Portfolio Performance (Month 21)
Over the 3 months to 31 July 2016 my share portfolio continued to outperform the benchmark indices, returning 11.9% for the 3 month period compared to 7.1% for the All Ordinaries Accumulation Index and 11.5% for the Small Ordinaries Accumulation Index.
The best performers during the period were:
- MACA Limited (MLD), up 57% over the 3 months on limited news;
- Boom Logistics (BOL), up 39% over the 3 months on the back of a succesful refinancing of its debt facilities – the company now has more flexibility in terms of its debt amortisation profile and one can only hope that management uses this additional flexibility to send cash back to shareholders, preferably through a share buyback, rather than easing off the cost cutting and asset sales (the aggressive amortisation under the previous debt facility actually ensured that management applied disipline in relation to those items);
- Gale Pacific (GAP), up 30% for the period based on positive updated earnings guidance;
- BSA Limited (BSA), also up 30% primarily due to a large contract win for work relating to the nbn; and
- Jumbo Interactive (JIN), which was up 27% for the three months, again based on positive earnings guidance – the value of the Australian database/business is starting to shine through as the negative performance in Germany is minimised.
The only really poor performer during the period was Brierty Limited (BYL), which was down 34%. However, the stock has already lost so much that a 34% move actually doesn’t mean that much from a $ perspective. I mentioned in a previous post that it is increasingly looking like the company was being mismanaged rather than just a downtrodden mining services company. Forager Funds recently shared similar thoughts. As with Forager, Brierty Limited is just part of a basket of mining-related stocks that I bought when things were looking particularly bleak for the sector. Over the whole basket, I have a positive return and still see significant upside in some of my positions. In some ways this confirms the basket approach to this sort of situation – however, it is still frustrating to have the courage to go against the grain, be generally proved right about the identification of significant value on offer (at least to date), but have some of that value destroyed by poor management of one of the companies in the basket.
Due to some trimming of profitable positions, I am now less than half invested, with the balance in cash. I would like to get back to at least half of my portfolio being invested, but haven’t found anything particularly attractive on offer over the past few months. Coming out of full year earnings reporting season I will actively be looking for opportunities to invest some of my cash balance. This often produces opportunities for value investors due to over-reaction or under-reaction to what is reported.