Portfolio update Exits -FOX -29%, SHG +28%

Brief post – decided to Exit my positions in Fox and Shanta.

On Shanta they seem to be deciding to move away from returning cash / paying down debt to exploring / investing more which given the environment in Tanzania and the fact they are not getting VAT back isn’s something I am in favour of. When I saw them at Mello they were talking about reviewing dividend policy but I dont think an actual dividend is going to be paid. It has done OK – mostly due to me getting in at a good price. I would have liked to hold this, just somehow I dont trust them any more.  This was only ever a very small position so hasn’t made a big impact either way. They may benefit from a rising gold price but I hold plenty of ETF gold.  I’d rather hold selected miners but if I can’t find quality people I trust I wont hold any.

Fox – my patience has run out. They seem to have a functioning marble mine, are mining marble but sales do not go up. Key stat for me was that production went up from 8-12 tonnes but sales went from €1.2-€1.4m. I dont particularly care about profitability for a new operation like this but they need to at least sell. Couple that with share issuance and the appointment of a new broker – often a prelude to a placing and I want to be out of this, the management have had more than long enough to turn it around. They announced sales today but have announced them before without it really materializing – I will watch for things turning and may go back in.

In other news I have put another tiny amount in COS – a medical collagen manufacturer with a knee implant medical device.  To me it seems like it could work.  It has been tried and works in patients, is better than the existing techniques.  It just needs to take off. They have raised funds and have an existing collagen manufacturing business that could also take off.  The nice thing about that is that other Co’s do the R&D and they just supply the collagen.  Whilst doing this they will build expertise, the value of which will acccumulate.

I also bought some WEY education – this is a leading online school co in the UK.  I bought it at about the value of the cash on the BS and its up c60% since then. Again, this is going for growth. They are the leaders in online schooling in the UK.  Think kids who can’t / wont go to school for various reasons. I actually think this is a market that will grow.  Increasingly people work from home /  vastly more of life is online.  In the past online was so removed from ‘the world’ that it could plausibly be argued kids were missing out if they didn’t have a traditional education.  Now ‘the world’ has changed that I believe that more parents will want their kids educated online and its a more paletable / viable choice.

As a last micro position I bought ENET this morning they develop a certain type of networking equipment for telcos, useful for 5G / increasing efficiency – if it works…  They IPO’d (raising cash), disappointed / expectations were too high, and were trading at about net cash. They have started to get orders – one of which was announced today and the stock is up 70%+.  Makes little difference to the portfolio but builds my confidence in areas outside my usual balance sheet based niche.

As ever, comments appreciated.


4 thoughts on “Portfolio update Exits -FOX -29%, SHG +28%”

  1. Hello, I enjoy the blog – one of only 2 or 3 things out there worth reading.

    Wey Education. I took a look. I agree the UKmarket is promising. I was really worried by a lack of detail about how they deliver online courses. Furthermore, I note that their cost of sales has risen as fast as their income. My fear is that the model is not operationally geared at all – they are not selling software so much as they are selling live access to a qualified teacher. That is potentially far less profitable, and might explain the paucity of detail regarding delivery and tech in their investor documentation.

    I’m staying away. Would be interested in why you disagree though.


    1. Thanks Ed,
      Curious as to what other things you read….

      Their disclosure isn’t great – I suspect lots of this will be marketing they have grown the top line lots. I am forgiving of a lack of bottom line growth – comes from something Jim Slater wrote in Zulu principle – to look at revenue more than profit when companies were growing – as growth in itself has costs, particularly given everything that has gone on with the co the last couple of ears.

      They arent selling just software – as I understand it the whole idea is you have access to a live teacher as well as online lectures and content etc…. So its a hybrid – I wouldnt expect growth to feed through just yet.

      1. Thanks for the answer, I see your logic. Re: what’s I think is worth reading: I like Wexboy, John Lee, Expecting Value (sadly defunct), PI Mello videos. I disagree with the first two more often than not – but that’s at least as useful as finding people you agree with, I’m sure you’ll agree.

  2. I like Wexboy, he has his moments of insight – I like KR1 and own a bit. John Lee – has a very different mindset to me – he lacks my paranoia.

    I was at Mello – so you might see me on the videos. I like people to disagree – always happy to change my mind.

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