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

Tags

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%].

Advertisement

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

Tags

Allied Irish Banks, Clontarf Energy, Fastnet Oil & Gas, ICON, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Kerry Group, portfolio performance, Providence Resources, Ryanair Holdings, TGISVP, The Great Irish Share Valuation Project, Total Produce

Continued from here:

Company:   Kerry Group

Prior Post(s):   2012 & 2013

Ticker:   KYG:ID

Price:   EUR 51.60

So, here I am again – eyeballing Kerry’s valuation, and searching for supporting evidence in its accounts. But it’s nowhere to be found… Now I think about it, maybe all the big Irish food/agri companies will end up looking wildly over-valued to my jaundiced eye? This investor homage perplexes me – surely someone recalls how little respect these companies commanded in the past?! Well, perhaps they were different beasts then – but I don’t believe they’ve (fully) delivered on what they promised, when they embarked on this multi-year process of portfolio rationalization & re-configuration. And I certainly don’t believe they’ve grown into their current valuations either.

Then again, maybe I shouldn’t look a gift horse in the mouth! Now Donegal Investment Group (DCP:ID) has ditched its dairy business, and is looking to shed non-core assets & move up the value chain, surely it’s on the verge of a similar multiple? Hmmm, so what’s a 20 P/E worth to DCP?! 🙂

TGISVP – H1-2013 Performance

Tags

alpha, Alpha Portfolio, Beta Portfolio, Clontarf Energy, Continental Farmers Group, DCC, Elan Corp, Fastnet Oil & Gas, Glanbia, Greencore Group, Irish shares, Irish value investing, ISEQ, junior resource stocks, muppets, Petroceltic International, Petroneft Resources, portfolio allocation, portfolio performance, Smart Alpha Portfolio, Smart Beta Portfolio, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas

Time to wrap up the mid-year review(s) – let’s finish with The Great Irish Share Valuation Project. To recap:

– A total of 73 Irish companies are included this year (same as last year – but US Oil & Gas (USOP:G4) & Fastnet Oil & Gas (FAST:LN) were subsequently listed, so I added them later in the year, increasing the 2012 total to 75).

– Each company’s been individually reviewed & valued, some time between Jan & May, and I’ve kept a record of all share prices (at time of evaluation) & price targets to properly assess performance.

– I’ve made no subsequent changes to the file, except: i) to adjust for DCC (DCC:LN) migrating to a London-only listing & for Petroceltic International (PCI:LN) consolidating its shares 1 for 25, and ii) Continental Farmers Group (CFGP:LN) will continue to be included at its GBP 36p takeover price (the Saudi bail-out came in the nick of time, just before the cash ran dry!).

– Since my TGISVP review/valuation phase was spread over 4 1/2 mths, we need to adjust our benchmark (the ISEQ) accordingly. Like last year, I’ll take the mid-point (in terms of companies valued) of this phase – i.e. Feb-25th – as the most appropriate start date for the index.

I’m bemused to see I’ve apparently become more bearish this year! Last year, I was bullish on 48% of all stocks, while this year that’s now dropped to 40%. But consider the unique nature of TGISVP, which includes an extraordinary selection of junior resource stocks, complete with assorted incompetents & cowboys! Not surprisingly, I’m bearish on pretty much all these rubbish stocks – so stripping ’em out, it’s fair to say I remain bullish on Irish stocks. 🙂 OK, perhaps a little less so today, but with the ISEQ up +17.1% in 2012 & another +16.7% this year, that’s no great shocker..!

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

Tags

Allied Irish Banks, Bank of Ireland, Biogen Idec, Dalradian Resources, Datalex, Elan Corp, ELG Scheme, Fastnet Oil & Gas, FBD Holdings, IIU, Irish shares, Irish value investing, Pageant Holdings, Permanent TSB Group Holdings, Prime Active Capital, Royalty Pharma, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas

Continued from here. [If you’re new to the series, I recommend you re-visit my first 2013 TGISVP post].

Company:   Elan Corp

Prior Post:   Here

Ticker:   ELN:US

Price:   $11.61

Last year, I had Elan pegged for a significant fall – which definitely appeared to be on the cards with the share price falling 25%+ to sub-$10 levels in Dec & Feb. In the past 2 months, however, they’ve certainly pulled a rabbit from the hat with their recent Biogen Idec (BIIB:US) deal. This hands full control of Tysabri back to Biogen, but in return Elan receives $3.25 billion of cash, and a 12-25% royalty on future global net sales. Post-restructuring, Elan was almost entirely dependent on Tysabri – so this deal transforms the company into a highly attractive pot of cash, and a low cost/high margin royalty stream.

Unfortunately, management didn’t quite grasp this was shareholder’s money – they acted like all their bloody Xmases had come at once! They’ve promised a share buyback, but their main plan is to use the majority of the proceeds & royalties to acquire a brand new portfolio & pipeline. This is coupled with a projected reduction in annual operating expenses to (only?) $180 million per year! This has lured Royalty Pharma out of shadows, to offer shareholders an interesting alternative: An $11.00 per share bid.

TGISVP – Hot? Not?!

Tags

Alpha Portfolio, Barron's, Beta Portfolio, binary outcomes, Fastnet Oil & Gas, FBD Holdings, garbage stocks, intrinsic value, junior resource stocks, Leverage, Margin of Safety, Petroneft Resources, portfolio allocation, portfolio performance, risk management, Smart Alpha Portfolio, Smart Beta Portfolio, stock screener, TGISVP, Total Produce, Trinity Biotech, US Oil & Gas, value investing

In my last post, I was delighted to see the TGISVP Alpha & Beta Portfolios continue to expand their level of out-performance vs. their ISEQ benchmark. Particularly pleasing was the sight of my favourite, the Smart Alpha portfolio, far outpacing the others with a 21.1% YTD absolute return. But we’re still only 9 months into the experiment, so clearly we need a far longer horizon to confirm if this performance edge is sustainable.

It also makes me wonder if there’s a lesson to be learned here..? No, not whether value investing out-performs in the long run – I’m fully convinced of that already! [And if you’re not, please please read some of the numerous papers published on the topic]. But whether a mechanical approach is perhaps better?

Ha! No, I’m certainly not planning on becoming a stock screening convert..! But I wonder: Even if you’re a v competent & disciplined value analyst, even if you’ve conquered much of the fear & greed involved in investing, perhaps that demon mind still trips you up at that v last hurdle, or two..? When you’ve a nice stack of portfolio candidates lined up, why do you then take a shine to some & not to others? Why does one special stock really get your heart racing, far out of proportion to its obvious prospects? Why do you end up triple invested in one stock vs. another, when they both lined up pretty much even-stevens in terms of risk/reward?

TGISVP, Q3 ’12 YTD Performance (II)

Tags

alpha, Alpha Portfolio, beta, Beta Portfolio, Fastnet Oil & Gas, intrinsic value, Ireland, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Smart Alpha Portfolio, Smart Beta Portfolio, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas, value investing

Continued from here. Sorry for that tease earlier this week, I promise we’ll actually get to YTD performance of the TGISVP Portfolios in this post..! My H1 post is good background – particularly note the following:

– Q3 2012 YTD performance for each stock is TGISVP specific – i.e., measured from the specific (Q1) date I set a target price for each stock – because this was/is intended to be a real-time exercise in portfolio construction & management

– Two exceptions: Fastnet Oil & Gas (FAST:LN) & US Oil & Gas (USOP) were added in Sep. Based on their significant Downside Potential rankings, both are now included as EUR (3) shorts in the Alpha Portfolios (see here for more detail on overall portfolio construction)

– ISEQ YTD performance is measured from Feb-6th**. I noted: ‘I think the fairest, and most comparable, benchmark to use is the ISEQ’s performance since Feb-6th. The valuation stage of the Project was stretched out over Jan-March, but on that date I reached the half-way point, so this is a good average starting point for a benchmark comparison. It’s not perfect, but I think it’s the simplest and most obvious solution.‘

TGISVP, Q3 2012 YTD Performance (I)

Tags

Aer Lingus, Alpha Portfolio, Beta Portfolio, Cove Energy, CPL Resources, Datalex, Fastnet Oil & Gas, FBD Holdings, garbage stocks, junior resource stocks, performance appraisal, Petroneft Resources, portfolio performance, Prime Active Capital, Providence Resources, Siteserv, TGISVP, US Oil & Gas, Worldspreads

Now Q3 2012 is over, it’s time to revisit The Great Irish Share Valuation Project. Here’s my H1 2012 performance post, for reference.

First, note there’s been 1 de-listing – we already had the heads-up on it last quarter: Cove Energy (COV:LN) was taken out for GBP 240p in cash per share by PTTEP (PTTEP:TB). A marvelous result for most shareholders, except for a few over-enthusiastic latecomers that bid the shares up to GBP 270p+ in the dying days of a Royal Dutch Shell (RDSB:LN) vs. PTTEP tussle. [I’ll continue to include Cove – at its final GBP 240p value – for performance purposes for the rest of the year].

Note: Q3 2012 YTD performance for each stock is TGISVP specific – that is, performance is measured from the specific date (in Q1) I set a target price for each stock. [Apologies if you’d prefer to see actual YTD performance for all stocks – but I suspect there’d be a high degree of overlap in the winners & losers, anyway].

Fastnet – What’s the Forecast?

Tags

2P Reserves, Aventine Resources, Bruce Rowan, bubbles, Cathal Friel, Cove Energy, FAST, Fastnet Oil & Gas, Independent Resources, Island Oil & Gas, John Craven, Jubilee Field, junior resource stocks, Kosmos Energy, Michael Nolan, Minco, Minmet, Mizzen Basin, Molly Malone Basin, oil, Oisin Fanning, Orogen Gold, Paul Griffiths, Petroceltic, prospective resources, Raglan Capital, Rathdowney Resources, San Leon Energy, shipping forecast, short sellers, shorting, Sterling Green Group, Terra Energy, TGISVP, Tiger Resource Finance, US Oil & Gas, USOP, value investing

I eyed up US Oil & Gas (USOP) here (‘I swear, yer ‘onor, I wuz just looking…I nevah touched ‘er!‘), and promised to return to Fastnet Oil & Gas (FAST:LN)… Ooh er, collywobbles – what’s he going to say about this one? Well, I really don’t know, we’ll just have to see where this post takes us – a reminder I never have an agenda when taking a first look at a company. My only wish is to find an undervalued & interesting company, regardless of sector or business. That, to me, is sheer bliss..! On the other hand, finding a ridiculously overvalued company is simply a fascinating glimpse of (in?) humanity. Because shorting such a stock would be all too rare for me.

And no, I don’t think shorting stocks is the inverse of good (value) investing. In fact, I can’t emphasize that enough! I believe there are v few investors with the aptitude & fortitude to regularly short stocks successfully. And there’s whole other dimensions to that skill, anyway – as I’ve noted about overvalued stocks:

‘…there’s always a chance, on their journey to oblivion, that they’ll bubble higher & longer than you might ever expect. After all, you can’t analyze irrationality, and you certainly can’t analyze stupidity…’

Right, back to the job at hand: Aah, Fastnet… That really conjures up childhood memories of the shipping forecast. ‘Specially on a stormy night. It’s amazing the drama one could wring from such rigid & clipped broadcasts. Comfortably sprawled in front of a blazing fire – half asleep before bed-time… Drifting away to the cadence of the names – Fastnet, Malin Head, Dogger. Thoughts of far-off barren rocks, mournful lighthouse flashes, giant crashing waves, and lonely fishing boats adrift in the black night, were sure to send a delicious thrill down one’s spine. Seems I’m not the only one who fell under this spell – just take a look here: ‘Influences on Popular Culture’. Here’s another fond tribute... And finally, here’s a marvelous Economist piece on the Fastnet lighthouse.

The New Vegas: US Oil & Gas (USOP)

Tags

2P Reserves, Brian McDonnell, Caveat Emptor, Chris Comerford, delisting risk, disorderly market, Eblana, Fastnet Oil & Gas, FBD Holdings, GXG Markets, intrinsic value, junior resource stocks, Karim Akrawi, Las Vegas, M&A, Nevada oil & gas, Petroneft Resources, PLUS Markets, prospective resources, TGISVP, US Oil & Gas, USOP

I missed 2 Irish stocks earlier this year for The Great Irish Share Valuation Project (& here’s the latest TGISVP post). The first was Fastnet Oil & Gas plc (FAST:LN), which only IPO’d in June. The second was US Oil & Gas plc (USOP), which was actually suspended at the time (and finally delisted in April)! I must admit, I’ve put off looking at them for the past month or two – TGISVP gave me a real bellyful of junior resource stocks! I wasn’t feeling too hopeful about the analysis & prospects of these candidates either. My bloody bad..! Sorry, Fastnet, right now USOP’s beckoning!

Picture the desert, feel that heat, that blazing sun – you’re just a poor thirsty investor, simply trying to stay alive… You’re on your knees. But wait… What’s that you see? A shimmer, a glint just there on the horizon? You painfully stand, stumble, begin to walk, and then break into a shuffling trot. You begin to hope, against hope – maybe it’s water, an oasis, can it be..?

Nothing else matters, you stagger on as fast as your weakened body allows, and still you see it! That shimmer begins to solidify, begins to seem more real, it even draws closer, maybe just maybe you’ll make it… But suddenly that image, your goal, flickers and changes. You no longer see the water that’s been driving you crazy, that you were almost able to taste in all its cold glorious wonder. But wait, what do you see instead? Yes! Oh yes, it’s far far better, it’s amazing…it’s OIL!!!