Ideas Farm 

Ideas Farm: Quality not quantity

Ideas Farm: Quality not quantity

Regular readers of our Tips and Ideas section may have picked up on a noteworthy change this week. Rather than our usual four company tips, we have two far more in-depth pieces. We’ve decided we can offer readers a lot more by focusing the same amount of effort on fewer ideas. 

Readers of my annual review of the magazine’s weekly tips may already be well aware that striving for quantity has its issues. Indeed, anyone with a decent chunk of equity investment experience will know that publishing 200 tips a year (our past output) can mean some stinkers. And overall this level of output means average performance is likely to simply revert towards that of the index. 

Some like to use a high-volume tip approach to highlight the occasional and inevitable 'multi-baggers' that will be produced. That’s something I’ve tried to avoid in my annual reviews.

Our buy and sell opinions will obviously always be fallible (while we invest heavily in data we’ve yet to convince the FT Group's top brass to buy us a crystal ball). This means explaining the nuances of an investment case to readers is important. Nuance is often hard to do justice to in just 500 words (historically the length of our shorter tips). 

Such word limits make it challenging to achieve our ultimate goal of helping stimulate our readers’ thoughts, aid better investment decisions, and also provide a fun and stimulating reading experience. With the longer format, we hope readers will be in a better position to either scoff at our recommendations or decide the case made is interesting enough to undertake some further research. 

What’s more, having space to explore the history of companies, major industry themes and competitive landscapes will hopefully mean our analysis provides a broader perspective that can inform other investment ideas.

A case in point from this week’s Tips section is Adobe (US:ADBE). The company is the top holding of this week's fund tip;  LF Blue Whale Growth (GB00BD6PG563). An investor interested in Blue Whale and its astounding, albeit short, performance record may want to know whether they are playing with fire when buying a company that holds so many tech shares with very high valuations. Hopefully, our analysis of Adobe, and explanation of its incredible growth story, will help readers towards making a decision on this point. We have come to the conclusion that Adobe shares are worthy of their extremely high earnings multiple based on the quality and growth potential of the company. However, it is undeniable that the recent Nasdaq correction illustrates that the crowded tech trade has made for a rather frothy and febrile market.

The other tip, Generac (US:GNRC), also provides a fund insight as well as an interesting perspective on climate change. It is the number three holding of leading ESG-focused investment trust Impax Environmental (GB0031232498). Given the huge range of approaches taken by ESG funds, understanding the type of investments that are being held at a stock level is, we think, of significant potential value. We will be working to make clearer connections between the companies we explore in depth and the funds that hold them as we improve the new format.

One thing readers should not infer from this week's tips is that we’ve turned our back on UK markets. London-listed shares will remain the mainstay. But with international opportunities becoming increasingly accessible through broker platforms and also more important for investors that want global market leaders in the most dynamic areas (tech, healthcare, environment), we are keen to provide more overseas ideas. The ability to research and write at greater length makes this easier and we’ve chosen to kick off the new format with two US companies. Plenty of London-listed ideas will be coming in the weeks ahead, though.

Inevitably, some readers will disagree with our view that less is more. If this is you, please give the new format a chance as we plan to make every effort to convince you of the case for quality over quantity.

 

Click here to view the tables in PDF form

 

Fund manager best ideas: Global sustainable
16/09/2020No. Funds
Apple Inc9 (NEW)
Amazon.com Inc7 (+1)
Microsoft Corp7
Alphabet Inc A4
Facebook Inc A4
Visa Inc Class A3 (-1)
Advanced Micro Devices Inc2
Alibaba Group Holding Ltd ADR2
PayPal Holdings Inc2 (+1)
Tencent Holdings Ltd2
Tesla Inc2 (+1)
Alphabet Inc Class C1 (-2)
CoStar Group Inc1 (NEW)
CrowdStrike Holdings Inc Class A1
First Solar Inc1 (NEW)
Fleetcor Technologies Inc1 (NEW)
Global Payments Inc1 (NEW)
Mastercard Inc A1 (-1)
Micron Technology Inc1
NVIDIA Corp1 (NEW)
Qualcomm Inc1 (NEW)
Salesforce.com Inc1
Synopsys Inc1
Twilio Inc A1 (NEW)
WEX Inc1 (NEW)
Zoom Video Communications Inc1 (NEW)

Source: Morningstar, as at 16 September 2020. Based on top 5 holdings.

 

New 52-week highs   
NameTIDMPrice% from hi
Capital Gearing Trust PlcCGT4,590p0.0%
Schroder AsiaPacific FundSDP515p0.0%
Schroder Asian TotalATR428p0.0%
Ocado GroupOCDO2,608p0.0%
RenishawRSW5,345p0.0%
Intertek GroupITRK6,322p0.0%
Merian Chrysalis InvtMERI160p0.0%
LSE GroupLSE9,150p0.3%
Henderson EuroTrustHNE1,330p0.3%
ExperianEXPN2,994p0.3%
Baillie Gifford Japan TrBGFD906p0.3%
Smurfit Kappa GroupSKG3,068p0.5%
Croda InternationalCRDA6,200p0.5%
Martin Currie Global PortMNP348p0.6%
Frontier DevelopmentsFDEV2,600p0.6%
Ashtead GroupAHT2,933p0.6%
Fidelity China SpecialFCSS328p0.6%
JP Morgan Japan SmallerJPS486p0.6%
FutureFUTR1,876p0.6%
Clipper LogisticsCLG457p0.7%
Montanaro Europn Small TrMTE1,375p0.7%
Baillie Gifford ShinBGS221p0.7%
Pacific Horizon Invt TrPHI582p0.7%
JP Morgan European SmallJESC408p0.7%
Collagen SolutionsCOS7p0.7%
Rio TintoRIO5,135p0.8%
Jubilee Metals GroupJLP6p0.8%
JPMorgan Asia GrowthJAGI429p0.8%
Hikma PharmaceuticalsHIK2,671p1.0%
Fidelity Japan TrustFJV192p1.0%
HgCapital TrustHGT284p1.0%
Scottish American InvtSAIN445p1.1%
JBM CN Grw&IncJCGI534p1.1%
Hipgnosis SongsSONG122p1.2%
Shanta GoldSHG19p1.3%
Hastings Group HoldingsHSTG253p1.3%
GenusGNS3,976p1.3%
Gresham HouseGHE690p1.4%
Aberdeen New Dawn InvtABD276p1.4%
Asia Dragon TrustDGN432p1.5%
Bankers Invt TrustBNKR1,042p1.5%
Scottish Mortgage Invt TrSMT971p1.6%
JPMorgan Japanese InvtJFJ565p1.6%
Atlan Jap GrthAJG235p1.7%
EPE Special OpportunitiesESO210p1.7%
BlackRock World Mining TrBRWM421p1.8%
SDCL Energy EfficiencySEIT111p1.8%
TR European Growth TrustTRG992p1.8%
Admiral GroupADM2,709p1.8%
BlackRock Greater Eu InvtBRGE457p1.8%
Spectra SystemsSPSY178p1.9%
Fidelity European ValuesFEV272p2.0%
ComputacenterCCC2,368p2.0%
JP Morgan Emerging MktsJMG1,068p2.0%
Biotech Growth TrustBIOG1,369p2.0%
Bail Giff EurBGEU1,195p2.0%
Phoenix Spree DeutschlandPSDL323p2.1%
First DerivativesFDP3,205p2.1%
Pershing Square HoldingsPSH2,175p2.2%
CQS Natural ResourcesCYN95p2.3%
Miton UK MicroCap TrustMINI55p2.3%
AnparioANP420p2.3%
William HillWMH220p2.3%
Unilever (GB)ULVR4,852p2.4%
HalmaHLMA2,320p2.4%
BBGIBBGI168p2.4%
Personal Assets TrustPNL45,850p2.4%
Aberdeen Japan Invt TrustAJIT638p2.4%
International BiotechIBT793p2.5%
PZ CussonsPZC212p2.5%
Avon RubberAVON4,220p2.5%
TEMITTEM854p2.6%
Edinburgh Worldwide InvtEWI280p2.7%
Jersey ElectricityJEL475p2.7%
JPMorgan Global GrowthJGGI358p2.7%
Mid Wynd Intl InvtMWY663p2.8%
JPMorgan American InvtJAM521p2.8%
Ruffer InvestmentRICA243p2.8%
CRHCRH3,031p2.8%
Sylvania PlatinumSLP68p2.9%
ElectrocomponentsECM710p2.9%
Witan Pacific Invt TrWPC382p2.9%
Smithson Investment TrustSSON1,512p3.0%
Augmentum FintAUGM118p3.0%

Source: FactSet, as at 16 September 2020

 

New 52-week lows   
NameTIDMPrice% from lo
Rolls-Royce HoldingsRR203p0.0%
Capital & RegionalCAL59p0.0%
FinablrFIN1p0.0%
Kier GroupKIE51p0.5%
Altitude GroupALT14p1.0%
AG BARRBAG374p1.2%
NatWest GroupNWG102p1.2%
PetrofacPFC135p1.6%
U & I GroupUAI59p2.0%
SME Credit Realisation FdSCRF56p2.2%
Standard CharteredSTAN377p2.3%
HSBC HoldingsHSBA323p2.4%
Lloyds Banking GroupLLOY26p2.8%
Capital & Counties PropsCAPC124p2.8%
WH Ireland GroupWHI35p2.9%

Source: FactSet, as at 16 September 2020

 

Shorts   
CompanyShort InterestNo. Shorters1wk chg in short interest
HAMMERSON PLC14.1%110.1%
SAINSBURY (J) PLC8.4%7-0.1%
CINEWORLD GROUP8.4%80.4%
PREMIER OIL PLC8.1%20.0%
PEARSON PLC8.1%80.0%
METRO BANK PLC8.0%5-0.7%
TULLOW OIL PLC7.2%60.0%
PETROPAVLOVSK PLC5.5%70.0%
PETS AT HOME GROUP PLC5.4%60.2%
DOMINO'S PIZZA GROUP PLC5.2%30.2%
WEIR GROUP PLC/THE5.0%40.0%
BABCOCK INTL GROUP PLC4.9%6-0.7%
FUTURE PLC4.8%50.0%
TUI AG4.7%30.0%
BLUE PRISM GROUP PLC4.3%71.1%
IQE PLC4.1%40.5%
WOOD GROUP (JOHN) PLC4.0%40.0%
WM MORRISON SUPERMARKETS3.8%30.0%
VODAFONE GROUP PLC3.7%50.0%
MICRO FOCUS INTERNATIONAL3.7%40.0%
CAPITA PLC3.7%4-3.8%
CRODA INTERNATIONAL PLC3.7%30.1%
Royal Mail Plc3.5%40.0%
N. Brown Group3.4%40.5%
ASHMORE GROUP PLC3.4%50.1%
SMITH (DAVID S) HOLDINGS PLC3.4%40.0%
GVC Holdings Plc3.4%40.5%
KEYWORDS STUDIOS PLC3.3%30.0%
NETWORK INTERNATIONAL HOLDINGS PLC3.3%3NEW
HURRICANE ENERGY PLC3.2%20.0%
BRITISH LAND CO PLC3.1%50.0%
MARKS & SPENCER GROUP PLC3.1%40.0%
AUTO TRADER GROUP PLC3.0%10.0%
Primary Health Properties PLC2.9%30.0%
ULTRA ELECTRONICS HLDGS PLC2.9%3-0.1%
VICTREX PLC2.7%30.0%
RESTAURANT GROUP PLC2.4%20.1%
DIGNITY PLC2.4%20.0%
B&M EUROPEAN VALUE RETAIL S.A.2.4%20.0%

Source: FCA, as at 16 September 2020

 

1-month EPS upgrades
 FWD EPS CHG
NameTIDM1mth3mth1yr
MJ GleesonGLE366.8%218.8%-38%
MJ Hudson GroupMJH180.0%166.7%-
Alfa Financial SoftwareALFA149.2%100.6%-72%
Halfords GroupHFD148.3%-24.8%-23%
Keystone Law GroupKEYS102.0%34.5%-12%
TI Fluid SystemsTIFS82.7%161.8%-85%
Science GroupSAG72.3%-12%
RMRM68.2%223.1%-59%
JD Sports FashionJD67.4%-40.3%-37%
Alumasc GroupALU65.7%65.6%-13%
Speedy HireSDY59.2%-65.7%-67%
Wentworth ResourcesWEN59.0%32.7%-35%
Accrol Group HoldingsACRL58.2%58.2%-
SigmaRocSRC53.8%54.5%-19%
Beeks Financial Cloud GrpBKS50.1%27.0%-31%
IXICOIXI50.0%--
City of London InvestmentCLIG49.3%49.3%33%
CapitalCAPD45.3%49.2%79%
Clipper LogisticsCLG39.7%36.7%0%
Grafton GroupGFTU38.6%41.8%-45%
Luceco PlcLUCE38.6%126.1%64%
Sylvania PlatinumSLP37.8%32.8%147%
AO WorldAO32.3%--
Dunelm GroupDNLM31.8%42.5%7%
Bushveld MineralsBMN31.0%-16.4%-51%
ProactisPHD30.0%30.0%-
Virgin Money UKVMUK28.2%-2.7%-81%
Plus500PLUS28.2%54.8%214%
Hummingbird ResourcesHUM27.5%105.3%354%
AbcamABC27.3%4.1%-31%
Ariana ResourcesAAU26.7%40.7%-5%
Games Workshop GroupGAW24.4%22.3%23%
Frontier DevelopmentsFDEV24.3%28.7%78%
BATM Advanced CommBVC21.7%-66%
CentralNic GroupCNIC21.4%18.0%4%
RedrowRDW20.6%-14.0%-39%
Lok 'n' Store GroupLOK20.2%20.2%13%
ChesnaraCSN19.5%27.5%-22%
Oncimmune HoldingsONC18.9%--
Henry BootBOOT18.7%18.6%-69%
GraingerGRI18.6%18.8%-9%
ComputacenterCCC17.8%31.5%36%
CMC MarketsCMCX17.5%65.1%429%
TBC Bank GroupTBCG17.1%-6.1%-44%
CRHCRH16.8%21.9%-15%
ASOSASC15.5%-259%
McBrideMCB15.0%18.9%13%
Barratt DevelopmentsBDEV14.7%2.5%-29%
RicardoRCDO14.5%-15.3%-50%
Spectra SystemsSPSY14.4%14.4%11%
GlencoreGLEN14.1%22.9%-74%
Kenmare ResourcesKMR13.7%-61.0%-77%
EVRAZEVR13.7%23.3%-53%
RobinsonRBN13.4%13.4%41%
PersimmonPSN13.3%19.7%-21%
BeazleyBEZ13.0%145.0%-77%
GenusGNS12.6%11.8%14%
WincantonWIN12.4%-33.7%-32%
FerrexpoFXPO12.2%56.2%-32%
Smart Metering SystemsSMS11.7%-9.9%-45%
Tritax EuroBoxEBOX11.6%12.8%27%
Central Asia MetalsCAML11.6%13.4%-29%
Flutter EntertainmentFLTR11.2%18.0%39%
John Wood GroupWG10.9%6.9%-44%
River & Mercantile GroupRIV10.8%12.8%-29%
Next Fifteen CommNFC10.6%12.3%-9%
FocusriteTUNE10.6%29.3%58%
NewRiver REITNRR10.1%-56.9%-50%
AntofagastaANTO9.7%135.7%-35%
McKay SecuritiesMCKS9.6%-13.0%-19%
Rio TintoRIO9.6%18.7%-10%
Signature AviationSIG9.5%-18.4%-69%
TymanTYMN9.4%25.9%-26%
RenewRNWH9.3%9.3%3%
Up Global Sourcing HoldingsUPGS9.0%42.7%-3%
OneSavings BankOSB8.5%0.9%-21%
FutureFUTR8.4%11.9%51%
Bank of Georgia GroupBGEO7.5%-26.2%-45%
Phoenix Group HoldingsPHNX7.5%18.7%27%
Dechra PharmaceuticalsDPH7.3%5.9%-1%
Standard CharteredSTAN7.3%5.3%-55%
Vivo EnergyVVO7.3%-21.9%-52%
Anglo American PlcAAL7.1%9.5%-36%
BunzlBNZL6.9%23.1%-1%
Team17 GroupTM176.7%6.0%57%
Polymetal InternationalPOLY6.4%16.9%77%
CLS HoldingsCLI6.3%17.9%-7%
Empiric StudentESP6.1%11.1%-45%
Watches of Switzerland GroupWOSG6.1%15.7%-12%
FresnilloFRES5.9%55.5%49%
Royal Dutch ShellRDSA5.8%66.7%-75%
Panoply HoldingsTPX5.4%46.0%8%
Chemring GroupCHG5.2%6.4%39%
RSA Insurance GroupRSA5.1%-1.4%1%
RenishawRSW5.0%82.5%-32%
Arcontech GroupARC5.0%5.0%2%
Burford CapitalBUR4.9%-18.4%-38%
EMIS GroupEMIS4.9%3.6%4%
CranswickCWK4.8%15.5%28%
Keywords StudiosKWS4.7%-0.6%-11%
United Utilities GroupUU4.6%3.5%-19%
PendragonPDG4.5%4.5%-
Oxford InstrumentsOXIG4.4%8.6%-23%
Just GrpJUST4.4%19.3%24%
Target Healthcare REITTHRL4.2%-0.4%21%
STV GroupSTVG4.2%-22.1%-32%
Man GroupEMG4.2%-7.1%-32%
Pets At HomePETS4.1%-2.4%-15%
NextNXT4.0%97.9%-60%
Network International HoldingsNETW4.0%-13.7%-49%
M&GMNG4.0%7.8%-
CapitaCPI4.0%-18.7%-51%
Gear4music HoldingsG4M3.9%261.1%457%
Atalaya MiningATYM3.9%184.2%-29%
Hikma PharmaceuticalsHIK3.9%9.3%19%
Advanced Medical Sol GrpAMS3.7%-41.2%-53%
NCC GroupNCC3.7%27.3%-31%
Royal Dutch ShellRDSB3.6%55.6%-76%
Admiral GroupADM3.5%16.6%20%
PrudentialPRU3.4%1.9%1%
MondiMNDI3.4%9.7%-29%
GVC HoldingsGVC3.3%26.2%-13%
CentaminCEY3.2%4.6%118%
Spirent CommunicationsSPT3.0%3.8%15%

Source: FactSet, as at 16 September 2020

 

1-month EPS downgrades
 FWD EPS CHG
NameTIDM1mth3mth1yr
Mears GroupMER-88.0%-94.9%-96%
Churchill ChinaCHH-87.9%-87.9%-86%
Hollywood Bowl GroupBOWL-76.6%-66.2%-94%
PageGroupPAGE-73.5%-93.6%-98%
Rank GroupRNK-68.6%-69.7%-
Melrose IndustriesMRO-64.2%-97.9%-99%
Midwich GroupMIDW-60.9%-70.3%-72%
Mercia Asset ManagementMERC-56.5%--
Jadestone EnergyJSE-54.4%--99%
InvestecINVP-54.2%-54.6%-65%
HaysHAS-53.1%-46.3%-80%
BangoBGO-52.9%-52.9%-11%
Bonhill GroupBONH-51.6%-51.7%-63%
Good Energy GroupGOOD-41.2%-41.2%0%
Inspiration Healthcare GpIHC-37.1%-47.6%-35%
HammersonHMSO-34.8%-41.9%-74%
Stagecoach GroupSGC-33.7%-84.9%-88%
PetrofacPFC-33.4%-55.8%-79%
Capital & RegionalCAL-32.3%-35.0%-74%
Card FactoryCARD-28.6%-30.2%-90%
Countryside PropertiesCSP-27.9%-59.7%-72%
MarshallsMSLH-25.5%-49.0%-62%
Secure Income REITSIR-25.5%-48.0%-61%
Bloomsbury PublishingBMY-24.9%-24.9%-46%
Gem DiamondsGEMD-23.9%-80.5%-95%
LancashireLRE-23.9%-43.6%-53%
InformaINF-23.8%-36.8%-72%
Medica GroupMGP-22.8%-29.8%-47%
Morses ClubMCL-21.2%-21.2%-35%
Breedon GrpBREE-20.1%-47.2%-61%
Mattioli WoodsMTW-19.2%-19.2%-5%
Pebble GroupPEBB-18.7%-18.2%-
InterContinental Hotels GroupIHG-18.6%-62.1%-85%
Vistry GroupVTY-18.3%-37.3%-49%
Serabi GoldSRB-17.4%-37.2%26%
Frasers GroupFRAS-17.4%25.8%-4%
Mediclinic InternationalMDC-15.8%-39.0%-61%
MP Evans GroupMPE-15.3%-18.8%-6%
United Oil & GasUOG-15.2%42.4%-
Costain GroupCOST-14.5%-39.2%-76%
SagaSAGA-14.2%-13.2%-70%
Cake Box HoldingsCBOX-14.2%-14.2%-6%
BellwayBWY-14.0%-27.6%-51%
FRP Advisory GroupFRP-13.8%-13.8%-
Pennon GroupPNN-12.4%-31.0%-45%
De La RueDLAR-10.9%27.2%-64%
4Imprint GroupFOUR-10.6%-44.3%-88%
First DerivativesFDP-10.4%-9.8%-37%
Marks & Spencer GroupMKS-10.4%-4.0%-67%
Appreciate GroupAPP-9.9%-62.2%-63%
Workspace GroupWKP-9.2%-16.5%-39%
EKF DiagnosticsEKF-9.2%44.0%184%
Taylor WimpeyTW-8.8%-49.9%-69%
Polypipe GroupPLP-8.6%-54.8%-65%
Equiniti GroupEQN-8.5%-20.7%-41%
Intermediate Capital GrpICP-8.3%-18.3%-33%
Bakkavor GroupBAKK-8.1%-10.3%-43%
Howden Joinery GroupHWDN-8.1%-27.9%-52%
Go-Ahead GroupGOG-8.1%-31.1%-64%
DignityDTY-7.8%-8.1%-29%
MeggittMGGT-7.4%-18.2%-52%
Forterra PlcFORT-7.4%-71.5%-84%
Fevertree DrinksFEVR-6.8%-10.7%-39%
Travis PerkinsTPK-6.4%-18.1%-51%
Kier GroupKIE-6.2%-19.7%-62%
Babcock International GroupBAB-6.2%-22.3%-41%
Airtel AfricaAAF-6.1%-15.9%-25%
Greencore GroupGNC-5.9%-20.8%-62%
James Fisher & SonsFSJ-5.6%-7.7%-33%
Balfour BeattyBBY-5.6%-41.4%-66%
STM GroupSTM-5.4%-5.4%-40%
SeverfieldSFR-5.3%-27.1%-24%
Coats GroupCOA-5.2%-34.6%-80%
Nucleus Financial GroupNUC-4.8%9.2%-33%
CVS GroupCVSG-4.3%50.9%-18%
Alliance PharmaAPH-4.2%-4.9%-8%
EbiquityEBQ-4.2%-4.2%-44%
InchcapeINCH-4.1%-32.3%-70%
Ashmore GroupASHM-4.1%-0.7%-15%
HelicalHLCL-3.9%11.4%-7%
JTCJTC-3.3%-5.0%3%
HSBC HoldingsHSBA-3.3%-19.3%-68%
PearsonPSON-3.2%-11.8%-52%
AFH Financial GroupAFHP-3.2%-3.1%-1%

Source: FactSet, as at 16 September 2020

 

Click here to view the tables in PDF form

 

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