Individual company strategy SMSF

[galumay]

SMSF
MND  ANZ  CCP  NVT  RCG  RFG  NWH  UOS  QBE  WPL  BRG  WES  DDR  VET  WPP  DWS  BCT  SDI  SRV  KTP  MYX  ADA  SXE  TNE  REH


Share - MND

Rationale for buying - another quality mining services contractor, low debt, strong earnings, absolutely hammered in the negative sentiments about the sector, i believe they will recover in the long term and provide good yield in the short term

EXIT STRATEGY - this is one to see through the lows, a real contrarian buy, hold unless the fundamentals really change

NOTE -

CAT RISK - Cant see any

FEB UPDATE - as expected, falls in revenues and profits as the impact of the end of the boom hits. Still no debt and strong balance sheet, average down!

HY 2015 update - see above

FY16 update Had a good run into reporting season, poor result although in line with expectations, got smashed

End 2016 update Doing ok, signs of a long term recovery

H1 2017 UPDATE - revenue and profit still falling but good signs of a coming recovery, share price has risen strongly through the year.

27/9/17 SOLD Simply paid far too much for this and took my eye off the ball, should have averaged down when it dropped to $7. I have made this mistake a couple of times, if I have confidence in the business its imperative to average down when paying too much initially. My concerns was that as it hit $15 it was trading at or above its IV range with not much indication that the IV range would increase any time soon - another words its fully valued and I decided to get the capital out and look for a home with more growth potential. Held for 3 years, $1660 capital return, $3515 divvys, so $5175 over 3 years, a 8% compounding annual return so not too bad in absolute terms for a bad decision.


Share - ANZ

Rationale for buying - Best buy of the big four

EXIT STRATEGY - i am moving away from even having one, buy and hold.

NOTE - entered the market for SMSF in downturn of last week of sept 14, timing was out by 1-2 days from the bottom of current market.

CAT RISK - Cant see any

FEB UPDATE- Pretty good result, asia slow, overall OK, headwinds this year?

TYPE- Slow Grower

HY 2015 update -

SOLD - for a small loss, better home for the capital in increasing TNE holdings and entering SDI.


Share - CCP

Rationale for buying - similar to TGA, interested in the competitive advantage of their analytical data systems. price was right according to my quick formula

EXIT STRATEGY - see above

NOTE - see above

FEB UPDATE - strong half yr with good results across the board

CAT RISK - Cant see any

TYPE - Stalwart

HY 2015 update - see above

FY16 update Just booming, really well run company, under promise, over deliver

End 2016 update the story continues.

H1 2017 UPDATE - Another fantastic half

click here to view newer commentary




Share - NVT

Rationale for buying - Have wanted to get in for some time, price was too high IMO, i mis timed this one, it fell hard after i bought, but still got in well below yearly highs. Great growth potential in a high earnings sector.

EXIT STRATEGY - see above

NOTE - see above

FEB UPDATE - impairment allowance not liked by market, but revenue & NPAT grew if you take the one off out, should recover from here.

CAT RISK - Cant see any

TYPE _ Fast Grower

HY 2015 update -

FY16 update TIcking along, all good

End 2016 update Not much growth yet, given the constant buy backs we really need to see some growth next year

H1 2017 UPDATE - solid growth this half, still lagging share price.

27/9/17 SOLD In hindsight, i paid too much for NVT, paid around my calculated IV range and bought the story without uderstanding the business, has disappointed all the way. Finally realised the folly of continuing to hold and got out, paid $4782 in Divvies, lost $4219 in capital, held for 3 years so the $550 odd dollars in profit represents a small loss after inflation. Hopefully I learnt a lesson!

Share - RCG
Rationale for buying - owner of Athletes foot stores, good solid retailer - we all need shoes, partly bought for the sector exposure in retail. good fundamentals under my IV

EXIT STRATEGY - see above

NOTE -  see above

CAT RISK - Cant see any

TYPE - Fast Grower

HY 2015 update - takeover, great results, full steam ahead!

FY16 update best of all my picks, up nearly 200% solid AR.

End 2016 update still going strong

H1 2017 UPDATE - Another good half, market got a bit spooked but financials remain strong

click here to view newer commentary

Share - RFG

Rationale for buying - exposure to the fast food sector, you cant go wrong underestimating the public taste and discretion. looked good against my IV and was the best of the fast food retailers i had on watch list

EXIT STRATEGY - see above

NOTE - see above

CAT RISK - Cant see any

TYPE - Fast Grower

HY 2015 update - good result, aqcuistions to shore up coffee business, going well

FY16 update Stength to strength, good AR, clever acquisition. all good.

End 2016 update as above

H1 2017 UPDATE - More solid results, coffee doing well again

click here to view newer commentary


Share - SGH

Rationale for buying - took a lot of research to choose between IMF and SGH, both good, but debt and FCF looked better with SGH, closer to IV as well

EXIT STRATEGY - see above

NOTE - see above

FEB UPDATE - Growth in profit now better than growth in revenue, expansion into UK going well, solid.

CAT RISK - Cant see any

TYPE - Fast Grower

HY 2015 update - Huge takeover, CR so got 2 for 3 share placement, hopefully will see strong growth next year

FY16 update Absolute disaster, lesson - avoid rollups. What a crock of shit, my worst pick ever.

End 2016 update Massive offset to what otherwise would be stellar performance from the portfolio

H1 2017 UPDATE - now seems little doubt SGH will not survive, my biggest loss of capital to date.


Share - WES

Rationale for buying - felt i needed one of the big two in the SMSF, WES just looked slightly better on my FA and my IV.

EXIT STRATEGY - see above

NOTE - see above

FEB UPDATE - solid ½ yearly report. steady as she goes!

CAT RISK - Cant see any

TYPE - Slow Grower

HY 2015 update - see above



FY16 update Tough year with coal and Target very poor.

SOLD 22/9/16 for a small profit and divvies. Bought for the wrong reasons, little prospects of much growth IMO, headwinds in the sector. bought REH

Share - BRG

Rationale for buying - FA, around IV, they have good basic household products i would never buy! But middle australia love this stuff and its recession resistant.

EXIT STRATEGY - see above

NOTE -  see above

FEB UPDATE - flat year, not a bad result.

JUNE 15 UPDATE - Good growth from the US sector, the numbers look much better for cash flow, mainly the drop in change in working capital.

CAT RISK - Cant see any

TYPE - Fast Grower

HY 2015 update - see above

FY16 update growing well in the US, a bit flat in ANZ but still nice numbers

End 2016 update Looking better now.

H1 2017 UPDATE - Nice growth this half. doing well

27/9/17 SOLD It was with some reluctance I sold out my postion in BRG, they have been a good business but the share price has just got too far ahead of my calculated range of IV. They have been trading over $11 and my IV is between $7 and $8. In reality I paid a bit much for them, but the market has been very kind. I think one bit of less than perfect news could really take the wind out of its sails. I had sold some down in June to take some profit off the table, overall capital gain was $10600, $3039 in divvies for $13639 gross profit over 3 years, a 20% compound return per year. A return I would always be happy with!

click here to view newer commentary



Share - WPL

Rationale for buying - usually avoid resources, they are a great gas & oil producer, a well

EXIT STRATEGY -

NOTE -

FEB UPDATE - Great year, still to see -tive impact of oil price drop but booming along otherwise

CAT RISK - Cant see any

TYPE - Cyclical

HY 2015 update - see above

FY16 update As expected it took a hit, but maybe doing better than other producers.

End 2016 update As above

H1 2017 UPDATE - ditto

Share - QBE

Rationale for buying - looking for an insurer to get exposure to the sector, consensus seems to be that QBE have the most upside and were trading close to IV. Definitely a contrarian purchase

EXIT STRATEGY -

NOTE -

CAT RISK - Cant see any, climate change and natural disasters as well as management disasters do provide risk but probably not cat risk

TYPE - Turnaround

HY 2015 update - Very strong result, may have picked a great entry on this one

FY16 update Doesnt look so good this year, gone way backwards after giving hope last year

End 2016 updateSold out at a small loss to by into SDI & SRV, have had a good run since so timing was a bit off.

Share - UOS

Rationale for buying - interesting property developer, no debt, loads of cash, NTA of 75c - even allowing for the nature of property valuations its impressive. good FA at an impressive discount to IV

EXIT STRATEGY -

NOTE -

CAT RISK - Cant see any

TYPE - Stalwart

HY 2015 update - all good, steady as she goes.

FY16 update Cheapest company on the ASX, just keeps booming.

End 2016 update Started to see some SP growth this year

H1 2017 UPDATE - share price still growing, good result as always

Share - NWH

Rationale for buying - see strategy for NWH in our portfolio above

EXIT STRATEGY -

NOTE -

CAT RISK - Cant see any

TYPE - cyclical

HY 2015 update - Averaged down again, holding the falling knife firmly, grimly waiting for news on Samsung

FY16 update strategy paid off, now in the black, great turnaround and defies the falling knife story.

End 2016 update sold about 2/3rds for a nice profit to bring position sizing down and enter MYX & KTP

H1 2017 UPDATE - continues to recover and grow, a great turnaround story



click here to view newer commentary

Share-DDR

Rationale for buying - analysis by Tony Hanson on the aquisition of Express Online into the DDR business. My concerns are the debt ratio and interest cover - both of which would prevent investment on my usual metrics. These issues should be addressed by a capital raising and increased earnings going forward.

EXIT STRATEGY -

NOTE -

CAT RISK - Cant see any

TYPE- Asset Plays

HY 2015 update - Merger with EOL more costly than expected, but steady flow of good news snippets, doing OK

FY16 update moved to Dec EOFY so no result, but travelling well.

End 2016 update travelling really well, great yield and growth as well

H1 2017 UPDATE - ditto

Share - VET

Rationale for buying - priced for total destruction after loss of gov contracts, core business will still continue, eventually should see a price recovery if litigation costs are not too high.

EXIT STRATEGY - when price returns to value in recovery

NOTE - Speccy

CAT RISK - very real! debt covenances

TYPE- turnaround

HY 2015 update - Catostrophic risk is now only litigation, after selling off business units to repay debt and satisfy lenders

FY16 update catostrophic risk came home to roost, entire postion wiped out, loss of 100% of capital - learning - risk management meant appropriate position size limited damage to overall portfolio. Risk was identified and considered. Actually happy that I got this right  - it was a binary punt and it went against me.

Share - WPP

Rationale for buying - been on watchlist for a while, has dropped all this year, fundamentals remain good, a notice that NPAT would be slightly lower this year caused them to drop to 12 month low, they have transitioned business well to online and underlying numbers are good.

EXIT STRATEGY - still to decide!

NOTE - up 10% in first week

CAT RISK - Cant see any

TYPE - Turnaround

HY 2015 update - More bad news, went too early on this one. Still hopeful of a recovery

FY16 update Ran up into the reporting season well, but results disappointed, still in the black but I think its time to look for an exit.

End 2016 update still looking to exit

H1 2017 UPDATE - good result, strong growth from merger, will continue to hold for nowe

Share - DWS

Rationale for buying - Good metrics on valuation, best of the software co's no debt, plenty of cash well run

EXIT STRATEGY -

NOTE -

FEB UPDATE - disappointing ½ yearly, lack of debt and plenty of cash means in good shape when cycle turns for software.

JUNE 15 UPDATE - My predictions of drop in FCF were just about spot on, dwonturn in revenue combined with a small acquisition caused this, they recovered pretty well in the 2nd half, another acquisition, this one means some debt being taken on, not much tho. Still looks well undervalued to me and in good financial shape.

March 17 - SOLD
Made a decision to sell DWS shares after they announced another aquisition, this has transformed them from a net cash business to a heavily net debt, and they would fail to meet my criteria for debt to equity if I were looking to buy. I have made a profit of over 38% before dividends in 2 years so its time to take the profit. There are signs the business is in structural decline, this table from Madamswer over at HC shows the problem in brief,

"NPAT ($m)
DH2011: 9.5
JH2012: 8.7
DH2012: 8.4 ($10m acquisition made)
JH2013: 8.5
DH2013: 7.8
JH2014: 6.7
DH2014: 5.7
JH2015: 5.0 ($10m acquisition made)
DH2015: 7.7 ($17.7m acquisition)
JH2016: 9.0 ($7m acquisition)
DH2016: 9.1 ($1.0m acquisition)

Put into context, the company is basically at the same level of profitability as it was 5 years ago, except that it has needed to spend over $40m in acquisitions - a not-insignificant ~25% of the value of the business today - in order to just maintain profits."

I am increasingly wary of businesses try to build balance sheets purely with aquisitions as a proxy for growth and will look to disinvest where I hold.

I expect that this may well prove to be a poor choice of acquisition for DWS, and unless it can quickly translate some synergies by mid year it may suffer a strong re-rating by then.
Modify message


CAT RISK - Cant see any

TYPE -

HY 2015 update - as above

FY16 update Done really well this year, seems they have repositioned in the market and numbers are solid. Good management

End 2016 update going nicely

Share - BCT

Rationale for buying - massively undervalued

EXIT STRATEGY -

NOTE - listed on NSX, very illiquid

CAT RISK - Cant see any

TYPE -

HY 2015 update - good result as always.

FY16 update as above

End 2016 update ditto

H1 2017 UPDATE - NY

Share - SDI

Rationale for buying - Good micro cap in dental products manufactering, tightly held, good metrics, growth potential from non-amalgams

EXIT STRATEGY -

NOTE -

CAT RISK - Cant see any

TYPE -

End 2016 update averaged down into these a bit this year, bit soft still.

click here to view newer commentary

Share - SRV

Rationale for buying - great business, strong financials, well managed, low debt. Like the story

EXIT STRATEGY -

NOTE -

CAT RISK - Cant see any

TYPE -

End 2016 update down a bit from my entry, hold and watch

H1 2017 UPDATE - Poor result, largely due for FX effects, will look to average down further.

Share - KPT

Rationale for buying - purely based on Tony Hansen from EGP research and analysis, long term prospect at least 2018 until profits flow.

EXIT STRATEGY -


NOTE -

End 2016 update very new in the portfolio

H1 2017 UPDATE - progressing well with development of wharf

Share - MYX

Rationale for buying - Turnaround story hopefully, crashed on slightly bad news of a investigation by USA DoJ. Seems well undervalued to me

EXIT STRATEGY -


NOTE -

End 2016 update Just bought

H1 2017 UPDATE - Great numbers, another success in buying in on market over reaction

Share - ADA

Rationale for buying - Exciting prospect, well run business, low debt, international sales, great growth potential

EXIT STRATEGY -


NOTE -

End 2016 update Hasnt performed as well as I hoped, patience!

H1 2017 UPDATE - poor result, price suffering.


Share - SXE

Rationale for buying - contrarian, a mining services electrical contractor that is diversifying and has a very solid core business

EXIT STRATEGY -


NOTE -

End 2016 update ticking along

H1 2017 UPDATE - very poor result, i missed something here!


Share - TNE

Rationale for buying - Great software company, 10 years of solid growth in all metrics, top internationally exposed Aussie business, well managed, low debt.

EXIT STRATEGY -


NOTE -

End 2016 update been a bit soft but will come good i expect

H1 2017 UPDATE - will be FY for TNE

click here to view newer commentary


Share - REH

Rationale for buying - Plumbing supplier, great business we run, tighlty held by owner, basically a private family business gone public

EXIT STRATEGY -


NOTE -

End 2016 update steady

H1 2017 UPDATE - steady growth.



Share -

Rationale for buying -

EXIT STRATEGY -


NOTE -

End 2016 update



Share -

Rationale for buying -

EXIT STRATEGY -


NOTE -

End 2016 update



Share -

Rationale for buying -

EXIT STRATEGY -


NOTE -

End 2016 update