Share Sleuth: three firms on the buy list. Here’s the one I chose
Richard Beddard names the shares on his radar, and those at risk of being reduced or cut from the portfolio.
6th February 2025 09:09
by Richard Beddard from interactive investor
Having decided the Share Sleuth portfolio is in good shape, I’m making small adjustments to keep it that way.
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A trio of additions
My scheduled trading day last month fell on Monday 20 January, when the portfolio had just over £8,500 in cash. That was more than enough to fund a meaningful-sized trade, which I define as one worth more than 2.5% of the portfolio’s total value (just under £5,000).
These were the shares my Decision Engine ranked most highly that day:
The shares are ordered by scores I give businesses when they publish their annual reports. They are also influenced by changes in share prices.
The lowest-ranked share in the table,Jet2 Ordinary Shares (LSE:JET2), has a score of 7.9, which is well above the lower bound of good value which I somewhat arbitrarily set at 7.0
The top 10 is a good place to draw a line because there are three clear investment opportunities in it, and the shares immediately outside it are not prime candidates for long-term investment even though their scores are high enough.
I added shares in #11, Softcat (LSE:SCT) last month, which disqualifies it, and #12 is Games Workshop Group (LSE:GAW), already a substantial shareholding.
The ih% column shows the ideal holding size of each share as a percentage of the total size of the portfolio. The higher the score, the higher the ideal holding size.
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Share Sleuth was worth just over £198,000, when I made this table. Churchill China (LSE:CHH), the highest-ranked share, had an ih% of 10%, so its ideal holding size in money terms was £19,800 (you can find out more about how the ih% is calculated in the Share Sleuth explainer).
The Max trade column shows the difference between the ideal holding size in money terms and the value of each holding. It is the amount I would need to invest or reduce a holding by to achieve the ideal holding size.
The pink highlights are meant to discourage me from investing in a share.
Shares 2 to 5 are all near their ideal sizes. The difference is less than the minimum trade size of 2.5%, so I was not interested in trading them.
Seven shares are ruled out because I have traded them in the last year.
Howden Joinery Group (LSE:HWDN) is out of contention because it will report soon, a year after last March’s annual report.
Excluding these shares leaves Solid State (LSE:SOLI) (score 8.3 rank 7), Focusrite (LSE:TUNE) (8.0, rank 9) and Jet2 (score 7.9, rank 10).
A pair of reductions
One of two conditions are required to reduce or eliminate a holding:
- A holding is too large, its value is at least 2.5% of the portfolio’s total value more than its ideal holding size.
- The share’s score is less than 6.25, which equates to an ih% of 2.5%. Anything less than this is too small to bother holding.
Here are the Decision Engine’s recommendations:
Five of the shares are not holdings, so they cannot be traded (max trade is zero).
The other six shares met the second condition. Their score was less than 6.5, so their ideal holding sizes were less than 2.5% of the portfolio’s total value. The Decision Engine set the max trade to the same value as the value of the holding. It was telling me to liquidate these holdings.
Since I have already traded Cohort (LSE:CHRT) and Goodwin (LSE:GDWN) in the last year, they got a reprieve.
Quartix Technologies (LSE:QTX) and Garmin Ltd (NYSE:GRMN) also received a stay of execution because I will re-evaluate them shortly, when they publish their annual reports.
That left Bloomsbury Publishing (LSE:BMY) (score 6.0, rank 30) and Celebrus Technologies (LSE:CLBS) (score 5.1, rank 37) in the frame.
Adding Solid State
I have written before about how I hate parting with good-quality shares unless something big has rocked my confidence in their long-term business prospects. Both Bloomsbury and Celebrus fit this scenario.
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Their scores are relatively low because their share prices are relatively high, not because I believe they are bad businesses.
With cash in the bank, I was predisposed to favour adding shares.
Of course, I slept on the decision. Then on Thursday 21 January I added 3,229 shares in Solid State to the portfolio’s holding.
I am trying not to overthink, so I went with the Decision Engine verdict.
I was tempted by Solid State last month, and of the three shares in the frame it was marginally the highest ranked and most under-represented.
The actual price, quoted by a broker, was 154.7p, which cost £5,005.26 after deducting £10 in lieu of fees.
A decade of trading Solid State. “B” indicates additions to the portfolio. “S” indicates reductions.
Share Sleuth performance
At the close on 31 January 2025, Share Sleuth was worth £192,282, 564% more than the £30,000 of pretend money we started with in September 2009.
The same amount invested in accumulation units of a FTSE All-Share index tracking fund would be worth £92,161, an increase of 207%.
After dividends paid during the month from Celebrus, Latham (James) (LSE:LTHM), and Oxford Instruments (LSE:OXIG), Share Sleuth’s cash pile is £3,589.
The minimum trade size, 2.5% of the portfolio’s value, is £4,982.
Share Sleuth | Cost (£) | Value (£) | Return (%) | ||
Cash | 3,589 | ||||
Shares | 195,692 | ||||
Since 9 September 2009 | 30,000 | 199,282 | 564 | ||
Companies | Shares | Cost (£) | Value (£) | Return (%) | |
AMS | Advanced Medical Solutions | 1,965 | 4,503 | 4,107 | -9 |
ANP | Anpario | 1,124 | 4,057 | 4,777 | 18 |
BMY | Bloomsbury | 845 | 3,203 | 5,628 | 76 |
BNZL | Bunzl | 201 | 4,714 | 6,930 | 47 |
CHH | Churchill China | 1,495 | 17,228 | 9,194 | -47 |
CHRT | Cohort | 861 | 2,813 | 9,902 | 252 |
CLBS | Celebrus | 1,528 | 3,509 | 3,469 | -1 |
DWHT | Dewhurst | 938 | 6,754 | 10,037 | 49 |
FOUR | 4Imprint | 116 | 2,251 | 6,995 | 211 |
GAW | Games Workshop | 100 | 4,571 | 14,560 | 219 |
GDWN | Goodwin | 133 | 3,112 | 9,762 | 214 |
GRMN | Garmin | 53 | 4,413 | 9,301 | 111 |
HWDN | Howden Joinery | 1,476 | 10,371 | 12,111 | 17 |
JET2 | Jet2 | 456 | 250 | 6,981 | 2,693 |
LTHM | James Latham | 1,150 | 14,437 | 13,513 | -6 |
MACF | Macfarlane | 3,533 | 5,005 | 3,851 | -23 |
OXIG | Oxford Instruments | 241 | 5,043 | 5,061 | 0 |
PRV | Porvair | 906 | 4,999 | 6,233 | 25 |
QTX | Quartix | 3,285 | 7,296 | 5,831 | -20 |
RSW | Renishaw | 234 | 6,227 | 8,436 | 35 |
RWS | RWS | 2,790 | 9,199 | 3,833 | -58 |
SCT | Softcat | 326 | 4,992 | 5,229 | 5 |
SOLI | Solid State | 5,009 | 6,033 | 6,637 | 10 |
TET | Treatt | 763 | 1,082 | 3,220 | 197 |
TFW | Thorpe (F W) | 4,362 | 9,711 | 13,260 | 37 |
TUNE | Focusrite | 2,020 | 14,128 | 3,939 | -72 |
VCT | Victrex | 292 | 6,432 | 2,897 | -55 |
Notes
21 January: Added to Solid State
Costs include £10 broker fee, and 0.5% stamp duty where appropriate
Cash earns no interest
Dividends and sale proceeds are credited to the cash balance
£30,000 invested on 9 September 2009 would be worth £199,282 today
£30,000 invested in FTSE All-Share index tracker accumulation units would be worth £92,161 today
Objective: To beat the index tracker handsomely over five-year periods
Source: SharePad, close on Friday 31 January 2025.
Richard Beddard is a freelance contributor and not a direct employee of interactive investor.
Richard owns all the shares in the Share Sleuth portfolio.
For more on the Share Sleuth portfolio, please see Richard’s explainer.
Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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