213m and allowing for a tripling of the interim dividend. Considering the hefty debt load in place just five years ago this is an excellent turnaround for the balance sheet. Still it's worth noting that iron ore prices doubled year-on-year, dominating sales growth, and that these frothy prices are already moderating. This process is likely to continue as new supply comes on-line and demand reduces as governments wind down their pandemic stimulus. Still the board believe that a higher base level will remain and that the company is in a position to command a price premium. The reason behind this is that Ferrexpo produces high-grade (62% and 65% Fe) pellets that can be fed directly to blast furnaces. They are also moving towards even higher grade (67% Fe) direct reduction pellets that reduce carbon emissions and allow for the production of "green" steel. This focus on pellets drives capex decisions and by the end of Q3 all of the pelletiser lines will have been upgraded to boost output. So the outlook for H2 depends on how increased production balances against the forecast price decrease of ~10% implied by the futures market. My feeling is that if prices remain near this level then Ferrexpo will continue to generate high FCF allowing it to fund growth capex, without recourse to debt, and to return cash to shareholders. In the longer term their focus on carbon-reducing pellets makes sense and they should be able to sell into whichever markets are demanding this commodity. For more colour it's worth watching the results presentation since it covers all of this in some detail. (Results)

Caledonia Mining

Another miner and another set of excellent results (despite the headwind of a falling gold price). Operationally Q2 hit a new production record of 16,710oz, taking H1 production up to 29,907oz and more than making up for a poor first quarter. Even better production in July hit 5,995oz which puts the mine on track to hit guidance for 2021 and is a huge step towards the target of 80,000oz for 2022 and beyond. Now if the new production level is sustainable, which it should be now that the Central Shaft is fully operational, then there's a chance that this years guidance could be beaten. That would be nice. As it is the all-in sustaining cost of $933 per ounce is lower than projected ($985 to $1080) and should fall further as production rises given that most of the mine costs are fixed. This leaves a decent margin with even a lower gold price and helps explain why adjusted EPS is up 70% to 62.6c, on a 31% rise in revenues. Cash generation remains strong with net cash from operating activities up to $12.7m leaving the company well able to pay a higher dividend and cover capex costs. These will be reasonably high over the next six months as the solar project ramps up, for completion in April 2022, but will reduce in future periods. It's a shame that the Glen Hume asset didn't meet requirements, leading to a $3.5m write-off, but I'm glad that the board aren't throwing good money after bad. I remain impressed by the management here but it's important not to get carried away given that this is a single asset company operating in Zimbabwe! (Results)

Best of the Best

Well this is a kick in the teeth and make no mistake about it. Foolishly I trusted management when previously they said that they hoped to see customer engagement return to normal levels. Maybe the clue was the fact that they didn't state what "normal" might be. Anyway the big problem is that customer acquisition costs have sky-rocketed due to social media (i.e. Facebook) costs increasing by up to 60%. Since the total marketing budget hasn't changed this means less ads and 40% less new customer revenues. Is this the right approach? Should BOTB just increase its budget and take the lower margin? It's hard to know as these new customers were generating 20% of total revenue with this fraction now down to 10%. This means that existing customers are providing 90% of total sales with their engagement down, due to Summer and end of lockdown, but not catastrophically. This is all well and good but the problem is that BOTB is very operationally geared - much more than I had thought. With costs mostly fixed the 15% drop in sales translates into a 57% drop in profits. OMG. I suspected that the forecasts for moderate growth this year were rubbish but not to this extent; this update slashes the forecast by a hefty 62%. Clearly the business was an astonishing lockdown winner with higher revenues and lower acquisition costs leading to massively inflated profits. Anyway there's no point crying over spilt milk after such a profit warning. I don't think that the business model is broken but with increased competition it is certainly "normalising". (Update)

GAN

I must admit that I thought that this year would be a strong one for gaming shares with exposure to the unlocking of US states. However it may be a case of it being better to travel, rather than arrive, since this has been a volatile sector recently. Still GAN continues to make strong operational progress with 11 real money gaming launches in the year-to-date and significant progress made integrating the new sportsbook engine into their B2B platform. As an outside observer GAN appear to be successfully positioning themselves as a go-to partner for large gaming operators which should, in time, pay dividends. That said the stand-out performer in Q2 was the B2C segment with revenues up 68% neatly off-setting flat B2B revenues. This rather validates the acquisition of Coolbet back in January with this new business outperforming all expectations so far in addition to smoothing group revenue volatility. Sadly the group isn't yet profitable at the bottom-line, although gross margins remain high and stable, as investments in talent and technology are growing in line with sales. As a result forecasts indicate a solid loss this year followed by a much smaller one in 2022 and profitability in 2023. Looking at the change in these forecasts over time it seems that this date has been pushed out, which would explain the share price weakness, but equally this could go the other way given momentum in the business. For H2, GAN expect continued strong performance from the B2C segment (particularly in Latin America and Northern Europe) as well as from their B2B segment as they gain new client wins in major markets. In addition they indicate that profitability metrics will improve as revenues scale up. Overall I'm happy with progress and look forward to the rest of their financial year. (Results)

Calnex Solutions

This is a simple in-line statement with the first quarter seeing strong trading and good order levels. Usefully the company has not experienced any negative impact from the global semiconductor shortage which is encouraging. That's it for now but hopefully we'll see a proper trading update before the interim results in late November. (Update)

UP Global Sourcing

This is a fine, if understated, full-year update. From a numbers perspective revenue and PBT will come in ahead of the market consensus which is excellent news given the disruptions of the past year. This means that EPS will be up 25-30% to around 10.5p with analysts currently estimating 13.8p for 2022. This will include a full year's contribution from the recently acquired Salter business while the core order book is currently ahead of this time last year. The biggest challenge right now remains shipping with retail customers being prioritised ahead of stock purchases (directly for the group I presume). This is a concern but management at UPGS have shown themselves able to deal with challenges before and I have valid reasons to trust their operational capability. Still it is an unwelcome headwind and I can see why the board aren't rushing to upgrade expectations. (Update)

Burford Capital

I must admit that I lose the will to live a little whenever I see a Burford announcement. It's not that they're bad, far from it, but the level of detail is punishing and I'm not sure that I wish to take the time to understand it. That's where the opportunity exists, of course, but equally it's taking forever for anyone to spot this theoretical opportunity! At the top-level this half-year period was relatively quiet, with pandemic related delays still featuring, although high levels of commitments and deployments were achieved. This means that actual asset realisations have been subdued leading to a profit of around $20m for the period, ignoring the impact of non-cash accruals, which is low considering the full-year forecast of over $200m (although these forecasts receive no guidance whatsoever from management). If you include the non-cash adjustments, which relate to compensation expenses in a moderately technical manner, then the company will report a loss. With this in mind I can't see the shares exactly surging in the coming months despite Burford appearing to provide ever-improving prospects from its volume of funded cases. One day this company will prove its worth - I hope. (Update)

Clipper Logistics

These are pretty knock-out results from Clipper, after a subdued few years, with profits up 34% on a revenue increase of 39% to £696m. It's hard to put an exact figure on the EPS though because there's quite a gap between the basic value of 21.3p and the underlying basic EPS of 13.1p. I need to look at the reason for this difference but more importantly cash generation remains strong (up 44% to £87m) with net debt falling from £45m to £17m. From an operational perspective the pandemic has created a permanent shift to online shopping which has driven record volumes for CLG with multiple new contract wins. The company has clearly benefitted from this change with a significant expansion in both headcount and estate size deemed necessary to cope with demand. In the new financial year trading remains strong, and in-line with recently upgraded guidance, with the prospect of yet more new contract wins as clients appreciate the value of its services. It's this exposure to the unstoppable rise of e-commerce, and the necessity for existing retailers to maximise sales in this channel, that draws me to Clipper as a company with a significant growth runway. The business model is proven as are the management team. However the group is expanding into Europe and perhaps the US which adds execution risk. European logistics is expected to be a high growth area in the future, and the group is already operating successfully on the Continent, but I do wonder whether stretching the board to cover North America is sensible. Still that is why we pay them the big bucks. (Results)

Computacenter

This is a rather unusual trading update in that analyst engagement (or rather the lack of engagement) has forced the company to make an unscheduled announcement. The problem is that many of these analysts have made no changes following the strong July update and so their forecasts are lagging the Board's expectations. As they point out the previous H2 was very strong, making growth challenging, but even a flat performance would see them 10% ahead of the market consensus. For sure there are headwinds, which is always the case, but the company sees tailwinds also from their momentum, order backlog and history of acquisition. So there is all to play for in the second half of the year. (Update)

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

Anyway the stand-out performer in July was Belvoir as investors digested its trading update and realised that the gravy train was still rolling. Other risers seemed to be less news driven and more a reaction to general good news across the market in spite of known headwinds.

On the downside Boohoo found itself on the rack (again!) as negative press articles continued to appear along with the fact that the founder will have to appear in front of a US court. I still don't think Boohoo's customers care though. Sylvania also fell sharply on a weaker than expected Q4 production report as the Rhodium price retraced and civil unrest increased in South Africa.

Risers: BLV 27%, GMR 23%, KNOS 19%, TM17 15%, MNZS 15%, SDG 13%, FXPO 12%, SCT 10%, CCC 9%, STAF 8%, AFX 7%, GAMA 7%, CAML 6%, CLG 5%, DX. 5%, BUR 4%, RWS 3%, GAW 3%, CMCL 2%, TND 2%

Fallers: CLX -1%, G4M -3%, LUCE -4%, VLX -5%, UPGS -5%, CER -7%, GAN -7%, SPSY -8%, BOTB -9%, DRV -12%, BOO -13%, SLP -17%

Purchases

UP Global Sourcing Bought at 209p

In June UPGS announced that they were buying Salter Brands for £34m and raising £15m to partially fund the acquisition. A quick back of the envelope calculation suggested to me that the purchase would significantly enhance earnings - as indicated by the board - and make the shares even better value at current levels. In addition this would remove any risk around the licensed Salter brand, along with eliminating royalty payments, while materially improving the brand portfolio of the group. In other words this purchase was bang in line with the group buy and build strategy. Unfortunately I was unable to take part in the placing and decided to wait for a pullback over the summer. This subsequently happened with the price dipping to the £2 level but I wasn't looking to be greedy as anywhere in the 200-220p range is good value in my view.

Boohoo Group Bought at 296p

There's no point going over the old ground around how much of a pariah Boohoo is for institutional investors. They're just not interested despite an excellent track record of double-digit growth. I guess that their caution could be rewarded if Boohoo turns out to be a giant fraud but there's no doubt that this is a real business with a growing customer base. So I'm taking the opposite side of the trade and have picked up a few more shares below the £3 mark. Personally I see a huge and unwarranted discount being applied here that's at odds with a P/E rating heading below 20 (and that's without any expectations being beaten which Boohoo have achieved multiple times). I'm sure that I'll have to deal with short-term volatility but I can deal with that for the long-term prize.

Belvoir Group Bought at 239p

I listened in to an investor webinar in July where the Belvoir management talked about trading and how it was still going very well. Right in the middle of the call I took another look at the share price and was surprised to see a fair amount of recent weakness. This pullback seemed directly opposed to the narrative that I was hearing so I took the opportunity to add to my already large position. With the share price forming a base at around 240p and a positive trading update due before the end of the month I figured that my downside was limited.

DX Group Bought at 32p

The investor reaction to this month's trading update was lukewarm to say the least which I find perplexing. The business is expanding like crazy, it's bringing in more revenue than management expected and the board are hugely invested in its success. Perhaps there's a persistent seller out there capping the share price but sooner or later these shares will break out. Anyway I decided to add to my holding to make it a 5% position in my portfolio. This is as high as I'm willing to go with my purchasing but if all goes well the shares will grow to the maximum weighting of 10% that is my limit for any position.

John Menzies Bought at 269p

On a Monday in late July the market, for some reason, took fright with various small and mid-cap shares plummeting 10-20% for no reason. This was a bit alarming to say the least and it would have been useful to have some cash lying around to take advantage of the opportunity. Unfortunately I only got the chance to buy one share and that was John Menzies. The price on offer was absurd, given the recent trading update, and I bought as many shares as I could at this level. A reasonable morning's work given that the market bounced nicely on Tuesday.

Sales

Fonix Mobile Sold at 146p - 15.4% gain

With no news from Fonix and an opportunity to top up UPGS below their recent placing price I decided to make the switch. There's nothing particularly wrong with Fonix but they are a recent IPO and it's surprising how often these new listings disappoint in the first year. It's almost as if the selling shareholders know more about their business than we do and tend to choose a highly opportune moment to cash out! Anyway Fonix is now back on my watchlist and I'll monitor any news-flow with interest.

RWS Holdings Sold at 573p - 15.3% loss

This has been a steady, high quality performer over a good number of years. Sadly the SDL acquisition last year seemed to spook a lot of investors and the share price has been persistently weak since then. This doesn't worry me too much since the RWS board have a consistent track-record of successful integration and I think that they've under-played the benefits of the merger. That said there could be ongoing issues now that we've left the EU and I probably bought more of the shares than was prudent at the time of the acquisition announcement. So with this in mind, and to give myself the opportunity to buy elsewhere (such as with DX Group), I've reduced my position by half. I think that RWS will continue to do very well in the medium term though and will probably increase this position again if trading proves stronger than anticipated.

Sumo Group Sold at 508p - 56.4% gain

Another gaming company and another takeover. Last time, with Codemasters, waiting for a competing offer was the correct strategy even though I held on too long. This time around the 43% premium is healthy, Tencent already hold 9% of the shares and it's clear that they have deep pockets. So I think that we're unlikely to see a heavyweight battle here and that Tencent will walk away with the spoils. Fortuitously this announcement came on the same day that the market decided to play silly buggers so I had no difficulty in hitting that sell button.

Belvoir Group Sold at 281p - 17.3% gain

In a piece of very short-term trading I held these shares for just over two weeks before flipping them. That's not my usual style but the sharp re-rating had pushed my total Belvoir holding up towards my maximum size limit and I decided to reduce my risk exposure rather than be greedy. After all while I was pretty sure that the next trading update would be very positive you can never tell how the market will react. Better to be safe than sorry.

Announcements

GAN

Back in May the directors raised their full year revenue guidance to a range of $103-108m on the back of $27.8m in revenues for Q1. In this half-year update it's clear that the business has moved on with revenues of $34-35m expected to lead to an adjusted EBITDA of $3-7m. Now the latter figure can be whatever management want it to be but the acceleration in sales is significant. As a result FY guidance is being raised again to $125-135m which is excellent news. Why then is the share price so weak? I've no idea since operationally GAN is really delivering. The big driver here was a stronger than expected performance from Coolbet in Latin America and Northern Europe. This is a recent acquisition and it's pleasing to see it making an impact. At the same time the B2B business is performing in-line with expectations and continues to win clients. So I'm happy to look through the depressed share price given the growth potential on offer. (Update)

Caledonia Mining

A short but pleasing operational update for Q2. Record production of 16,710 ounces of gold was achieved which is 24% up on the same quarter last year. The first quarter wasn't so great this year so H1 production is only up 8% to 29,907 ounces. Still the company is on target to hit its full-year target and I remain impressed by the capability of the mining team to keep delivering. (Update)

Central Asia Metals

This update for H1 doesn't contain any financial guidance but we can make some inferences. Copper production from Kounrad came in at 6,214 tonnes which is 6% below the output achieved in 2020. In fact this is the lowest H1 production in the last three years which may be related to Western Dump leaching providing 100% of the metal during the winter period. Fortunately for the bottom-line Copper prices have remained elevated with a solid base forming since a peak was hit in mid-May. This will far more than offset the slight production fall. It's a similar story at Sasa with Zinc and Lead production down by ~8% due to a Q1 mill shutdown and additional ground support work. It's possible that full-year guidance for these metals may just be met but it'll be a stretch. Fortunately the prices of both commodities are strong especially when compared to H1 2020. As a result Central Asia Metals is generating a lot of free-cash and will have no net debt by the end of the year. This is very supportive for the high dividend yield and perhaps we'll get a special dividend thrown in? (Update)

Gamma Communications

A positive update with many parts of the business performing slightly ahead of expectations. This is a good result given that sales activities are somewhat restricted in all territories. Particular areas of interest are the UK Direct business which has won some notable new contracts and the performance of newly acquired Mission Labs. Other parts of the business are trading in-line and as a result the full-year should come in at the upper half of market consensus estimates. This is a very solid result that bodes well for the remainder of the year. (Update)

Alpha FX Group

This is a more than impressive update. Since the last announcement in late May, which indicated that expectations would be exceeded, trading has remained strong. As a result the group will further exceed the current expectations. This ability to repeatedly perform better than expected is the hallmark of a quality business. All divisions are trading well but FX Risk Management is storming ahead with the newer offices in Canada and Amsterdam finding their feet. As a result of this success the board are planning to open an office in Milan with three existing employees relocating to kick-start the new team. If these spin-offs continue to deliver growth I can see this approach paying huge dividends in the future. The key here is the corporate culture put in place by Morgan Tillbrook, CEO, with employees given the space and support to perform to the best of their ability. At the same time it's clear, from Glassdoor reviews, that employees are expected to work very hard and take on as much responsibility as they can handle. This won't work for everyone but I suspect that the survivors remain driven to perform. (Update)

Luceco

Interesting. The company is trading ahead of market expectations and yet the share price hasn't reacted. Usefully the directors have also provided some numbers and it seems that revenue will be at least £220m and adjusted operating profit will breach £39m - which is a 25-30% improvement on last year. So why is the P/E ratio under 20? Well I don't know given broad demand for Luceco products and an ability to protect margins from inflationary pressures on raw material and freight prices. I guess that most obvious explanation is that the shares have really re-rated over the last six months and now they are pausing for breath. I can live with that given that all segments are doing so well with commercial demand continuing to recover. I can well believe the CEO when he says that they expect to deliver another year of record results. (Update)

DX Group

Here's an interesting situation. In mid-May the company stated that DX Freight bought in £10m more in sales for the year than expected. The direct result was that DX would significantly exceed existing market expectations for the current year ending 3 July 2021. This propelled the shares to 36p, led to forecasts being upgraded and probably convinced Lloyd Dunn (CEO) to spend another £1m buying shares in early July. For reference he now has over £20m invested in the group. I think that this update is reiterating the previous update since it's referring to the same period but I'm not wholly clear as it refers to DX Freight chipping in £6m more than expected. Perhaps this is a second out-perform update? Either way the shares have drifted since May to the 31-32p level which feels like a steal given business momentum. Evidence of this comes from the expansion of the depot network with three new depots opened since March and a total of fifteen new depots planned over the next two years. You don't invest in this way if you're not incredibly bullish about business prospects. There's really all to play for here. (Update)

Sanderson Design Group

Things are looking good as the positive trading seen in Q1 has extended into Q2. As a result profits for the half-year will be ahead of Board expectations. Given that the brands are still impacted by pandemic restrictions it's good to see that the period sales are up 1.4% compared to the same period back in 2019 (and up 39.8% against last year's decimated trading). Particular highlights are strength in manufacturing, with sales up 20.5% versus 2019, and licensing income with apparel proving very popular. The new management is clearly being assisted by consumer trends such as increased spending on home interiors, along with a swing back towards maximalism, but equally they have put the group in a good place to benefit. The turnaround is well on track by the looks of it. (Update)

Computacenter

Somewhat remarkably Computacenter is set to deliver an adjusted PBT for H1 which is ~50% better than that for last year. What's remarkable is that Computacenter did very well last year so we're hardly looking at a soft comparative. So last year the half-year adjusted PBT was almost £75m (itself up 40% from 2019) which means that we're looking at £110-115m hitting the bottom-line. Given that the full-year PBT in 2020 was just £200m, and that the business is traditionally second-half weighted, I can see PBT for the whole year being in the range £225-250m. This makes a mockery of the analyst forecast of just £218m in 2021 let alone that of £221m in 2022 and £229m in 2023. Frankly these forecasts are embarrassing. Perhaps they're wary of the headwinds from component shortages and a strengthening pound but H1 profitability would have been even better without these factors. I think that management are alluding to this research gap when they say that it is highly likely that 2021 will be another year of substantial progress for the Group. In fact I'm convinced that they are making this point and yet the share price has barely reacted. Crazy. (Update)

John Menzies

I'm not surprised that the Menzies share price has gone nowhere for three decades: over that period EPS has been basically level (which means that it's reduced after accounting for inflation). However a new management team are in charge and they look serious given how much money they've spent buying shares. Right now the business is trading slightly ahead of expectations which is reassuring given how dependent they are on air travel. The key to this success is extremely tight cost management, new business gains and, yes, additional support from government schemes. I certainly won't argue that this support isn't valid given how the airline industry will probably be the last to recover from the pandemic. Commercially the business is really moving ahead with new, and large, contracts being won along with other business opportunities. My feeling is that when all parts of the business are in a position to trade effectively then we'll really see the benefit of the groundwork being laid today. That'll be an exciting day to be an investor in the company. (Update)

Games Workshop

These are excellent results that are fully in-line with expectations that were raised repeatedly during the year. It's worth taking a moment to savour them as profits jumped an astonishing 70% on a 30% increase in turnover. This is the benefit of operational gearing and a relatively fixed cost base. Such success allows the business to invest further in its development studio and it's notable that studio payroll costs will be a higher percentage of revenue in the next financial year. This is good news because it means that even more product lines and new intellectual property will make it's way to the marketplace to generate even more sales. This is a virtuous circle that I can believe in. It's clear from the detailed strategic narrative that the board are wholly focused on creating content that customers will value now and in the years to come. At the same time the board acknowledge that they aren't perfect, which is refreshing, and that they encountered avoidable problems. Most materially these issues impacted distribution and shipping with customers receiving goods either late or not at all in some European cases (leading to £1.2m of refunds). This is clearly disappointing but I'd rather hear about these setbacks now rather than not at all. Looking forward plans are in place to improve the shipping experience and the board are looking to refresh the online store as it is no longer truly fit for purpose; this will be a major project, which adds risk but should also pay back its investment rapidly. On the outlook front no financial guidance is provided but a new Warhammer 40,000 range was released in July 2020 and historically such releases have marked a sales high point. So I can see why analysts are forecasting single-digit earnings growth over the next few years - which should make these forecasts easy to beat. That's why I'm happy to have Games Workshop as my second largest position. (Results)

Staffline Group

Trading has continued to be strong in this half-year and is ahead of expectations in all three core divisions. This is great news and with cost reductions in place the bottom-line should benefit. As a result H1 revenue will be £450m with gross profits up 14% to £39m. In the separate segments GB has won new business in online food distribution with gains more than offsetting challenges due to shortages of drivers. Over in Ireland trading was buoyant with the Republic growing strongly. Finally PeoplePlus has moved from a loss to a profit and seems to be turning around nicely. There remain challenges but things are moving in the right direction. (Update)

Volex

In essence positive trends in Q1 suggest that profits will be slightly ahead of current market expectations. Key drivers here are strong demand in Consumer Electricals and EV revenues growing as Volex's position in the sector pays dividends. Medical and Complex Technology are also doing well as customers recover from the pandemic; more a case of delayed orders rather than lost ones. Of course there remain challenges from supply chain shortages, material cost inflation and freight issues but we pay management to deal with such inevitable difficulties. For example they handled the copper price inflation earlier in the year by passing on the cost increases. All in all the business continues to do well. (Update)

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

Anyway I did almost no trading in the month and basically sat on my hands. Most of my holdings are doing well operationally, despite numerous headwinds, so I'm not looking to get rid of them. The danger with this is that there could be structural reasons for their decline (such as a reversal in commodity prices) but then you're guessing whether the longer-term trend remains intact. I don't have the mindset or inclination for this level of trading hence my decision to do nothing. Instead I hosted another StockSlam with piworld and used my time to speak about Gamma Communications. It's a fine, quality company that's sticking to a solid growth path.

So what did the damage this month? In no uncertain terms it was Best of the Best with a woolly and unappealing outlook statement. This triggered a rush for the exit by shareholders with poor liquidity exacerbating the impact on the share price. In a follow-up call the extent of the pullback was more quantified, and management sounded cautiously optimistic, but by then it was too late. Otherwise a bunch of holdings went sour in line with poor sentiment and a lack of buyers. Still some of my holdings proved resilient with Luceco leading the pack for no apparent reason; at least the Driver Group recovery was stimulated by reasonable results and a buoyant management presentation. Hopefully July will prove more satisfactory but I am concerned that markets will remain weak until September. Maybe I'll just go and sit in the garden.

Risers: LUCE 21%, DRV 18%, CER 17%, G4M 13%, STAF 13%, VLX 9%, TM17 8%, UPGS 6%, CLG 5%, KNOS 4%, SPSY 2%

Fallers: GAN -2%, BOO -3%, SCT -3%, BLV -4%, SDG -4%, CCC -4%, FXPO -5%, GAW -5%, SUMO -5%, FNX -6%, CLX -6%, K3C -7%, SLP -8%, GMR -9%, BUR -10%, RWS -12%, CAML -13%, DX. -14%, TND -18%, CMCL -19%, BOTB -33%

Purchases

Staffline Bought at 50p

In the recent, successful placing I took my full allocation and applied for as many extra shares as I could in the Open Offer. Unfortunately I was hugely scaled back in the latter part and only received 17% of the shares that I requested. Very annoying but at least the scale of the demand is now apparent. Also the company now has sufficient funds to handle the deferred VAT repayments and has been able to agree a new receivables finance facility. This is all great news and really the board are set fair to succeed in the current recruitment market. I still wish that I'd received more shares though!

Tandem Group Bought at 572p

From the trading and AGM updates mentioned below it's clear that Tandem is trading very well in all of its market niches and that this is more down to management actions rather than the pandemic. That's not to say that Tandem hasn't benefited from the lockdowns, because it has, but management identified areas for growth long before we'd heard of Covid-19. One of these areas involved the introduction of own-brands since these generate higher margins and can be designed to occupy a specific gap in the market. The board also realised that they could sell directly to consumers which proved invaluable when people switched to shopping on-line. However Tandem haven't forgotten about their distributors: they can deliver a bike order directly to a local bike shop for assembly and the sale of accessories. In this way both parties benefit. Anyway to cut a long story short I think that the business is in a good place, despite well publicised headwinds, and that the current price will look cheap in the longer term. Hence my top-up purchase.

Sales

Burford Capital Sold at 790p - 24.8% loss

As ever the problem with being fully invested is that to add a holding you need to sell a holding. This is made worse by the fact that I am optimistic about the longer-term prospects for every one of the shares that I hold - none of them were bought for trading purposes. Hence I had to sell something in order to add more Tandem and Burford Capital was first in line for the chop. It's no secret that Burford shares have struggled ever since that Muddy Waters bear report came out a couple of years ago (despite the best efforts of management). That's a long time to wait for investor enthusiasm to return and I can't honestly say that investors seem all that eager to, well, invest in Burford even now.

Announcements

Tandem Group

It's interesting that this update hasn't been received very well by the market given that it delivers much positive news. For instance trading has remained robust even when compared to the prior year where sales exploded from March 2020 onwards. This strength isn't confined to bikes either and I'd say that this is the weakest segment despite revenue being 21% ahead. In contrast the Ben Sayers golf business is up more than 100% while B2B sales overall are roughly 32% ahead across all ranges. That's impressive. The B2C market is also up 18% with gazebos and the like being strong sellers. It's true that challenges remain around stock availability, freight costs and raw material price increases. However profitability is also considerably ahead year-on-year with the cost base remaining suppressed. Given that the shares are priced on a P/E of 10 or less I'd say that a lot of bad news has already been discounted. (Update)

Clipper Logistics

It's clear to me that, after a few years of pedestrian growth, Clipper Logistics found itself in a valuable position when the pandemic began. As a market leader in e-fulfilment and returns management services it is benefiting from the switch by retailers towards an outsourcing model as they seek to reduce costs and focus on their core business. This, along with a timely entry into the life sciences sector, has accelerated growth and for FY21 revenues and profits will be up by around 40%. Even better the contracts being won are sticky and here management are upgrading both their FY22 and FY23 guidance by mid-single digit percentages in both years. This is a ballsy move which suggests that earnings are set to rise by ~20% in both periods with debt being reduced quickly by strong cash-flow. I'm all in favour of this type of forward guidance and I can see why the board are keen on further expansion in Europe (and elsewhere) given how smartly they've dealt with Brexit related disruption. Even after a strong performance in the last quarter the shares don't look over-priced. (Update)

Driver Group

I cannot deny that Driver Group has been a frustrating investment over the last few years and I probably should have thrown in the towel. Actually I should definitely have dealt with the opportunity cost by now. The problem is that the business has new management and really is regaining its focus. In addition it is set to benefit from a rise in contract disputes arising out of the pandemic with a fair level of certainty. The problem is that the wheels of change turn slowly and that the five-year strategy really does need time to play out. So these interim results aren't very exciting although you've got to remember that H1 2020 was basically pre-Covid while this half-year has been plagued by lockdown restrictions. From that perspective an 11% drop in sales leading to a 22% fall in profits is actually pretty good when you consider that only the Europe & Americas regions made any profit and an increased profit at that. Unfortunately the Middle East and Asia Pacific regions posted small but annoying losses to off-set this positive performance. A surprising issue in the APAC region was that an entire team in Singapore upped and left to join a competitor taking their clients with them. According to management this team had a special contract, meaning that it can't happen again, but it does highlight the risk of a business where talent walks out of the door every evening. More positively Diales, the expert witness support service, is continuing to expand with plans for a forensic accounting service in the pipeline. While sales between now and the end of the financial year (on 30th September) are likely to be as subdued as in H1 this progress at Diales along with cost reductions puts Driver in a good position for FY22. Additional colour is provided in the results webinar for anyone interested in joining this journey. (Results)

RWS Holdings

Another disappointing position is the one that I hold in RWS following its transformational acquisition of SDL last year. Sadly the only transformation so far has been in the share price with it falling by a third from its pre-purchase heights of ~750p last August. The reason for this is that the top-line is up 92% to £326m only because of the acquisition with no organic growth in the core business. Lower down adjusted PBT is up 53% to £50m but the adjustments are substantial since the reported PBT is down 7% to £24m. Now I can perhaps allow £11m of acquisition costs to be ignored and even £7m of exceptional items around restructuring SDL but that still leaves a 20% gap between the profit figures. With all of that in mind the integration does seem to be progressing well, with trading currently in-line with expectations despite currency headwinds as USD weakens. At the operational level Language Services generates almost half of all sales and had a mixed H1 with certain large customers growing while others became cautious due to the pandemic and potential teething issues with the RWS/SDL integration. The other divisions enjoyed equally mixed trading with gains and losses mostly cancelling each other out and margins moving around under the new divisional structure. My take on this is that the RWS/SDL combination is very much a work in progress and so it's disappointing to see Richard Thompson, CEO, leaving the group. The timing isn't great and while Andrew Brode, Chairman, remains both a guiding and a driving force this change in leadership is hardly helpful during a period of upheaval. Still with a forward P/E of ~25, falling to ~20 next year, the business hasn't been this cheap in five years. So from a medium-term perspective it might be worth tucking away a few more of these shares while investors are looking elsewhere for excitement. (Results)

Boohoo Group

Reading this update it's remarkable to me just how much institutional investors hate Boohoo. Here we have a 32% rise in sales for the quarter to 31st May with the two largest markets (UK and USA) up by 50% and 40% respectively. For sure this isn't all organic growth, because Boohoo have been acquiring brands like crazy, but this acquisition strategy has remained focused. All that they've been buying are the brand names, rather than the liabilities, and these are relatively easy to strap on to their existing e-commerce structure. So I think that management are playing a blinder here and that these new labels are diversifying the group into new verticals and customer demographics. Financially the gross margin is pretty stable and guidance remains unchanged with revenue growth of around 25% and adjusted EBITDA margins expected to be in the region of 9.5-10%. With this in mind it's worth noting that Boohoo shares have almost never traded below a P/E of ~30, apart from after their profit warning in 2015, and yet existing forecasts have the rating falling from ~28 this year to under 20 in 2024. This feels extremely pessimistic to me given the management track record. At some point the ESG efforts of the group will be recognised and institutions will want to buy back into this growth story. I want to be significantly invested when that change in tune takes place. (Update)

K3 Capital

Another business that looks more than fairly priced, after a transformational year, is K3C Capital. After already upgrading expectations in March and April this FY update completes the set by boosting the numbers yet again! Here we learn that all divisions have grown strongly with EBITDA nudging up another 5% or so to no less than £14.25m. For once a transformational acquisition strategy has really delivered and K3 is a diversified group without a total reliance on corporate M&A with the volatility that that brings to the party. The only note of caution is that there remains a degree of uncertainty in the markets in which they operate which is probably why the 2022 forecasts show growth of only 5-6%. So it's no great surprise that the share price has weakened a touch lately with results not due to be published until September. Even so the directors remain bullish and with cash of £14m, plus a new debt facility of £15m, they have plenty of firepower for another bolt-on purchase. I wonder if they have a target in mind? (Update)

Best of the Best

Ah where to start with these results? Let's go with the good stuff. There should be no doubt that last year was extraordinary for Best of the Best with revenue increasing 257% and profits jumping 235% as punters looked for some lockdown distraction. At the same time the board had placed BOTB in the perfect place to benefit by closing down all airport operations and moving to an online-only operation. Add on highly targeted advertising and a nimble approach to maximising the attraction of the prize pool and at a certain point the board thought that they were actually making too much money! As a result they beefed up the pay-out level simply to keep profit margins at half decent levels. Even so cash levels more than doubled to £11.8m as the business spends essentially nothing on capex. So all pretty fabulous. Unfortunately there was always the suspicion that BOTB might just be a massive lockdown winner, rather than a sustainable business, with a large placing by directors in March lending some credence to that position. Now we learn that, in contrast to last year, there has been a reduction in customer engagement since April with this leading to lower sales and lower profits. This is pretty rubbish news and it's unclear whether engagement will return to normal levels (whatever those are) or not. What is clear is that it'll be hard to match 2020 which suggests that overall profit will fall. The problem is that no one knows the size of the fall which is why the share price has halved following these results! I have no further insight on the outcome either but I don't believe that the company has become uninvestable overnight or that it will be unable to grow in the medium-term. So my holding remains with an option to pick up a few more shares if the news flow improves. (Results)

Volex

The turnaround story continues with profits rising more quickly than revenues as margins continue to trend higher. In numerical terms PBT jumped a solid 37%, on 13% sales growth, which is pretty decent for a company on a P/E of ~18. Also this is against the backdrop of Covid-19 which led to a drop in medical demand even as sales to electric vehicle manufacturers and data-centre customers rose materially. At the moment Volex are leaders in the EV charging cord sector, with Tesla a key customer, with sales surging as people stop buying internal combustion engines. This momentum has continued into 2021 with the medical market starting to recover as customers are once again able to access hospitals. Generally speaking Volex generates good levels of cash although working capital movements towards the end of the year reversed the favourable movement seen at FY2020. Nevertheless debt levels remain low and this is after acquiring DE-KA in February. We should expect further acquisitions to be made, since this is part of the board strategy, and I'm fine with that given the purchase and integration record so far. One area of concern, that is shared by most manufacturers, is the impact of cost inflation particularly with the price of copper and much higher shipping costs. In the former case customer contracts allow price rises to be passed on, with a short delay, while the latter is being managed through close customer contact. These headwinds ensure that it's not all plain sailing for Volex. Nevertheless management at Volex have demonstrated their competence over the past few years and I've no doubt that they will continue to successfully drive the business forwards. (Results)

Sumo Group

An in-line update for the year so far with the backdrop of growth in video games providing a tailwind. All divisions are trading well and the new Secret Mode division has made a good start. There's little else to take from this statement, in terms of trading news, except that the acquisition pipeline remains strong. (Update)

Gear4music

These are stupendous results with net profit up 488% on a revenue increase of just 31% due to a material improvement in margins and great operational gearing. More importantly the narrative provides a textbook example of how to manage expectations after such a pandemic-driven boost. For context the analyst consensus indicates that earnings will more than halve in 2022, despite stable sales, and yet shares are pretty much at an ATH. The reason for this is that management have been very clear that H1 last year was exceptional and that they do not expect to achieve the same level of full year profitability this year. At the same time trading in the first quarter had been stronger than expected and so FY results should be ahead of expectations. This is quite something as clearly Gear4music have handled Brexit with aplomb and on this front they are planning to open new distribution hubs in Ireland and Spain. Makes a lot of sense now that UK and International sales are basically equal as the business has gained traction in Europe. Another key development is the own-brand range where this accounted for 29% of total revenue despite being just 7% of the total product count. Clearly this taps into the beginner/intermediate market by providing a decent product at a keen price while maintaining profit margins for the group. This focus on margin, combined with cutting out lower margin sales, has been instrumental in improving the quality of earnings and that's the real story here. In the early days management made some mistakes chasing growth but now they're proved that they can handle unprecedented pressures and build a sustainable e-commerce enterprise. I like where G4M is heading. (Results)

Staffline

As mentioned above I took as many shares as I could during the recent placing at 50p. I didn't take this action purely to avoid being diluted out of existence. Instead this fund-raising has transformed the group by removing any concerns about covering deferred VAT payments. At the same time we know that Q1 trading was ahead of expectations which bodes well for the rest of the year. From my perspective Staffline is now in an excellent position to benefit from the buoyant recruitment market as management can fully focus on winning business in its core sectors and running the group effectively. As for last year there doesn't seem much point looking at the numbers even if underlying profitability appeared to improve. Really last year was focused on survival, cost-cutting and restructuring the group to get the most out of its assets. Recruitment GB, which provides flexible blue-collar recruitment, has certainly benefited from this focus as it was badly run for many years. Now lower-margin contracts have been terminated and temporary recruitment is driving this division forwards. In contrast Recruitment Ireland, which is more generalist, has remained well-run and is continuing to win new business despite the incredibly hard lockdown in Eire. Finally PeoplePlus, which provides adult skills and training, was the division that almost bought down Staffline a few years ago but seems finally to be on the road to recovery. A tailwind here is that the government are trying hard to retrain people and get them back into employment which is leading to contract wins at PeoplePlus. Obviously it's early days yet, and the bottom-line would benefit from achieving more permanent recruitment business, but the trajectory is clear if economic conditions continue to improve. (Results)

Tandem

This AGM update for Tandem is very positive and yet also notably cautious. On one hand forward order books are at record levels (£34.7m now compared to £10.7m last year) with bicycle customers ordering much earlier than usual. So Tandem can have some confidence about future sales but at the same time they do need to be able to source goods to fulfil these orders. This is harder than it sounds with component manufacturers continuing to struggle with demand, raw material prices at significantly elevated levels and freight rates higher than ever as shipping companies have issues sourcing containers. So there are numerous challenges but equally management claim to be handling them well and I feel that this is likely to be true given their long history of operating in this sector. More positively sales in different areas are all strong and equal to, or ahead, compared to the same period last year. So Tandem isn't purely a lockdown beneficiary. Instead their pivot to supplying more own-brands and targeting the B2C market has really paid off. Management sound bullish, despite their caution, and the shares are hardly expensive despite the rerating over the last year. (Update)

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

Luckily I was kept usefully distracted by the constant flow of updates along with two appearances on Mello Monday. The first of these covered Staffline as a charity pledge with my argument being that these would be a great recovery play once their finances were in order. At the time I didn't realise just how imminent the fundraising was going to be but with that in the bag I'm positive about the prospects going forward. A little later in the month I talked about Calnex right before they released their results. Here I had a bit more time and I tried to convey how Calnex occupies a slim but profitable niche with exposure to long-term growth drivers. Sadly the near-term outlook is a touch subdued, compared to a bumper pandemic year, but I can see Calnex doing very well in the longer term if it sticks to its core strengths.

Actually while I'm on the topic of presentations the next virtual StockSlam will be taking place on June 23rd. It will be our last event before the summer break and you can register here. If you have never attended before it's a totally free event that I host with piworld and Stockopedia and it's a great way to pick up some new investing ideas.

Glancing at how my holdings moved around in the month it's clear that volatility was high with Sanderson Group up 36% and Staffline down 27%. The former is another recovery play that's gaining real traction with investors while the latter is just a reflection of the placing discount (which was definitely higher than I'd have liked). Elsewhere my gaming related shares (BOTB, GMR, GAN) took a bit of a dive on various concerns around regulation and over-excitement in the sector but I'm comfortable with my exposure given how it's deregulation that is driving growth in the US. On a positive note UPGS has re-rated nicely as growth continues unabated while Cerillion has risen sharply as investors appreciate its step-change in prospects on the back of some large contract wins.

Risers: SDG 36%, UPGS 33%, CER 23%, K3C 15%, BLV 14%, DX. 13%, CLG 11%, GAW 10%, GAMA 10%, SUMO 8%, LUCE 7%, CMCL 7%, SLP 6%, FXPO 2%

Fallers: TND -3%, G4M -4%, SCT -4%, BOO -6%, AFX -6%, KNOS -7%, RWS -7%, CLX -7%, GAN -9%, SPSY -10%, BUR -11%, FNX -12%, TM17 -13%, GMR -19%, BOTB -23%, STAF -27%

Purchases

Softcat Bought at 1872p

The last update for Softcat came with its half-year results at the end of March. These revealed that the FY results would be significantly ahead of previous expectations. A fantastic update and I almost increased my position on the day but hesitated at the last minute in the hope that the price would fall back intra-day. That didn't happen of course and the share price ended 15% up by the end of the day. Stung by my failure to act I didn't take advantage of the following few days of consolidation either. Anyway the price hit almost £20 a few weeks ago and seems to have found support around 1900p. With analysts raising their forecasts by 10% in the last month I still want to add to my holding, despite the price rise, and have done so at the support level.

Central Asia Metals Bought at 284p

If you don't know that we're about to enter a commodity supercycle then you've done well to ignore the increasing pitch of the jungle drums. I certainly don't claim to have any insight to whether the predictions will come to pass but the arguments for ever-rising demand for copper make sense to me. So while I'm wary of becoming too exposed to the commodity sector, as I've suffered here in the past, it seems sensible to add a copper producer to my existing positions. At the moment I have exposure via Ferrexpo (iron ore), Sylvania Platinum (precious metals) and Caledonia Mining (gold) so CAML fits the bill in that it produces copper, zinc and lead in a fairly low risk manner. The share price has been very strong over the last six months but has had difficulty breaking through resistance at 285p. I think that it's just a matter of time with volume on up days being consistently higher than volume on down-days.

Menzies (John) Bought at 330p

I decided to pick up a few shares in Menzies on the back of its recent fundraise. The thesis here is trading so far this year has been encouraging with profitability now ahead of previous management expectations. This is no easy task with passenger flight volumes still materially reduced from 2019 but the management team have successfully reduced costs to make MNZS a much more efficient operation. At the same time new contract wins continue to arrive in the cargo handling space. This makes Menzies a clear recovery play, as the share price is still just half of where it was four years ago, and you can see why Small Company Share Watch is very positive on future prospects. Fortunately it's not just the tip-sheet recommendation that attracts me to Menzies; the directors put over £4m of their own money into the recent placing which tells me that they are very confident in the direction of travel. In this case I'm happy to follow the money.

Calnex Solutions Bought at 115p

As mentioned above I presented on Calnex at Mello Monday and perhaps over-convinced myself of the company's virtues. That is always a risk when you deep-dive into the background of any enterprise and expose yourself to the story being told by any board. It was in this frame of mind that I parsed the excellent post-IPO results and formed an opinion on the outlook statement - which was that much of the caution was around timing as opposed to any issues with customer demand. Hence I decided to top-up my starter position. In retrospect I was a touch hasty, as other investors have proven to be less sanguine, but I remain confident in the medium-term prospects here. The fact remains that Calnex is a successful specialist which operates in a price-insensitive niche that demands gold standard testing equipment. The board will have to try quite hard to mess up this opportunity and their steady track-record over the last fifteen years suggests that this is unlikely.

Sales

Plus500 Sold at 1500p - 38.0% gain

I've disposed of my remaining position in Plus500 as it's one of my few holdings that I'm happy to reduce at the current time. It's possible that Plus500 may surprise us all but it can never be a long-term holding for me due to the ever-present regulatory risks. It's a shame, as the dividend payments are extraordinary, but I'm happy to invest the proceeds of this sale elsewhere.

B&M European Sold at 576p - 1.5% gain

I decided to liquidate my small position in BME because I wasn't convinced enough in the company to add to my holding and felt that the funds could be used elsewhere. For once my timing was good since recently the company announced bumper results for the year and indicated that this performance was unlikely to be repeated. This is a common theme with those companies that profited during the lockdown and it's not too surprising to see buoyant share prices become becalmed as a consequence.

Announcements

Boohoo Group

Investors seem pretty disappointed with these FY results as the share price has slipped lower to support at 315p. This seems perverse to me given that Boohoo is a £4bn business growing at 40% year-on-year with barely any year in the last five reporting growth of less than 30%. Despite this the shares trade on a forward P/E of ~30 which is simply incorrect, given forecast growth in FY22 and FY23, and materially below the rating given to the business historically. I can understand that some investors have ethical concerns but the board are putting huge amounts of time and energy into fixing labour concerns, improving sustainability and raising corporate governance standards. In time I believe that this effort will leave competitors scrambling to catch up. Despite this investment 41% sales growth last year still led to PBT rising by 35% as margin levels were maintained. The standout territory driving this performance was the USA with sales up 65% to £435m making this the most exciting market for Boohoo outside the UK (which itself grew 39% with new brands adding to organic growth). This is really something and I can see the many newly acquired brands adding significantly to growth in the coming years as Boohoo expands its target customer range. There remain reputational risks to the business but I don't see competitors making much headway against the juggernaut that is Boohoo as it sweeps up brands and applies its test and repeat model across the board. If the price weakens further I'll be looking to add to my position. (Results)

Caledonia Mining Corporation

A steady first quarter for Caledonia in Zimbabwe. On one hand issues with flooding and lower grade ore led to a fall in production to 13,197 ounces compared to 14,233 ounces in 2020. Both of these issues have now been resolved and April production bounced back to 5,470 ounces with May also strong so far. As a result management retain their 2021 guidance of 61,000 - 67,000 ounces. On the upside the realised gold price improved, which offset the 7.3% drop in gold mined to some degree, but not enough to prevent a 10% drop in earnings as fixed costs rose. All of this is to be expected with a working mine though and management have shown high operational ability in the past which allows me to trust their guidance. Looking forwards the Central Shaft is soon to be connected to producing areas, exploration activities are taking place at a measured pace elsewhere and the solar project is expected to be operational within 12 months. So progress is being made in all of the ways that management have previously highlighted. (Update)

DX Group

Sometimes it's nice to wake up to an excellent trading update and this is one of those days. In short the board anticipates that DX will significantly exceed existing market expectations for adjusted profit before tax for the year. The driving force here is sales growth in DX Freight with this likely to be £10m more than anticipated. It's hard to believe that this division used to be the problem child but management always believed that they could turn the business around. Full marks deserved. At the same time DX Express is trading in-line and hopefully self-help actions taken here will provide a boost during the year. On the back of improved confidence the board are accelerating their depot expansion plans and who can blame them. It's easy to see why directors have been such heavy buyers of shares with this magnitude of turnaround success. (Update)

Best of the Best

On the very same day BOTB came out with an in-line update and investors totally lost their shit. Forgetting that earnings growth will be over 200% for the year these people rushed for the exit en masse to the extent that the share price dropped somewhere around 15% at its worst. I can only shake my head in wonder at this mass panic. Anyway the FY results will be out in a month and we'll learn more then. Personally I think that management remain cautious but optimistic due to the amount of skin that they have in the game. They're not about to act rashly in the pursuit of higher growth but neither are they sitting back and counting their millions. That sort of attitude works for me. (Update)

Luceco

With four months of H1 in the bag things are looking good for Luceco. Strong momentum has continued into the year with robust demand more than off-setting higher raw material and freight costs. As a result the half-year should see revenues of around £105m with adjusted operating profit of approximately £18m. This is double the operating profit of H1 2020 (which improved on 2019) on much lower revenue growth which highlights the continuing improvement in margins. This, along with sales growth in both retail and commercial segments, has been the big driver behind rapidly increasing earnings since 2018. There's nothing to suggest that Luceco's vertically integrated manufacturing model won't continue to deliver through the rest of the year and beyond from this update. With a forecast P/E of ~19 these shares are looking modestly valued for the growth on offer. (Update)

Cerillion

Remarkably Cerillion shares have doubled in price in just two months which suggests that investor sentiment has turned highly positive. This is with good reason as these interim results indicate. In H1 new orders grew 148% to the record level of £23.6m with the largest ever contract win, for $18.4m, signed in the period. At the same time adjusted earnings grew over 100% to 11.5p on sales growth of 26%. This suggests a high level of operational gearing which is what you'd expect for a software solutions provider. Current forecasts are for 18p of earnings in the full-year, with this rising to 24p in 2022, which feels a touch light. The reason for this is that the house broker is being very cautious with its forecasts, assuming that the pipeline doesn't convert, while an independent broker is much more bullish about future prospects. The average of these two positions is the estimate shown on Stockopedia and SharePad. Clearly I also see the future as bright for Cerillion with the 5G transition stimulating capex spending and upgrading from telecoms customers. In my view this, and a growing reputation, is driving growth in both deal size and volume with a major channel partner providing further growth options. The nice thing about Cerillion is that once a customer is on the platform then they tend to be sticky because changing your CRM and billing provider is a big deal - which partly explains why annualised recurring revenue grew 43% in H1. All in all there has been a step-change in prospects for Cerillion and I would like to add on any weakness. (Results)

Sanderson Design Group

In an ordinary year a fall of 14-15% in revenue and earnings wouldn't extend the positive re-rating of a share but then again 2020 was no ordinary year. The key to this divergence is the split in H1:H2 performance. In the first half sales fell over 30% with the business barely being break-even despite taking £3.2m of furlough grants. It was a rough six months for a new board trying to implement a strategy of cost-cutting and rationalisation. Fortunately trading in the Autumn period was stronger than expected and this strength continued across the Christmas period. This performance must, to some degree, be due to locked-down home-owners splashing out on decorative upgrades but equally the board have worked hard to tidy up the Sanderson brands and make the products more accessible. Much of this change has been digital, with the launch of new websites and design books, but efforts have been made to sign up partners and put in place licensing agreements. This seems eminently sensible given that Sanderson rely on other people to specify and sell their high-end products. This is just one element of the new strategy though with other elements focusing on core products (wallpaper, fabric and paint) and core geographies (UK, Northern Europe and the US). In many ways it's this stripping back the business to its essential strengths that really excites me about Sanderson. It has a unique back-catalogue just waiting to be exploited but the business was previously mis-managed with sales and profits taken for granted. Now that a new team is in place I think that we're on the cusp of a real transformation in fortunes. (Results)

Games Workshop

After a number of positive trading statements this update further refines what will be an excellent year for the company. At the very least sales will be up 30% leading to PBT growth of 68% or more at a profit margin of 43%. These are astounding figures and it's worth taking a moment to appreciate them. In this light I have no problem at all with £12m of profit-share bonuses being shared with all staff. In a difficult year they have really delivered. It's amusing (if that's the right word) to note that analysts are forecasting single-digit growth in both 2022 and 2023. It's possible that growth will subside massively but with the volume of releases and licensing deals taking place at the moment I will be incredibly surprised if these estimates aren't raised multiple times in the next twelve months. (Update)

Gamma Communications

Here we have one of my favourite companies with its solid 5-year track-record of 20%+ profit growth in each of those years. It seems that this achievement will continue into 2021 with this update indicating that revenue and profits will be at the higher end of the range of market forecasts. Usefully these ranges are included and amount to revenue £442.4m - £461.3m and adjusted EPS 54.9p - 63.1p. Right now the analysts covering Gamma have not re-visited their spreadsheets and the forecast average EPS still remains at 59p when we now know that it will be circa 61-63p. The story behind this is that growth has continued into Q1 with key products being launched into the core UK market. These broaden the scope of the UCaaS and CCaaS solutions available to customers and should lead to increased sales per customer. Along similar lines Gamma acquired Mission Labs in March to bring in their contact centre and digital channel products that are a good fit to the existing product line. It all looks pretty good and hopefully I'll learn more from the Capital Markets event in June. (Update)

Kainos Group

I have to say that the year ending 31st March 2021 was little other than spectacular for Kainos. Sales increased 31%, which was good and mostly organic, while bottom-line profits jumped a remarkable 120% with or without adjustments. This is no accounting fiction either as cash jumped 98% to £80.9m due to a 112% cash conversion rate. This outcome was largely a result of Kainos supporting digital transformation programmes across the public, healthcare and commercial sectors. Unsurprisingly demand was high for these services. Equally the Workday Practice division grew just as strongly which implies that the business is no one-trick pony. In fact it's well diversified across clients and geographies which takes away concentration risk. Looking forward the directors intend to continue on the same growth path and that makes sense to me; Kainos really delivered benefits to customers last year and I expect these happy customers to come back for more. That said certain costs, such as those around travel, will come back and analysts are clearly cautious with just 15% EPS growth in place for 2022. On the other hand this 2022 estimate has doubled in the last 12 months, from 18.1p to 36.9p, so the trajectory suggests that further upgrades are plausible. With a forward P/E of ~38, which is hardly cheap, this profit progression does need to be maintained but I have at least one good reason for remaining confident. This is that the Kainos board prefer organic growth and are spending time and money developing internally generated ideas. Given that staff, who work closely with customers, are in the right place to identify key problems this feels like an excellent initiative. (Results)

Calnex Solutions

After an excellent start to life as a publicly listed company Calnex have rather disappointed investors with this announcement. It's not that the results are poor; far from it. On a sales increase of 31% adjusted PBT is up a hefty 43% to just over £5m. At the same time cash is up from £3.6m to £12.7m including £4.9m net proceeds from the IPO. The company is financially strong and has been performing well so what's the problem? Well it's all about the dour Scottish outlook. Right now the board are saying that FY22 will be consistent with FY21 when taking into account last year's travel cost savings and the fact that £0.8-1.1m of sales were pulled into FY21 at the expense of FY22. Since travel costs will bounce back as soon as they can, because Calnex want to get themselves in front of clients, and those early sales have been sucked from FY22 then there's already a £1m PBT headwind to be faced in the new year. Hence analyst forecasts are pointing to a 32% drop in earnings this year down to a PBT of £4.4m which is not unreasonable given other moving parts such as reduced finance costs and increased staffing costs. On the latter point Calnex have been recruiting heavily to expand their R&D and Business Development functions. The benefits of this investment will be seen, but not immediately, as it takes a good 6-12 months to develop a new product. The upside is that new products are very much designed to meet pressing, ubiquitous customer needs and so should find a ready market for sales. It is this, and the fact that Calnex continues to benefit from sustained trends in the telecoms sector, that leads me to conclude that this negative sentiment will wash through as the year progresses. There's nothing in these results to suggest that Calnex technology is in anything less than high demand and that the testing market is deflating. Hence current price weakness offers up an opportunity for the medium-term investor. (Results)

Softcat

A welcome Q3 update from this leading UK provider of IT infrastructure technology and services. Due to year-on-year double-digit growth at both the top and bottom line it seems that FY results will be ahead of expectations. That's great news, of course, but management do moderate expectations for FY22 as certain circumstances have boosted profits in the current year. One effect, as mentioned elsewhere, is that cost savings related to Covid-19 will reverse as travel and events become possible. In addition H1 contained a number of large, one-off deals which will largely not recur. Other deals may be won, of course, but still FY21 has benefitted in a unique way. In total these factors are adding around £12m of EBIT which is about 10% of the forecast for £116m of EBIT in FY21. At the moment the board expect FY22 to be broadly in-line with this figure which means that growth next year looks flat compared to a 23% increase in profits this year. Optically this is disappointing but logically I'd rather have profits now, rather than later, so long as the business is performing well. (Update)

Alpha FX

After a difficult 2020, which still improved on 2019, it's great to hear that 2021 is shaping up to be even better. All aspects of the business are trading strongly with all divisions and geographies reporting growth. As a result the board believe that they are on track to exceed current expectations for the full year. The next update will be in mid-July but I like the way that things are going at Alpha FX. (Update)

Belvoir Group

Here is a business going from strength to strength with several years of double-digit growth and yet the forecast P/E is less than 12. Hard to believe given that the first 4 months of the year have been exceptionally strong and materially ahead of management's expectations. On the back of this statement the one broker has upped their FY21 forecast to 20.6p which is a jump of 42% from 14.5p. Wow. The Group's key underlying income stream is its Management Service Fees and in total this is up 22% (12% from lettings and 81% from sales). The financial services division is also going well with net income up 24% as the adviser network has expanded. No doubt the property market will cool down when the Stamp Duty holiday reduces in June, and ends in September, but you've got to admit that Belvoir are making hay while the sun shines. Hence FY22 won't be as incredibly strong as this year but the shares are hardly on a growth-stock valuation even at current levels; at worst they are fairly valued at the current share price. Great company though. (Update)

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

Looking at the winners and losers in my portfolio during April the stand-out winner is clearly Burford Capital with a more than 50% gain. Given that I halved my holding here last month, after the anaemic reaction to the results, it's a particularly galling outcome. The key lesson, as reiterated by Andy Brough, is that patience remains a key strength when investing. It's all too easy to chase the brightest, shiniest idea of the week but such an approach will never capture the lower frequency but higher amplitude movements in share prices.

Still I'm not complaining about Burford recovering or Alpha FX, and a host of other holdings, putting in double-digit gains. Some of these moves make sense to me, given the number of forecast-beating announcements, while others appear to reflect generally increased confidence in the mid-cap space. On the downside only Team17 and Calnex are worth talking about. These single-digit declines are very much within the expected range of volatility but if you like explanations it's possible that recent bearish comments have unsettled a few holders?

Finally May will see the third virtual StockSlam, with piworld and Stockopedia, at 6pm on Wednesday 19th. If you'd like to attend the event then please register here. It should be a lot of fun, as ever, with new investing ideas to ponder. Even better if you're interesting in presenting then please drop me a line. We're always looking for new presenters.

Risers: BUR 53%, AFX 26%, GMR 21%, LUCE 18%, FXPO 17%, BOTB 17%, K3C 15%, G4M 15%, STAF 13%, CCC 13%, RWS 13%, GAMA 11%, TND 10%, SLP 10%, BLV 9%, GAW 9%, PLUS 8%, BME 7%, DX. 6%, SCT 6%, SDG 5%, FNX 4%, DRV 3%, KNOS 2%, SPSY 1%, GAN 1%, VLX 1%, SUMO 1%

Fallers: CMCL -1%, TM17 -4%, CLX -5%

Purchases

Clipper Logistics Bought at 669p

I last held Clipper Logistics briefly back in 2018 after presenting them at the very first Stockopedia StockSlam. At the time they had just taken on Boohoo as a new customer and appeared set to benefit from the growth of on-line shopping with forecast growth in the mid-20% range. The only factor that put me off a little was the low operating margin but that was about it. Unfortunately the following results were poorly received, the price slumped and I sold out at a loss. This was a good decision as it took the shares 2 years to close above my sale price. Since then the shares have taken off on the basis that they are a lockdown winner. Right at at the start of the pandemic Clipper won a contract to support the NHS supply chain and from that point supported existing clients switching to an online strategy and won further contracts. As a result trading strengthened and brokers steadily increased their FY estimates for both 2021 and 2022. In the last few months the pace has quickened with Farfetch, River Island, Mountain Warehouse and JD Sports signed up to Clipper's fulfilment services. These are significant names and their addition suggests that the company has proven its reliability and value over the past 12 months. With the price retracting a little after breaking out to a new high above 650p I figure that the risk:reward is good enough to take an initial position.

Cerillion Bought at 540p

I first encountered Cerillion just over 4 years ago and liked the look of the company apart from a few caveats. These were that it remained a minnow in a pool full of sharks and that it was looking to diversify from the telecoms sector but with limited success. Both points remain valid but since that meeting Cerillion has made steady progress in growing profits and retaining a decent return on capital invested in the business. Clearly there's money to be made providing CRM and billing software for global telecommunications providers and the 5G roll-out is helping to increase customer spend. Lately, since announcing the largest ever new contract [at the time] worth £11.2m in September, the shares have taken off on continued positive news-flow. Partly this is down to the back-order book reaching a record high of £31m. This consists of sales contracted but not yet recognised which makes it a strong leading indicator. Given that existing customers are sticky, generating lots of recurring revenue, these new sales will provide a continuing boost to revenues. Since then Cerillion has announced an even bigger new contract, of £13.3m, with a 10-year agreement in Latin America. Everything seems to be going the right way for Cerillion at the moment and the recent, positive trading update was enough for me to finally take a position.

Gear4music Bought at 843p

The board put out an excellent FY trading update this morning with EBITDA expected to be not less than £19.0m. This is a ~5% improvement on existing forecasts and EPS should come in at 52-53p (compared to 12.3p in FY20). While such extraordinary earnings won't be produced in FY22 I don't see why 30-35p isn't possible? The way I look at it is that the business has real momentum, it's proved that it can cope with the most trying economic conditions and customers are clearly happy to buy from Gear4music. So with the shares effectively treading water for the last 3 months I've decided to increase my holding by a third before they come out with any more good news.

UP Global Sourcing Bought at 163p

Back in 2019 I saw, and passed, on UPGS over concerns stemming from its recent listing. However six months later I was happy enough to invest only to sell within the month on fears around the Coronavirus outbreak in China. At the time I thought that the pandemic would be contained but if only I'd had the foresight to sell everything! Anyhow the board at UPGS proved more than up to the task of dealing with the ensuing disruption and issued a number of positive trading updates as the shares crept back up to my sale price. Perhaps this is the advantage of having founder management in place? This momentum has continued over the last six months with market expectations repeatedly beaten and debt reduced to a nominal level. It's a remarkable performance and the very recent interim results made me realise that UPGS still isn't expensive on a P/E of ~15 given that it's evolving from a supplier/distributor into a brand-management company. This will give the company more control over its own destiny as it sells into a variety of channels with reduced dependency on any single customer. Add on the fast growing online business, which accounted for 15.6% of revenues in H1 with a long-term target of 30%, and you're looking at a company with multiple growth drivers. Hopefully this time I'll be able to maintain my position for more than a month.

Sales

Tristel Sold at 642p - 52.4% gain

Here I've sold a third of my holding for a couple of reasons. One of these is that the shares have done very well out of the pandemic with the result being that they are the most highly rated share in my portfolio (with a P/E > 50). This isn't necessarily a sell signal but there has been a steady re-rating at Tristel over the last five years and this tailwind won't last for ever. At some point earnings growth has to catch up and that could easily happen if the company gains authorisation from the FDA - but that hasn't happened yet. Also the shares were a pig to sell, with fairly limited liquidity, although I was off-loading on a down day. For this reason I don't want my exposure to be too large just in case the market takes fright at the next trading update in July.

Plus500 Sold at 1535p - 40.7% gain

This has been a solid performer in my portfolio since I bought in last year with several material dividend payments. However despite being optically cheap the shares haven't made much progress in getting on for a year now because they're viewed as a Covid-19 winner. This is despite earnings forecasts for 2021 and 2022 rising steadily over this time against a backdrop of continued market volatility. So I've lightened my position here by 2/5 to release capital for potentially more attractive opportunities. It's only a small top-slice because I believe that Plus500 will continue to do well, as it matures into more of a financial services business, and I see scope for further chunky dividend payments out of free-cash flow.

Tristel Sold at 571p - 36.1% gain

I don't want to say that I'm prescient but I'm sure glad that I sold some of my Tristel holding a few weeks ago! This morning's unscheduled trading update made for unpleasant reading with high-margin sales badly impacted by the continuing NHS gridlock. The bottom line is that profits will likely come in 30% below expectations which is quite a hit and will make the shares look even more expensive. Now I have no doubt that sales will recover at Tristel, because they provide a valuable and recurring service, but there's no need for me to hang around while the recovery takes place. Frankly I was happy to get out with the shares down only 15% on the day.

Announcements

Belvoir Group

Well these are a cracking set of results when you recall that management slashed their FY forecasts in half at the start of the pandemic. It turns out that their franchisees are far more flexible and determined than anyone expected and they worked their socks off to generate sales. Of course the stamp-duty holiday helped by boosting property sales but that isn't where Belvoir makes most of its revenue. Instead the bulk arises from lettings (60%) with the remainder coming from sales and financial services. As a result revenues rose 13% and PBT an excellent 20% as reduced overheads allowed the group to beat pre-Covid expectations. To drive growth going forwards management have a few different strategies. One is to buy and integrate smaller franchise networks which they've just done by acquiring Nicholas Humphreys for £4m in cash. This immediately adds around £2.8m to the top-line and the purchase consideration will be reduced when the board franchise out the three corporate owned agencies. In addition Belvoir has entered a strategic alliance with The Nottingham Building Society to run dual-branded offices which adds capacity at a low cost. Finally the strategy to pair financial advisers and franchisees is continuing apace with 141 of the group agencies now offering financial services. Frankly the future looks bright for Belvoir and this growth, along with very high quality metrics, is available at a bargain P/E of ~13 after 5 years of rating deflation. Yes, deflation! I find that fact remarkable but it does provide an opportunity for us private investors. (Results)

Plus500

With this Q1 trading update we see, once again, the inherent volatility of a CFD operation. On one hand revenue is more than double that of Q4 2020 with EBITDA up more than 5x from $19.9m to $121.7m. Great news? Well yes but equally revenue is down 36% from Q1 2020 with EBITDA down 47% comparatively. Swings and roundabouts. More significantly 89,406 new customers signed up with the number of active customers a mighty 269,743 compared to 194,024 a year ago. These customer figures are important because each customer has a limited life-span and Plus500 has to keep feeding the funnel in order to stand still let alone grow. As a result even at this early stage the board expect FY revenue and EBITDA to be moderately ahead of the consensus. This is important because, for now, analysts are guessing that profits in 2021 will be half those generated last year. If the company manages to beat this prediction even moderately then the shares will look like a bit of a bargain given the hefty dividend supported by prodigious cash generation. While I've cut my position in Plus500 recently this update is enough to keep me engaged with the remainder of my holding. (Update)

K3 Capital

Just over a month ago K3 Capital informed us that they were trading ahead of expectations. Excellent news. However now we find that the FY result will be significantly ahead of revised consensus market expectations. That's quite remarkable with all divisions performing well and KBS trading even more strongly than the rest of the group. The strategic decision to diversify last year has really paid off and I expect the group to go from strength to strength as business flow improves due to the economy gradually being unlocked. (Update)

Volex

A rather decent FY update with revenue and profit to be ahead of market expectations. In terms of figures this means at least $440m of sales with over $52m coming from electric vehicle customers (a year on year increase of 187%). This is great news as EV sales should be a big growth driver going forwards. In addition the core medical and industrial markets have stabilised which bodes well. This means that the underlying operating profit should exceed $41m which is a solid 30% increase on the $31.6m achieved last year (implying an improvement in margins). In addition the new DE-KA acquisition is trading significantly ahead of the previous year which will meaningfully improve the results for next year if this performance continues. The only sour note is that commodity prices remain strong which is creating input inflation for Volex. They are able to pass these increases onto customers but perhaps with a short lag. Nevertheless management feel that they can defend recently improved margins and frankly if I don't believe that they can do that, by running the business effectively, then I shouldn't be invested. I'm very happy with progress and remain a holder. (Update)

Kainos Group

No numbers in this FY update unfortunately but trading remained strong in the last few months of the year and results should be at the upper end of current market consensus forecasts. I suppose another "above expectations" result would have been nice but forecasts have doubled over the last year which is very impressive. Apparently there is a significant contracted backlog and demand remains robust which is indicative of another strong year ahead. (Update)

Gear4music

This is an excellent year-end trading update with total sales up 31% to 157.5m with the UK and RoW contributing equal revenues. This is an impressive result, given Brexit, and the company are planning to strengthen their European distribution network. At the same time gross margin is up 3.6% to 29.5% which suggests that management have really dealt with the margin issues that arose a few years ago. Together this means that EBITDA will be ahead of market expectations and that the company will end the year in a net cash position. Trading in the new year is good though not up to the exceptional trading seen in April last year - hardly surprising - and as ever the pandemic and Brexit continue to deliver challenges. However I just don't see earnings dropping back 48% from FY21 and I believe that brokers are too cautious in their forecasting. (Update)

RWS Holdings

It's been a while since the last RWS update and happily the first half has played out well despite a 5% FX headwind. Revenue will be £326m with 5 month's contribution from SDL (amounting to £151m). If you adjust by £30m to account for another month you get £356m which is about half of the FY forecast for £706m in sales. Seems on track. Right now FY profits are in-line with expectations even though H1 PBT will be at least £50m which is apparently ahead of expectations. Are management just being cautious given the sensitivity of earnings to exchange rates? The big SDL integration is progressing and, as alluded to previously by management, cost synergies should be around £32m rather than the £15m originally stated. Does this have a direct bearing on bottom-line profits? Lower costs should equal higher margins but it would be interesting to know what costs are being removed. Still at a divisional level all parts of RWS are growing, despite Covid-19 weighing on certain customers, which bodes well for the future. All in all I've been impressed by RWS and Andrew Brode, Chairman, in the past and I have a feeling that I'll be impressed once again in the near future. (Update)

Staffline Group

A solid double update for both the year ended 31 December 2020 and the three months ended 31 March 2021. In a difficult year management quickly reduced their cost base and positioned the business for a return to growth in H2 as the food distribution, retail, e-commerce, and logistics sectors bounced back. As a result all three operating divisions returned to profitability in H2 and total underlying operating profit improved substantially to around £4.8m (ahead of expectations). That's a good result and Q1 has retained this momentum with strong demand and cost savings creating a year-on-year rise of 133% in profits. As things stand the board are confident that FY results are likely to be ahead of expectations. I have no problem believing this statement given how eager people are to get back to work. The only fly in the ointment is that net debt remains high at £55m and that this includes £46m of deferred VAT that will start being paid back from June. The board are evaluating their options with regard to financing and I expect an equity raise to be announced soon. While this will dilute existing shareholders I wonder if the resolution of this issue will actually propel the shares higher? (Update)

Gaming Realms

The historical financials for Gaming Realms are a sea of red and do not suggest that this is a quality enterprise. So why my interest? Firstly this, along with GAN, is a play on the deregulation of on-line betting in the States and a sense that this will provide a multi-year tailwind for gambling companies. Secondly the trend in historical results clearly indicates that earnings have been steadily getting less negative over the last five years with analysts forecasting a small profit for 2020. So how do these results look? Well sales are slightly higher than expected, at £11.4m, while EBITDA is slightly lower at £2.9m and bottom-line EPS is -0.54p rather than the +0.2p we were looking for. Good enough I suppose. More importantly both licensing and social publishing revenues are growing strongly and many new partners have been signed up for Slingo content. As a result licensing revenue is up 60% in Q1 which is a heck of a growth rate. In addition Gaming Realms have licensing applications in for Pennsylvania and Michigan and are preparing to launch in Italy. These are all welcome signs for 2021 and for now the board believe that they are trading marginally ahead of board expectations. While there is an element of jam tomorrow to these expectations there is clear evidence that the board have a clear plan for growth and that this is available to them on numerous fronts. I'm happy to be invested in this journey. (Results)

Computacenter

A positive trading update although without any figures. Indeed it's a very positive update with management "extremely pleased with the profit growth" in the first quarter. Given strong customer demand and continued cost base reductions I'd say there's a fair chance of Computacenter beating expectations in 2021. Set against this US dollar weakness is creating an FX headwind (of ~£4m for the full year) and the recent French acquisition will remain loss-making as it's pulled into shape. Still there's nothing here to suggest that the business will not continue to be successful. (Update)

Driver Group

For a change this is a fairly "meh" statement from one of my holdings. Half-year profits are expected to be slightly lower than those for the same period last year. Underlying this performance are significant challenges from Covid-19 restrictions, key staff members being poached in the APAC region and generally lower activity levels. The latter issue is resolving itself as lockdowns ease and H2 should be a stronger period for the company. It would be nice to have some jam today, if only for the becalmed share price, but the medium-term picture remains unchanged. This is that Driver Group has a refreshed board, is focusing on higher margin expert assignments, and dispute volumes will inevitably rise as countries unlock and construction customers start agitating around the status of their projects. I'm not inclined to increase my position without more positive news but I have no specific concern that my current investment is at risk either. (Update)

Sylvania Platinum

A solid Q3 result for Sylvania with net profit doubling to $41.3m despite a 5% drop in delivered 4E PGM ounces (from 18,363 to 17,420 ounces). The key driver behind this performance was a 38% improvement in the gross basket price from $3,323/ounce in Q2 to $4,576/ounce. The continued rise in the rhodium price delivered a real kick here while the iridium and ruthenium prices hit all-time highs in the quarter. The company take no credit for this tailwind, which is entirely appropriate, and instead focuses on operational issues. Up front they report that inconsistent supply of mine waste has caused a number of problems with certain mines resorting to older, dump waste that is less effectively processed. Management have acted sensibly to deal with these changes, and keep feed tons constant, which is why delivered ounces haven't dropped all that much. Various remedies are being put in place to mitigate these issues and here I'm assuming that management know what they're doing - which seems reasonable given their prior record. Financially the company is doing very well, which cash moving from $67.1m to $102.1m, and will have no difficulty meeting obligations as they fall due. Looking good for now. (Update)

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

Personally I prefer companies with a little less hope in their share price such Softcat, Belvoir and Luceco. These three companies performed extremely well during the pandemic but they're not just lockdown winners. Instead they're simply well-run companies providing a service or product that their customers are happy to pay for. It's no surprise that this trio were some of my top performers in March, along with Tandem and Sumo, but not far off half of my holdings gained more than 10% during the period. Unfortunately this positive action was offset by a hefty fall in my largest position as GAN investors sold their shares both before and after the full-year results. I don't really understand this behaviour, given that this is a medium-term story, but I guess that some people like to lock in their profits.

Still I managed +1.2% for the month and +7.2% for the YTD which is pretty remarkable given that GAN's fall took out about 5% of my portfolio! That's the benefit of being diversified with a maximum position size of ~10%.

Risers: SCT 24%, TND 20%, BLV 19%, SUMO 16%, GMR 16%, LUCE 15%, STAF 14%, CCC 14%, KNOS 13%, FNX 13%, VLX 11%, TM17 10%, GAMA 9%, TSTL 8%, SPSY 8%, FXPO 7%, G4M 6%, K3C 5%, GAW 4%, PLUS 2%, BUR 1%, BOO 1%, AFX 1%, BOTB 1%, RWS 1%

Fallers: DRV -1%, DX. -1%, BME -3%, CMCL -6%, SLP -7%, GAN -28%

Purchases

DX Group Bought at 28p

The share price has been weak for DX recently despite the sequence of positive trading updates. It's possible that the price got a little over-extended, as the business returned to profitability, and there's no harm in a period of consolidation. That said I'm impressed by the interim results and took the opportunity to join the group conference call with management. Here the tone was so confident that I decided to add 50% to my existing holding during the call on the basis that liquidity was available in the market. It was an unusual move for me but management is key in any business and doubly so with a turnaround. In speaking and listening to the directors at DX it's become clear to me that they are the type of cost-conscious, plain-speaking, focused management that I look for and that they have a proven plan for making DX a much more efficient and profitable machine for growth. They could just be blowing smoke but they've done this before and have done what they said they would three years ago when they joined the company. It's not all perfect of course and they don't try to disguise that fact. But they're willing to put in the hours to complete the transformation of DX and I'm happy to back them in this journey.

Sanderson Design Group Bought at 122p

This is a recent investment idea which I picked up from the Cockney Rebel chatroom. The thesis here is that this is a business which badly lost its way long before the pandemic with the share price ultimately falling over 80%. The old CEO fell on his sword and a couple of years ago Lisa Montague joined on the back of a successful career in the luxury good industry. Since then the management team has been refreshed and a strategic review completed. This identified that the company has a strong portfolio of brands but I suspect that these were mismanaged. So the medicine of focusing on these brands, the core products of wallpaper, fabric and paint and three key geographies (UK, Northern Europe and the US) is not much of a surprise given the diagnosis. Obviously the lockdown in 2020 threw a massive spanner into the works but since last summer the news flow from SDG has just been improving with better than expected trading performance in July, August and September continuing towards the end of the year. Partly this was down to consumers spending more on home improvement but the board have placed the group in a position to benefit. The last update in January indicated that PBT for the year would be no less than £6.3m which is a big improvement on forecasts. The uncertain outlook has left 2022 forecasts unchanged and potentially lagging the progress in the business which is the reason for investing now.

Ferrexpo Bought at 388p

Following up on my maiden purchase last month I've decided to double my holding on the back of some excellent results. Ferrexpo enjoyed an excellent year in 2020 and notably moved to a net cash position after using its strong cashflow to pay off debt. This has enabled the payment of a large special dividend and there's every reason to expect these pay-outs to continue. On top of this production is being increased and high-grade iron ore prices remain elevated. With China and the US driving a global recovery from the pandemic I'm betting that Ferrexpo stands to benefit. There are clearly risks due to the mine being located in the Ukraine when you consider that Russian troops are apparently massing on the border but is this anything more than sabre rattling? Russia has annexed the Crimea and there is a slow-burning conflict taking place on the Eastern flank of the Ukraine. But it's hard to believe that Putin has any desire to take over the entire country; not that this makes the border skirmishes any less repellent but the risk to Ferrexpo appears remote if non-zero. On this basis the company appears to offer real growth at a decent price.

Sales

Plus500 Sold at 1320p - 21.1% gain

This has been a solid performer in my portfolio since I bought in last year with several material dividend payments. However despite being optically cheap the shares haven't made much progress in getting on for a year now. This is despite earnings forecasts for 2021 and 2022 rising steadily over this time against a backdrop of continued market volatility. So I've lightened my position here by a 1/6 to release capital for potentially more attractive opportunities. It's only a small top-slice because I believe that Plus500 will continue to do well, as it matures into more of a financial services business, and I see scope for further chunky dividend payments out of free-cash flow.

Burford Capital Sold at 613p - 41.8% loss

I've held Burford for a number of years now, through the bear raid and beyond. I still believe that the business is sound, cheap at current prices and cash-generative in the medium term. However, I thought that the US listing would provide a rerating catalyst on the basis of the shares being listed in a much more liquid market with much greater disclosure requirements. The shares did advance on this news but not significantly. I also thought that the recent results, indicating the resilience of the business during a pandemic, would stimulate some investor interest. Again I was disappointed. Frankly I don't see what else the directors can do apart from keep churning out decent results. At any rate I've reduced my position again to release funds for investment elsewhere on the basis that I'm incurring a real opportunity cost by holding Burford. I still think that they'll come good eventually although it may require success in Argentina to unlock the value inherent in the business.

Announcements

DX Group

Following a number of updates reporting trading to be materially ahead of expectations these HY results continue the positive trend. This is the product of several years effort and it's notable that the business is making solid profits on only a small (7.4%) increase in revenue. The key to this is a significant improvement in the DX Freight division from a loss of £1.4m to a profit of £8.1m. In part DX have benefitted from the lockdown boosting deliveries and Brexit boosting parcel rates but management have also consciously ended marginal contracts and replaced them with ones that provide a decent margin. This is all part of the game plan and you can understand why the board are strategically opening new depots where beneficial. The DX Express division had a tougher H1 due to a fall in Document Exchange revenue and the impact of the lost Passport Office contract. Management have detailed plans in place to improve customer service and retention in the Document Exchange space and hopefully these will stem the decline in this area of the business. Given the way in which the board have improved operations and commercial discipline so far I think that we can be confident of further progress and this outlook statement "we view prospects with an increasing level of confidence" supports this conclusion. Ultimately I like the fact that this is a relatively simple business and that the directors are heavily invested in the turnaround. Like them I view the future for DX with some optimism. (Results)

K3 Capital

As K3 enters its last quarter of the financial year it's pleasing to see that trading in H2 already puts them ahead of expectations. All business divisions have been performing well with KBS notably strong. I suspect that some of the corporate transactions intended for last year are unlocking along with some desire from business owners to lock in capital gains at current rates. This is all good news and the update mentions that the pipeline remains strong for the remainder of the year. In addition the new diversified revenue stream appears instrumental in moving the group on from its old feast/famine model. This announcement went down well with investors as the shares gapped up to 300p, twice the level where funds were raised in 2020, before consolidating at a new level above 290p on miniscule volume. I expect to see further material progress as the year unfolds. (Update)

B&M European

Another positive update from BME with adjusted EBITDA being pushed up yet again to a range of £590-620m compared to the £540-570m announced in January. This is quite some improvement and comes after the board decided to repay roughly £80m in business rates. In other words the business is flying with sales and margins remaining strong. Sadly this good news was over-shadowed by a note of caution for the future and the shares continued their decline from the 600p peak reached in mid-February. The problem is that sales started elevating in March 2020 and this makes for a tough sales comparison going forwards. In addition people stocked up because of Covid-19 and it's hard to predict how this business will unwind as restrictions ease. Hence there are significant forecasting challenges for the new financial year. This news has certainly spooked investors, as uncertainty always does, and it'll take some time to get a more accurate perspective on the new year. Still BME is a heck of a business and I doubt that it'll suddenly go into reverse just because people are allowed to shop in more places. (Update)

Plus500

This Q1 update is notably light on numbers so there's not a lot to go on. Trading remains strong and the board remain comfortable about the outlook. As is always the case revenue growth will be driven by attracting new customers and growing the active customer base. At the bottom-line continued cost control and efficiency will maintain profits. That's about it but we'll learn more in mid-April with Q1 results publication. (Update)

Team17

I always like to see results where top-line growth is in the same ball-park as bottom-line growth. It says to me that the company is stable with defendable margins and little in the way of adjustments or other funny business. With Team17 I'm happy to say that 34% sales growth is echoed by 36% PBT growth and 33% EPS growth. These are very solid numbers and with earnings quality remaining high, as profits convert efficiently into cash-flow, I feel that the business deserves its high P/E rating of ~39. Clearly Team17 has benefitted as the pandemic boosted computer game purchases but equally they released a record 10 new titles with the solid underlying back catalogue generating 78% of revenues. This is significant as it suggests that the games have a reasonable shelf-life which makes sense when you consider the target market. For example the Worms franchise is now 25 years old and yet it rumbles on as new players discover the attractions of its puzzles. Looking forwards there is a whole raft of titles due for release in 2021 and the new generation of consoles should drive sales as consumers upgrade and look for ways to enjoy their new purchase. I don't have a lot more to say here as the accounts are very simple and the growth trajectory is easy to understand. The company does capitalise some development costs, which boosts reported profits, but these are largely amortised within 12 months. So I don't have any concerns about manipulation on this front. I image that while Debbie Bestwick, CEO and Founder, remains happy to be massively invested then I will too. (Results)

Computacenter

This is another long-term holding of mine and one that has also performed well during the pandemic due to certain customers spending heavily. Still that only boosted total revenue by 7.7% while at the adjusted profit level this converted into a mighty 36.6% growth rate. Unusually the adjustments being made are such that the adjusted EPS of 126.4p is actually lower than the basic figure of 133.8p. Normally companies massage their earnings in the opposite direction! Still it's a very fair adjustment as it relates to the acquisition of BT Services France where £14m of assets were acquired for €1 - the catch being that the business is loss-making and future losses will be off-set against this technical gain. Either way management did well in 2020 to deal with difficult markets in Europe and the US along with a significant drop in expenditure from industrial customers in the UK. Fortunately the group is well diversified and Public Sector clients took up much of the slack. This resilience belies the apparent low operating margin which ignores the fact that pass-through costs are a major feature and that reported revenue should be adjusted for this fact. For the coming year analyst forecasts seem off in that the 2021/2022 forecasts have been essentially identical for the last 12 months and they're basically the same as the result for 2020. Given the positive start to the year, and the quiet excitement evinced by the board, it's clear to me that the analysts are out of line. I suspect that we'll receive positive trading updates in due course and if the share price remains weak these will represent solid buying opportunities. (Results)

Games Workshop

A very brief update here with trading up to the end of February 2021 being in line with expectations. A decent outcome with the majority of UK and European retail stores closed during the period. In addition we have yet another dividend being distributed from truly surplus cash. This is a regular feature with Games Workshop even if the dividends occur on an irregular basis. (Update)

Alpha FX

Last year was volatile for Alpha FX to say the least with the share price dropping more than 60% on fears that the company might go bust. Obviously such a fate was avoided but it felt pretty scary at the time. What's absolutely remarkable is that profits actually grew 20% to £14.6m on a group sales increase of 31% to £46.2m. This was sufficient to generate an underlying EPS of 32.8p which is comparable to pre-pandemic expectations for around 36p of earnings. That's positive but then again analysts raised their forecasts to 35.5p early in 2021 and the numbers have come in 8% below that level. There is no single reason behind the shortfall that I can see. Instead a combination of factors, such as increased headcount, Brexit planning, office moves and client repayment provisions, have increased costs and reduced margins. None of these changes are permanent and they should either reverse or serve to boost future profitability. So I'm inclined to agree with the directors that the business has proved resilient, under the most testing of conditions, and that growth is likely to remain strong if Covid-19 remains under control. One of the keys to this is the entrepreneurial corporate culture of Alpha FX and that comes across clearly in the narrative to these results; the plan continues to be one of building a group that can prosper in the FX and alternative banking space even at the expense of short-term costs. It's probably the latter which has led to an 8% fall in forecasts for 2021 (or brokers have just caught up with the share placing from last April which added 7% to the share count). In this light I'm not too surprised that the share price has fallen back 16% over the last couple of months but this feels to me like consolidation rather than anything more malign. (Results)

Ferrexpo

This is a company outside of my usual comfort zone in that it's a vertically integrated iron ore miner based in the Ukraine with a single dominant shareholder. So there are evident risks and not just from fluctuations in the commodity price. On the other hand Ferrexpo has a high operating margin and return on capital (both above 30% for the last five years), pays a rising dividend and generated enough cash last year to become entirely debt free. Add on steadily improving earnings forecasts with a price that has just closed above its ATH from a decade ago and the attraction is clear. Ferrexpo really made the best of it in 2020 with pellet production up 7%, iron ore prices up 17% and costs falling 13% to turn a 13% rise in revenue into a 58% jump in EPS to 107.9c. There are good reasons to believe that this trend will persist as a number of key investment projects were completed in 2020, which improved production, while high-grade iron ore prices have gone above $200/ton in February compared to the average of $122/ton seen last year. That's very positive for the current year although it's best not to get over-excited since the pellet premium (above the iron ore fines price) halved from $57/ton to $29/ton as the pandemic reduced demand and exports shifted towards China to take up the slack. Still with these factors in play, and a much stronger balance sheet now then existed a decade ago, there's every reason to believe that the current price momentum can continue. Whether it'll continue for the 50 years of ore reserves that Ferrexpo has on the books is unknown but for now this looks like the right company in the right place at the right time. (Results)

Luceco

These are record results from Luceco and that's no idle boast with gross and operating margin improvements leading to a doubling of profits. That's a fantastic result, given the difficulties of the year just passed, but Luceco isn't simply a lucky beneficiary of the pandemic. This turnaround has been three years in the making after a disastrous 2018 when profits more than halved. Since then the gross margin has improved by 10.9% to 39.8% with 3.6% of that gain made in 2020. This is primarily down to manufacturing efficiency gains, better sourcing and improved sales mix. To my mind these sound like sustainable improvements that will serve the business well in years to come. This is important because Luceco doesn't sit at the cutting edge or have some exposure to scalable cloud technology. Instead it manufactures switches, LED lighting and extension leads. These are the types of boring product where quality, reputation, cost and availability are paramount. If you can do these things better than anyone else then sales are there for the taking. Looking forwards revenue growth has accelerated from the high levels achieved at the end of the year (with H2 recovering to more than offset a weak H1) which is promising. Inflation in raw material prices is a concern (except that it effects all manufacturers equally) but operating margins should be maintained even if gross margins come under pressure. With analysts forecasting a paltry 8% rise in EPS for 2021 I'd say that there is plenty of scope for this forecast to be handsomely beaten and that the shares don't look expansive even as they head to an ATH. (Results)

Gamma Communications

Gamma has been an excellent investment for me since I initially bought in three years ago. Not just in terms of the share price doubling, although that's very welcome, but more through repeated high-quality earnings growth of 20-30% at improving operating margins. Much of this growth is organic but Gamma has also made a number of targeted acquisitions in Europe to increase its footprint in Spain, Germany and the Netherlands. Somewhat fortuitously the board also acquired Exactive Holdings in February to bring in Microsoft Teams expertise. Talk about good timing. What is interesting is that the board rarely mentions integration issues which suggests that they're able to find and on-board purchased companies in a consistent manner and without any fuss. It's also worth noting that all acquisitions, totalling £52m, were funded from internally generated cash flow and that Gamma remains healthily cash positive. The rationale for expanding into Europe is that the UCaaS market in Spain and Germany is significantly less penetrated than in the UK but is expected to grow rapidly. On the face of it, given Gamma's success in the UK, there's no reason to believe that their product offering will not be welcome across the Channel. Looking forwards it's clear that Gamma has a product set which is well suited to organisations that wish to work remotely or choose to allow flexible working. The pandemic had essentially no impact on Gamma and analysts remain positive with 20% EPS growth already inked in for 2021. I'm very happy with that. (Results)

Softcat

These feel like some bumper interim results with a 10% rise in sales driving gross profit up 20% and operating profit up 41%. That's quite some operational gearing. With EPS for the period coming in at 23.3p analysts covering the stock have scrambled to increase their FY forecasts to 44.9p. However this is only a 6% improvement and somewhat below a simple doubling of the half-year figure (which would give you 46.6p). Some of this caution may be down to Covid-related cost savings being a factor in this bottom-line growth but equally management are confident that they will deliver a full year result significantly ahead of previous expectations. What I find interesting is that this performance has occurred despite enterprise customer gross income declining by 9% and certain verticals (non-essential retail, travel, entertainment and events) yet to return to pre-pandemic spend levels for obvious reasons. The slack has been more than taken up by mid-market and public sector clients with some of the largest ever deals being signed off. I like this kind of flexibility in a business as you can't always expect the sun to be shining. Now it's possible that deal sizes will revert to normal levels but much of the spend with Softcat is non-discretionary so I'm not too concerned. They've navigated the pandemic quite ably and without any recourse to government support (unlike some of their customers). Frankly this is a great result and I need to up my exposure to this company. (Results)

Spectra Systems

This is one of the smaller, slower burning shares in my portfolio. However it ticks so many of the boxes that appeal to me: motivated management, high returns on capital, excellent cash generation and a track-record of double-digit growth. This is all available for a P/E of ~20 while you're getting paid a yield of 4% just to hold the shares. So how did Spectra do last year given that it's heavily exposed to the banknote sector and cash usage took a nose dive? Well sales grew 11% with EPS up 14% to 11.9c as an existing central bank customer demanded more materials along with additional equipment. In addition the company innovated in several areas related to bank note security (such as improving authentication sensors and producing machine readable covert taggants), developed systems to decontaminate and clean bulk banknote volumes and renewed six lottery contracts. Looking forwards the stable central bank revenues will continue to fund innovation in areas that could deliver material growth over the next five years. The investment case for Spectra is thus pretty simple: this is a stable, profitable and growing company operating in specific technical niches. Potential sales are prudently not included in forecasts which explains why the forecast history contains large rises when such contracts are announced. On several fronts Spectra is working with clients who could decide to sign very large, ongoing contracts which would substantially boost earnings. In my view this option value accounts for little of the company's current valuation and that's the attraction. (Results)

Burford Capital

And now we come onto one of my most disappointing investments. Following the Muddy Waters bear attack in 2019 the shares have utterly failed to recover to even the level plunged on the day of the attack. This is quite reasonable as reported earnings have struggled to come close to the earnings reported in 2017-18 despite a large increase in deployed assets. This does rather add weight to the argument that unrealised earnings were being used to generate high reported growth levels up until 2019 and this was all a bit of a scam. You can see the problem in these results in that group-wide realisations are up 72% from $354m to $608m and yet IFRS reported income is flat year-on-year while reported EPS is down 20% from 97c to 78c. Which of these numbers provides the most useful representation of the business? The argument put forward is that third-party funds are being used to drive growth and that performance fees on these funds are typically back loaded. This means that the full cost of these investments is being borne now in the expectation of future profits. I can't say if this scenario will play out but the cash-flow statement suggests that closed matters do actually generate cash. In previous years over $500m of cash inflow has been masked by much larger amounts flowing into new legal assets making Burford look like a business that never converts profits into cash. This year there was a drop from 7% to 4% of inbound inquiries turning into closed financial assets which may be down to Covid-19 disruption along with presented matters being of lower quality in general. As a result only $295m was put into new assets compared to $476m of cash inflow leading to a net cash inflow of $180m. This is still a lot lower than the reported operating profit but it is in the same ball-park. As ever management provide no forward-looking guidance and analyst forecasts for a 12% growth in earnings for 2021 are pretty useless. What I would like to see is some unexpected good news from Burford to inject some optimism into the shares. Without that I suspect that they will drift despite potentially being good value. (Results)

Tandem Group

Despite sales falling 5% Tandem enjoyed a spectacular year at the bottom-line with EPS jumping 69% from 40.5p to 68.5p. This comes on the back of three solid years of positive earnings but 2020 represents a huge step-change in performance. There doesn't appear to be a single reason for this improvement bar Tandem taking advantage of exceptional demand for bikes and outdoor equipment during the lockdown. Instead it seems that management have been running a tighter ship all round. At the gross profit level margins increased from 30.4% to 32.9% as little discounting was required and low-margin products were dropped for higher-margin ones. This left a bit more profit to absorb operating costs and these decreased a handy 7.5% due to reduced travel/exhibition costs and lower storage charges for reduced stock levels. Together these were enough to lift operating profits by a third. Such improvements can't be expected in 2021 but it seems that management are now more focused on running Tandem efficiently. Usefully directors report an encouraging start to the year with sales in the first 11 weeks up ~90% compared to the previous year. There remain issues in the supply chain and higher shipping rates in general, which will impact margins, but the much larger forward order book should allow the business to make progress. This sense of optimism is reinforced by the acquisition of freehold land next to their existing Birmingham facility which will allow for an expansion in warehousing and distribution. I would suggest that management recognise the opportunity in front of them and are intent on growing Tandem after 20 years in the doldrums. This will be positive for all shareholders. (Results)

Sumo Group

Bought in as a replacement for Codemasters it's fair to say that Sumo had a decent year with sales up over 40% with 26% of this growth being organic. This didn't translate into bottom-line earnings, for a number of reasons, but cash generation from operations remained stable. The biggest hit to profits, a hefty £7.3m, came from costs related to the Pipeworks acquisition. This seems quite a lot when compared to the potential maximum purchase price of $99.5m but should at least be a one-off impact. In addition the share-based payment charge doubled to £5m and there were other exceptional costs of £1.2m related to acquisition expenses. I'm not sure that these costs are either one-off or exceptional so that's worth bearing in mind as the company actively pursues its acquisition pipeline. Still IFRS reporting standards have proved no impediment to Keywords Studios becoming a £2bn company and it's plausible that Sumo can follow the same path given the tailwind of a fast growing gaming industry. In line with this growth Sumo is now working on more than 40 projects with 28 different clients (up from 21 projects with 12 different clients a year ago) which is impressive even considering the Pipeworks purchase. Given that Client-IP projects are fairly predictable in that they generate mainly development fees, along with some royalty upside, there's a certain stability to revenues independent of the success of any single game. To add some excitement Sumo also have Own-IP projects where they develop and own a game which means that they are exposed to its positive reception or otherwise. This is a useful side-line but I'm glad that the majority of revenues are contracted (even if management would like more Own-IP projects). This means that more projects and more clients should directly translate to higher sales. Looking ahead the board are very confident and analysts share their enthusiasm with EPS forecast to jump 251% to 9.3p. Obviously there will be adjustments required to achieve this result but Sumo do feel like a decent company in the right industry at the moment. (Results)

GAN

Following the repeal of a US federal ban on sports betting in May 2018 this is my "picks and shovels" play on gaming in the States. GAN is a B2B supplier of SaaS solutions for online casino gaming and sports betting in the States. As one state after another enacts legislation to regulate online gambling then GAN piggy-backs on casino operators as they rush in to fill the void. Because this is a state by state process the opening of new markets is erratic but in time I expect the addressable market to be much larger than at present which makes GAN a long-time hold. This is worth remembering as GAN shareholders are a febrile bunch as indicated by the share price almost halving in the six weeks leading up to and including these FY results. Ordinarily you'd see such a drop with a major profit warning or some other unexpected, devastating piece of news but that's not the case here. Instead GAN missed their FY forecast due to the licensing of a patent for $3m (linking real-world and on-line accounts together) slipping from Q4 into 2021. In addition a separate, known impact to revenues came from FanDuel migrating user accounts to their own digital wallet in Q3 - while annoying it was hardly a surprise although with FanDuel accounting for 42.6% of sales there is an obvious customer concentration risk here. Together these factors, along with a doubling of operating costs as the business scaled up, ensured a hefty loss at the bottom-line despite a 17% increase in sales. Looking forwards GAN has signed up a number of new clients and expects 2021 to deliver $100-105m in revenue with half of this coming from Coolbet. This implies a 50% increase in existing gaming sales from $35m to $50-55m which feels like a decent growth rate. I do expect continued share price turbulence but GAN does look attractive with such a regulatory tailwind behind customer growth rates. So are the shares worth a flutter at the currently depressed price? Quite possibly although I am at my portfolio allocation limit of 10% and that's enough exposure for me. (Results)

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

That said I don't think that it's time to strap on the tin-hat just yet. For one thing the UK economy is still shut-down, as are many other countries, and it doesn't look as though we're going to unlock at more than a snail's pace. This artificial limit on supply will ensure that demand goes through the roof when people are released from their bonds irrespective of the fact that so many of us just want to get out there and live. So the companies which have survived should do very well over the remainder of the year. In addition interest rates remain so incredibly depressed that you almost need some inflation in the system to even start the process of recovery. The trick will be balancing this inflation to ensure that it doesn't get out of hand. It's this part that has everyone worried.

Surprisingly, after all that excitement, I managed a rise of 1.1% for the month putting my YTD return at 5.5%. About half of my holdings rose in February and the other half didn't. Leading the way, for a second month, is Best of the Best as investors reacted positively to the end of the Formal Sales Process. I'm glad to see the back of this distraction and very pleased that the board didn't fall for a derisory offer. This business is going places and I'd like to stay for the ride. Also up strongly was Sylvania Platinum as the PGM basket price continues to soar and various newsletters repeatedly point out just how cheap the shares are at current levels. On the flipside I can't identify any particular reason for shares like Gaming Realms or Computacenter being down by 10% or more on no news. I expect that it's just the usual market volatility that is part and parcel of investing.

Risers: BOTB 26%, SLP 18%, FNX 13%, GAN 9%, K3C 7%, RWS 7%, KNOS 6%, TND 4%, GAW 3%, DRV 2%, CMCL 2%, PLUS 2%, G4M 1%, STAF 1%

Fallers: BOO -1%, BUR -1%, SCT -3%, BLV -3%, GAMA -6%, VLX -6%, SPSY -8%, DX. -9%, TM17 -9%, LUCE -9%, AFX -10%, CCC -11%, GMR -12%

Purchases

DX Group Bought at 33p

Since first buying into DX at 17p last October (I was late to the party) I doubled my position last month as a late reaction to the positive AGM statement. At the time I knew that a trading update was in the offing and determined that the group was likely to have continued trading strongly. This was partially a hunch, given news around how busy all delivery companies were over the New Year, but also a bet on the board continuing with their successful strategy. Anyhow the trading update was excellent and analysts have raised their 2021 earnings forecast by a mighty 33% (the 2022 estimate is unchanged for now but the direction of travel is clear). So I thought that I was being pretty clever by topping up during the mid-morning slump (avoiding the excitement at market open) but in the last few days the price has fallen back to support at 32-33p. It doesn't matter in the long run but this is another reminder that if you don't see a breakout on news then the chances of consolidation are high.

Games Workshop Bought at 9992p

I've been buying back into Games Workshop pretty steadily over the last few months as it has unleashed a sequence of positive trading updates. Over this period the share price has been consolidating between £100 and £117 with occasional forays outside these levels during moments of optimism and pessimism. The reason for this, I believe, is that the Buffettology Fund has been repeatedly running into a hard limit that prevents them holding more than 10% of the fund in a single share. So even if Keith Ashworth-Lord remains confident in the business he's still had to reduce his holding and sell shares. This will remain an ongoing technical issue but eventually the shares will break out if trading remains strong. Still this effect has been rather fortunate as the volatility has allowed me to bring my average buying price down quite substantially and I now have a significant position in the business. With other indications suggesting that licensing efforts remain strong and that games (both physical and digital) based on Games Workshop IP are selling well I don't see an underlying reason to be concerned about the future.

B&M European Value Retail Bought at 566p

It's fair to say that B&M performed extremely well during the pandemic which led to a steady increase in analyst forecasts and a re-rating of the shares. Despite this B&M still passes just about all of my quality, momentum and value screens which makes it a rare beast indeed. In the last week the share price conclusively broke out above resistance at 570p, hitting 600p, before retreating 5% to test the new support level. These factors suggest that the odds are in my favour if I invest now. Add on the strong news flow of the last six months with forecasts being ratcheted up on a continuing basis and you've got a business that's on a roll. The last update, at the beginning of January, indicated that group revenue rose 22.5% in Q3 with UK like-for-like growth of 21.1%. As a result of this trading performance the board decided to voluntarily repay £80m in business rates and pay another special dividend, this one amounting to £200m. I'm not surprised that adjusted EBITDA will come in ahead of consensus estimates. Looking forward I think that B&M will continue to do well as the lockdown eases since people are eager to get out and spend while the business has proved its resilience and attractiveness to customers.

Calnex Solutions Bought at 121p

I've decided to buy back into Calnex at roughly the price I sold at in January for one key reason. We now have a recent trading update providing new information. Most importantly customer spend has remained high in H2 which means that sales will be ahead of expectations. In addition lower costs have led to higher margins which means that profits will also be ahead of expectations. This is an excellent result so soon after listing. However the CEO does say that customer orders may have been pulled forward due to the pandemic, although I don't see how the two are linked, and that spending is reverting to more normal levels. As a result forecasts haven't been raised for 2022 and for now these show a slight dip in earnings. Personally I'd rather have sales being made now, rather than in the future, and I suspect that 2022 will be a good year as the 5G transition continues. If this leads to upgrades in due course then I'll add to my position.

Ferrexpo Bought at 354p

With all of the talk of inflation, and a commodity boom in the wings, I decided to initiate a position in Ferrexpo as the shares broke out to new highs above 350p. The investing thesis is pretty simple in that Ferrexpo is a cheap, quality company with rising analyst forecasts. Of course mining companies are almost always assigned a low valuation multiple on account of their dependence on volatile commodity prices along with a lengthy capex cycle. These businesses are primed to boom and bust. However the 2020 forecast has more than doubled in the last year, to 88.9p, while the 2021 forecast is up almost 4x to 109p. Over the same period the share price is up a bit less than 3x which means that it's lagging the consensus upgrades. An additional factor here is that Ferrexpo has ramped up production recently with a 22% rise in iron ore pellet production from Q3 to Q4. Having completed this expansion project it's easy to see why earnings are projected to rise by more than 20% and the company is in a position to pay multiple special dividends.

Sumo Group Bought at 324p

With Codemasters disappearing from my portfolio I've been looking for a replacement gaming company to sit alongside my Team17 holding. Sadly there isn't much of a choice in the UK market with just Keywords Studios, Frontier Developments and Sumo Group being available for investment in the UK. Comparing these three Keywords has performed extremely well since listing with its roll-up strategy driving consistent growth. However it's on an extremely high P/E rating with 215% EPS growth in 2021 required just to bring the multiple down below 50. Frontier Developments is similarly highly rated but with the impediment that earnings have been historically lumpy with a big rise in one year consistently followed by a fall in the next. That leaves Sumo which is a little less expensive, on a P/E of ~45, due to the fact that it only moved into profit in 2019. So the track record is much shorter and it's hard to know if the forecasts for 30% growth or more will actually be achieved. Right now though we know that sales and EBITDA will be ahead of consensus market expectations and that the shares are trading below where they were when this announcement was made. The board are rightfully very positive about the prospects for 2021 with the potential for further acquisitions. Now feels like a good time to be a part of the Sumo journey.

Gear4music Bought at 760p

I was perhaps a bit hasty buying into Gear4music back in January when they announced results to be ahead of recently upgraded consensus market expectations. This seemed like a slam-dunk buying opportunity to me but the shares immediately nose-dived, rather than breaking out, and fell back almost 20% in a month. This behaviour made little sense to me and I wasn't entirely surprised by there being another ahead of expectations announcement little more than 4 weeks later. Apparently EBITDA will now be no less than £18.2m, up from £16.5m, which indicates that UK and European trading continues to be strong. With this in mind, and the share price at a recent low, I was ready to double my holding at 8am when the market opened. As an aside trades from the day before indicated that you could buy at 729p and sell at 713p. I wasn't sure that I'd be lucky enough to buy at around 730p and reckoned that I might need to go in at the 750p level given how market-makers mark up prices after a positive announcement. In the event shares opened at 760p and closed at 810p - the moral here being that it's not worth quibbling about a few pence around your target price when you're investing for a much larger long-term move.

Sales

RWS Holdings Sold at 610p - 2.1% gain

This has been a steady, high quality performer over a good number of years. Sadly the SDL acquisition last year seemed to spook a lot of investors and the share price has been persistently weak since then. This doesn't worry me too much since the RWS board have a consistent track-record of successful integration and I think that they've under-played the benefits of the merger. That said there could be ongoing issues now that we've left the EU and I probably bought more of the shares than was prudent at the time of the acquisition announcement. So with this in mind, and to give myself the opportunity to buy elsewhere (such as with DX Group), I've reduced my position by half. I think that RWS will continue to do very well in the medium term though and will probably increase this position again if trading proves stronger than anticipated.

GAN Sold at 1927p - 182.5% gain

Here we have one of my most outstanding performances ever what with GAN moving its listing to the US and being perfectly positioned to ride the wave of online gaming deregulation. I do not think that the story is over yet, not by a long shot, as more and more states pass enabling legislation in the next few years. So I plan to maintain my exposure to this trend, through GAN and GMR, for a good while yet. However with the share price at GAN heading to an ATH, causing GAN to become almost 20% of my portfolio, I've decided that a small top-slice would be sensible. As a result I've sold one-sixth of my holding to lock in some of the gain. This is my first disposal and with luck it won't be the last if the share price continues heading upwards. Given that analyst forecasts are moving higher this point may arrive more quickly than expected.

Burford Capital Sold at 610p - 41.8% loss

I've held Burford for a number of years now, through the bear raid and beyond. I still believe that the business is sound, cheap at current prices and cash-generative in the medium term. However, I thought that the US listing would provide a rerating catalyst on the basis of the shares being listed in a much more liquid market with much greater disclosure requirements. The shares did advance on this news but not significantly. I also thought that the recent results, indicating the resilience of the business during a pandemic, would stimulate some investor interest. Again I was disappointed. Frankly I don't see what else the directors can do apart from keep churning out decent results. At any rate I've halved my position here to release funds for investment elsewhere on the basis that I'm incurring a real opportunity cost by holding Burford. I still think that they'll come good eventually although it may require success in Argentina to unlock the value inherent in the business.

Announcements

DX Group

This is a super update. In short DX will materially exceed current market expectations for adjusted PBT (no EBITDA here). This performance reflects strong progress at DX Freight which is rather important as it's been loss making for quite a while now. Given that turning around this side of the business has been a key goal for management it's pleasing to see that both volumes and margins are improving. Previously I asked the directors why they didn't just sell the freight business and concentrate on the profitable DX Express segment. Their reply was that they were confident that they could materially improve DX Freight and that this would make the group as a whole much stronger. In other words the board are fully committed to this business. Because of the new lockdown margins at DX Express are slightly lower due to higher B2C deliveries and less B2B work but this will reverse when the lockdown eases. Impressively the analyst estimate for 2021 has just been lifted by 33% from 1.06p to 1.41p putting the shares on a P/E of ~23. Hardly expensive given the business transformation. If the shares breakout over 38p then there's no overhead resistance until about 80p. (Update)

Staffline Group

This is another turnaround story, like DX, with new management and a fundamentally sound business. However the new board haven't been in place that long and we're earlier on the recovery path. So the year ending 31st December 2020 won't have been profitable at the bottom line but, as this update indicates, operating profit will be marginally ahead of expectations. More importantly significant progress was made improving the operational, financial and governance processes and board composition, including strengthening the Group's financial position. These root and branch reforms put the group in a much stronger position for 2021 and I happen to believe that economic tailwinds, as we emerge from lockdown, will boost this recovery. So I can see why market forecasts point to an EPS of 3.6p for 2021 with the P/E rating being ~15. This is inexpensive for a start but when you consider that the group produced annual earnings of ~45p in 2018 (adjusted for a doubled share count in 2020) then you can see the potential for a re-rating. There remains the potential for another fund raise, to further strengthen finances, but the company is in a much better place than it was a year ago due to a focus on working capital. There remain challenges but the board remains cautiously optimistic. As do I. (Update)

Tandem Group

It's fair to say that Tandem does not meet my usual investment criteria. It is small (£26m market cap), illiquid (>5% spread) and ignored by all brokers which makes it hard to value. It also used to have a hostile board and little investor interest (as indicated by an unchanged share price for much of the 21st Century). However in the last six months the shares have tripled as Tandem benefited from high lockdown-induced sales and a refreshed management team. I picked up some shares a few months ago on the basis that the shares were still cheap and there was a chance that sales could continue growing at a decent pace. As it happens H2 revenue came in at £20.2, after a strong Q4 offset a weaker Q3, giving FY revenue of £37.1m. This is 4% lower than 2019 but PBT will be materially higher due to a combination of reduced expenses and higher margin domestic sales. No numbers are given around what the actual profit will be. The outlook is strong though with sales to the end of January up 75% compared to 2021 with the forward order book also substantially ahead. There are some issues around freight though, with ballooning rates making some imports unprofitable, while some product lines are both hard to get hold of and subject to material price increases. So the trading environment is hardly benign but this statement is clear about the measures being taken to mitigate these issues. (Update)

RWS Holdings

This is a nicely positive update. The original RWS business has seen good sales growth in Q1 with a significant double-digit percentage increase in adjusted PBT. The newly acquired SDL business is performing in-line which is perfectly reasonable at this point. Integration of SDL will be a primary focus this year and so far this is progressing to plan. Beyond this no specific guidance is given. We'll learn more in the updated scheduled for April following the half-year completion in March. (Update)

Gaming Realms

It seems that Gaming Realms is on a roll with FY20 revenue to be 4% ahead of expectations. Apparently December was a record month with strongly growing licensing sales driving this performance. The positive momentum has continued into 2021 which I can well believe given the volume of recent news flow. Particularly exciting is the provisional supplier licence granted in Michigan and a multi-state contract directly with BetMGM. It seems to me that Slingo is a valued brand and the board aren't over-egging things when they refer to a strong pipeline of new partnerships. It feels as though the company is at a turning point with the potential for profits to come in above market expectations. (Update)

K3 Capital

These are the first results from K3 Capital following the transformational acquisitions of Quantuma and randd. Considering that this period covers the summer months of the pandemic it's pleasing to see decent sales growth from the new businesses. In 4 months of trading Quantuma made £9.3m of sales, up from £7.7m, while randd made £2.6m (up from £2.1m). The core KBS business fell back from £8.0m to £5.9m, which is not especially surprising, but even so the adjusted EPS was up at 6.9p compared to 6.25p despite the hefty increase in share count. Although, it's fair to say, this EPS figure is calculated using an average of 61.7m shares over the period compared to the current share count of 68.5m. This is technically correct although if you take the full share count then EPS is basically flat year-on-year. This suggests to me that the acquisitions were an excellent move and that we now have a high margin, cash generative, and debt free group capable of significant cross-selling. This is borne out by the positive outlook which states that KBS is seeing strong levels of performance while randd and Quantuma are growing steadily despite the reduced insolvency market due to Government support. This potential growth is backed up by analyst forecasts indicating 33% EPS growth in 2022 and 29% in 2023. It seems to me that we could see an upgrade to the current forecast, which the business is comfortably in-line with at the moment, and future forecasts as a result of organic growth and further bolt-on acquisitions. With this potential being available for a P/E of ~23 (along with a 3%+ yield) I think that K3 Capital is good value at anywhere below 300p. (Results)

Plus500

As expected these results for 2020 are extraordinary with revenue up 146% to $872m, earnings up 249% to 471c and cash up 103% to $594m despite continuous share buybacks and a very high dividend pay-out. An absolutely remarkable performance which won't be repeated in 2021 and we should be thankful for that. This is why current forecasts have earnings halving in 2021 to just 224c (although this estimate has risen 60% in the past year, from 139c, so earnings upgrade momentum is very positive). Still even with such a drop in earnings the forecast P/E is under 9 so you're hardly paying a high price for such a cash-generative business. What is interesting to me is that platform usage remains elevated so far and that the board are bringing in targeted hedging to reduce market risk. The latter change will address some of the criticism that Plus500 benefits from customers losing - which is true but equally Plus500 loses when customers win which is what happened in Q4 2020. Really this all ties in with the plan to change Plus500 from a CFD platform to a multi-asset fintech group with products beyond CFDs. This seems like a sensible way to reduce revenue volatility and the company certainly has enough cash to fund the announced spend of $50m on R&D over the next three years. Still it's hard to know how the share price is going to react in the short term as markets normalise and the next update won't appear until early April when Q1 is complete. Hard to call. (Results)

Burford Capital

On the face of it this comes across as a solid year-end update even if PBT will be modestly down compared to 2019. For once analyst forecasts appear to be on the mark with the consensus being a 10% drop in EPS to 90.3c. If this is the outcome then Burford will be on a P/E of 10 which feels pretty cheap given the narrative to this announcement. Management talk about this being the best year ever for the business with record realised gains and cash generation with the total portfolio larger than ever at $4.6bn. This didn't make it to the bottom line because most of the realisations occurred in the managed funds but still this suggests that the company is making sensible investment decisions. This success takes the concluded case ROIC up to 92% which is the highest-ever year-end level. A key question with all of these legal finance companies is whether their claimed profits actually turn in to cash. For Burford almost all of their realisations turned into cash in 2020 with end of year receivables just $30m (compared to cash receipts of $519m). That seems like a good conversion ratio. On the downside new commitment rates fell sharply in H1, which included the first lockdown, before rebounding in H2. However full year commitments were still down around 40% compared to 2019 since it wasn't possible to make up all of the lost ground. I do wonder how this drop will impact future profits but hopefully it'll come out in the wash due to the variable durations of legal cases. On the whole then I'm happy with this update but it's clear that investors still aren't bullish on Burford. (Update)

Tristel

A good set of interim results here with this being the third six-month period to be impacted by the pandemic. As a manufacturer of medical disinfectants the impact on hospitals globally has given with one hand and taken away on the other. On the downside a sharp reduction in medical procedures has pared back sales in the Medical Devices segment which is by far the largest generator of revenues for Tristel. Fortunately sales of the Cache Surface disinfectant system rose steeply last year before falling back to a higher, normal level in Q1 and Q2. These factors, along with some Brexit stockpiling by the NHS, drove overall sales growth of 15% in H1 with 20% of this rise overseas and 8% in the UK through increasing volume rather than price rises. This stronger growth in foreign markets, over a number of years, has allowed overseas sales to reach almost 60% of the total and I don't see this process changing as the UK is a mature market for Tristel. Further meaningful growth will come from India, where approval has been received, and USA/Canada where the lengthy approval process continues. Positive news in the latter territories will be massive for Tristel. In the short-term it's unclear how H2 will play out since the NHS may or may not recover to previous levels of examination activity before the end of the financial year in June. Nevertheless I'm encouraged by how well the board have managed the pandemic so far and I can see non-UK sales making up for any shortfall in the UK. (Results)

Fonix Mobile

With any new listing it's a relief to see positive early updates/results as an indication that investors haven't been sold a pup. In the case of Fonix sales are up 25% with this growth filtering down to both the adjusted EBITDA and EPS income lines. All three business segments of payments, messaging and managed services grew during the period and in-line with management expectations. As reported in the IPO documentation no customers have been lost for quite a few years, which continues to be the case, and 21 new customers have signed up from different sectors. This growth should continue, with a strong pipeline of new business opportunities, which rather suggests that analyst forecasts are behind the curve. A simple doubling of the H1 numbers implies sales of £49.2m and EPS of 7.2p which is 5-10% ahead of how the single broker covering Fonix sees things playing out although there is an element of seasonality to the business so it's best not to get too carried away. Still on a P/E of ~22 Fonix isn't exactly expensive for a high ROCE, cash-generative business with strong operational gearing and a prospective dividend yield of 3.5% (with 75% of profits being paid out as a dividend). It may take time for investors to become comfortable with the business model but this is a simple operation which clearly meets a customer need with its technology platform. Definitely worth holding. (Results)

Sylvania Platinum

It's fair to say that Sylvania is picking up a lot of investor interest as PGM prices continue trending upwards. There's an argument to be made that Sylvania is dirt cheap, on a P/E below 5, and I'm not going to disagree with that conclusion. In the space of a year the average gross PGM basket price has jumped from $1830/oz to $3184/oz and this re-rating shows no sign of slowing as Rhodium continues to be bid upwards. Rather fortunately this increase in selling price masks a 9% decline in production from 40,003 ounces to 36,335 ounces as the scale-down in host mine operations reduced feed volumes. It's not clear when this volume effect will reverse, given how the chrome market remains depressed, but managers at Sylvania are working hard to boost production by other means. One possibility being explored is looking to re-treat low PGM grade tailings that would otherwise have been sterilised. If this can be done profitably, which seems plausible at current PGM prices, this should boost production and expand operational life beyond the current 10 years remaining. Frankly I don't know how these moving parts are going to play out but management are confident that they'll hit their target of 70,000 PGM ounces for the year and historically they've delivered on their promises. So I'm happy to collect my windfall dividend here and retain some exposure to precious metals as commodity prices increase. (Results)

Best of the Best

This is the update that we've all been waiting for. Trading in Q3 remains strong and the company is on track to outperform its previous management expectations driven by the traction of the pure online model and increased confidence in marketing investment. The excellent cash conversion of the business is apparent as the cash balance is above £10m despite the payment of a £3.75m special dividend in February. At this rate we can expect quite a few more chunky dividends. Even better the Formal Sale Process has been concluded without any party making an offer. This is excellent news as Best of the Best is only just getting started, in my view, and I expect the CEO, William Hindmarch, to continue exploring ways to expand the proven on-line model. Things are just getting exciting. (Update)

Gear4music

A short update stating that trading performance remains strong. This applies both in the UK and Europe which suggests that Gear4music are a Brexit winner. In fact anecdotally I hear that UK customers are moving away from German competitor Thomann because it's more expensive and complicated to order across the border these days. So with EBITDA expectations moved up another 10%, to not less than £18.2m, I feel pretty comfortable that this estimate will be raised again in the April FY trading announcement. (Update)

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

The downside of starting another year is that your YTD performance gets reset to zero and you can easily end up negative rather than positive. Fortunately January has been kind and, while I've given quite a few percent back in the last week, my portfolio is up 4.6%. Online gaming drove most of this gain with BOTB, GMR and GAN benefiting from the gradual opening up of states in the US and/or a ready audience of gamblers with time on their hands. SLP also stepped up to the plate as increasing PGM prices focused investors attention on just how cheap SLP still is.

On the flipside half of my shares fell over the month, at mostly single-digit levels, for no obvious reason beyond profit taking. In fact some of the fallers announced outstanding, or ahead of expectation, trading figures and still they got sold off. The most painful fallers were GAW, where I suspect the Buffettology Fund to be reducing again, and BUR. I've no idea why Burford has pulled back so much except that it remains unloved. It's likely to be a beneficiary of the lockdown, with cases being deferred rather than cancelled, but no one seems interested. That probably means that now would be good time to buy.

Risers: BOTB 38%, GMR 38%, SLP 16%, GAN 16%, BLV 13%, TSTL 12%, AFX 12%, SCT 10%, RWS 10%, SPSY 5%, VLX 5%, DX. 4%, LUCE 2%, TM17 1%

Fallers: BOO -1%, KNOS -1%, K3C -1%, GAMA -3%, FNX -3%, CCC -4%, DRV -6%, TND -6%, PLUS -7%, GAW -8%, CMCL -8%, BUR -13%

Purchases

Staffline Group Bought at 64p

It's often said that recruiters are first to fall in a recession and then the first to rise afterwards. Intellectually this makes sense in that recruitment, and advertising, are costs that can be cut quickly when sales flag although they cannot be held low indefinitely. This was certainly the case in 2020 with UK recruiters such as Robert Walters, Page Group and Hays suffering steep declines in Net Fee Income. Things hadn't improved much by the late Autumn but the rate of fall looked to be reducing. Still investors remain wary and the share prices of these companies have essentially flat-lined since March. Now Staffline have performed similarly but on top of this self-inflicted problems have cratered the share price by over 90% in the last two years. In many ways the company looks like a basket case but new management have recently joined and will have no compunction in ditching profitless operations (such as the Apprenticeships business of PeoplePlus). Combine this changing of the guard with a bombed-out share price and economic recovery and I can see plenty of upside. Other investors seem to feel the same way with the price racing through resistance at 50p. With a trading update due shortly we'll soon discover whether our optimism is to be rewarded.

Sylvania Platinum Bought at 90p

Share price momentum has been strong at Sylvania Platinum in the last six months with the price doubling. Despite this the rating is still cheap at under 6x EPS for 2021 as the company benefits from PGM prices rising. Tied into this the company is generating high levels of cash and has stated that a special dividend will be paid out of excess cash. If analysts are correct this payout could be equal to a 15% yield which would be astonishing. There are clear risks of course around volatility in PGM prices, the known lifespan of chrome dumps and arisings and economic conditions within South Africa. Still the directors have guided the company very ably over the last five years and I like the operational plans that they are pursuing. So I put in a cheeky order as the price briefly consolidated and luckily for me it got filled on intraday volatility.

DX Group Bought at 32p

Another company with strong momentum is DX Group with the price doubling since November. I think that investor interest has been stimulated by continued director buying combined with a very positive AGM statement. This indicated that despite being just a few months into the new financial year the company was on track to perform materially better than current market expectations. Key to this performance is that both divisions are growing and margins are improving in DX Freight. Very much a continuation of the plan that management have followed over the last three years. Sadly I didn't top-up after the AGM but as buying pressure continued I realised that if I wanted to make DX a full position in the portfolio then I needed to act. The problem was finding a price that I was happy to pay. A few weeks ago I almost bought at around 28p but bottled it for some reason. Then the price moved away again and I decided that I would definitely purchase in the next period of consolidation. To achieve this I left a limit order open in the market and saw it taken out a few days ago. Sometimes this is the best way to trade when liquidity is limited and it's hard to get an online quote from your broker. The next update is due in February and hopefully Brexit hasn't disrupted the business to any significant extent (which it shouldn't as DX is a national rather than an international business).

Best of the Best Bought at 1645p

Further down I cover the outstanding H1 results delivered by Best of the Best. Just skimming the numbers it was obvious that the price would leap upwards when the market opened because analyst forecasts were so far behind the curve. I had no idea where the price would end up but I knew that I had to try and pick up some more shares. So at 7.59am I was ready to buy what I could with the funds that I had available. For once my broker was able to offer a quote at just a few seconds past 8am and I took all that I could. A lucky purchase for sure but I think that Best of the Best has a lot more growth to offer investors (if it doesn't get bought out at a bargain price which is unlikely given the concentrated shareholder base).

Gaming Realms Bought at 31p

An investment here is a bet on Slingo continuing do well in the USA as more states open up to online gaming. Right now Slingo games are licensed in the regulated New Jersey market which has almost doubled year-on-year. Remarkably the company has a 3.5% share of total gross gaming revenues. At the time of the last interim results the board had applied to be licensed in Pennsylvania and Michigan with further states following in due course. So when the company announced that they had been granted a provisional license in Michigan the share price took off like a scalded cat. This makes sense as the company is rewarded on the performance of its games with customers and every new regulated market delivers more potential customers (and Michigan is the tenth largest state in the US). In retrospect this is obviously great news but I wasn't prepared to chase the share price as it almost doubled in the three days after the announcement. Fortunately the shares have come back a bit and seem to be consolidating at around 31p - which is why I've added to my holding at this level. There's no fundamental justification for this being the "right" price but we know for sure that more states will allow regulated gaming and there's no reason to believe that Gaming Realms won't benefit from this regulatory process.

Gear4music Bought at 888p

I've felt negative about Gear4music for quite a few years now. It listed five years ago and went ballistic in 2017 as profits jumped by almost 500%. An incredible step-change and some people made a lot of money. However the business couldn't cope with this growth and crashed back to Earth over the next two years. This consigned it to my "flash in the pan" bucket. However - and this is the key point - management learnt from this near-death experience and have spent the last couple of years turning Gear4music into a sustainable business. Happily for the board this recovery coincided with a global pandemic and a huge surge in demand for online retailers. As a result Gear4music have issued four "ahead of expectations" trading updates in the last year. That is truly remarkable but still I ignored the progress being made. Only with the last update, a few days ago, did I change my mind for a couple of reasons. Firstly sales growth and improving margins have worked together to ensure that FY21 results will be ahead of recently upgraded consensus market expectations. Secondly the board have planned for Brexit changes and scaled up their European hub to deal with the challenges. Thirdly the share price has broken through the previous ATH of 870p, on high volume, and doesn't look like it's going to fall back. So all of the indicators are positive for the company and I've taken an initial position.

Best of the Best Bought at 2200p

After reading through the interim results in more detail I've come to the conclusion that Best of the Best is being mispriced at the moment. After a stunning H1 it's clear that the current broker forecasts are nonsense. The question isn't whether BOTB will beat the forecast of 69.8p; it's by how much it will be beaten. I don't think it's much of a stretch to say that earnings for the full-year should be at least 100p with a decent shot at 120p. This puts the forecast P/E ratio at 18-22 which doesn't feel extreme for an online-only business growing at such a clip. The sales process remains a distraction but I don't see management selling out at a bargain level when the business is throwing off so much cash (which they can pay out as dividends). So I've added another 25% to make this the second largest holding in my portfolio.

Kainos Group Bought at 1278p

With an ahead of expectations announcement in the public domain I've decided to bump up my initial purchase position. My thinking here is around portfolio management in that I want to reward my winners and cut the losers. From this perspective Kainos, as a business, has done incredibly well over the past year and this momentum is being maintained. I also think that a consistent track-record of delivery means that they'll be first in line to pick up new contracts within their area of expertise. So while this is a fairly new holding for me, and the rating is pretty aggressive, I'm happy enough to pay up in the belief that future earnings upgrades will drive the share price upwards.

Belvoir Group Bought at 177p

I really like the management at Belvoir and over the past year they've demonstrated their ability to deliver in the most testing circumstances. This isn't a mega-growth stock, in a hot sector, so I'm not expecting to see the share price double any time soon. Instead it's a consistently profitable, highly cash-generative, low capex business which satisfies its customers through highly motivated franchisees. This is a great model when it's done well and I have no doubt that Belvoir delivers on this front. Nevertheless the share price is below where it was a year ago despite the company beating their pre-Covid expectations. To me this suggests that investors are concerned about the rest of the year (since sales transactions could contract when the stamp duty holiday ends) while also being behind the curve. My perspective is that the board have a solid track-record of dealing with whatever hand they are dealt and this is one of the qualities that I value most. Hence I've added another third to my holding to make Belvoir a top-ten position.

Sales

Property Franchise Group Sold at 188p - 0.1% gain

I bought into The Property Franchise Group back in August as a pair trade with Belvoir. Both operate in the area of property letting using a franchise network and both are subject to the same macroeconomic forces. However since then their fortunes have diverged with BLV rising 25% while TPFG has basically flat-lined. There's no obvious reason for the discrepancy except that the management at Belvoir are more proactive about speaking to investors and there's a lot more liquidity in their shares. Side by side their financial metrics are very similar although Belvoir has better analyst coverage in that the forecasts are updated regularly while The Property Franchise Group appears to have basically no coverage. So it could be sailing under the radar? Either way I don't need two identical shares in the same sector and I have more interesting places to put these funds. So it's out.

LoopUp Group Sold at 81p - 52.9% loss

This was definitely my disaster share for 2020 in that I could easily have sold out for a decent profit and yet now I've ended up with a thumping loss. There were a couple of problems in my execution here. One was that I looked at the astonishing performance in H1 and extrapolated it forwards. The broker wasn't fooled, because they predicted a much lower FY result, but I assumed that I knew better and that the forecasts would inevitably get updated. In reality the massive Spring spike in business evaporated over the Summer and LoopUp failed to capitalise on their opportunity. My second error was that then the price flat-lined after its massive rise, and failed to break-out on positive news, I dismissed the actions of other investors. In reality they sold into any positive momentum and took their money off the table. Looking forwards there are some positive elements to LoopUp with their Microsoft Teams integration but it's going to take time to rebuild investor confidence. This implies that there are other, better places to recover my loss and so I've bailed out of LoopUp.

Calnex Solutions Sold at 121p - 43.9% gain

My belief in Calnex remains undimmed at the present time. However this is a very new listing, which means that we don't have much history to go on, and the price feels very up with events. So I think that it's reasonable to remain cautious about how the share will perform in the near-term. As a result, and because I'd like to deploy some funds elsewhere, I've decided to take the profit and run. This is the downside of being pretty much fully invested at all times; you have to sell something to buy elsewhere. The upside is that in a bull-market you benefit from the rising tide that lifts valuations across the board. I may well return to Calnex in the future if the price stagnates and the business continues to perform strongly.

Tatton Asset Management Sold at 286p - 2.0% loss

For most of my time as a private investor I've been a proponent of diversification. Having a wide spread of positions has saved my bacon on many occasions. The downside is that outstanding performance by a few holdings tends to be diluted by other holdings treading water. The upshot is that if you want to see material portfolio gains then you need some degree of concentration. I'm never going to be one of those people who can put 20-30% (or more) into a single company but I can stomach 10% in a proven position which means that I need to aim for around 20 holdings. As a consequence I'm trying to be more active in dropping companies which aren't really going anywhere and don't have a clear catalyst for re-rating. Tatton Asset Management is one such company. I like management and their plans for growth but investors don't seem very interested in the story and the share price is pretty moribund. So I've cut it at just less than breakeven for reinvestment elsewhere.

Codemasters Group Sold at 601p - 56.9% gain

I've retained my holding in Codemasters through all of the takeover volatility in the view that it's not over until the fat lady sings. Also the initial approach from Take-Two was set at an embarrassing level and the board should be ashamed to have backed it. Fortunately Electronic Arts came through with a decent counter-offer at 605p and the price reacted positively by shooting up to 650-660p. I continued to hold on the basis that Codemasters retains unique IP and that there really isn't an alternative if you want to add racing games to your roster. Unfortunately Take-Two decided not to engage in a bidding war and the price has fallen back. That's life. I have no problem taking my holding until the bitter end but I believe that there's more upside in using my stake to initiate holdings elsewhere. So the position has been sold at a small discount to the offer price.

Announcements

Caledonia Mining Corporation

A solid update which reconfirms that the Central Shaft will be commissioned in Q1 with a very beneficial impact on production. At the same time capex has now fallen away releasing cash for increasing dividend payments. In fact this is the fourth increase in the last five quarters which is remarkable. This is simply a well run company which is now able to invest in new projects in areas where gold mining has been successful in the past. At current prices this remains worth buying if you're interested in gold miners. (Update)

Softcat

The good news is that with the seasonally important December trading period behind them Softcat is significantly ahead of where they expected to be at this stage. That's very positive even if H2 is hard to forecast. The principal difficulty is that corporate clients are taking a mixed approach. Some are pursuing large projects while others are more cautious. Fortunately the public sector remains strong and Softcat is in a good position to meet any challenges. It all bodes well as the economy looks forward to recovering when the pandemic has been controlled. (Update)

Plus500

It's hardly news that Plus500 has done tremendously well out of the market volatility in 2020. As expected the year delivered record revenues and profits which will drive a handsome dividend payout. What is interesting is that the board upped their marketing budget in Q4. According to the board this investment was made due to the opportunity to on-board new customers at an attractive ROI. This makes sense to me as Plus500 needs a steady stream of new investors to replace those who stop trading for various reasons. As a result management are confident about the outlook although no guidance is provided. So I think that analyst forecasts for a halving of profits in 2021 are perhaps too pessimistic even if volatility falls compared to last year. (Update)

Gamma Communications

I've held Gamma for a few years now and over that period they've been a very steady performer with no nasty surprises. This update continues the trend with adjusted EBITDA and EPS to be slightly ahead of market expectations. Usefully the update spells out the consensus ranges which are EBITDA £73.9m - £76.0m and EPS 47.0p - 51.0p. As a result broker expectations have been raised again to 50.4p capping a 22% rise in the 2020 EPS forecast over the last 18 months. Curiously this is slightly less than 51.0p even though the company will deliver slightly more than this. Make of that what you will. Since Gamma provides communication services it's been ideally positioned to support businesses working remotely. Demand has remained strong, with Gamma moving into the European market, and cancellations and bad debt have remained at the low levels experienced historically. An additional marker of quality is that net cash is almost unchanged, at £48.4m, despite a spend of £48m on acquisitions. A great result for the year. (Update)

Alpha FX

It's fair to say that the directors at Alpha FX proved their mettle in 2020. After a promising start last year it looked, for a moment, as if Alpha FX might fail when their largest customer defaulted at the point of maximum market volatility. Fortunately the business had enough resilience to take the blow and with a recovery plan in place the business has powered onwards. In fact it's done so well that analyst forecasts are back to pre-Covid levels following one massive downgrade and a number of upgrades. Given the unhelpful backdrop of lockdowns and Brexit, which cut international trade levels and a need for FX, this is a remarkable result. A few factors drove this recovery. FX risk management slowed in H1, but grew strongly in H2 as trading activity recovered, while alternative banking solutions delivered growth throughout the year. In addition new sales teams in Canada and Amsterdam performed well which suggests that the business model is robust. In fact I believe that this model, and the corporate culture, explains much of the success of Alpha FX with a focus on training new sales staff alongside more experienced team members. Since this is unlikely to change I can see why Morgan Tillbrook, CEO, expresses confidence for the future. (Update)

Games Workshop

When I skimmed across these half-year results at 7am I almost fell off my chair. For earnings to rise 55% on a 27% increase in sales demonstrates excellent operational gearing despite a small drop in royalties (which are essentially pure profit). Behind this rise it's no surprise that retail sales fell 19% but this was more than offset by trade sales jumping 34% and online sales leaping 88% (putting these ahead of store revenue for the first time). The actual numbers are quite something too since an EPS of 226.1p is already 65% of the current FY forecast for 345p (which has already been upgraded multiple times). Given little H1:H2 bias to previous results I expect brokers to upgrade yet again once they've digested these results. Right now I would expect to see ~400p for the year (rather than a simple doubling of H1 to give 450p) because the company seems to be having a little trouble meeting demand and possibly sales have slowed a little in December. I say this because the 'out of stock' metrics are higher than expected and December sales were only broadly in line. I absolutely don't read anything into this, given the continued expansion in manufacturing capability and a track-record of growth, but even Games Workshop isn't perfect. It's just honest. There are stronger and weaker elements in all businesses and from the narrative of these results it's clear that the board are happy to share the details, within limits, with shareholders. I appreciate this openness as the board have a clear desire to continuously improve the company and it is this drive that has led to the current levels of success. It's well deserved in my opinion. (Results)

Boohoo Group

Online shopping has been the place to be over the last year and Boohoo has been a huge beneficiary of the switch from the High Street. This wasn't necessarily a given at the start of the pandemic as much of Boohoo sales are supposedly driven by customers going out on the town. In practice this just isn't the case and growth rates across all territories have remained astounding. Notably sales in the USA have risen by 67% over the last ten months, to become second only to the UK, despite the lack of warehousing across the water. With UK warehousing being further extended management seem happy to continue supporting foreign sales from here. As a result of the continuing sales strength the board are raising guidance from 28-32% sales growth to 36-38%. With the adjusted EBITDA margin remaining around 10% that jump in revenues should mostly filter down to the bottom line. This performance comes despite cost headwinds related to Covid-19, higher distribution costs and the efforts being put into improved corporate governance. From here it seems that the knockout growth of previous years is continuing and that the group is starting to look reasonably priced. For the patient investor I suspect that the current price will have presented a great opportunity in years to come. (Update)

Best of the Best

I thought that the Games Workshop results were good but these are extraordinary. After moving to an on-line model we have sales almost tripling to £22.1m and profits near enough quintupling to £6.8m. I was expecting Best of the Best to have done well in the six months to 31st October, even if this wasn't peak lockdown, but this performance is beyond my wildest dreams. What's funny, in retrospect, is the EPS for H1 is a mighty 59.84p which represents 86% of the current FY forecast of 69.8p. I can see the consensus being raised to at least 100p which puts the company on a P/E of ~22 even after the price rising 50% in just the last few days. It's still not over-priced in my view since management are aiming to accelerate growth through enhanced content and increased marketing while benefiting from a reduced cost base. What's very clear is the board are investing in their website and looking to grow the user base through the addition of iOS and Android apps. Underlying this is their customer database and knowledge of how people interact with the competitions on offer. This is a valuable commodity and you can see why the formal sale process continues (despite a lack of resolution). I continue to suspect that price remains a sticking point and possibly buyers were waiting for BOTB to become a pure online operation (which it is now). The only problem with BOTB is that its shares are very tightly held and there's very little free float. Still you can't say the the directors aren't aligned with other shareholders! (Results)

Caledonia Mining

This is a strong Q4 production update from gold miner Caledonia with 15,012 ounces produced. This takes annual production to 57,899 ounces which is at the top end of expectations. Next year the target is 61-67,000 ounces and I suspect that this is conservative. More than this I like management with a track record of saying what they are going to do and then executing on this plan for year after year. This tells me that they are able stewards of my investment. For sure the company can't control the gold price but for the factors that are within their purview I know that the directors are on their A-game. (Update)

Luceco

Three months ago the board raised their guidance, again, from an adjusted operating profit of at least £23m to between £28m and £30m. A big jump and the shares gained around 15% on the news. Now we learn that profits will be at the top-end of this range and so £30m is a racing certainty. This is a tremendous result and while demand remained high, because consumers were stuck at home with time on their hands, this follows an equally excellent performance in 2019. So Luceco isn't simply a Covid-19 beneficiary. Management here have worked hard to grow the business and this momentum is carrying forward into 2021. It's true that there are raw material cost pressures, and management reference a more challenging inflationary environment, but they have made significant margin gains and aim to defend them. It's certainly easier to do this from a position of strength. In fact with production and sea freight capacity unable to fully meet exceptional demand my main concern is that they don't lose business through items being out of stock. From here forecasts for just 8% EPS growth in 2021 feel very light. I suspect that analysts need to feel that last year wasn't a one-off before upgrading their numbers. (Update)

Team17

It's been a great year for Team17 which is why they're able to report that sales and profits will be ahead of the Board's expectations yet again. You just need to look at the analyst consensus graph over the last year, with its steadily rising slope, to see how consistently the business has performed. Still this is an open secret with the shares being richly rated on a P/E of 40-45. However if earnings rise by 25% next year (more than the forecast of 7.5% but a conservative guess in my view) then the P/E falls to ~35. Still high but hardly ridiculous for a high-margin, capital-light business in a growing sector such as gaming. Of course the board remain cautious for 2021, citing the lack of a one-off lockdown boost and supply chain challenges for gaming hardware, but this is in their nature. I prefer to focus on their solid release pipeline for the coming year with successful titles moving onto new platforms while a number of new games are ready to go. With Codemasters being taken over there aren't many listed computer game companies left on the UK market. Fortunately Team17 remains and it's a great company in its own right. (Update)

Computacenter

Another solid update from this technology partner serving large corporate and public sector organisations. It seems that adjusted PBT will be in excess of £195m which should lead to an EPS of 122-123p ceteris paribus. This is a further upgrade from their unscheduled December trading update and suggestive of a business that is delivering value to its customers. Critically the group saw strong growth in Technology Sourcing product sales into the public sector and services based customers as opposed to customers in the manufacturing and industrial sectors where spend slowed materially. Margins improved, due to better staff utilisation and a significant reduction in travel costs, allowing profits to grow more quickly than revenues. While some of these benefits may reverse the positive momentum seen in trading since the start of the pandemic shows no sign of abating. As a result the board are as confident as they can be at this stage that 2021 will be a year of progress for the Group. This is more positive than the outlook statements for both 2019 and 2020 (and they were very upbeat) which suggests to me that 2021 will turn out well. How analysts can believe that profits will remain flat over the next couple of years beats me. (Update)

Kainos Group

The shares of Kainos have been drifting down for a few months. This makes sense given the lack of news flow and fairly punchy rating. Fortunately continued momentum in the business has driven a strong trading performance and results for the year should be ahead of current market consensus expectations. No numbers are given but a particular highlight of the narrative is that they continue to work on several substantial, long-term engagements as part of the UK Government's digital transformation programme. Being part of this is huge for the business as it provides stable, extended revenues and demonstrates the value of the group to other clients. There will undoubtedly be challenges in the future but the board are confident in their strategy and this confidence is well deserved. (Update)

Belvoir Group

Management at Belvoir have excelled themselves in 2020 with tight cost control and consistent support for their franchisees. Everyone worked harder and smarter than ever with Management service fees (MSF) growing despite the sales lockdown and financial services up 13% despite a fall in mortgages. As a result trading for the year exceeded pre-Covid-19 expectations with revenue up 12%. This growth kept on going to the bottom line and results will be comfortably ahead of management's expectations. This outcome demonstrates the resilience of the business model with letting income (60% of gross profit) stable and sales income able to flex with supply and demand. Unlike some companies Belvoir is highly cash generative. So much so that net debt has fallen from £6.9m to £3.7m, all Government support has been repaid, staff have been reimbursed for any salary sacrifice and catch-up dividends are being paid to reward shareholders. I'm not surprised that Belvoir have managed 24 consecutive years of profit growth and yet the shares are priced at a P/E of 12 with a 3-4% yield. Perhaps you could argue that 10-20% EPS growth every year isn't enough to deserve a higher rating but if my portfolio did that year in, year out then I'd be very happy. (Update)

Fonix Mobile

This is a recent listing to it's reassuring to receive a steady update with no surprises. The business is growing comfortably at the top and bottom line with gross profit up 21% compared to the previous H1. With strong underlying cash-flows, a hallmark of the business, there should be a maiden interim dividend declared with the results. All three business segments are growing as expected and new customers are joining from the media, charity, gaming and digital services sectors. On a P/E of ~20 the business does not look expensive and still offers a fair amount of upside. (Update)

Sylvania Platinum

Production volumes remained strong in Q2 at 18,363oz vs 17,972oz for Q1. This is an impressive result given the level 3 lockdown in SA and continuing power supply issues (due to vandalism!). This is a testament to the operational abilities of the company with the target production for the year remaining at ~70,000oz. A useful tailwind is the PGM basket price with this increasing 17% from $2,834/ounce in Q1 to $3,323/ounce as a result of the continued increase in the rhodium price during the past quarter. Inevitably this basket price will remain volatile but news reports are fairly consistent in saying that demand for these metals will remain strong due to the growth in battery production for electric vehicles and other industrial uses. So Sylvania appears to be in a bit of a sweet spot and it's clear that management are capitalising on this by pushing forward with operational improvements. These include ongoing circuit optimisation at the new Lannex mill which will improve processing efficiencies and profitability based on current feed sources. There is also the Mooinooi chrome proprietary processing modifications and optimisation project which remains on track to commission during Q3. Both of these will allow the company to improve their feed grades and how much metal they are able to extract. It all looks very positive and with PGM prices remaining high we can look forward to a windfall dividend in short order. (Update)

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

Looking back at December a number of my holdings rose more than 20% but DX Group took off like a scalded cat with a 43% rise. I think that a combination of director purchasing and positive statements has finally bought the company to wider attention. Sadly I dallied too long in considering a top-up at around 28p as the price then jumped another 25%. At the same time new holding Calnex Solutions moved up 32% as investors learnt more about this new listing and its exposure to the 5G roll-out. Elsewhere the US markets helped me out by either engaging in a bidding war for Codemasters or re-recognising the merits of GAN as states approve legislation around real-money gambling and sports betting. Happy days for sure with very few of my holdings falling by any material amount. Right at the bottom we have Plus500 and Spectra Systems dropping by 7% on little more than an easing in investor sentiment.

Overall my portfolio was up a ridiculous 9.8% in the month (what a Santa rally!) taking me to 26.1% for 2020 as a whole. This is a touch below the ATH but frankly who's counting? It's a great result which completes an excellent four years where the unitised asset value of the portfolio has doubled (this is adjusted for inflows and outflows). I'm no investment genius but it's pretty clear to me that the motivated private investor can do a lot better then sticking their savings or pension pot into an institutional fund. It takes a bit of work, of course, but the results speak for themselves.

However the DIY approach does come with mark-to-market volatility which can be unnerving. Still the range in monthly returns is not usually quite as extreme as this year:

Risers: DX. 43%, CLX 32%, CDM 30%, GAN 22%, SCT 21%, VLX 17%, K3C 15%, SLP 14%, LUCE 14%, BOTB 13%, GAW 13%, CCC 10%, BOO 10%, TSTL 9%, TPFG 8%, AFX 5%, BLV 5%, CMCL 3%, GAMA 2%

Fallers: TAM -1%, LOOP -1%, DRV -2%, TM17 -2%, RWS -5%, BUR -5%, PLUS -7%, SPSY -7%

Purchases

Belvoir Group Bought at 154p - December 20

The recent trading update from Belvoir is remarkably good, as mentioned below. For the group to be doing better than predicted before the pandemic even started is a testament to all of the staff within the business. The implication of this is that 2020 will be the third year in a row where sales and profits have both grown by more than 20%. And yet, despite this, the shares are valued on a forward P/E of ~10. Part of the reason for this may be the low growth forecast for 2021 (just a few percent) but I am certain that the analyst predictions for 2020 and 2021 will shortly be increased by the house broker. Once this happens the shares should break through overhead resistance at 160p and could make their way back to the 180p level first reached in February. Meanwhile we'll receive a bumper dividend in the knowledge that Belvoir is trading well on all fronts.

Caledonia Mining Bought at 1245p - December 20

This has been a moderately frustrating investment in that the sinking gold price has utterly overwhelmed positive operational news flow. I can understand why this has happened, and why the shares have lost a third of their value since July, but it's still a bit trying. The fact is that we've had two strong quarterly production updates in the last six months along with key news regarding the completion and fit-out of the new Central Shaft. This is a game-changing development for Caledonia with it both doubling potential production while reducing the cost of production. That the company has managed to complete this development using internal staff and with no deaths (which is always a risk in mining) shows the quality of the on-site team. They've also handled the pandemic restrictions with resilience and appear well-versed in dealing with the Zimbabwe administration. As a result I've been looking for an opportunity to increase my holding. With the gold price starting to bounce, and the share price finding support at ~1300p, I figure that now is a good time to be brave. In January we'll receive an update on Q4 production and hopefully the news will be positive as the miners always seem to work hard in the final quarter. Perhaps this is because of their Christmas bonuses? Either way things are looking good and I'm happy to be patient.

Games Workshop Bought at 9990p - December 20

In fairly short order this purchase makes Games Workshop my third largest holding. There have been three very positive trading updates in quick succession and yet the share price has barely moved. I believe that this weakness is down to one of the larger institutional holders becoming a forced seller. As the price rises this will remain a headwind but eventually it will abate. In the meantime we're left with a company trading phenomenally well at an unusually suppressed valuation. I would buy more but I don't want to get too carried away.

Best Of The Best Bought at 1253p - December 20

The price action here has been downright disappointing in the last few months. The last trading update indicated that trading remained strong, which is reassuring, but didn't raise expectations. Still these do indicate earnings rising 86% this year which is a remarkable level of growth for a P/E of just 16-17. More perplexing is that the sales process remains ongoing with several parties still in the running. It's hard to believe that it's taking this long to go over the accounts. I think that the blocker is that management, who own the lion's share of the business, want a higher price than any buyer wants to pay. If this means that the sale collapses then so be it. I'm happy to continue holding such a profitable enterprise. On the other hand it's notable that a date for the H1 results announcement hasn't been published as this might indicate that an offer is imminent? As I see risk to the upside with Best Of The Best at this level I've increased my holding by 50%.

Tandem Group Bought at 490p - December 20

Tandem is a step outside my comfort zone with a market cap of just £25m and a 5% bid-offer spread to match. In the past it also had directors that failed to hide their disdain for the private investor. Still governance is starting to improve and Tandem has profited handsomely from the pandemic. At the same time a number of well-respected private investors have taken large positions in Tandem in the belief that the business is set for continued growth. The mood music here is certainly positive and with the price dropping just over 15% from its recent ATH I've taken an initial position. From here sentiment is likely to turn positive if an upbeat trading announcement emerges and will certainly go negative if Brexit blocks the docks and prevents Tandem from delivering orders to customers. I've no clue which way things will go but if the price continues to weaken I may buy some more (on the basis that transport will return to normal reasonably quickly).

Kainos Group Bought at 1211p - December 20

This has been a great year for Kainos with public-sector contracts boosting profits. This is no one-off though as sales and profits have been improving for the last five years since listing. Over that period earnings quality has remained high with ROCE consistently above 40% and high FCF conversion in almost all years. As a result the share count has barely risen in this time with net cash on the balance sheet steadily increasing. It's no surprise that Kainos passes all of my quality screens. From a momentum perspective analysts have been raising their estimates since June with the current forecasts of around 30p in earnings (for 2021 and 2022) around double the consensus six months ago. The share price has responded to these upgrades but it's only 60-70% higher than the price seen in the summer. This seems a lot but the price rise is lagging the forecasts and the forward P/E has reduced a little (it's still ~40 so this is no value share). So why buy know? Well the share price is down just over 10% from its October high and has formed a distinct base at 1160p. In the last two months volume on positive days has been distinctly higher than on negative days with much higher volume recently. This suggests to me that buyers are keen but waiting for a break-out (just as happened in August-October). I don't whether this will happen but with the 100-day MA moving towards the base I can see the share price reacting in one way or another.

Fonix Mobile Bought at 126p - December 20

This is a very new addition to the stock market, listing in October. Ordinarily I steer clear of companies with a short public history but this piece by Martin Flitton piqued my interest due to the overlap in some of our holdings. Looking at Stockopedia, growth over the last few years has been very strong with profits rising 158% on an almost doubling of revenue. Margins are high, and rising, while the ROCE and FCF conversion numbers are both very high due to the capital-light business model. In a nutshell Fonix is a mobile payments and messaging platform provider that allows consumers to make payments with their mobile phone. Fonix takes a commission from the end merchant and pays on a commission to the mobile operator; it's the difference between these two numbers that drives profits. Currently Fonix is UK focused with much of its revenue coming from the gaming and charity sectors. Future growth will come from taking carrier billing into new verticals and expanding internationally. So far management don't appear to have put a foot wrong although I do need to go through the admission document to make sure that there's nothing nasty lurking in the fine print. If the prospectus is clean then analyst forecasts for 12% EPS growth in 2021 and 2022 look very undemanding (a point made in the Momentum Investor newsletter recently). I suspect that the broker is being cautious while there's so little information available which is why I've taken an initial position.

Gaming Realms Bought at 20p - December 20

Last week the CEO and Executive Chairman of Gaming Realms presented on Mello Monday to a large group of eager investors. I saw this as a golden opportunity to see management and ask questions for one very good reason: it seems that Gaming Realms has never made a profit and has regularly issued shares to keep the show on the road. In my mind these are not the characteristics of a successful business and a significant pivot needs to have occurred to make the shares investable. Now according to David Thornton of the Growth Company Investor newsletter the big change is a shift from B2C to B2B. Previously management had tried to capture all of the profit by dealing with customers directly but this exposed them to high acquisition costs and onerous regulatory requirements. So a few years ago they decided to distribute non-exclusively through gaming operators and distributors. This removed almost all variable costs and turned the company into a games designer, with valuable IP in its Slingo brand, that make much of its revenue through performance fees. So popular games are important and Gaming Realms are set to benefit from expansion in the USA as more states legalise real-money gaming. This is a huge opportunity and the company is in a great position due to its existing successful relationships. As a result the firm should become FCF breakeven in 2020 with a move into profitability in 2021. If all goes well the stable fixed cost structure will ensure that sales growth falls straight to the bottom-line and profits should rise rapidly. Clearly this is a higher risk investment but the signs look positive.

Sales

3i Group Sold at 1129p - December 20 - 26.9% gain

I've held 3i for just over three years now and they've been a solid if unspectacular investment over that period. The portfolio managers have done a fine job in that time with Action, a huge discount retailer in Europe, being an outstanding success. As a result the share price has rarely traded below the NAV, which has steadily grown, with occasional enthusiasm taking the price up to a 40% premium. This level has represented a resistance level for the past five years and I have no reason to believe that the shares should trade at a higher premium. Right now, with a recent NAV of 905p, the premium is 25% and the shares could easily push on past 1200p. However I need to release some funds for purchases elsewhere and I've dumped my holding to generate liquidity. I will miss having some Private Equity type exposure though.

Hipgnosis Songs Sold at 121p - December 20 - 6.6% gain

All of my shares in Hipgnosis were acquired via PrimaryBid as the manager raised investment funds. I took part in these cash calls partly to test out PrimaryBid and partly because I think that song catalogues are a sensible investment opportunity. However it's become clear that Hipgnosis are going to keep acquiring new catalogues for quite a few years in order to reach their song count target. This means even more fundraising at a discount to NAV which will dilute existing holders. In addition catalogue valuation is an imprecise art and I have some concern around valuations being managed upwards. It would be an easy trap to fall into and it's hard to create a mark-to-market test with every catalogue being unique. So I've taken a moderate gain from the experiment and that's fine.

SDI Group Sold at 102p - December 20 - 78.0% gain

SDI is an excellent company with seasoned, careful management. It's had a surprisingly profitable pandemic with certain divisions benefiting from large, one-off contracts. These won't be repeated in H2 which is why the H1 earnings just reported are more than 50% of analyst forecasts. Some of this gap may be narrowed by acquisition but it's too early to tell how the full year will turn out. Even so investors have become excited lately, with these results and news of a bolt-on purchase, and the shares have risen by more than a third. I can't say that the business is over-priced at these levels but I'd be surprised if the recent buoyancy is sustained without an expectation beating announcement. In this light I expect to see ordinary price volatility bring the share price back down again before a new base can be formed. If I'm right I'll buy back in. If I'm not then that's my loss.

IG Design Group Sold at 603p - December 20 - 8.6% gain

I've been pretty positive on IG Design recently and felt optimistic about their full-year results. I even had my specific concern about the CEO selling all of his shares allayed when he explained that this was a tax planning measure. OK, fine, I can believe that. However now Paul Fineman has sold even more shares - these ones being held in a trust where he has a non-beneficial interest. This follows a number of other director sales in recent weeks with many of these taking their holdings down to minimal levels. There's got to be a red flag here and this time I'm not inclined to ignore the signs. I'd like to see IG Design do well, and their numbers will look good if Sterling continues to weaken, but something isn't right here. I'm out.

Announcements

Belvoir Group

In a remarkable turnaround Belvoir is now trading ahead of pre-Covid expectations. This is really something given how these forecasts fell from 15.2p to 6.1p over the course of the summer. What this says to me is that earnings could be 5-10% better than 15.2p which gives at least 16p for the year, 24% earnings growth from 2019 and a P/E below 10. The key drivers here are strong trading in both the property and financial services divisions combined with a greatly reduced cost base. In fact trading is going so well the board have decided to reimburse staff in full for the salaries which were sacrificed and to repay the Government in full the Covid furlough monies and grants received. Shareholders will receive a further catch-up dividend to make up in full for the previously suspended final dividend. I am very impressed by the actions of the management this year and see this as a good moment to increase my holding. (Update)

Alpha FX

The key fact to note here is that the board anticipate full year earnings to be ahead of expectations. This is great news given how difficult the year has been with their largest client defaulting as markets slumped in March. This slaughtered the share price and for a moment this looked to be a life-or-death challenge for the group. Fortunately the client is financially sound and management were able to agree a realistic payment plan to resolve the default. I'm sure also that this experience has influenced how they manage counterparty risk at Alpha FX. So the fact that trading has remained strong through the Autumn, after recovering in the Summer, suggests that growth is back on track and that five years of uninterrupted profit growth isn't about to end in 2020. Still it's worth recalling that current forecasts are still 15% down from where they were in January and that even a 5-10% uplift here won't recover the lost ground - and yet the share price is almost back to an ATH. I don't see this as a big problem but there could be some price consolidation in the short term. (Update)

Hipgnosis Songs

It's been an incredibly busy year for Hipgnosis with close to £500m in capital raised, and then invested in new catalogues, with a forward pipeline north of £1 billion. It just shows the scale of the music business to consider that the company has acquired 117 catalogues, providing interests in 57,836 songs, and yet this is just a drop in the ocean. Usefully the NAV is up 7.4% to 125p (which is roughly the current share price) with this increase coming from revaluation gains, streaming revenues and a reduction in the discount rate. I'm happy to accept these changes but it's worth remembering that valuation is more of an art than a science with quite a lot of professional latitude. Still revenues have doubled and Hipgnosis have raised their annual dividend target to 5.25p which equates to a yield just over 4%. This income is a big attraction here as licensing revenues should remain stable in all economic environments. In fact I quite enjoy listening to Hipgnosis owned songs on Spotify knowing that in some infinitesimal way I'm adding value to my shares! I'm clearly not alone in streaming more music during the pandemic and the board expect this to be a key driver in growing royalty revenues. I'm sure that they're correct on this front and that in a few years time Hipgnosis will be a much larger fund with operational gearing kicking in as revenues grow more quickly than costs. (Results)

Games Workshop

Hot on the heels of last month's update we now learn that H1 was even more successful than previously thought. On sales of around £185m (25% up on 2019) the PBT will be not less than £90m (52% above the £59m of 2019). Last month management estimated that PBT would not be less than £80m so they've clearly added some high-margin profits lately (perhaps from licensing). Right now analyst forecasts are for full-year PBT of £139m and I find it hard to believe that the company will only make £49m of pre-tax profit in H2. In addition the company is distributing another 60p of surplus cash which is a nice Christmas present. (Update)

Computacenter

Computacenter is coming towards the end of its financial year and the positive momentum of Q2 and Q3 has happily continued into Q4. As a result adjusted PBT should be no less than £190m which is a few percent higher than current forecasts. This puts the company on a P/E of ~18 which seems very reasonable for a high quality business generating double-digit growth on a continuing basis. The next update in late January should add extra detail from the unaudited numbers with some guidance on initial trading in 2021. With the shares down 10% from recent highs there could be a decent buying opportunity here. (Update)

RWS Holdings

A resilient set of results here given the global pandemic. Sales and gross profit were flat, compared to 2019, with a 10% increase in operating costs being offset by the proceeds of a warranty claim. Down at the bottom-line profits were also more or less unchanged with 16.9p of earnings (or 19.9p when adjusted). It could be argued that £4m of acquisition costs should not be adjusted out given that RWS is a serial acquirer. I agree. The £1m of share-based payments is also a real cost to investors. So I see adjusted EPS as more like £65m, down from £73m in 2019, giving an adjusted EPS of 19.0p. Just a 5% change but more of a miss compared to expectations. Not that it matters with the new financial year started and trading being slightly ahead of expectations. The big change for 2021 is the acquisition of SDL. This is a very complementary addition which should deliver far more than the identified synergy benefits of £15m. There was a belief that the customer bases of the two companies were broadly different and that the language technologies of SDL would fit neatly into RWS (given that they already licensed some technology from SDL). A successful integration will clearly be the focus of the board in 2021. It's hard to know how this will all pan out but RWS has an excellent track-record of integrating acquisitions and they are now a leading player in the global translation industry. I am quietly confident that they will continue to do well. (Results)

K3 Capital

I've been positive about K3 Capital ever since they went on the acquisition trail in the summer. Ordinarily a buying spree would be a red flag but in this case management have carefully broadened the scope of the business. This should make profits less cyclical and unlock cross-selling opportunities within the group. In fact KBS was the third largest referrer to Quantuma during the period while 13% of randd's new client mandates were directly attribute to Group referrals. In the first half KBS and rannd trading particularly strongly while Quantuma remained in-line with expectations due to the subdued insolvency market. Overall the group is trading ahead of expectations and the group has entered H2 with significant momentum. Further acquisitions are a possibility but even without them the group looks pretty good value at the moment. (Update)

Tristel

I've been waiting for Tristel to break through the 520p level for six months now. This statement could be the catalyst to make this happen but I suspect that it's not quite punchy enough. Still it's very positive that H1 PBT is expected to increase by no less than 10%, to £3.3m, with this all being down to organic growth. Current FY forecasts are for 15% growth to £7.7m of pre-tax profit so the company is in the right ball-park. Q1 sales were lower than anticipated though due to hospitals still deferring patient procedures. This can't go on forever and from October there has been a substantial recovery in demand. The board expect normal growth to resume in H2 with the new Cache product range contributing materially. So there's plenty to look forward to in 2021. (Update)

Driver Group

Given the difficulties endured during H2 (Apr-Sep) it's impressive that Driver has managed to remain profitable and deliver near to the analyst forecasts. Certainly these were 6% lower, at 5.4p, than the peak estimate of 5.76p in 2019, but there were no revisions to the numbers from February onwards. At the top line sales fell a little from H1 (the H1:H2 split was 53:47) as the economic uncertainty resulted in delays to claims and disputes proceeding. This effect is still apparent as contractors try to complete projects before resorting to dispute resolution but current activity is encouraging and the pandemic will inevitably lead to more work for Driver. Sensibly management responded to these changes by cutting costs and focusing on cash management. As a result profits were equally split between the two halves (when £760K of severance costs for the outgoing CEO are excluded). The new CEO has completed his strategic review and has a clear 5-year plan for growing revenues and moving to a double digit operating profit margin. The key to this is to focus on higher margin Diales revenue, expand geographic presence in a cost-effective manner and share more risk/reward with consultants. Steps have already been taken on this front with the opening of a New York office and it's likely that a few more teams will be added in North/South America. This will allow Driver to access the large number of disputes and claims available in these areas without great expenditure. In time I think that Driver will do well with its new-found focus and refreshed management team. From a technical perspective the share price has formed a downward triangle since peaking exactly seven years ago with firm support at the 45-50p level. So the downside is limited with every chance of a breakout once the news flow turns positive. (Results)

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

Even without this the majority of my holdings made ground with a good number of standout performers. At the top K3 Capital is once again in favour as people see the corporate finance market opening up along with additional opportunities from recent acquisitions. IG Design has also proved popular as reports of Christmas being cancelled have proved to be untrue and retailers have ordered hefty amounts of wrapping paper and cards. Then, of course, there's the cut-price offer for Codemasters. In my view the selling price is tantamount to daylight robbery, and the shares should be up by much more than 21%, but there you have it. On the downside there were almost no losers to speak of except for Caledonia Mining and LoopUp. The former has fallen back along with the gold price while the latter delivered a shocker of a profit warning. This really came out of nowhere and investors reacted predictably by selling indiscriminately. They might have been right to do so.

Overall then my portfolio was up a very decent 6.6% in the month taking me to 16.0% YTD. This isn't quite my high point for the year but it's a very acceptable result.

Risers: K3C 52%, IGR 42%, DX. 31%, SDI 21%, CDM 21%, DRV 21%, SLP 18%, AFX 18%, BOO 15%, TM17 14%, BUR 14%, III 11%, GAN 11%, VLX 9%, BLV 9%, PLUS 5%, SONC 5%, TAM 3%, SONG 3%, TPFG 1%, SCT 1%

Fallers: LUCE -1%, TSTL -1%, SPSY -2%, CCC -2%, GAMA -4%, BOTB -7%, CMCL -11%, LOOP -60%

Purchases

Codemasters Group Bought at 422p - November 20

In the last three months Codemasters has made several attempts to sustain a break-out above 400p. Until now these have always failed with the price falling back 10% or more. So I've been waiting for the price to close above 420p on the basis that this is the highest price paid by anyone to date. In the end my patience was rewarded and I managed to double my position as momentum kicked in and other buyers jumped on the same buying signal. It could always reverse again but I think that finally Codemasters is on its way again.

Luceco Bought at 224p - November 20

I took an initial position here on the back of an expectation-beating trading statement. As often happens though the price put in a sharp reverse a few days later and plunged back to the previous resistance level at 220p. This is a pattern that occurs repeatedly but not predictably. With volume falling at these lower levels I took the view that averaging-down was the right action to take. At the very least the shares were back to where they were before the update and the company looks even cheaper with the recently upgraded forecasts. It's hard to see the price going much lower with the series of recent forecast upgrades in the bag but you never know!

Games Workshop Bought at 10197p - November 20

It's pretty obvious that I shouldn't have dumped my outsize holding in Games Workshop back in the summer. My expectation that sales would be harmed by the closure of all stores was dead wrong. If anything a much higher volume of sales emerged as players sat around with nothing to do but paint models. I could see my mistake plainly but at the same time I couldn't quite believe that this growth was sustainable. Again I really should have known better. It took last week's astonishing trading update to shake me out of my torpor. In it we learned that half-year PBT would be not less than £80m (36% growth from H1 2019). When you consider that FY estimates have just £132m PBT for the FY it's clear that either these forecasts are going to get destroyed or the company is going to make just £52m in H2. This seems unlikely and as a result I've taken GAW back to a decent holding size as the share price has wobbled in the days following the update.

Calnex Solutions Bought at 83.7p - November 20

This is a very new listing and ordinarily I avoid these like the plague. There's a structural information asymmetry here, even with a detailed prospectus, and the retail investor is at a disadvantage. Occasionally though a decent company floats at a reasonable price with insiders retaining meaningful stakes in the business. Calnex fits the bill. It provides specialist testing equipment for key network equipment with customers operating in the telecommunications and data-centre sectors. With 5G being rolled out this is very much a growth market and clients such as Cisco, Nokia, Samsung and Verizon aren't about to reduce their testing of critical infrastructure just to save a few pennies. From a quality perspective the company is profitable and growing fast. Revenues over the last few years were £8.4m (2018), £10.5m (2019) and £13.7m (2020) with forecasts indicating £15.4m for 2021. Over the same period earnings have quadrupled with a little volatility in progression as R&D spend has flexed. The catalyst for my purchase came with the maiden interim results which led with a 37% rise in sales, to £7.7m, creating a 90% jump in profits. Momentum in the business looks strong and the shares aren't highly valued on a P/E of ~23 even with the recent price rise. Elsewhere the well-regarded investor Private Punter has written about Calnex here, here and here. I agree with his conclusions and look forward to the next update.

Sales

FDM Group Sold at 1003p - November 20 - 15.6% gain
Springfield Properties Sold at 96.2p - November 20 - 3.2% gain
Franchise Brands Sold at 88.5p - November 20 - 14.8% loss
Medica Group Sold at 98.2p - November 20 - 39.0% loss

With the announcement of a second lockdown I decided to clear my portfolio of the companies that hadn't really recovered since the first lockdown and were likely to be further impacted. Fortunately I got rid of my most vulnerable holdings back in the Spring but I'd optimistically held onto this quartet. The results have been mixed. For a consultancy company FDM has proved remarkably robust which is what you get when you have founders at the helm. In the middle Springfield Properties and Franchise Brands have coped reasonably well with the pandemic but I'm not certain that they're about to bounce-back to a high level of growth. The real laggard though is Medica although I do suspect that the refreshed management team are about to turn the company around. Unfortunately the group is wholly dependent on the NHS and it's become clear where the pricing power resides (it's not with Medica). They may be able to grow through acquisition but it's hard to see Medica being able to re-invest meaningfully in order to leverage its high ROCE. So they've all gone and given me a chance to invest elsewhere.

SDI Group Sold at 87.0p - November 20 - 51.7% gain

I like SDI a lot and very much rate the management team. They've done a sterling job of growing the company by acquisition in recent years with an eye on how each business can be consolidated and made more efficient. In addition the share price has been very strong lately which suggests that investors see SDI as a post-lockdown winner. So why have I sold half of my holding? Put simply SDI is still a small outfit and the shares are not all that liquid. In addition I'm basically fully invested and want to take advantage of share price weakness at Games Workshop. The only way to do this was to reduce another holding and SDI seemed an obvious candidate. If the price falls back then I'll look to reinstate a full position; if it doesn't well at least I'll benefit with my remaining holding.

AJ Bell Sold at 401.5p - November 20 - 3.1% gain

I picked up some AJ Bell six months ago on the basis that this is a high quality, very profitable business with high customer growth. The only problem was the high valuation is everyone "knows" the attractions of the business. Still with the share price having gone nowhere for a year, despite steady profit growth, I figured that a break-out above 430p was just a matter of time. To be fair the share price has had 3 or 4 goes at this resistance level but the volume hasn't really picked up and the shares have fallen back each time. Right now they're back at the 400p support level and toying with the 200-day MA. It could go either way from here with the P/E still being a heady 45 while current forecasts have no earnings growth indicated for 2021. At the same time the business hasn't served customers well recently with systems locking up during the recent vaccine announcements and investors repeatedly having issues when logging in. So I'm happy enough to get out at break-even with these funds now switched to Calnex Solutions instead.

Liontrust Asset Management Sold at 1357.93p - November 20 - 2.1% gain

Another share which has failed to make headway this year is Liontrust. Operationally the business has performed well, despite market volatility, with most funds being first-quartile and AUM rising strongly through acquisition and organic growth. The shares aren't even that expensive given a history of double-digit earnings growth and high quality metrics. Even so the price has stalled at the 1450p ceiling multiple times, despite a number of decent trading announcements, and it's hard to see what's going to break this pattern in the near future. As a result I took the decision to redirect some more funds into Games Workshop. The share price action here has been most perplexing since the last trading update but I see this as opportunity to get back on board with a business that I shouldn't have sold in the first place!

Announcements

Codemasters Group

Ordinarily a takeover approach for one of my holdings would be welcome - or better than a disappointment - as they usually come offering cash at a decent premium. Sadly this opportunistic approach from Take-Two Interactive fails on both fronts. The offer, such as it is, consists of 120p in cash and 0.02834 new Take-Two shares for each Codemasters share. The latter is a movable feast but right now TTWO trades at $161.57 (or £122.25) so you're getting £3.46 per share in the US listed company. With CDM trading at 435p before the announcement the takeover premium is a miserly 7% (and just 11% if you use the more optimistic value of 485p from the announcement). Frankly this is taking the piss. Even more so when you consider that Codemasters is trading very strongly and likely to perform very well as the benefit of new releases/consoles makes itself felt. There's no doubt in my mind that Take-Two are trying to buy the company on the cheap and benefit from all of the upside which rightfully belongs to existing shareholders. So why are the directors recommending this crappy offer? Could it be that this is a chance for them to cash out their options before remaining in their current roles with Take-Two and receiving hefty Take-Two RSUs? They're certainly not going to lose out. Still the directors represent less than 5% of the share count and more than 75% of shareholders have to approve the scheme for it to pass. This is quite a hurdle and I hope that institutional investors will vote against the current offer. I'm certainly going to do this while the current terms stand. If enough of us oppose this derisory approach we have a chance of benefiting from Codemasters for many years to come. (Takeover)

3i Group

I'm sure that when investors saw the share price halve over the span of a month, back in Feb-Mar, they were judging 3i to be a lockdown loser. I can see the logic in this with Action, the discount retailer, being by far the largest holding in the portfolio at £4.3bn and subject to multiple trading restrictions. In the event Action's performance exceeded expectations with strong like-for-like sales, EBITDA and cash flow growth. This has been a stunning investment for 3i which suggests that it's unwise to bet against a winning team even during a pandemic. Their second largest position, a 30% stake in 3i Infrastructure, also contributed strongly to both the NAV and operating cash profit. As a result the NAV has bounced 12.5% since March (and 3.7% year-on-year) to 905p despite the array of lockdowns across Europe. As might be expected the pace of cash investments fell in H1 with just one new investment in GartenHaus (an online retailer of garden buildings) in September. I can see this business doing well. 3i also funded four bolt-on acquisitions to existing holdings and moved from net cash to a small level of gearing. In terms of sectors consumer, e-commerce, healthcare and business services have done well while travel and automotive remain challenging. The key for 3i is that their investments are well diversified and aligned with secular growth trends. I suppose that this isn't the most exciting investment imaginable but I enjoy the private-equity exposure and diversification that it provides. (Results)

Volex

These HY results demonstrate the ongoing benefit of operational gearing for Volex. Total sales are roughly where they were 5 years ago, with 3.5% year-on-year growth whereas underlying PBT is up 37% and underlying EPS has jumped 52% from 8.5c to 12.9c. These are remarkable numbers and testament to the efforts of current management to reduce costs and re-focus the company on higher margin opportunities. As a result gross margin is up 200bps to 25.1% while operating margin is now in double-digits at 10.3%. Happily this margin expansion applies across the board, in both integrated manufacturing (IMS) and power products (PP), although margins are likely to fall back a little in H2 as FX and copper pricing benefits reverse. Still the underlying trend is very positive. Looking at the separate segments IMS benefited from high-demand with data-centre customers and in specific parts of the medical device supply chain. Other areas were materially lower (diagnostic imaging and surgical treatment) but not enough to offset the overall gains. In PP some customers reduced their order levels in Q1 before resuming normal operations in Q2 as countries shifted to home-working. In addition EV automotive sales jumped 78% as electric vehicle demand continued to rise. Looking forwards Volex have a strong forward order-book for Q3, as Q2 strength has continued, which bodes well for the full-year. Add on current and future acquisitions, such as that of DEKA in the power product space, and there's every chance that Volex will meet or exceed current analyst estimates. Or to put it another way I can't see a reason why the business should lose its current momentum. (Results)

Caledonia Mining

Caledonia is an object lesson in how gold miners are highly geared to the gold price. Since reaching a yearly high in August the gold price has slumped a massive 9% and is back to where it was in July. Not much of a slump really. Over the same period Caledonia's share price is down over 30% and that's a serious drop. In contrast the operational performance of Caledonia is going from strength to strength despite the pandemic. Each quarter they are managing to mine more ore and refine more gold with a slight improvement in recovery rate. As a result, in early October, management upped their production guidance from 53,000-56,000 ounces to 55,000-58,000 ounces for 2020 with 42,896 ounces already produced in the first 9 months. Given that Q4 production in 2 of the last 3 years has been at record levels, with an average production of 16,084 ounces, I have no doubt that Caledonia will hit the revised range and may even exceed the 58,000 ounce level. On top of this the new Central Shaft is expected to be fully equipped by the end of 2020 and to be commissioned in the first quarter of 2021. This is a three-month delay but production will be immediately enhanced with guidance of 61,000-67,000 ounces in 2021 and 80,000+ ounces in 2022. This is a hugely material upgrade, and forecasts do show roughly a doubling of earnings in 2021, but investors seem to have forgotten about it. Maybe they believe that the gold price is set to continue falling? It's possible that I'm missing something but a 2020 P/E of ~8 seems good value and a 2021 P/E of ~4 looks extremely good value with Caledonia winding down its capex bill while still generating high cash-flow. I think that shareholders will be rewarded in due course. (Update)

Softcat

It's pretty early in the year with this Q1 update. Still the company has delivered year-on-year growth in revenue, gross profit and operating profit while also achieving its recruitment targets. Right now analysts have indicated just 2.6% EPS growth in 2021 (with 8.9% sales growth). I find it hard to believe that Softcat is doing any worse than this which suggests to me that these forecasts are behind the curve. Positive momentum continues into Q2 and I remain optimistic. (Update)

GAN

With US listed firms reporting quarterly this is a useful Q3 update showing continued strong growth. Year-on-year revenue is up 86% to $10.3m with Real money Internet gaming providing $7.7m and simulated gaming making up the rest at $2.6m (both segments grew roughly equally). The cost of providing these services rose slightly less rapidly with gross profit margin rising from 58% to 62%. At the bottom line the loss came in at a hefty -$4.1m due to administrative expenses more than doubling. Primarily this was down to staff numbers rising from 141 to 215, share-based compensation and increased costs due to the US listing. I suspect that share-based compensation was the largest cost here but no breakdown is provided. Still for the time being actual profits aren't important because an investment in GAN is all about capturing the growth opportunity of online gaming growth in the US. Right now Michigan is due to go live in December with Louisiana, Maryland and South Dakota all passing enabling legislation on the recent election day. By the end of 2021 GAN estimates that 50% of all states will have passed new laws with the land grab continuing. The company has a solid track record of signing up with new partners and I can see them retaining this momentum. In addition the board are looking to acquire Coolbet, an Online Sports Betting platform, which should complement the GAN offering. Hopefully the company isn't taking on more than it can handle as it'll be working flat-out for the next year at least. (Results)

Tatton Asset Management

Tatton is a remarkably high quality business at a decent valuation. I say this because consistently high operating margins (>30%) have enabled a high ROCE (>50%) even as the business has grown at double-digit rates. Capital requirements have remained low driving the FCF conversion rate above 100% in many years. Despite this the share price hasn't managed to gain much traction since listing at 156p in 2017. For sure its done alright, being up 81% since that point, but the P/E rating has drifted down from 30 to ~20 now which tells me that the shares haven't kept pace with earnings growth. This is a conundrum as analyst forecasts point to 40% EPS growth in 2020, despite dipping 8% from 14.95p to 13.7p over the year, and Tatton have just reported H1 earnings of 6.55p (up 21% on improving margins). Listening to the results presentation it's clear that the investment part of the group has performed very well so far while IFA services took a knock from mortgage and valuation work cratering during the lockdown. Still the housing market has bounced back strongly since the summer and it's reasonable to have some optimism for H2. It's still hard for IFAs to bring on new clients, which is a headwind, but eventually restrictions will ease and Tatton will be in the right place to benefit. At the same time it's clear that management are on the acquisition trail. One bid fell through (which suggests that they won't pay any crazy price) but they now have a £30m credit facility in place which makes them deal ready. There's a lot to like here and when the share price breaks 300p I reckon that it'll move up quickly to the 400p level. (Results)

Best of the Best

A pretty short update here with trading remaining strong and the online strategy still gaining traction. It looks like H2 will be buoyant which bodes well. Current forecasts suggest that earnings will rise 86% to ~70p but these haven't been updated since June. So there's a decent chance that the upcoming H1 results will blow this estimate out of the water. The water is however muddied as the company remains in discussions with interested parties from a number of sector verticals and including private equity. These discussions have taken rather a long time so far but the fact that a number of businesses remain engaged is positive as they've had plenty of time to walk by now. I would suggest that the sticking points are price, given the level of director holding, and the involvement of management post-acquisition. In this light I see the recent price drift as symptomatic of investors losing interest combined with low liquidity. Hopefully this is just noise and nothing untoward is coming down the pipe.
(Update)

Codemasters Group

As anticipated these are notably excellent results. Margins remain high with a doubling of sales, from £39.8m to £80.5m, driving a doubling in profits at all levels. Remarkably adjusted EPS of 13.3p is over 70% of the 2021 forecast for 18.7p which suggests to me that analysts remain behind the curve despite a number of upgrades. Driving this performance was the release of three titles (F1 2020, Fast & Furious Crossroads and Project CARS 3) with a strong contribution from the back catalogue. Looking forwards DiRT 5 has just been released and a new focus on Games as a Service is delivering positive results. Sadly this may be of little benefit to shareholders with the derisory offer from Take-Two Interactive on the table. The premium on offer is marginal at best and, as I've stated elsewhere, I believe that Take-Two are trying to make off with the spoils of previous investment before the benefits become truly apparent. I also believe that the management of Codemasters are not acting in the best interests of other shareholders. They will all cash-out hugely when their options vest at which point they'll continue working at Take-Two and will pick up a whole new batch of options. It's also worth nothing that the non-execs have large quantities of options which is not best practice and makes them non-independent. No wonder they support the takeover. So these are great results but I may end up disappointed by the ending. (Results)

IG Design Group

Ever since analyst forecasts for 2021 were slashed by 60% back in July I've been wondering how the brokers arrived at this conclusion. There's no doubt that 2020 has been a tough year for IG Design with the pandemic hitting both their 2020 and 2021 numbers. Even so as Q1 and Q2 progressed management statements spoke of the business trading more positively than their Covid-19 adjusted expectations with existing customer orders covering a high proportion of the FY revenue forecasts. For sure management remained cautious, and the CEO selling his entire holding in August trashed sentiment, but still there seemed to be an obvious disconnect between actual trading and perceptions. Anyway with these H1 results we now know that the year has started more strongly than expected, with the CSS acquisition offsetting reduced trading elsewhere, and now the FY performance will be ahead of market expectations. Amusingly analysts have now pushed their numbers back up by 60% but I think that they're behind the curve. The reason for this is that the board already know that Christmas will be strong with customers reporting strong sell-through rates. They also know that Everyday products sell well in Q4 and that this segment has been strong all year. So if this trend continues then the FY will turn out to be much less gloomy than anticipated. It's been a bumpy ride but it looks like IG Design has turned the corner. (Results)

DX (Group)

What a lovely phrase: "materially better than current market expectations". This is the state of play for DX with just a month to go of H1. Trading has been strong throughout the period, despite the second lockdown, with both volumes and margins improving. Management really are reaping the rewards for three years of hard work, during which they have been consistent buyers of shares, and it's hard not to see the trend continuing. The next update should appear in March and hopefully it'll be positive if people shop heavily over the Christmas period. (Update)

LoopUp Group

Well this is a hefty kick in the nuts. For much of the year LoopUp looked like a lockdown winner, a Zoom-lite for grown-ups, but now it appears to have been pure dumb luck. In fact it's worse than that. A key reason for my buying into LoopUp was the steady rise in analyst forecasts for 2020 with expected profit more than quadrupling. The rate of change for 2021 wasn't quite as impressive but even here analysts more than doubled their EPS forecast from 4.275p to 9.233p. So a big bump this year with management being able to reinvest these super-normal profits. In fact (forgive me!) with recent H1 results generating 13.9p of EPS (88% of the FY forecast) strong operating leverage and high cash generation I figured that we might even be due an upgrade. So paint me surprised to learn that FY revenue will be no lower than £50m (i.e. £18m of sales in H2 compared to £32m in H1) with this drop magnified at the EBITDA level. In H1 the company grew EBITDA to £12.2m and yet it should be no lower than just £15m in H2. In other words we're looking at just £3m of EBITDA for the six months to 31 December. Okay forecasts were for £17.1m of EBITDA (implying a contribution of £4.9m in H2), and the drop is just 12%, but I am lost for words with this second-half collapse. A big part of the problem is that users have switched from PAYG pricing to committed subscriptions while at the same time opting for a cheaper call mix (fewer international calls). Even so business costs must have got out of hand as well for the overall impact to be so great. Still the damage to my holding has now been done (a 50% drop) and the pivot to professional clients (and MS Teams) should bear fruit in the future. I'm not happy but I don't think that the business is a busted flush. It's no Zoom though. (Update)

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

Elsewhere in the portfolio Codemasters finally managed to react to its excellent trading news while Spectra Systems slowly grinds upwards on the back of intermittent but positive updates. Unfortunately all of these gains were offset by heavy losses in GAN, Best of the Best and (oddly) the rental franchise owners Belvoir and The Property Franchise Group. I can understand some heat coming out of gaming companies, as they've enjoyed an excellent year, but I can't see any problems in the rental market. In fact this did very well in the lockdown and the property market as a whole is on a tear. Perhaps some marginal holders got bored and relatively low liquidity led to a large drop in prices? Overall I was down 2.9% for the month with my YTD return slipping back to +9.6%. Good enough given all of the doom and gloom but a touch disappointing.

Risers: VLX 28%, CDM 14%, SPSY 6%, TAM 5%, IGR 3%, LOOP 2%, TSTL 2%, TM17 2%, SONC 2%, SLP 2%, K3C 2%, SDL 1%, SDI 1%, GAMA 1%, BUR 1%, SPR 1%, LIO 1%

Fallers: RWS -1%, FDM -2%, AFX -2%, III -4%, CCC -4%, PLUS -6%, CMCL -6%, SCT -7%, AJB -7%, FRAN -11%, TPFG -11%, MGP -12%, BLV -14%, GAN -15%, BOTB -16%, DRV -21%, BOO -24%

Purchases

Caledonia Mining Bought at 1390p - October 20

In the last week Caledonia Mining has released excellent updates that have dispelled some concerns that lingered. On one hand the quarterly dividend has been increased and we learned that the Central Shaft is on-track to be completed by the end of Q4 and commissioned by the end of Q1 2021. I had been concerned that travel restrictions in South Africa might cause further delays but it appears that the company have worked around these issues. This is very positive because the fall in capex means that other opportunities can be explored along with a dividend increase. Then the company announced strong production for Q3, up 11.1% year-on-year, along with a rise in guidance for the year. This is an excellent result, given the difficulties of the year, since increased production feeds directly into increased sales and profits. I'm surprised that the shares haven't bounced more strongly but I'm sure that they will given how cheap the company is at the current share price.

Volex Bought at 190p - October 20

I'm impressed at how well Volex has navigated the pandemic and it's clear that Nat Rothschild remains a fan (based on him spending almost £1m buying shares this year). The interim results will be out in November and with the share price breaking out to new highs it seems to me that investors feel pretty positive about the company. It's hard to say if this is misguided given that we've had no news since the end of July. At the time consumer electronics and the data centre business was resilient with electric vehicle demand recovering to pre-crisis levels. I would think that this situation remains unchanged or perhaps somewhat improved. We'll know soon enough and this top-up is driven as much by the charts, with good volume taking out the 52-week high, as it is by the fundamentals.

DX Group Bought at 16.8p - October 20

I've seen the new management at DX present a couple of times now and every time I've come away impressed. These guys know how to run a distribution company and, more importantly, how to turn one around. They've done it before and they are absolutely committed to making DX profitable and sustainable. And let's face it the company needs something special having been floated at 130p in 2014 before rapidly collapsing into five straight years of losses. Fortunately the issues at DX are fixable because many were self-inflicted and down to management trying to centralise operations with no understanding of local business conditions. Anyway new management are in place and they've been continuously buying shares for the last three years with no sales. So they are fully aligned with other shareholders and this year it looks like DX will become profitable again. This is largely down to losses being reduced in the freight division while profits have remained steady in the secure delivery division. There's a clear roadmap in place to return freight to profitability and from there things should really start to motor.

Burford Capital Bought at 750p - October 20

I've held Burford for a good few years and all of the way through the shorting attack of last summer. It's been a bumpy ride and the complexity of the Burford business model hasn't exactly endeared itself to investors despite management's best efforts to provide transparency. With the recent interim results being well received it appears that people are waking up to the fact that Burford is pretty cheap and it really does provide uncorrelated returns. Well mostly. The lockdown in H1 did diminish new business flows, as law firms battened down the hatches, but the litigation is still out there to be picked up. So I expect Burford to do pretty well out of the pandemic in the medium to long term. In the short term I suspect that the share price will receive a boost when the US listing completes shortly. Some holders may choose to simply transfer their holdings to New York but many others will never have invested in Burford and now is their opportunity. In this light, and with the current tailwind, I figure that now is a good time to up my holding by a quarter.

Driver Group Bought at 49p - October 20

This is an archetypal out of favour, value stock that's in the middle of a turnaround with not a lot of growth to excite the masses. That's why the share price hasn't really gone anywhere for the last five years except for brief intervals of excitement. The thing is that much of the hard work involved in rationalising the business has already been done and a new CEO, promoted from within the company, is in place to return the company to growth. At the same time this is a company that should benefit from the lockdown as they consult on disputes in the engineering and construction industries. There are sure to be plenty of these appearing in the coming months. In fact with a trading update due in mid-October we'll soon have a clearer picture of how the business is performing. The only fly in the ointment for me is that the directors have very small holdings and haven't bought any shares despite the weak share price. On the other hand the new Buffettology fund could well be a buyer of Driver Group shares, when it launches, as the company was only dropped as a holding because it was too small to make a difference. In a fund aimed at small and micro-cap shares that wouldn't be a problem. Hence I've picked up a few more shares while the liquidity is available and plan to hold them indefinitely as the business continues to recover.

Boohoo Group Bought at 225p - October 20

I've been picked up bits and pieces of Boohoo ever since that shorting dossier came out in July. The latest catalyst for adding to my position was the news that Boohoo is changing auditor. Under normal circumstances this would be a non-event but the newspapers are saying that none of the big auditors want to bid for the work and it is unusual to switch auditors so soon after the annual results. Anyway this news was poorly received by the market and spooked investors sold the shares down heavily. Fortunately for me my cheeky limit order got filled not long before some of the directors piled in with purchases of their own. A useful short-term trade then with the backdrop that lockdown part two is only going to drive more business online. So I can easily see Boohoo outperforming the already high expectations for 2021 if Christmas isn't a damp squib for everyone.

Luceco Bought at 248p - October 20

This manufacturer and distributor of high quality and innovative lighting and power products has been a real winner this year. The real kicker has been high demand from online/multi-channel customers and DIY markets as people decided to spend money on their homes. I can see this continuing as we make our way through the winter/lockdown season. In addition the professional channel has continued to recover with wiring accessories off-setting lower sales in the LED channel. Remarkable they've done enough to make up all of the lost H1 sales in H2 and expect revenue to at least equal the £172m of 2019. In summary Luceco is trading ahead of previous expectations with adjusted operating profit likely to be £28-30m compared to the previously guided £23m (giving EPS of 13.5-15p). This is an excellent result and when you combine such growth with high quality metrics, falling debt and a moderate P/E of ~17 you're looking at a potential winner. Obviously anyone buying earlier in the year has already profited handsomely but if the price can break out above 260p, the previous all-time high from 2018, then I can see share price momentum continuing up to 300p.

Sales

ScS Group Sold at 198p - October 20 - 16.2% gain

This was a pretty short-lived holding but I can explain. I took a position on the back of a strong trading update in September where growth appeared to be exceeding management expectations. Very bullish and the stock moved upwards sharply. However there's an adage which is that sometimes it's better to travel than arrive. Well in this case the FY results at the end of September were received with a shrug and it would have been better to have sold the day before. Personally I thought that the results were as expected and that the next financial year looks decent and may even be outstanding. However the board are cautious and investor appetite for the shares has waned. So I figure that it's better to take an easy profit rather than stick with a retailer during a difficult winter.

Craneware Sold at 1480p - October 20 - 39.0% loss

I bought Craneware a couple of times last year, either side of a hefty profit warning. At the time I viewed Craneware as a high quality company with high recurring revenues and excellent cash generation. These aspects remain true but a combination of self-inflicted issues and the Covid-19 pandemic have left Craneware struggling to regain its previous momentum. At the same time the shares have de-rated as investors have lost confidence in the recovery and elected to cut their losses. Last weekend I reviewed my investment and came to the conclusion that I should hold until the AGM statement due in early November. The reason for this is that the CEO bought £188,000 of shares in mid-August and currently owns 12.7% of company. So he's very aligned with other investors. In the results he also expressed a cautiously optimistic outlook with the US healthcare market returning to some form of normality. However I decided that I wanted to add to my Burford position, before they list on the NYSE in just over a week, and this was the top holding in the firing line. My sale has crystallised a nasty loss but in the context of the portfolio it's of no particular relevance.

H&T Sold at 241p - October 20 - 31.4% loss

I've held and topped up in H&T for a few years now and in that time it has remained a cheap but decent quality share. There have been a few ups and downs during that time but I've always seen management as being decent operators. However back in March/April, when I was dumping any shares which seemed exposed to the pandemic, I decided that H&T would be a beneficiary of the lockdown. My reasoning was that people would still need access to ready money and that the buoyant gold price would boost their profit when disposing of scrap jewellery. However it seems that the furlough scheme gave people sufficient money to survive and the opportunity to save with most spending options closed down. So the share price has been very weak with a recent fall through support at around 250p. Disappointingly there hasn't been much in the way of director buying at these levels although the CEO does own 2.8% of the company. With the next trading update not due until January there doesn't seem much point continuing to hold H&T when the sentiment is so poor - especially with any FX earnings being essentially zero for the foreseeable future. I've cut my losses so that I can put the remaining funds to better use.

Announcements

Alpha FX

This FX business has enjoyed a difficult lockdown but management have stayed focused on keeping the business going. As a result trading has been able to recover in July, August and now September. In fact growth has been so strong that the board have raised their expectations to estimate that earnings will be at least in-line with 2019. This is a remarkable result and it's no surprise that the shares have responded strongly. If trading continues to recover I think that there's a good chance of earnings actually beating last year's result. Few would have predicted this outcome in March/April. (Update)

Burford Capital

These are some complicated interim results and Burford really doesn't guide analysts on what to expect. But they look positive with realisations and cash generation both rising. In addition the Argentinian YPF case plays no part in this performance and that's a big positive considering the unrealised gains already taken against this matter. Another reassuring fact is that cases did continue to be heard, or negotiated, during the lockdown and realisations continued to occur. So from that perspective Burford is quite counter-cyclical. However new case numbers fell significantly in this period as client firms became disrupted and obtaining litigation finance became less important. Fortunately these potential cases haven't gone away - they've just been deferred to a later date. Looking forwards these cases should mostly turn up for consideration by Burford and there are likely to be a raft of new cases related to the impact of the pandemic on various companies. From a shareholder perspective these results have been the long-awaited trigger for selling pressure to fall away as new investors see the attractions of the business. In addition Burford will complete its US listing this month and I expect that to drive significant demand for the shares from US investors. It could be a good October for Burford. (Results)

FDM Group

With Q3 in the bag the group continues to trade comfortably in-line with expectations. It should be noted that these are pointing to an almost 20% drop in earnings so this isn't a perfect outcome - but it is pretty good for a professional services company that relies on clients being busy. Market conditions are returning to normality and the number of Mounties on the bench is reducing. Throughout the pandemic cash generation has remained strong and the balance sheet is bullet-proof. This has allowed the business to look after its employees and continue training new hires. It might take a little while for FDM to return to full utilisation but I have no concerns about the company getting to this place. (Update)

Codemasters Group

Computer gaming has been very popular during the lockdown and Codemasters have definitely benefited. For H1 sales have more than doubled to £80.5m with adjusted EBITDA also increasing markedly to ~£21m. With higher-margin digital sales now up to 73% of total sales the business is in a great place and looking set to crush the FY estimates (which have sales at just £114m). Cash generation has also been excellent with net cash rising to almost £50m (as compared to ~£100m of new debt a few years ago). With additional releases coming up, along with a new generation of consoles, I expect Codemasters to trade very strongly in the coming months. Expect upgrades from analysts as the momentum continues. (Update)

Liontrust Asset Management

This is a solid update with new inflows of £1.75bn and positive investment performance, since the end of March, taking AUM up to £20.6bn. Shortly this will materially rise to over £26bn with the acquisition of the Architas UK Investment Business at the end of October. Since AUM drives fees for Liontrust, and AUM will have increased 65% once the takeover is complete, it's pretty clear that the analyst forecasts of EPS rising 71% for 2021 are in the right ball-park. With earnings rising to ~64p the forward P/E rating on the shares is just ~20 which is on the low side historically and pretty mean for a business increasing profits at a double-digit rate in most years. Whether this performance will continue is impossible to say but most of the Liontrust funds are ranked in the top quartile and management have steered the company very ably for a number of years. From a technical perspective the share price has been range-bound for the last four months with multiple failed attempts to break out above 1450p. There's decent support at 1200p and this is a key level to watch if the price weakens some more. (Update)

Volex

This is an excellent update with trading continuing to improve since the last update at the end of July. As a result revenue and profitability are expected to be above current market expectations for both the HY and FY. We also get some numbers and sales should be at least $200m - which suggests that the FY forecast of $380m needs to be upgraded. The operating profit will also be at least $20m, an increase of 25%, which again is much more than half of the forecast value. Clearly then electric vehicles and consumer electronics are really driving growth here, more than offsetting weakness in the medical sector, and the company have good visibility going forward. It all makes me pretty happy that I doubled my holding recently. (Update)

Tristel

Really solid results from Tristel here although perhaps to be expected given that they manufacture infection prevention and contamination control products. Still they had to pivot meaningfully during the year from device decontamination to surface disinfectant sales. The latter more than made up for a reduction in the former and it's hard to believe that hospitals are going to do less disinfection for a while. On this point the company has acquired a significant number of hospital disinfection customers and this side of the business is expected to keep growing. In fact these products weren't going to be launched until the end of the year so the pandemic has both accelerated the uptake of these new products and validated the use of them in a hospital environment. At the same time all twelve overseas subsidiaries had record years which lessens the dependence on any single customer and suggests that Tristel products are globally valued. This exposure to foreign markets is important as they are growing more strongly than the UK (32% vs 7%) and this trend is certain to continue. The result of all these moving parts is that sales and profits grew by just over 20% with cash generation remaining strong. Looking forwards analysts have pencilled in sales growth of 9% and EPS growth of 16% but the financial year has just started and there's plenty of scope for Tristel to improve on these figures. That would certainly be a positive as the share is priced for continued success. (Results)

IG Design Group

I've been waiting for this update with some anticipation. Over the course of 2020 IG Design has managed to turn from being one of the stars of my portfolio to becoming a right dog. Unfortunately I didn't see this coming but I probably should have sold along with the CEO back in mid-August. Right now directors basically hold no shares which suggests to me a certain lack of confidence. So what does this half-year update tell us bearing in mind that sales and profits are heavily weighted to the Christmas period? Excluding CSS, the new acquisition, revenues fell 8.3% over the lockdown period. The second quarter showed a strong recovery though which is positive. Cash control was also very strong with new debt down to $23m from $106m in the prior year. Partly this is down to working capital management with both inventory and debtor balances down but I can't blame management for that. Operationally the integration of CSS is going well and all facilities are servicing customer orders. So it's still unclear to me why the share price remains so beaten up when the underlying business is doing pretty well considering its dependence on retail customers. I don't see people cutting back on their wrapping paper and cards this year and they might splash out a bit more if they're stuck at home. Maybe the next update at the end of November will give investors something to cheer about? (Update)

Tatton Asset Management

An in-line update for the HY with revenue up 12.6% and operating profit up 21.9% to just over £5m. Alongside this AUM increased 17.4% to £7.8bn with just over 2/3 of this growth coming from investment returns while the other 1/3 came from net inflows of £328m. Very much business as usual then and there remains an awful lot to like about this company. If the interim results, due in mid-November, are positive about H2 then I expect the share price to make a sixth attempt to break through the 300p level. At some point this level will be breached, if profits continue to grow, and I can see the share price taking a solid leap out of the 200-300p zone. (Update)

RWS Holdings

Another in-line update with sales to be comparable with those for 2019. Adjusted PBT should also be in-line but there's no figure given in this announcement and the figures on Stockopedia and SharePad don't agree. One suggests that profits will be up by 20% and the other suggests that they'll be down by 5%. This variance will be down to a different treatment of adjustments and I'm not going to try and reverse-engineer the figures. Suffice to say that some divisions were busy with Covid-19 related work while others suffered as clients either cut back on translation or delivered new work more slowly. The bigger news is that the merger of RWS with SDL is proceeding and should, barring anything very unexpected, complete relatively soon. Generally I'm wary of big corporate actions like this but RWS have an excellent acquisition track-record and the merger does make good business sense. One to hold while this all plays out. (Update)

Softcat

On the whole the 2020 financial year was solid for Softcat rather than spectacular. This is something of a disappointment given that they resell IT infrastructure products and services; exactly those segments which were in high demand during the lockdown. Still sales did rise 8.6%, with EPS up 10.4% and cash conversion a solid 87.8% (although a touch down on the prior year). It's a creditable result although somewhat at odds with the positive narrative that talks of a 3% growth in customer base and an 8% rise in gross profit per customer. My understanding is that clients in the most affected sectors (hospitality, tourism & leisure) cut back spending heavily while natural cost savings during the lockdown only offset 40-50% of the gross profit impact. Fortunately Softcat also has public-sector clients and growth of 26% helped offset the fall in demand elsewhere (public-sector now makes up 39% of gross invoiced income although the margins in this sector are slightly lower). It's also worth noting that all growth was organic and that with almost 10,000 customers there's no dependency risk on any one client. The plan going forward is to acquire more customers and sell more to them. There appears to be a lot of headroom left for growth on this front and the board are also looking at additional verticals like defence, central government and financial services. This anticipated growth is why head-count rose slightly more than sales pushing admin costs up slightly in the short term. The only fly in the ointment is that management are cautious but positive about the future and forecast growth is in the low single-digits as a result. I remain optimistic, having watched the results video, and may top up on share price weakness. (Results)

SDI Group

This is an excellent update with sales and PBT expected to be broadly in-line with forecasts as they were before the pandemic. That's quite something given how dependent it is on new capital orders driven by site visits and scientific conferences. The reason for this result is that Atik Cameras and MPB Industries managed to secure significant contracts related to Covid-19 requirements. These wins offset softness in other areas of the business where there is a return towards normality. That said these were one-off contracts and so forecasts for the following year are unchanged. These currently predict essentially flat sales and profits which feels reasonable at this point in time. (Update)

AJ Bell

This end of year update doesn't include any trading information which is a bit frustrating. Expectations point to a 16% increase in revenue and a 19% rise in EPS for the year. This is pretty good although less than the growth rates achieved in the last three years. Driving this performance will be the 27% increase in total customer numbers, with very high growth in the D2C segment, along with an 8% improvement in total assets despite the difficult market conditions of 2020. With AJ Bell also launching new products, such as their Retirement Investment Account and Cash savings hub, I'd say that they're in the right position to keep attracting new customers and keeping them engaged with the platform. So it's a bit odd that forecasts for 2021 show basically no growth compared to 20% earnings growth when you look at pre-pandemic forecasts. I'd say that analysts are being over-cautious and that they'll have to re-evaluate their position when the FY results come out in early December. (Update)

Driver Group

This is a business in transition as new CEO Mark Wheeler pushes forward with his strategic review. He's starting from a good position as the group has already been returned to consistent profitability but there is more work to be done. Much of this revolves around restructuring the Middle East and Asia Pacific operations to deal with weaker trading and target higher margin opportunities. In addition efforts are being made to increase access to the American and African markets which should allow clients to be serviced more easily. Since Driver provides consultancy along the lines of dispute resolution and expert witness testimony these changes are being made at just the right time. As the aftermath of the pandemic plays out there is sure to be an increase in contract disputes as parties try to apportion costs. This will benefit Driver in the coming years even if this one is nothing to write home about. Still the board have coped with the various global lockdowns, PBT should come in at ~£2.5m for the year and net cash is up to £8.2m which is about a quarter of the market cap. Even without considering cash the whole business is being priced on a P/E of just 8 which is historically right at the low end for Driver. So what we have here is a very decent value play which just needs to gather some momentum. (Update)

Plus500

Another business being priced very cheaply is Plus500 with the forecast 223% increase in earnings this year, to 436c, putting the business on a sub-5 P/E ratio. In this case the valuation isn't entirely crazy as profits will drop next year - although whether they'll drop by 55%, as analysts expect, is anyone's guess. What we do know, from this Q3 update, is that customer income has declined from the record levels seen in Q2 and that the reduction has continued into Q4. Still both revenue and EBITDA were up by more than 90% compared to Q3 2019 and the YTD growth in these metrics is still comfortably over 200%. For now the board are very confident about meeting the analyst consensus figures for the year but I see scope for a further upgrade. The reason for this is that revenue so far is $780m and forecasts are for $859m which implies Plus500 bringing in just $79m in Q4. This seems exceedingly unlikely as that would be just 36% of the Q3 revenue and I can see Q4 coming in at $100-150m when you consider the heightened volatility that we're currently experiencing. Add on the impact of daily share buybacks, a much reduced tax rate in Israel and a cash balance over $700m and I think that investors will be well rewarded going forwards. (Update)

Franchise Brands

This is an interesting example of analyst expectations being behind the curve as a result of there being just one broker making forecasts. From the onset of lockdown the forecast for 2020 remained, incorrectly, at the 6.0p level. This only changed when the interim results came out at the end of July at which point the analyst chopped their forecast down to just 3.9p. Right now the company is confident of meeting this expectation with a sales total of £48.6m (which is in the ball-park of the £50m shown on Stockopedia). The business mix leading to this result is that the B2B division (drainage and pumps) has traded decently with a strong recovery and some weighting towards higher margin work while the B2C division brands have recovered at different speeds. ChipsAway and Ovenclean are trading at pre-pandemic levels while Barking Mad is moribund as dog owners aren't travelling anywhere. New franchisees are continuing to sign up, which is positive, although slightly more have left as they've looked for some other way of making a living. In the long run I think that Franchise Brands will prosper, from a mix of organic and acquisition growth, as the board are both competent and heavily invested. However the business is facing a real headwind at the moment and is unlikely to fully recover while we go in and out of lockdown. (Update)

Sylvania Platinum

Last year Sylvania produced outstanding results (167% growth in EPS) as a result of steady production and a sharp increase in PGM metal prices. The main concern for this year is whether they can repeat the trick due to various pandemic related difficulties in South Africa. It's reassuring then to see Q1 come in with 17,972 PGM ounces declared compared to 9,055 in Q4 and 20,797 in Q1 2020. With cash costs also reducing this production level has bumped up revenue to $41.5m (from $31.2m) and net profit to $21.0m (from $12.5m). Excellent numbers which suggest that the current FY forecasts are very much achievable. There remains an ongoing challenge from host mines reducing their operations but the company has a number of upgrades in progress that will improve processing efficiency and profitability. At the same time the group is debt free and able to generate a lot of free-cash to maintain plants, fund capital expansion and so on. This will all help the company to achieve its production target of 70,000 ounces for the year and if PGM prices hold up then the company will look like a steal with its P/E of ~4. At some point either the share price will rise or profits will fall and I'm putting my money on the former given the way that management have handled themselves during the pandemic. (Update)

Computacenter

No surprises here but the board is very comfortable with expectations for the full-year. Usefully a couple of acquisitions (Pivot Technology and BT Services France) will complete imminently. While they won't have much impact on the 2020 results, at this late stage, they should add significantly to the 2021 numbers. Right now analysts have nothing in their forecasts to reflect this change (in fact they have no growth at all for 2021) and I suspect that they will revisit their spreadsheets shortly. This is a fine business that's on a roll. Well worth holding. (Update)

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

On a similar topic I enjoyed watching this interview with Richard Crow where he talks about his investment strategy and thoughts about various companies. His current approach is very different to mine in that he doesn't screen on fundamentals but instead screens on the shape of the chart and whether a "bowl" shape is visible. If this in place then he uses recent news flow (such as a change of board, director buying and trading not getting worse) to decide whether a significant change in fortune is underway. It's a very simple set of rules and I must admit that I find this style attractive - which is why I've joined his private chat room. If you'd like to know more this other interview is well worth a read.

As for my portfolio it's been a pretty equal split between the blues and reds this month with all of this activity leading to no change in portfolio value from August (leaving me at 11.8% YTD). I suppose that this result is a bit disappointing but on the other hand I've managed to absorb the fact that my largest holding GAN has dropped 14%. With no news catalyst I believe that this drawdown is down to over-excited investors from the IPO selling out and moving onto the next hot stock. I think that they're crazy given the growth runway in front of GAN but everyone has a different strategy. On the upside my other US stock, Spectra Systems, has bounced back from recent weakness while Boohoo has recovered from its recent shorting attack with excellent trading news. Hopefully news flow will continue to be positive in Q4 and we'll get a bounce as Brexit heads to a close.

Risers: SPSY 31%, BOO 30%, AFX 19%, CCC 17%, TPFG 16%, BOTB 14%, FRAN 13%, SPR 10%, BUR 10%, PLUS 8%, SLP 7%, III 6%, VLX 4%, GAMA 4%, SDI 4%, TM17 1%

Fallers: SONC -1%, TSTL -2%, LIO -2%, FDM -2%, BLV -4%, HAT -5%, CMCL -5%, CDM -7%, RWS -7%, IGR -7%, SDL -7%, CRW -10%, MGP -11%, LOOP -11%, K3C -12%, TAM -13%, SCT -13%, GAN -14%, DRV -16%

Purchases

ScS Group Bought at 169p - September 20

I managed to pick up some ScS earlier this month on the back of a positive trading update and favourable comments made by friends in the industry. I'm not particularly keen on retailers at the moment but it seems that certain sectors, such as furnishings and DIY, are going well precisely because people are stuck at home. Hence post-lockdown trading has been very strong with like-for-like growth of 51% for the six weeks heading into September. This performance has significantly exceeded board expectations and they sound pretty encouraged by how things are going. The FY results will be released at the end of September and I'm sure that the numbers for 2020 will be diabolical. Which won't matter a jot - what's important is whether 2021 can bounce back to the levels of 2018/19 and perhaps even exceed them.

Best of the Best Bought at 1740p - September 20

I'm a recent convert to the attractions of BOTB having heard Paul Scott, and others, bang on about it for years. What's clear to see is that their transition from airport spiv operator to slick on-line gaming platform is both complete and wildly successful. They've no doubt received a boost from the lockdown but the board have put the company in a position to benefit and full marks to them. The catalyst for picking up a few more shares was their AGM statement that trading to date has been stronger than expected. As a result both sales and profits are expected to be ahead of prior management expectations. This is fabulous news and, as far as I can tell, analyst forecasts are yet to include this new information. As such I'm currently expecting BOTB to at least double their earnings from last year, taking them to an EPS of 75p or more, compared to the current estimate of 69.8p. This puts the shares on a P/E ratio of ~23 which is absurd for a triple-digit growth rate.

Boohoo Group Bought at 372p - September 20

The publication of the independent review, on supplier issues within Leicester, last week precipitated a steep rise in Boohoo's share price this week. The appearance of the report was very timely as Boohoo put out its interim results today. A quick look this morning told me that the group traded incredibly strongly during H1 with growth on all fronts. This is the best possible response to recent short-seller attacks and confirms my belief in the strength of the group. That said the board are moderately cautious about the second-half of the year which makes sense considering the economic headwinds that exist globally. Still I think that the Boohoo model is so well proven, and profitable, that it would be foolish to bet against continuing momentum as customers line up to buy their "fast fashion" offering. In this light I was happy to take advantage of the struggle between bulls and bears today as the share price closed 4% down and failed to break out above the 400p level. Personally I believe that Boohoo has turned itself into a truly global brand and has an outstanding growth runway ahead. This makes it an excellent candidate for becoming a long-term holding.

Sales

Avacta Sold at 163p - September 20 - 35.8% gain

I decided to sell out of my Avacta holding, picked up in the placing, for a couple of reasons. One of these was that I needed the money elsewhere. More importantly though it's important to remember that Avacta continues to be a loss making company with minimal (<£5m) revenues that dilutes shareholders on a regular basis. The reason that it's popular with private investors is that it has a great story, with real IP, and the potential to generate a lot of sales if just one of its developments becomes commercially viable. Unfortunately this combination drives an awful lot of hope into the share price (enough to make it a 10-bagger this year, in theory) along with plenty of volatility. My take on this is that Avacta is more a punt than an investment at the moment which means that it's sensible to take a profit when one is available. If Avacta actually strikes gold then there will be plenty of time to buy back in, even if the share price jumps 50%, as the potential reward from a licensed Covid-19 test is so gigantic.

Announcements

Computacenter

A very short update but it's become clear to the board that FY trading will be materially above previous expectations. This is quite something given that the company is just a few months into H2. Bodes well for the future. (Update)

Alpha FX

It's been a difficult six months for Alpha FX with their largest client defaulting at the height of the Covid-19 crisis. A sense of this comes from the fact that while sales rose 16% to £18m underlying EPS fell more than 30% from 14.0p to 9.5p (but only fell 11% if you exclude non-cash adjustments related to the default payment plan). On the other hand FX volume comes from clients actually being able to trade and for a good part of H1 this activity was substantially reduced by the lockdown. So I believe that the board have done a good job of steering the company through the crisis. The big question is whether they can bounce back to the double-digit growth rates seen in previous years. On this front there is room for optimism with group performance returning to Q1 levels and recent investments (in Canada and with Alpha Payment Solutions) achieving record revenues. In fact it's these new ventures which have partially held back profitability since Alpha FX is covering staff costs in these areas now in order to reap profits at a later date. In addition the company paid full salaries and commissions throughout the pandemic with the only change being a slight pull-back in hiring. So I'm inclined to see H1 as an unavoidable blip for the company with undiminished potential for growth on many fronts. In fact it's plausible that they could beat the current much reduced forecasts (down 28% from pre-Covid expectations) which might bring them in-line with the 2019 result. That would be pretty good. (Results)

Belvoir Group

There's a remarkable story of success here with this property letting and sales group. At the beginning of lockdown the board took a realistic, but pessimistic, view of potential outcomes which triggered a 29% fall in analyst expectations for the year. However a couple of factors, one internal and one external, have allowed the group to trade successfully enough to bring these forecasts right back up again. On the self-help front the head office fully supported franchisees during the lockdown and in return these business owners worked hard to generate sales where possible and prepare for the future. At the same time the Government eased restrictions on the property market earlier than expected and juiced the market by cutting the stamp duty payable on house purchases. As a result revenue rose 8% in H1 (with 2% organic growth) and bottom-line earnings rose 16% to 7.3p which is in-line with pre-Covid expectations. A very impressive result that's allowing the company to pay an interim dividend and a partial catch-up of the suspended final dividend. In retrospect a key driver here is that the lettings business (62% of gross profit) is both recurring and reliable as renters want to keep a roof over their head. This area is likely to remain a growth factor as the letting market consolidates and regulation pushes private landlords towards paying someone else to manage their properties. On top of this financial services revenue is growing strongly with plenty of runway to expand headcount. An excellent business that isn't highly rated. (Results)

Spectra Systems

Given that these interim results straddle the peak of the Covid-19 pandemic it's impressive that sales/profits are the same as in 2019. One of the reasons for this is that Spectra enter into long-term contracts with customers and benefits from reasonably stable revenues. At the same time the company is active on a number of R&D fronts in the areas of banknote printing, product authentication and banknote decontamination. This supports their claim to be technology leaders who can deal with difficult technical requirements. In addition the board are currently evaluating the IP of another company with patents applicable to biotech assays, point of care testing and metrology. This could provide another related but separate line of business for this research driven business. Remarkably discussions with central banks support a belief that worldwide demand for banknotes will be higher in 2020 than in 2019. I find this astonishing but, if true, this will boost H2 earnings. As a result of this, and other positive attention from customers, the board expect both sales and profits to significantly exceed market expectation for the full year. This is a heck of a statement and analysts have responded by lifting their 2020 and 2021 estimates by 16%. This puts the shares on a forward P/E of 18-19 which is undemanding for high EPS growth, operating margins of 30%+ and a ROCE rising above 15%. I don't want to get over-excited here but Spectra could be on the cusp of transformational growth! (Results)

Sylvania Platinum

This was a remarkable year for Sylvania with buoyant metal prices (particularly rhodium which increased 165%) vying with the lockdown in South Africa and a depressed chromium market. In the end a 58% increase in the average gross basket price to $2015/oz (from $1277/oz) landed a knockout blow. As a result revenue rose 62% to $114m and net profit jumped 125% to $41m despite a 4% drop (~3000 ounces) in production. The small size of this fall is all the more remarkable given that circa 10,000 ounces of production were lost during the lockdown. Looking forward the company expects to maintain production at the 70,000 ounce level which is a solid result given the challenges facing Sylvania. A big problem is that underground mining has been cut back at the host mine which reduces volumes being fed to Sylvania. As a result operations are substituting other sources such as historic dump material. This is a perfectly acceptable source for processing but the company needs to re-calibrate in order to deal with the changing chemistry most efficiently. In addition water constraints and power shortages continue to hamper operations and inject inefficiency. The board are active in mitigating the impact of these factors but they remain a drag on throughput. More positively the group is debt free and can fund various expansion and optimisation projects with a number of these due to complete in 2021 and 2022. In addition the board have appointed a new CEO and CFO which looks to have injected new energy and focus into the group while retaining a focus on cautious expansion and shareholder returns (both appointees have worked at Sylvania for many years). This investment is not without risk but a staggeringly low P/E of 3-4 discounts an awful lot of trouble and I believe that Sylvania is materially underrated. (Results)

The Property Franchise Group

This is yet another set of results spanning the lockdown and TPFG have managed to navigate the pandemic adeptly (if not quite as profitably as Belvoir). After a strong start to the year the group reported stable sales and profits for H1 with strong cash generation taking net cash to £6.1m. An important factor here is that lettings accounted for 73% of MSF (Management Service Fees) and these provide sticky, recurring revenues. Since the period end sales and lettings have really boomed in July (double-digit increases) with EweMove recording very high levels of activity. This resonates with the narrative that the Government have successfully primed the property market by reducing stamp duty and easing lockdown restrictions early. On this front EweMove franchisees were able restart very quickly and take instructions ahead of other estate agents which demonstrates the strengths of a model where operatives are incentivised to act like business owners. Unsurprisingly the head office is looking to capitalise on this momentum by adding new territories and materially increasing the number of financial service advisers serving the network. Acquisitions are also a possibility and TPFG support franchisees looking to take on lettings books. Frankly I see a lot of growth in the pipeline and while the board have re-affirmed their pre-Covid expectations for the year I suspect that there's upside available in the second half. (Results)

Gamma Communications

Gamma has been a rock-solid constituent member of my portfolio for a number of years now and the attractions are obvious. In each of the last five years the company has achieved double-digit EPS growth with a 29% CAGR. These earnings have consistently converted to cash enabling the company to acquire and prosper without the use of leverage or share issuance. Over this period the ROCE has sat at the 25% level, which is excellent, while margins have steadily improved. This trend is set to continue with Gamma trading very well through the lockdown and generating a 22% rise in earnings off the back of a 12% increase in sales. The majority of these sales emerged from the UK Indirect business, with a focus on existing partners, but the overseas business is expanding quickly and the board are focused on widening their footprint in Europe. Apparently the adoption of cloud services by businesses is low on the Continent and Gamma are specifically targeting the Dutch, Spanish and German markets. Given their continued success in the UK I'm happy to back management in this venture. At the same time, by a stroke of luck, the company acquired a specialist in Microsoft Teams back in February and, for obvious reasons, this part of the business has performed very well. Still fortune favours the brave. Looking forwards the company very usefully includes the range of sales (£369.0m-£394.3m) and EPS (43.5p-49.9p) that they forecast and anticipate coming in at the top end. Personally I expect them to trade more strongly than this over the next quarter with a positive trading update in due course. (Results)

Computacenter

This is a nice set of HY numbers with adjusted EPS up 35% on essentially flat sales compared to 2019. This suggests a healthy improvement in margin along with a reduction in costs. In fact these effects are explicitly mentioned in the narrative with falling sales to industrial customers being offset by new business in the government and financial services sector. Operationally then the business has dealt with Covid-19 effectively despite a wide variation in the strength of end markets (with the UK and Germany trading well while France and the USA struggled). As a result the board are confident enough to state that adjusted PBT for the year is unlikely to be less than £180m - which encouraged analysts to raise their forecasts by 22.5% from 94.2p to 113p. It's this sort of acceleration in estimates that gets me really excited about any company since the share price is always playing catch-up and there's the chance that a P/E re-rating could start to kick in. With Computacenter the shares are up 16% following the results and the P/E is decent but not outrageous at ~20. A point worth noting in these results is that employees have been utilised more effectively with time previously spent travelling now available to deal with customer issues. I've seen this effect mentioned elsewhere and I suspect that, at least partially, this efficiency boost is here to stay. Looking forwards Computacenter won't see the WFH boost repeated, which is reflected in the flat EPS forecasts for 2021 and 2022, but the company has barely put a foot wrong in years and this crisis has demonstrated their resilience and flexibility to customers. I'm content with this outcome. (Results)

Team17

As revealed in earlier updates Team17 has benefitted significantly from the Covid-19 lockdown as people were left with time on their hands. The result is that revenues in H1 grew 28% to £38.8m (a record), adjusted EPS improved 22% to 8.9p and operating cash conversion reached a remarkable 114% (leaving the company with net cash of £50.4m). While the board expect trading to normalise in H2, which is why FY estimates are less than double the H1 numbers, they still expect revenue and adjusted EBITDA to be ahead of market expectations. On the other hand the H2 weighting to new releases could easily offset any Covid related slowdown. It's progress like this that has allowed analysts to hike their 2020 and 2021 estimates by ~70% in the last eighteen months and I don't believe that we're anywhere near the end of this growth cycle. Backing this up is the fact that a number of successful titles are due for release in H2, in-line with the arrival of next generation gaming consoles, together with ten additional games signed for release in future years. It's remarkable to note that Debbie Bestwick founded Team17 30 years ago and, as the largest shareholder with 22% of the company, I see no evidence that she's looking to take a back-seat. In fact it appears that she listed Team17 in order to drive growth, both organically and by acquisition, as the public listing facilitates any future fund raising (although internally generated cash-flow is high and may remove the need for any dilution). Looking at the accounts the only thing that concerns me is that £3.8m of development costs were capitalised in H1 (double that of previous periods) although I can understand the accounting practice. At least amortisation of this cost isn't excluded from the adjusted EBITDA figure so the company isn't trying to have its cake and eat it. All in all I see an excellent runway for growth ahead with a strong tailwind from trends in the gaming industry as a whole. (Results)

Medica Group

It's been a tough H1 for Medica with operational gearing acting in reverse. Sales fell a resilient 23% but fixed costs lower down triggered a 62% fall in operating profits as the margin more than halved from 24.3% to 11.9%. Then, right at the bottom line, EPS plunged 79% to a mere 0.74 pence (which is less than the maintained interim dividend of 0.85p). On the upside the reason for the dividend payment is that cash collection remained strong with net cash up 82% to £7.7m. This will reduce in H2 as increasing sales pull more cash into working capital, and capex spend increases, but the balance sheet here is strong. Another bright note is that NightHawk revenue (the out of hours, higher margin service) was flat year-on-year while elective sales halved. Since most of the elective procedures will still have to take place, possibly in a compressed time span, it's plausible that a chunk of Medica's revenue has been deferred rather than lost altogether. The board don't say this but they have been recruiting which gives them significant latent capacity to meet the recovery in demand. Talking about the board there has been a wholesale refresh in recent years with a new CEO, CFO and Clinical Director. I suspect that the previous directors took their eye off the ball, after getting the company listed, which is why growth fell back post-listing. Now there is a new strategy in place and I expect this to produce results, despite an increasingly competitive environment, although perhaps more in the medium-term than in the short-term. (Results)

Best of the Best

An excellent AGM update with both revenue and profits for the full year to be ahead of previous management expectations. The key to this appears to be the launch of a midweek contest along with additional marketing spend. I've seen a number of Best of the Best adverts on TV, which is new, which suggests that they're working hard to acquire customers. It would be interesting to know how sticky these clients are, to get some idea of the effectiveness of the marketing effort, but that kind of information is only included in the annual report (if at all). Either way trading in the first four months has been strong and the board expect this momentum to continue. (Update)

Plus500

Another company benefitting from the lockdown is Plus500 with continued market volatility driving high levels of client activity. Here, as well, marketing efforts have continued apace with this leading to the onboarding of a high level of new customers. As a result platform usage remains at elevated levels and I very much doubt that this will change while the markets remain in such turmoil. In fact I can see volatility persisting for at least another six months as we pass through Brexit and the US election. Sadly this isn't another outperforming update but the board do state that they are very confident about the outlook. I can well believe this and I expect the Q3 update in late October to raise expectations for the FY. If this happens then will Plus500 remain valued on a P/E of 5-10 with a yield above 5% as most of the profits are returned to shareholders? Too cheap surely? (Update)

Craneware

With Craneware selling into the US healthcare market, which has been preoccupied with more than just software in 2020, it's notable the company matched its sales for 2019 and improved EPS by 3-12% depending on which adjustments you include. The reason for this stability is that Craneware sells contracts that generate recurring revenues and are generally sticky for clients (since it's painful changing a software platform). On this front 90% of sales were made to existing customers, or new hospitals within existing customers, which suggests that customer satisfaction is high while non-customers have a lot of inertia when it comes to selling them a new billing system. So there's both risk and opportunity there. Still it should be remembered that the story here is one of long-term growth as US hospitals transition to a value-based care system where services are tracked, monitored and analysed in increasing detail. From this perspective the difficult trading seen in 2019 and 2020, with some self-inflicted wounds, should be a short-term blip rather than an indication that the market has moved on. In fact during 2021 all core Craneware products should have been migrated on to their Trisus cloud-based platform which will allow for a richer set of features (as twenty years of data prove their unique value). This may well provide the motivation for customers to move from their current on-premise solution. In the meantime cash generation remains strong with an ambition to convert 100% of earnings into cash. Unfortunately deferred payment plans and terms meant that the target wasn't reached this year but still Craneware have $45m of cash and an unchanging share count so they're doing something right. This probably won't make much difference to the share price in the short-term but the company should regain its mojo over the next couple of years. (Results)

IG Design Group

I like how IG Design has performed in recent years but forecasts pointing to a 44% drop in profits for 2021 (at 15c compared to 30c in 2019) are painful reading. This AGM statement confirms that the business is on track to meet these forecasts after a strong start to the period. Personally I'd expect a strong start to provide more of a boost, given how analyst sentiment appears to be in the toilet, but no such luck. Still the directors remain optimistic and we'll learn more with the HY update in mid-October. It could take a while for this star to regain its former glory unfortunately. (Update)

K3 Capital

Solid FY results from K3 Capital here considering that they include at least two months of lockdown. Sales rose 10% to £15m with some weakness in KBS Corporate offset by KBS Corporate Finance rising 263% to £2.9m. At the bottom line EPS rose an impressive 31% to 12.37p due to efficiency gains and cost cutting. It should be remembered that 2019 was a very poor year, with profit falling back by a third, and that 2018 was an outstanding year which produced earnings of 14.1p. So this is a decent outcome with a reminder that corporate finance and company sales is a volatile, cyclical sector. In fact without Covid-19 this would have been a record year given the likely rise in transaction fees. To address this variability the board have been on an acquisition spree recently diversifying into the related areas of R&D tax credits, restructuring and insolvency. These purchases have been immediately earnings enhancing and already cross-selling benefits have emerged as referrals take place between separate parts of the group. From listening to the recent investor call I sense that the board are very excited by the chance to apply their database of prospects to these new brands. Up until now both randd and Quantuma grew through referrals and professional networks which, it seems, held back growth. So I believe that the group has been strengthened by these acquisitions and that the market hasn't woken up to this potential (with the share price flat-lining at 150p). I can understand this reticence with Brexit looming and a weird update to the 2021 forecast on Stockopedia doesn't help (since it suggests a 48% drop in EPS to 6.7p). This number is clearly nonsense as the board have just confirmed that they are trading in-line with the earlier forecast of 11.4p. This figure is still shown on SharePad with additional estimates of 16.0p and 20.8p for 2022 and 2023. A lot will change by then but 20p of earnings would put the shares on a P/E of 7.5. That's attractive. (Results)

LoopUp Group

Wow. What a set of numbers. After many years of on and off growth this time LoopUp has hit it out of the park with sales up 43% to £31.9m, adjusted operating profit up 664% to £9.2m and EPS up a staggering 1164% to 13.9p. Absolutely incredible and definitely not to be repeated after the nationwide lockdown drove customers into LoopUp's arms. Nevertheless with a 2020 EPS forecast of just 16.4p it's absolutely certain that the FY results will materially beat this forecast. The bigger question is whether the board can build upon this success by retaining their new customers, leveraging recent exposure to potential customers and providing services that'll remain in demand when businesses finally return to normality. Looking at the results I suspect that this year will mark a turning point for LoopUp for three reasons. Firstly, LoopUp has won numerous customers across the legal, corporate finance, investment banking and consulting sectors with a top-5 law firm signing a new contract. Secondly, sales visibility is materially improving as customers migrate to committed term contracts, with an average duration of 2 years, and this momentum continues. Finally, the recently launched integration with Microsoft Teams will allow LoopUp to leverage the success of this platform and could be a game changer. Any one of these reasons makes the shares an attractive proposition but together the sky is the limit. Realistically there's no point getting too excited as the company has disappointed before but still the current setup is about as good as it can get for LoopUp. So far they've capitalised on the opportunity by scaling up, and avoiding any core platform downtime that would frustrate paying customers, but the future remains to be written. I await it with interest. (Results)

SDI Group

A pretty short update noting that the group has made a very good start to the year. This is slightly better than last year where they made just a good start! So it's no surprise that the board are comfortable that trading is in-line with expectations which are for 3.7p of earnings. This represents a decent improvement over 2020 although up until July analysts were pencilling in an EPS of 4.3p so that downgrade is worth bearing in mind. The reason for this change is probably a reflection of foreign sales remaining tricky while travel restrictions remain in place. The company has done well to replace these lost sales, as well as those in the subdued aerospace and industrial chiller sectors, but they really need to have all business lines growing. Definitely worth holding through the current turbulence though given the competence and flexibility of the board in managing the group. (Update)

ScS Group

As anticipated these are pretty awful results with a significant impact from the pandemic. With stores closed for around two months the 19.5% fall in sales, and 20.2% drop in gross profits, feels about right. Unfortunately operational leverage in reverse, due to a low margin and fixed cost model, slaughtered profits and left the group at not much above break-even. Still cash generation was strong, probably a result of working capital unwinding, and cash on the balance sheet is up from £57m to £82m. Yes looking a bit deeper customer deposit balances have increased by £19.9m and the cash position benefited by £6.1m due to the deferment of NI and VAT payments and by £4.3m from rent deferrals. Still there's no chance of the group going bust although with IFRS16 labelling leaseholds as debt the accounts do have to show a net debt position (which I don't agree with). More significantly for shareholders the rebound in trading post-lockdown has been immense with order intake up 45.8% like-for-like in the first 9 weeks of the new year. I'm sure that this is an unsustainable reaction to people being stuck at home but still the board are seeing trading above their expectations. This optimism for 2021 has been enough to bring analyst expectations almost back to the pre-Covid level of 24p, from a barely believe low of 1p in the summer, with a recent update to 22.2p. Absent another national lockdown I expect this momentum to continue as sales from 2020 have been shifted into the current year. Uncertainty remains, of course, especially over the key Christmas period but that's what makes investment interesting. (Results)

Springfield Properties

The attraction of Springfield for me is that it's a conservatively run Scottish housebuilder which is on dirt-cheap P/E of 5-6 despite five years of double-digit earnings growth. Something doesn't quite stack up here and I believe that part of the problem is that it's illiquid and off the radar of most investors. A related issue is that the broker forecasts are pretty useless for Springfield. This is illustrated by the fact that they made 8.3p for the (admittedly difficult) year, as opposed to the forecast of 15.3p, and yet the shares rose by over 10% on the day. Why is this? One key factor is that sales in Scotland are legally contracted which means that delayed sales for April/May 2020 will now show up in the 2021 results. That's a clear boost. Add on a significant increase in demand post-lockdown, as people are looking for family homes with outdoor space, and there's a decent chance that 2021 will be an excellent year for Springfield. A further angle to consider is that Springfield have partnered with Sigma PRS Management to construct homes that Sigma can rent out based on a fixed-price design and build contract. This sounds like a valuable initiative and adds to my sense that the board are alert to the risks and opportunities that they face (which they should given the level of director shareholdings). With luck trading will remain strong and the shares will get re-rated to a sensible level for a housebuilder - or the company will get taken over. For the time being I'm happy with these results. (Results)

Boohoo Group

These are some remarkable results which cover all of the lockdown period so far. We already knew that trading had been strong, with the group pivoting away from party clothes towards the comfort market, but to lift sales by 45% and have this as the least impressive number is quite something. Moving away from the top line the gross margin moved a little higher to 55% while the operating margin improved 60bps to 9.7% - with these leading to a 51% increase in PBT. Now it's possible that growth in H2 will tail off, and the board continue to plan for reduced consumer spending, but September has started strongly and growth so far has been across all geographies and brands. In addition the group has recently added the Oasis and Warehouse brands and they have a decent chance of adding other well known names as the High Street carnage continues. This seems like a smart way to add sales without cannibalising existing markets. A key change here was the late-May purchase of the outstanding 34% of PLT which the group did not own (and where much of the sales growth seemed to be occurring). While the price paid seemed high the board believes that owning all of the PLT sales will be significantly earnings enhancing. I can well believe this to be true and this is one good reason for H2 earnings being greater than those in H1. There's also the fact that new brands take Boohoo into the premium and older customer markets which further expands the size of the potential customer base. With management making new brands more trendy, and reducing price points, it's hard to see what can derail the test and repeat strategy that has worked so well. (Results)

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