The Great Irish Share Valuation Project – 2014 Portfolio Performance (Part II)

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Aer Lingus Group, Aminex, Connemara Mining Company, Fastnet Oil & Gas, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Kenmare Resources, NTR plc, portfolio performance, TGISVP, The Great Irish Share Valuation Project, Zamano

Continued from here.

My commentary & analysis of last year’s TGISVP losers & winners may have been meat & veg for some, but let’s kill the suspense & move on to dessert… How did 2014 performance stack up for the TGISVP Portfolios, vs. our ISEQ benchmark? Let’s take a look at the Beta Portfolios first:

[NB: Here’s a reminder of how they were constructed:

TGISVP – Beta Portfolio:  Assume an investor goes equally long all 27 stocks with positive Upside Potential (e.g. invests EUR 1 in each stock, for a total of EUR 27). The other 54 stocks, identified as neutral (2) or over-valued (52), are ignored. The portfolio return contribution from each stock is simply its Gain/(Loss)%/27.

TGISVP – Smart Beta Portfolio:  Stocks are chosen on the same basis as the Beta Portfolio, with one twist: All 27 stocks are divided into quartiles – assume EUR 4 is invested in each top quartile stock, 3 EUR in the next quartile stocks, down to EUR 1 in the bottom quartile stocks (for a total of EUR 70). This preserves diversification, but focuses the portfolio on stocks with the most Upside Potential.]

[NB: Again, see my last post – the appropriate benchmark return here is 4.7%, reflecting the ISEQ’s performance from March-30th ’til year-end. For reference, calendar year ISEQ performance was 15.1%].

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2014 – The Great Irish Share Valuation Project (Part I)

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Abbey plc, Aminex, Andor Technology, Connemara Mining Company, DCC, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, portfolio performance, Smurfit Kappa Group, TGISVP, The Great Irish Share Valuation Project, UDG Healthcare, US Oil & Gas

Thanks, I’ve received some great feedback & encouragement from readers in the past couple of weeks…so why not, let’s rock this TGISVP bitch all over again! Despite the exclusive focus on Irish stocks, I’m also hoping to see a lot of international readers checking in (& commenting) on these posts. For two good reasons, I hope:

i) Regardless of my individual price targets, many readers have highlighted their appreciation of the wide variety of valuation techniques & perspectives I’ve employed here across a broad spectrum of companies. I’ll try to place even more emphasis on the valuation process this year, so hopefully this project will prove interesting to a far wider readership.

ii) I mean, have you noticed the Irish market – it’s bloody on fire! The ISEQ was up +17.1% in 2012, and nearly doubled that return in 2013 (+33.6%) – um, like wow! And to top it all, my TGISVP portfolios actually out-performed the index, across the board in 2012 & on average in 2013. Uhoh, I think I’m scaring the value investors away…

However, it’s worth remembering I’ve been bullish on Irish stocks for a couple of years now – but a lot of investors really only started to pay attention last year. And much of the overseas interest to date, for example, has been primarily focused on (distressed) property & loans – rather than equities. So, arguably, we may only be reaching a point now where sentiment & interest in the Irish market’s fully blossoming. It’s also worth highlighting the rather unique economic & fiscal abyss the market’s rallying out of – in fact, the ISEQ remains 55% below its May-2007 highs.

Now, I hasten to add – I’m not actually making a specific ISEQ call here. I usually don’t think about indices in that manner (& often find the main indices too expensive anyway). I prefer to get comfortable with the current macro backdrop – as opposed to making macro predictions. [A fool’s game – noting current growth forecasts, and historical error ranges, all those highly-paid forecasters are really telling you is that developed market growth may be positive…or, um, negative!] Presuming a market passes enough macro hurdles, I’ll usually ignore the index & simply focus on stock-picking. Exactly as I’ll be doing here – though it will surely prove tempting to draw some overall market conclusion(s) near the end of the valuation stage (of this project).

2013 – The Great Irish Share Valuation Project (Part I)

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Aminex, Aryzta, Connemara Mining, Continental Farmers Group, Independent News & Media, Irish shares, Irish value investing, iShares MSCI Ireland ETF, Kenmare Resources, Kerry Group, TGISVP, The Great Irish Share Valuation Project, Tullow Oil, UTV Media

I finished my last post with a question: ‘So, shall we continue with this TGISVP experiment in 2013..?!‘

Despite the relative comment silence, an emphatic ‘Yes!‘ appears to be in order. The success of the series was evidenced by the strong surge in Q1-2012 page views, and the significant level of out-performance enjoyed by each of the TGISVP Alpha & Beta Portfolios last year. I’d first recommend a quick review of my first TGISVP post last year as a primer, but we need to cover some important points here:

– I’m planning to (briefly) review & set a price target for all Irish companies.

– An Irish company is any company which conducts a major portion of its business in Ireland, is (genuinely) headquartered in Ireland, and/or whose management/directors/shareholders/history are predominantly Irish.

– Sure, it would be marvelous if I covered all companies simultaneously. But life (& investing) are never so convenient… I reckon there’s about 70 companies to cover, so I’ll give myself an end-March completion deadline.

– This is TGISVP-Yr II, so perhaps this will all move along much quicker this year – who knows?! To add some spice, I plan to cover companies in random order this time ’round.

The Great Irish Share Valuation Project I

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Abbey plc, Aer Lingus, Allied Irish Banks, Aminex, Bank of Ireland, Conroy Gold, Continental Farmers Group, CPL Resources, CRH, Irish shares, Irish Stock Exchange, Irish value investing, stock screener

Time to take a little breather from Catalysts..! I’ve finally got ‘round to beginning a project that’s been top of my to-do list ever since starting this blog:

Yes, I wanted to identify all the listed Irish companies out there, (re)acquaint myself with their business fundamentals and financials, come up with a rough and ready valuation for each stock, and thereby come up with a list of the most potentially under- and over-valued Irish stocks.