Category: From Ideas to Investments

This time is different for Design Group

If you watch Design Group’s annual results presentation, you may detect a bashful smile on chief executive Paul Fineman’s face. Paul Fineman, chief executive of Design Group. Source: Design Group Full Year Results 2020 (video). Despite unexpected tariffs on products imported into the USA from China and the onset of the pandemic, Design Group was […]

A safety first stock

I found James Latham a couple of months ago when I was trawling for cheap shares with strong balance sheets. The shares are still cheap, James Latham’s Price Earnings (PE) ratio is 13, and the balance sheet should remain strong… Centuries trading timber James Latham has a long and storied history. It manufactured plywood for […]

Preparing for the worst, capitalising on the best

Listening to Porvair’s long-standing chief executive Ben Stocks talk about the challenges ahead, it is clear the company is bracing itself. Phrases like “preparing for the worst, hoping for the best”, and “the overall balance is negative”, come readily to him. This is a company I have long admired, but I have never had the […]

Making a new discoverIE

I discovered discoverIE using a simple and fruitful method of finding new investment ideas: a list of shares sorted in SharePad by previous annual report date. Having squinted for a few minutes at financial charts showing profitability, cashflow and debt (more on that later), I thought the company looked promising: Sorting a list in SharePad […]

A cheap profitable share with a strong balance sheet

Today I have added two more criteria to turn the list of cheap shares with strong balance sheets I made in my last article into a list of cheap profitable shares with strong balance sheets! The profitability criteria are free cash conversion and return on capital employed. This table shows the individual and aggregated rankings […]

Putting safety first

Funny thing (peculiar, not ha! ha!). Search SharePad news for the phrase “strong balance sheet” and there are dozens of companies every day confirming their finances are strong as they reflect on the prospect of reduced, or in some cases, no revenue for a while. Search SharePad news for the phrase “weak balance sheet” though […]

Going for repeat business

Fundsmith Equity probably needs no introduction. Since its launch in November 2010 the fund has racked up class-leading annualised returns of more than 18%, compared to less than 12% for an index of global equities, by investing in high quality businesses at attractive valuations. You can, of course, make further comparisons, and explore the makeup […]

Taking back control

Richard investigates Dialight, a supplier of industrial LED lighting that flared up ten years ago briefly setting the stock market alight, and subsequently dimmed alarmingly. What are its prospects now it is taking back control of manufacturing? Ten years ago Dialight was a feted, fast growing business in a booming industry, LED lighting, but it […]

Death in paradise

The demise of Thomas Cook impacted the whole package tour industry including London listed Online Travel Agent, On The Beach. Whether you trust the accounting regulations or On The Beach’s adjustments makes a big difference to the company’s profitability in 2019. Richard unravels the exceptional items. It’s January, The BBC is screening Death in Paradise, […]

The ultimate competitive advantage

Business schools identify the sources of competitive advantage that tie customers to companies and what they produce. Fundamentally though, there is only one true competitive advantage: people. If I could recommend one book for long-term investors, it would be “Intelligent Fanatics Project” by Sean Iddings and Ian Cassell, which is subtitled “How great leaders build […]

Skin in the game: Two for the watchlist

Richard uses his “Skin in the game” table to find companies whose directors are major shareholders. The experiment starts off badly with Asset Co., but gets better. Frontier Development and Focusrite could be great owner-managed businesses. To recap: We can use SharePad to find companies that are run by managers who are themselves significant shareholders. […]

Investing alongside managers with skin in the game

Richard uses SharePad to find companies whose managers are also significant shareholders. They are likely to be building businesses for the long-term, he says. The reasons for investors to look kindly on owner-managers, executives that have large shareholdings in the firms they run, are ably described in this article by Harry Fraser, manager of the […]

Burberry joins “Future of Fashion” portfolio

In his quest for companies that control their own destinies, Richard discovers luxury fashion brand Burberry, a company whose products he is in no danger of buying. Last time, I promised to investigate one of the shares I found while filtering for vertically integrated companies, companies that control their own destinies because they control many […]