Portfolio updates - one position sold
Added to existing positions and why (1/2)
Hi there, I hope you feel better after the trade agreements coming into place.
The markets have recovered, there is maybe a China deal, and I still invest like I have no idea what will happen politically, because I don’t.
I have sold my position in Japanese large tech company LY Corp.
LY stands for Line Yahoo. Two dominant quality companies in Japan.
I identified LY as a sort of Japanese tech Berkshire and they have continued to grow, initiated buybacks, and turned the Payment business PayPay (not PayPal, PayPay) into a cash machine.
While the company grew revenues 5.7% and earnings 13.5%, the guidance is kind of underwhelming for this type of tech company at this type of valuation (Forward adjusted PE of 21).
The stock has done well but the currency the yen crashed and ate away the returns. I could bet on the currency, but I did so by adding to more undervalued names last year (Available in my portfolio review - but I would say that I am not a Japan expert).
I generally prefer a higher forward rate of return caused by faster growth or a lower valuation.
As usual for most of us, our best opportunities are already present in our portfolio, so I went against my buy and hold idea, have sold it with a low tax impact, and added to the following portfolio positions.
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1-SDI PLC
SDI is a serial acquirer in scientific instruments.
The interim results showed the following
Revenues of £30.9m (H1 FY24: £32.2m) , a slight decrease.
Adjusted profit before tax* of £3.2m (H1 FY24: £3.7m)
Good perspectives “Order intake significantly up on a like for like basis compared to the second half of FY24”
Various acquisitions: Acquisition of Collins Walker for £1.85m and InspecVision £6.1m. Collins Walker is a designer and manufacturer of electric boilers, offering bespoke steam and hot water systems for industrial applications. InspecVision is a designer and manufacturer of computer vision-based measurement systems for industrial applications
The acquisitions allow for regular earnings growth, at reasonable valuations
Forward PE of 8.8 (Koyfin).
At this Price, there is no growth paid for and it represents an opportunity.
In investing, temperament before brains. Everyone knows some fallen angels like SDI, but they loved them at 200p, not at 50p. Which makes no mathematical sense.
The rest below is as interesting.. one Deep value cyclical company busy with large dividends and buybacks, one EM quality company with a big growth runway (Cheaper than LY corp) and another deep value European champion with a hidden quality asset.
I will split the email in two parts because the second part with more additions is simply not ready. I was very busy. (Personal updates coming this month).