Update on covered stocks
SUP, DPP, PNIX, FEVR, GYM, TRR, KWS, GMS, AGFX, CMCX, FNTL
It has been a while since our last post, and we thought we would give a brief update on a wide range of previously covered stocks. We are well aware that there has been a drought of new blogposts lately. We have been trying to improve our strike rate instead of posting for the sake of making a post. There are several potential candidates in the works and we plan to publish on one of them shortly, available for paid subs only.
Stocks mentioned later in this update are…
Supreme Plc - posted at 100p, now 170p
Dominos Pizza Poland Plc - posted at 11p, now 11p
Phoenix Digital Assets - posted at 3.5p, tender offer at 5.4p (and now at 3.5p)
Fever-Tree - posted at 900p, now 1000p
Gym Group - posted at 102p, now 136p
Trident Royalties - posted at 50p, now 48p
Keywords Studios - posted at 1800p, now 2390p
Gulf Marine Services - posted at 7p, now 17p (via 23p)
Argentex - posted at 105p, now 32p
CMC Markets - posted at 250p, now 325p
Fintel - posted at 190p, now 315p
Before moving on to discuss the stocks above, we should note that we have had many bad calls that we are not going to touch on in much detail in this note, including Aston Martin Lagonda, S4 Capital, Frontier Developments, Oxford Nanopore, Catena Media, and Ocado. There are also other stocks with less bad outcomes that we have simply moved on from and decided not to mention here.
We should re-iterate that this is not a trading tip or advice service, and as such we tend not to keep a running update on most ideas after publishing, unless we find it particularly interesting to do so. Nor do we tend to post when we might think an exit is wise. S4 Capital and Aston Martin could have both made decent trades depending on one’s time horizon. These two are also the two stocks from the aforementioned naughty list where we would most likely feel comfortable holding on today for a better result in future. The other stocks were straight out poor calls. Catena Media looks likely to be a permanent loss of capital. The other three arguably have potential to bounce back and do well over time, but we make no excuses that these were bad entry points for a blogpost, and we also add that we would not feel comfortable holding any large weighting to them as of today either.
What have we learned from these poor calls? One unifying feature of these businesses is that none of them have predictability in their results yet, either due to being weak/volatile businesses or due to being early stage and thus as-yet unproven business models. This quality was often mentioned as a risk factor in the blogposts, but we should explicitly mention these outcomes both to highlight the failures and to draw out the primary lessons we took from the experience.
We are open to the possibility that Aston Martin could prove a predictable business at some stage in future, as could Oxford Nanopore, but neither of them are as of today. S4 Capital could also prove somewhat more reliable in future, and we note the encouraging director buys in some decent size very recently. On the other hand, we also remain mindful of one of the highlighted risk factors from our blogpost - that in acquiring companies whose value is mostly in human capital, one risks overpaying for talent and/or relationships that leave after the contract terms allow. Furthermore, advertising is a cyclical business and adspend has suffered in recent months.
The rest of the note will cover, in widely varying extent of detail, Supreme, DP Poland, Phoenix Digital Assets, Fever-Tree, Gym Group, Trident Royalties, Keywords Studios, Gulf Marine Services, Argentex, CMC Markets and Fintel.