FY-2017 Wexboy Portfolio Performance…Crackin’ The Code


, , , , , , , , , , , ,

Hello. Why yes, it’s me…

Happy New Year!

Admit it: You thought I’d bloody well scarpered, to become the Wild Eyed Crypto-Boy from Freecloud – didn’t you?!

Well, not quite…

Though I did a mini-grand tour of Xmas dinners & meetings, and was bemused how often the conversation ended up in crypto-territory. Ha, so it’s not just me!? And even though I enjoyed some lighthearted crypto debate (best to avoid people who get too emotional about investing), I’m also left wondering how high #CryptoFOMO levels are running out there right now?! My new portfolio mantra may be dead on target:

Doesn’t everybody deserve a little crypto pixie dust?!

But anyway: I was actually 100% committed to an incredibly brutal training regime – preparing for my first naked solo New Year’s Day Iron Man Triathlon. Yeah, I know, just about anything to get out of the house…

Haha…again, not quite.

In reality, life simply got in the way, as it has a habit of doing…albeit, sometimes in great ways! But after all, isn’t that precisely what my life’s designed for & supposed to accommodate? Next time you fear dying chained to your office desk, keep your eyes on the prize & remember money isn’t really about buying things – which is just another form of indenture – what it really buys you is freedom!

And more recently, I’ve taken advantage of that freedom to meditate on doing…absolutely nothing! To explain: Over the last couple of years, I’ve executed a sloowww but steady transformation of my entire portfolio: Far less value, far more GARP. [The nay-sayers will insist this is simply an excuse to pay up]. And in 2017, I finally felt like this huge effort had come together beautifully…

Continue reading

Kryptonite Even Superman Could Love…


, , , , , , , , , , , , ,

As some of you suspected, my last post (& related comments) were intended as an essential intro here, so it’s worth revisiting:

Cryptocurrencies & Blockchain – Longs, Shorts, or Trading Sardines…

[And since I ducked providing some kind of primer, let me highlight the best introductory books I’ve read in the past year: ‘Digital Gold’, ‘The Age of Cryptocurrency’, ‘Blockchain Revolution’, ‘The End of Money’…nor would I under-estimate the ‘For Dummies’ books. And this is new: Hash Power. And finally, here’s an interesting news/research resource.]

After highlighting some of the risks & challenges investors face if they’re considering direct investment in cryptocurrencies & blockchain (via mining, buy & hold investment, initial coin offerings, and/or blockchain VC investment), I concluded the safest & most practical approach for the vast majority of investors was inevitably via:

Listed Investment Companies

But while I detailed metrics for 16 core listed sector plays (& highlighted another 23 potential plays), I offered no recommendations. In fact, in terms of such nascent technology/innovation & the listed sector’s $2.6 billion market cap (just 2% of the $144 billion cryptocurrency market…which is another rounding error globally), I question if valuation’s even a relevant filter at this point. Same for management – many of which don’t necessarily match the typical CEO profile investors expect, or boast a prior/public track record.

[Not suggesting you abandon all (valuation) rationale. Or ignore management: Companies/projects will ultimately live or die by their management & they still need to be evaluated in their current role (at the very least). Focus particularly on what they actually do & achieve, not just what they say…]

In reality, the main challenge (& best framework) now for investors is to develop a real view on the entire sector – long, or short – one strong & personal enough to hopefully steer you towards the best investment opportunities, and help you sleep through the inevitable volatility & reversals to come. Thinking about cryptocurrencies & the blockchain separately is a great place to start, as people still confuse/conflate them*. Ultimately, they’re very different beasts…a negative view of one shouldn’t preclude a positive view of the other.

[*Even crypto-warriors have decided (or at least conceded) they’re trading Ethereum…but they’re actually trading Ether!]

Continue reading

Cryptocurrencies & Blockchain – Longs, Shorts, or Trading Sardines…


, , , , , , , , , , ,

Over the last few months, I slowly added lines here & there to this post in my head. Well, the original: It soon evolved into a bear of a cryptocurrency & blockchain primer. One which, anticipating an eventual audience, kept dragging me down an endless rabbit-hole of what about & what if questions…

It’s astonishing such a new innovation has attracted so much passion & opinion so fast. [In reality, its key components – cryptography, a distributed ledger (i.e. a peer-to-peer network), digital money – have existed for decades. The genius of Satoshi Nakamoto was applying them in such a radical & elegant new way]. We’re barely outta the gates here, but it seems like everybody’s already adopted a fervent position of advocacy, denial, or just plain old ignorance… Take your pick & damn the facts close your eyes & you’d swear it’s politics, not technology.

But maybe this is no surprise – after all, we find it harder to talk (rationally) about money, even more than sex!? ‘Cos it’s personal. And emotional…nothing evokes those familiar demons, fear & greed, more easily than money. And that deeply personal relationship’s become even more fraught & anxiety-ridden – particularly in the West, with more to lose – as we live in a post-financial crisis world, with increasingly meagre economic growth prospects, relentlessly climbing public & private debt burdens, ever more polarised voters, and with even the future of work threatened by technology.

And then, Bitcoin: A new paradigm, uber-money, a stateless & entirely digital currency. Which only served to ratchet our fear & greed even higher. Too many struggle with the apparent irrational exuberance, and even more so the sheer intangibility, of cryptocurrencies. Which inevitably invokes a much deeper fear, of the same intangibility inherent in our fiat currencies, our fiscal obeisance to governments who seem dead-set on printing & spending their way into oblivion, the fragility of our financial assets & markets (which now exist only as electronic blips on hackable centralised repositories), and our economic future & security itself. Hence, that recent primal scream of denial:

‘But they’re not real!!!!!’

[Yes, I counted – Howard Marks really did use five exclamation marks.]

But we also flog ourselves into a real frenzy of greed: How did we miss out so completely on Bitcoin’s incredible & stupendous gains over the last few years (even this year!)? We wonder if maybe, just maybe, this is still the beginning…could a cryptocurrency (or two) ultimately scale up to match the gold market, or even a major global currency? [So why didn’t the media swarm Murray Stahl, as they did Marks or Jamie Dimon? Here’s Stahl’s incredibly bullish take. Ironically, he helped inspire Marks’ next letter, a rather grudging & half-hearted mea culpa]. We even speculate whether investing in the blockchain is a chance to go back in time & actually get in on the ground floor of the internet itself?!

Continue reading

New Portfolio Snapshot & Allocation


, , , , , , , , , , , , , , , , , , , , ,

Welcome to the dog days of summer…

A good time to pause & take stock of my portfolio. Following on from my recent H1-2017 portfolio performance post, here’s my Top 10 Holdings today:

In fact, the table lists all of my current disclosed holdings. And just to add some overall context, only five of these holdings actually feature in my Total Portfolio Top 10, while Newmark Security doesn’t even make the Top 20 any longer.

I won’t add new commentary here, since I last focused on my big H1-2017 winners & losers, and covered all my disclosed holdings in this January Top Trumps post. Not to mention, the rash of new investment write-ups this year: Alphabet (GOOGL:US), Record (REC:LN) & Applegreen (APGN:ID). But for your reference, I will provide corporate website & Bloomberg links, links to relevant historic posts & write-ups (remember, good investment theses tend to evolve slowly!), plus the latest share price & market cap for each stock:

i) Alphabet (GOOGL:US, or GOOG:US)   (9.5% Portfolio Holding):

‘So Why Not Google It..?’

Share Price:   USD 940.08

Market Cap:   USD 648 Billion Continue reading

H1-2017 Wexboy Portfolio Performance


, , , , , , , , , , ,

Benchmark Performance:

Let’s jump right in, here’s the H1-2017 performance for my usual benchmark indices:

Move along, nothing to report here…but that’s exactly what we should focus on! Of course, the financial media’s become more & more hysterical about the markets – de rigueur in an ADHD world – but cooler & more logical heads have also been sounding the alarm bells so often, I’m sure I’ve gone deaf. But sacrilegious as it may sound, a +8.2% YTD gain for the S&P 500 isn’t all that extraordinary… Sure, it’s within spitting distance of the market’s average annual return, but that doesn’t mean much – history confirms annual returns tend to rack up in just a few months, with the market faffing around for the rest of year.

And looking back, I’m hard-pressed to find this outrageous bull market everybody’s yammering about. In reality, the S&P soared a massive 6.6% pa over the last three calendar years (2014-2016). Seriously…that’s it!? [How many readers are reacting with disbelief right now?] Even my blind maiden aunt couldn’t get her knickers in a twist over that kind of return…

Of course, the nay-sayers will argue the S&P’s trajectory is irrelevant – we should really focus on how expensive it is today, in absolute terms. Hmmm…maybe if you cherry-pick the most damning P/E multiple comparison!? But taking a longer-term perspective, the Nifty Fifty actually peaked at 42x in 1972, while TMT stocks peaked at 60x in 2000 (with the S&P hitting 29x). Except isn’t that just a greater fool approach…shouldn’t we be evaluating the market vs. normal P/E multiples? Well, again I fail to understand the alarm: The S&P today actually sports an 18.8 forward P/E, a mere 9% premium to the average 17.2 forward P/E over the last 20 years (which included the dot-com bubble, but also the financial crisis).

And absurdly, the doubters choose to ignore gravity (i.e. interest rates)! Whereas I’m perfectly happy to defer to Buffett here – aside from secular earnings growth itself, interest rates are arguably the equity market’s greatest single driver (& valuation benchmark). This one 10 Year UST chart effectively tells you more than a dozen books could about the US equity market’s trajectory over the last 50+ years:

Continue reading

Applegreen – Just Grab & Go!


, , , , , , , , , , , , , , ,

And yes, with the blog turning six this year & a tsunami of retail apocalypse headlines recently, it’s ironic I’m only now posting my first retail investment thesis ever! But rest assured, this isn’t some soggy chewed-up cigar butt. Nor some story stock priced & pitched for perfection. Though, almost inevitably, the retail sector only seems to come in those two flavours nowadays… Whereas Applegreen plc (APGN:ID, APGN:LN) is that rarest of beasts:

A bona fide long-term retail growth story trading for a value price. 

And since it’s a retailer, first let’s focus on Applegreen’s story – its history, its people, its offering, its prospects – we’ll home in on the numbers later. If you’re a story person, I hope you enjoy the videos along the way. As for the numbers people…I definitely encourage you to circle back & watch ’em later! Let’s begin:

Applegreen is a major Irish petrol forecourt* retailer, with a significant & growing presence in the UK, and an emerging footprint in the US Northeast. [*As the Irish would say, a fillin’ station. To translate: A gas station, gasoline stand, gasbar, petrol station, petrol garage, petrol pump, service station, servo, etc….selling petrol, gas, or gasoline (& diesel)]. Bob Etchingham (CEO) founded the business as (Petrogas) in 1992, after working at Esso for 10 years, and was joined a year later by Joe Barrett (COO) (ex-Tesco & John West Foods). They’ve been described as ‘chalk & cheese’, and it’s obvious they play to their respective strengths & personalities in their roles. Growth was gradual at first, but from the outset management focused on developing its retail proposition & establishing a quality food offering. Which led to the launch of the Applegreen brand in 2005, heralding a distinctive retail-led proposition for customers built on a ‘Low Fuel Prices, Always’ price promise, ‘Better Value Always’ convenience shopping, and high quality own brand/international food & beverage offerings.

Continue reading

Love That Record…Give It A Spin!


, , , , , , , , , , , ,

Record plc (REC:LN) is the world’s largest independent currency manager. Based in Windsor, it was founded in 1983 by Neil Record, winning the world’s first stand-alone currency overlay mandate two years later. Record is still majority-owned by its directors/employees, with no proprietary business of its own – it focuses solely on being a ‘trusted advisor’ to an institutional client base (pension funds & foundations), providing (bespoke) passive & dynamic currency hedging and currency for return strategies, with AUME now at $58.2 billion (£46.6 billion). [Record only manages currency risk, so AUM is notional – i.e. it doesn’t manage underlying client assets – therefore, it uses the term Assets Under Management Equivalents]. This (old) video is still worth your time watching:

But unfortunately, after listing at 160p a share (a £354 million market cap) in Nov-2007, its long-term chart is none too pretty:


By early 2012, investors were so convinced Record’s AUME & business were heading to zero, its shares had collapsed 94% & were trading for net cash. [Which was pretty irrational, as Record’s operating margin was bottoming out at 32% at the same time!] Any investor brave enough to buy it sub-10p has a tasty four-bagger at today’s 43p share price (a £93 million market cap). [As did Jeroen Bos, see the final chapter of his book]. Even buyers six months ago have a near-60% return. But noting an average share price of 31p over the last 5 years, gains have been limited for most investors, while long-term shareholders continue to nurse big losses.

Maybe the financials look better? Continue reading

So Why Not Google It..?


, , , , , , , , , , , , , , , ,

Last month, I posed a serious question:

‘So Why Not Buy Apple..?!’.

Just days later, we got our first hint that Buffett himself was buying Apple! Followed shortly after by that bombshell CNBC interview (here’s the transcript), where he revealed an $18 billion+ Apple investment*, the vast majority bought by him in Jan/recent months (& the rest by Todd/Ted in early-2016). What better confirmation of my assertion that value investors – even the greatest of them all, at 86 years of age – would be wise to pose such a question to themselves!?

[*Pretty sure Apple is Buffett’s largest common stock investment ever (on a cost basis). In fact, I wonder if it’s the largest stock investment ever made by a single investor (again, in terms of cost)? Sure, Todd/Ted/Charlie did provide some inspiration/feedback here, but we can be damn sure Buffett never buys anything ’til he makes his own mind up! So: Your thoughts/feedback?]

Granted, I got lucky…

Was I confident I’d see Buffett talking up an Apple position just weeks later? Um, no… [Don’t forget, Icahn announcing a multi-billion holding some years back was a huge surprise too!] And maybe I chose it specifically as the largest & most obvious/controversial value stock out there. Not to mention, the head fake I pulled: While I did summarise its attractive fundamentals/valuation, my post clearly wasn’t intended to be a detailed thesis. But hey, it was still the right question at the right time, so I’ll take the kudos!? And Buffett’s purchase now serves as great inspiration to present a genuinely compelling investment thesis here. Yeah but, just not Apple – I mean, who even needs a thesis right now when Buffett’s put so much money where his mouth is?! Instead, we’ll focus on a company which is arguably the antithesis of Apple – therefore, I ask:

So Why Not Google It..?

Continue reading

So Why Not Buy Apple..?!


, , , , , , , , , , , , , , ,

We all know the type: Born-again value investors who still have that new car smell. No longer clueless, but the market hasn’t beaten adequate sense (or humility) into them just yet, so they’re still insanely over-confident. Which we tolerate – after all, we were like them once – then they start expounding their new & improved value investing philosophy, and it all goes downhill. I recall one encounter, some years back, where I struggled to get a word in, let alone offer some kind of reality check. Finally, my new guru was forced to pause & finally breathe, so I did the only sensible thing. I lobbed this hand grenade:

So why not buy Apple..?!

All I got was a puzzled look. Repeating the question, I then pummeled him with a veritable laundry list of Apple (AAPL:US) fundamentals & ratios. If he was such a value expert, surely Apple was a screaming value buy?! Needless to say, I never got much of a reply, but it stopped him in his tracks & scared him off…job well done! But the more I thought about it, the more it seemed like a valid question for other investors (& even me…). And a question to be asked in a spirit of honest inquiry. I mean, let’s look at Apple’s numbers today:

  • Net sales have reached $216 billion (as of FY-2016).
  • Net sales increased 99% & over 1,000% in last 5 & 10 years, respectively.
  • Gross margin increased to 39% ($84 billion) in last 10 yrs.
  • Op profit margin more than doubled to 28% ($60 billion) in last 10 yrs.
  • Net income increased 76% & almost 2,200% in last 5 & 10 yrs.
  • EPS compounded by 16% pa & 38% pa in last 5 & 10 yrs.
  • Net cash/investments inc’d almost 1,400% to $151 billion in last 10 yrs.
  • Current share price (as of cob Feb-7th):  $131.53
  • Current market cap:  $690 billion
  • Current P/S ratio:  3.2 times
  • Ex-net cash/investments P/S ratio:  2.4 times
  • Current P/E ratio:  15.7 times
  • Ex-net cash/investments P/E ratio:  12.1 times
  • Current FCF ratio:  13.2 times
  • Ex-net cash/investments FCF ratio:  10.1 times

OK, just take a moment & marvel…even with the share price now approaching all-time highs again, surely Apple’s still a screaming value buy?

So why not buy Apple..?!

Continue reading

Top Trumps For 2017…


, , , , , , , , , , , ,

So, bet you thought this was about Trump…and/or his Inauguration?

Nope, sorry…just my little bit of fake news! I meant something much better – who remembers this childhood classic: Top Trumps! To know the game is to love it…though if you don’t, it probably seems impossibly quaint in today’s digital world. I still remember the De Tomasa Pantera was the best card by far in my Supercars deck – what are the chances you’ll remember a detail like that about your latest app in the years/decades ahead?! Anyway, it’s still that time of year…and yeah, I’ve cheated a little. Pretty much everybody’s finished with their Top Tips & Picks for the New Year, so now I’ll swoop in & hog your undivided attention! Well, at least ’til your next tweet…

Regular readers will know what to expect from my Top Trumps for 2017 – yep, I’m sticking with my disclosed holdings. I mean, what could be better?! [Well, except some undisclosed holdings..?! No more teasing, I swear: I’m just about finished with the (very) slow accumulation of positions in half a dozen new stocks, soon I’ll line ’em up & start work on some proper investment write-ups]. Though I should remind you, in my last post I deliberately focused on the negative aspects of my 2016 Losers…hopefully, I offer a more balanced perspective here. Or at the v least, highlight how ridiculously cheap some of these stocks have gotten!? So, let’s crack on:

[NB: i) With the near-liquidation of Alternative Asset Opportunities (TLI:LN) this month, it’s no longer a disclosed holding, ii) I highlight my current portfolio allocation (as of CoB Jan-26th) for each holding, but will use my year-end allocations (which are similar) for 2017 performance reporting purposes, and iii) I include relevant corporate/IR websites & Bloomberg tickers, but avoid posting previous write-ups, in an effort to present each holding afresh – but feel free to reference last year’s portfolio commentaries (here & here), plus it’s easy to search/find original investment write-up(s) on the blog also.]

i) Newmark Security (NWT:LN) (2.4% of current portfolio):

Share Price:   GBP 1.45p

Market Cap:   GBP 6.8 Million

A special situation…which actually obscures an underlying growth story. While these trading updates (here & here) have crucified the share price, Newmark’s electronic division still looks like the real problem here. For almost a decade now, revenue’s unchanged, while divisional margins declined relentlessly – from 20-23%, to a £(0.5) million loss today. Poor return on capital was bad enough, but losses kill any argument for keeping the division. And after 4 years as CEO, shareholders presumably have little confidence Marie-Claire Dwek can still deliver a turnaround – and her hands are now full dealing with the larger asset protection division. Noting Chairman Maurice Dwek always ran a tight ship here, the situation appears untenable – something’s gotta give…

Continue reading