Richard wonders if Colefax’s lucrative buyback strategy is destined to go on for another generation. Six more shares pass 5 Strikes.
5 Strikes
Since my last update, 12 shares passed my minimum quality filter. After a cursory examination of their director shareholdings and financial histories in ShareScope, seven have achieved less than three strikes.
|
Name |
TIDM |
Prev AR |
Strikes |
# Strikes |
|---|---|---|---|---|
|
CFX |
Colefax |
12/8/26 |
? Growth |
1 |
|
IGP |
Intercede |
12/8/26 |
– CROCI – Growth – ROCE – Shares |
4 |
|
BKG |
Berkeley |
11/8/26 |
? CROCI – Growth ? ROCE |
2 |
|
CBOX |
Cake Box |
5/8/26 |
? Acquisitions – Debt |
1 |
|
HFD |
Halfords |
3/8/26 |
– Holdings ? Acquisitions ? CROCI – Debt – ROCE – Shares |
5 |
|
JET2 |
Jet2 |
3/8/26 |
? Holdings ? CROCI ? Growth ? ROCE |
1 |
|
NWF |
NWF |
29/7/26 |
– Holdings ? Acquisitions – Debt – Growth |
3 |
|
GAW |
Games Workshop |
28/7/26 |
? Holdings |
0 |
|
KNOS |
Kainos |
24/7/26 |
? Growth |
0 |
|
LTHM |
Latham (James) |
23/7/26 |
– CROCI ? Growth |
1 |
|
SFR |
Severfield |
23/7/26 |
– Holdings ? Acquisitions – CROCI – Debt – Growth – ROCE |
5 |
|
17/08/2026 |
||||
It is these shares, with the most reliable histories, that I focus my attention on. Four of them, Cake Box, Jet2, Games Workshop and James Latham are either candidates for or members of the Share Sleuth model portfolio, which I manage at interactive investor. I will be writing them up there shortly.
Colefax [? Growth]
Colefax is a curiosity to a growth oriented investor like me. It’s a slowly growing business with limited ambition that long ago decided the best investment it could make was to buy back its own shares.
Colefax owns a library of designs which are printed or woven by its suppliers on or into plush fabrics and wallpaper. It sells the fabric at high prices to wealthy people, often via interior designers.
ShareScope tells us it has spent no money on acquisitions. While Colefax moots acquisitions, it has often repeated that vendors ask too much. Inventing new brands, it says, is a cheaper alternative, but it has not done that either in the nine years of annual reports I have searched.
It spends money on showrooms and new ranges, to keep its brands fresh and in the minds of its customers.
The pandemic years have muddied the picture, but the outcome from this limited investment is that in inflation adjusted terms, Colefax has barely grown turnover over the last eight years.
The company believes this choice, to limit investment and buy back shares, is low-risk and relatively speaking high return.
Buying back shares reduces the number of shares in issue, which increases the profit attributable to each shareholder (earnings per share). Profit may not be growing that fast over the long term, but each shareholder has a claim on a bigger proportion of profit so the shares are more valuable and traders are prepared to pay more for them.
Between 2018 and 2026, the number of shares has almost halved, from £9.8 million to £5.2 million (and the company is still buying back shares in the new financial year).
Note: ShareScope is missing data for 2023, the actual number of shares in issue from the annual report was 700,000.
During that period, you might expect eps to have nearly doubled, but in fact Colefax’s reported eps has risen from 38.1p in 2018 to 140.7p. Maybe there have been operational improvements too.
The share price has followed the earnings. It has nearly tripled since 2018.
Although I focus on the last eight or nine years when fishing for new shares with 5 Strikes, I know Colefax’s strategy has been in place much longer.
I held the shares in interactive investor’s Share Sleuth portfolio between 2011 and 2019 when, if I remember correctly, bored by the strategy and the market’s indifference to it for much of the period, and spooked by looming Brexit where Colefax buys fabric, I removed the shares from the portfolio.
Colefax’s strategy is probably set while eighty year old majority shareholder, chief executive since 1986, and chairman since 1996, David Green remains in control. The elevation of his son Tim, may mean it will go on even longer.
Tim Green is 51. He joined the company in 2018 and was appointed commercial director of the Fabric division in 2019. In 2024, he joined the board when he was promoted to group commercial director (Colefax also has small furniture and interior decorating divisions).
Perhaps the strategy is destined to be multi-generational.
Berkeley [? CROCI – Growth ? ROCE]
London and South East England house builder Berkeley is also busy gobbling up its shares, though not as quickly as Colefax. However, despite a resilient past its future looks less assured.
Last year I wrote that I know next to nothing about housebuilders and that is still true (you need to know if I am offering an opinion). I also wrote that the prospect of buying shares in a company selling houses in the least affordable part of the country filled me with doubt. Reports that high costs are also reducing housebuilder profitability also put me off.
For the second time since the pandemic, Berkeley contracted in 2026 and the forecasts look a bit bleak.
Cake Box [? Acquisitions – Debt]
Cake Box, the fast growing but perhaps maturing Cake shop franchise, would have had a perfect track record had it not racked up debt to buy Ambala, a sweet shop chain it also franchising.
The debt and immaturity of the Ambala roll-out has added an element of risk, but also perhaps improved the company’s growth potential.
Jet2 [? Holdings ? CROCI ? Growth ? ROCE]
I flew to Madeira in July on Jet2. It is my airline of choice for travel and investment.
The company’s financial history raises four question marks, but I have allotted them only one strike collectively.
The CROCI, growth and ROCE question marks all relate to the pandemic, when Jet2 couldn’t fly. Inevitably growth and profitability nosedived and it consumed copious amounts of cash while it promptly (unlike most other airlines) refunded tickets and retained staff and capabilities.
Games Workshop [? Holdings]
The inventor and populariser of the Warhammer modeling and war game hobby really does have a perfect financial track record. Here it is:
The question mark against directors’ holdings is churlish. They own over £5m worth of shares between them (mostly in the hands of chief executive Kevin Rountree), which is a tiny fraction of the company’s market value. There can be little doubt the company is being run for the long-term in alignment with shareholders’ interests.
Kainos [? Growth]
I investigated software developer Kainos in 2024, when turnover grew just 2%. Last year turnover contracted by 5% . Turnover grew more strongly in 2026, though, and judging by a positive trading update last week it will grow even more in 2027.
With no strikes, and one question mark for that minor contraction, Kainos is currently top of the shares yet to be researched this year on my list of 0’s, 1’s and 2’s below.
James Latham [- CROCI ? Growth]
Timber importer and distributor James Latham’s main weakness is its thirst for cash, which it needs to buy timber and build depots to stock it.
The nine-year 5/ period is bracketed by two years when cash returns turned negative (the company used more cash than it earned). There will probably be at least one more year of negative cash returns in 2027 as the company builds a £45 million National Distribution Centre.
The good news is, it has the cash to build it.
All the 0’s, 1’s and 2’s
Of the 79 shares to have achieved less than three strikes so far this year, I gave 13 no strikes, 26 one strike, and 40 two strikes.
The next stage in my research process is to examine the annual reports and other sources to assess each company’s capabilities, the risks they face, and how they are addressing the risks. These shares have prospered in the past, and this process helps me to decide whether they will continue to prosper in future.
The table of all the 0’s, 1’s and 2’s below links to my latest article on each share that I have started to research.
|
Name |
TIDM |
Prev AR |
Strikes |
# Strikes |
Link |
|---|---|---|---|---|---|
|
CER |
Cerillion |
12/1/26 |
0 |
||
|
HWDN |
Howden Joinery |
25/2/26 |
? Holdings |
0 |
|
|
PRV |
Porvair |
11/3/26 |
? Holdings |
0 |
|
|
NICL |
Nichols |
23/3/26 |
0 |
||
|
MGNS |
Morgan Sindall |
24/3/26 |
0 |
||
|
QTX |
Quartix |
25/3/26 |
? ROCE |
0 |
|
|
CCC |
Computacenter |
8/4/26 |
0 |
||
|
FOUR |
4imprint |
14/4/26 |
? Holdings |
0 |
|
|
KEYS |
Keystone Law |
13/5/26 |
0 |
||
|
AUTO |
Autotrader |
8/6/26 |
0 |
||
|
TAM |
Tatton Asset Management |
16/6/26 |
0 |
||
|
CWK |
Cranswick |
30/6/26 |
? Growth |
0 |
|
|
KNOS |
Kainos Group Ltd |
24/7/26 |
? Growth |
0 |
|
|
BOWL |
Hollywood Bowl |
5/1/26 |
– Debt |
1 |
|
|
MEGP |
Me Group International |
23/3/26 |
– Growth ? ROCE |
1 |
|
|
ALFA |
Alfa Financial Software |
24/3/26 |
– Growth |
1 |
|
|
GAMA |
Gamma Communications |
24/3/26 |
? Acquisitions – Holdings |
1 |
|
|
INCH |
Inchcape |
24/3/26 |
– Growth |
1 |
|
|
ROR |
Rotork |
27/3/26 |
– Holdings ? Growth |
1 |
|
|
CKN |
Clarkson |
30/3/26 |
? Growth – ROCE |
1 |
|
|
RMV |
Rightmove |
30/3/26 |
– Holdings |
1 |
|
|
IMI |
IMI |
31/3/26 |
? Holdings – Debt ? Growth |
1 |
|
|
FDM |
FDM Group |
10/4/26 |
– Growth |
1 |
|
|
HILS |
Hill & Smith |
10/4/26 |
– Holdings ? Acquisitions |
1 |
|
|
NXT |
Next |
16/4/26 |
– Debt |
1 |
|
|
BAG |
Barr (AG) |
21/4/26 |
? Acquisitions ? Growth |
1 |
|
|
SAG |
Science |
21/4/26 |
? Growth |
1 |
|
|
ELCO |
Eleco |
9/5/26 |
– Holdings ? Growth |
1 |
|
|
LSC |
London Security |
15/5/26 |
– Holdings |
1 |
|
|
W7L |
Warpaint London |
22/5/26 |
– Shares ? Growth |
1 |
|
|
PETS |
Pets at Home |
9/6/26 |
– Holdings ? Growth |
1 |
|
|
BMY |
Bloomsbury Publishing |
19/6/26 |
– Growth |
1 |
|
|
HLMA |
Halma |
24/6/26 |
? Holdings ? Acquisitions |
1 |
|
|
XPS |
XPS Pensions |
13/7/26 |
? Holdings ? Debt |
1 |
|
|
LTHM |
Latham (James) |
23/7/26 |
– CROCI ? Growth |
1 |
|
|
GAW |
Games Workshop |
28/7/26 |
? Holdings |
1 |
|
|
JET2 |
Jet2 |
3/8/26 |
? Holdings ? CROCI ? Growth ? ROCE |
1 |
|
|
CBOX |
Cake Box |
5/8/26 |
? Acquisitions – Debt |
1 |
|
|
CFX |
Colefax |
12/8/26 |
? Growth |
1 |
|
|
RWS |
RWS |
8/1/26 |
? Acquisitions – Growth – ROCE |
2 |
|
|
IHP |
IntegraFin |
9/1/26 |
– CROCI |
2 |
|
|
RFX |
Ramsdens |
15/1/26 |
– CROCI ? Growth ? ROCE |
2 |
|
|
REL |
RELX |
19/2/26 |
? Holdings – Debt ? Growth |
2 |
|
|
IHG |
InterContinental Hotels |
26/2/26 |
? Holdings – Debt |
2 |
|
|
DATA |
GlobalData |
2/3/26 |
? Acquisitions – Debt ? ROCE |
2 |
|
|
GSK |
GSK |
6/3/26 |
? Holdings – Debt ? Growth |
2 |
|
|
MONY |
Mony |
9/3/26 |
– Holdings ? Growth |
2 |
|
|
STEM |
SThree |
9/3/26 |
– Holdings – Growth |
2 |
|
|
CTEC |
ConvaTec |
10/3/26 |
? holdings – Debt ? Growth ? ROCE |
2 |
|
|
BNZL |
Bunzl |
17/3/26 |
? Holdings – Debt – Growth |
2 |
|
|
HIK |
Hikma Pharmaceuticals |
18/3/26 |
? Acquisitions – Debt |
2 |
|
|
YU. |
Yu |
18/3/26 |
– CROCI ? ROCE |
2 |
|
|
JSG |
Johnson Service |
19/3/26 |
– Holdings – Debt |
2 |
|
|
ITRK |
Intertek |
20/3/26 |
? Holdings – Debt ? Growth |
2 |
|
|
BA. |
BAE Systems |
24/3/26 |
? Holdings ? Acquisitions – Debt ? Growth |
2 |
|
|
DOM |
Domino’s Pizza |
24/3/26 |
– Holdings – Debt ? Growth |
2 |
|
|
LUCE |
Luceco |
25/3/26 |
? Acquisitions – Debt ? Growth ? ROCE |
2 |
|
|
BBY |
Balfour Beatty |
2/4/26 |
– Holdings ? CROCI ? Growth – ROCE |
2 |
|
|
APTD |
Aptitude Software |
8/4/26 |
– Holdings ? Acquisitions – Growth |
2 |
|
|
IGG |
IG Group |
8/4/26 |
– Holdings – Growth |
2 |
|
|
SPX |
Spirax |
8/4/26 |
– Holdings – Debt ? Growth |
2 |
|
|
SVS |
Savills |
9/4/26 |
– Holdings – CROCI ? Growth ? ROCE |
2 |
|
|
MACF |
Macfarlane |
10/4/26 |
– Holdings – Debt ? Growth |
2 |
|
|
PAGE |
Michael Page |
13/4/26 |
– Holdings? CROCI – Debt – Growth – ROCE |
2 |
|
|
CAML |
Central Asia Metals |
15/4/26 |
– Growth ? ROCE |
2 |
|
|
FEVR |
Fevertree Drinks |
20/4/26 |
– CROCI – Growth |
2 |
|
|
JDG |
Judges Scientific |
22/4/26 |
? Acquisitions – Debt – Growth |
2 |
|
|
WINK |
M Winkworth |
24/4/26 |
– Holdings – Growth |
2 |
|
|
EKF |
EKF Diagnostics |
27/4/26 |
? CROCI – Growth ? ROCE |
2 |
|
|
IOF |
Iofina |
1/5/26 |
? CROCI – ROCE ? Shares |
2 |
|
|
AEO |
Aeorema Communications |
18/5/26 |
– CROCI ? Growth ? ROCE |
2 |
|
|
ASY |
Andrews Sykes |
18/5/26 |
– Holdings – Growth |
2 |
|
|
CARD |
Card Factory |
21/5/26 |
– Holdings – Debt |
2 |
|
|
ANP |
Anpario |
1/6/26 |
? CROCI – Growth ? ROCE |
2 |
|
|
QQ. |
QinetiQ |
10/6/26 |
? Holdings ? Acquisitions ? Growth – ROCE |
2 |
|
|
OXIG |
Oxford Instruments |
23/6/26 |
– Holdings – Growth |
2 |
|
|
REC |
Record |
23/6/26 |
– Holdings – Growth |
2 |
|
|
POLR |
Polar Capital |
3/7/26 |
? Holdings – Growth |
2 |
|
|
BKG |
Berkeley |
11/8/26 |
? CROCI – Growth ? ROCE |
2 |
Richard Beddard
Contact Richard Beddard by email: richard@beddard.net, web: beddard.net
This article is for educational purposes only. It is not a recommendation to buy or sell shares or other investments. Do your own research before buying or selling any investment or seek professional financial advice.
