A shrewd exit, or dumb luck?

Today I finally closed one of the most frustrating positions in my portfolio for a profit, Goldplat (GDP:LN). This company has been a continual disappointment throughout the 6 years I’ve held it, repeatedly running into operating problems which turned a profitable business into a loss making one in recent years.

Goldplat is not (just) a gold miner. Most of its operations are recovering gold from waste products. As such, I originally thought of it as a useful hedge against economic meltdown, as it benefits from a rising gold price, but also can (in theory) make profits during low gold price periods too.

That, at least, turned out to be true. The current turmoil coupled with a nice half year operating update announcing it had sold its loss-making mine meant this business finally almost reached my valuation this week.

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Portfolio Review

It’s been a while since I posted here, mostly because I have remained passive since becoming busy with other things like writing a series of novels (I enjoy it, but it’s a lot of work).

But what a crazy world right now! My portfolio is up 16% this year, when the markets are down. Could be luck, or a well protected portfolio. Here’s the breakdown.

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Sold SCS Group (SCS:LN)

This morning SCS Group released their preliminary results for the year. They were very good, with both revenue and profits up on a like for like basis compared to the previous year. The company had cash of £58m and free cash flow of £16m for the year, which is extraordinary considering the market cap is £94m.

So you might be wondering why I sold. It was due to the profit warning at the end of the announcement.

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Gattaca plc ($GATC:LN)

I bought shares in Gattaca (GTAC:LN) over a year ago but never did a proper write-up on the company. The shares have been one of the worst performers in my portfolio, and after the company issued a profit warning earlier this month, the shares were predictably hammered. I was down 43% on the position so it was time to do a proper analysis of the company and see if my thesis has changed.

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Topped up United Carpets ($UCG.L)

I first wrote about United Carpets just over a year ago, when I noted that the company was trading at an enterprise value of £6.8m despite making £1.2m in net profits. Since then the share price has fallen even further and the EV is now £5.3m. I took another look at the company and saw that the investment thesis has not changed. It’s last half year report showed increased like for like sales, stable profits and an outlook that was positive up to December 2017 but cautious of the general environment.

I decided to take a longer look at the company’s history before deciding whether to add to the position. I started the position small at around 2% due to being uncertain about how 2017 would play out, so with an extra year of data, it was time to decide whether to make it a full size position.

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Cenkos Securities (CNKS:LN)

Cenkos Securities is a company I came across a while ago and have just added to my portfolio. I was attracted to its strong returns on capital of 20-40% and cash generative business (free cash flow has been roughly equal to net profit over the last 6 years). It also has a consistent record of returning all the cash it generates to shareholders (yes, all of it) via dividends and share buybacks. Since it listed in 2006, it has returned over £105m to shareholders (well over the current market cap of £64m). So is it going out of business, or struggling? No. It has net cash of £17m and another £20m in short term investments. The company has never made a loss and doesn’t look like it ever will due to the nature of the business. It is only at a P/E of around 10 (from a base of modest earnings) and with a forecast dividend yield of almost 10% this year.

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