Share Sleuth: tweaks to two shares I’ve held for over a decade

Richard Beddard has made changes to two longstanding holdings this month – taking profits in one, and adding to the other.

4th December 2024 10:49

Richard Beddard from interactive investor

Last month, I traded two of Share Sleuth’s most estimable members.

I added more shares in Thorpe (F W) (LSE:TFW), a holding of 14 years standing. And I reduced the portfolio’s holding in Cohort (LSE:CHRT), a share the portfolio has held continuously for more than 12 years.

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FW Thorpe makes commercial lighting and Cohort is a defence technology company. They have both rewarded a long-term buy and hold approach, and I expect to hold them for many more years.

But Cohort’s share price has risen strongly. It had grown to be the biggest holding in the Share Sleuth portfolio. It represented 8.2% of the portfolio’s total value, yet its Decision Engine score was 6.6, well below FW Thorpe’s score of 8.6.

The remorseless logic of the Decision Engine nudged me to reduce over-represented Cohort and add to Share Sleuth’s holding in under-represented FW Thorpe.

Before I document those trades, I should mention Solid State (LSE:SOLI). Its score was 8.4, only very slightly below FW Thorpe’s score, so it was also in contention for investment.

Last week, I downgraded Solid State and last month I mooted adding more FW Thorpe shares, so I took the easy decision.

Cohort was also an easy decision when it came to which, if any, of the holdings I would reduce or remove from the portfolio.

In addition to Cohort, the Decision Engine deemed Garmin Ltd (NYSE:GRMN) and Quartix Technologies (LSE:QTX) over-represented and available to trade (because they are not about to publish annual reports and I have not traded them recently).

But had I reduced them by the minimum trade size (2.5% of the total value of the portfolio), the remaining holdings would have been worth less than 2.5% of the portfolio’s total value, which is also the minimum holding size.

Technically, the decision to reduce these holdings means removing them entirely.

That is quite a big step for a buy and hold investor! It is not inconceivable, but Garmin and Quartix are probably not overvalued and I prefer to keep them as relatively small diversifying holdings.

Adding more FW Thorpe

I only trade once a month in the Share Sleuth portfolio. The date is not determined by the illogic of the markets or the logic of my Decision Engine. It is determined by my writing schedule.

If this Share Sleuth update is the next article in my schedule I clear the decks and think about the trade. This month, that date fell on Friday 29 November. Because the FW Thorpe trade was premeditated, I did not feel the need to sleep on it.

I simulated the trade on the same day, using the actual price quoted by my broker. I added 2,362 shares at a price of £3.17 at a total cost net of £10.00 in lieu of broker fees of £7,505.

This was greater than my minimum trade size of £5,000, because the portfolio already had about £10,000 of cash (about 5% of its total value) and I did not want it to rise any higher after the sale of Cohort that I was also about to make.

Source: ShareScope. “B” stands for “buy”, “S” stands for sell (I reduced the holding in 2015, I did not liquidate it entirely).

The last time I traded FW Thorpe was in 2015, when I reduced the portfolio’s holding, initially acquired in 2010 and augmented in 2014.

Reducing Cohort

Then I simulated the Cohort trade. The holding had grown so much I needed to reduce it by more than the minimum trade size so it was in the ideal range stipulated by the Decision Engine.

If you are interested in how these calculations are programmed into the Decision Engine, you can read all about them in the guide linked at the bottom of this article.

I reduced the holding by 739 shares at a price of £10.16, which raised £7,498 after deducting £10 in lieu of broker fees.

Source: ShareScope. “B” stands for “buy”, “S” stands for sell (I reduced the holding in 2024, I did not liquidate it entirely)

This is the first time I have reduced Cohort since I added the shares in 2012, and augmented it in 2017.

The fact that Cohort announced it had acquired EM Solutions in November made me pause for thought. EM is an Australian supplier of satellite communications systems for naval surface vessels.

In a sense, the acquisition is business as usual. Acquisitions have been an important component of Cohort’s strategy since it floated in 2006.

However, it is Cohort’s largest acquisition. EM cost about four times Cohort’s average of free cash flow in recent years, and Cohort raised money through a placing to part fund the deal.

Although large acquisitions can be risky, and I prefer companies to fund them out of their own cash flow, I did not deem it necessary to rethink the company’s score since I had considered acquisition risk when I scored the share in September.

Share Sleuth performance

At the close on Friday 29 November, Share Sleuth was worth £198,443, 561% 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 £87,870, an increase of 193%.

Past performance is not a guide to future performance.

After dividends paid during the month from Anpario (LSE:ANP), Bloomsbury Publishing (LSE:BMY), FW Thorpe and Games Workshop Group (LSE:GAW), Share Sleuth’s cash pile is £10,056.

The minimum trade size, 2.5% of the portfolio’s value, is £4,961.

Share Sleuth			Cost (£)	Value (£)	Return (%)
Cash				10,056
Shares				188,387
Since 9 September 2009			30,000	198,443	561

Companies		Shares	Cost (£)	Value (£)	Return (%)
AMS	Advanced Medical Solutions	1,965	4,503	4,185	-7
ANP	Anpario	1,124	4,057	3,765	-7
BMY	Bloomsbury	845	3,203	5,611	75
BNZL	Bunzl	201	4,714	7,152	52
CHH	Churchill China	1,495	17,228	10,652	-38
CHRT	Cohort	861	2,813	8,868	215
CLBS	Celebrus	1,528	3,509	4,622	32
DWHT	Dewhurst	938	6,754	10,318	53
FOUR	4Imprint	116	2,251	5,858	160
GAW	Games Workshop	100	4,571	14,130	209
GDWN	Goodwin	133	3,112	9,124	193
GRMN	Garmin	53	4,413	8,873	101
HWDN	Howden Joinery	1,476	10,371	12,044	16
JET2	Jet2	456	250	7,173	2,769
LTHM	James Latham	1,150	14,437	13,513	-6
MACF	Macfarlane	3,533	5,005	3,710	-26
OXIG	Oxford Instruments	241	5,043	4,965	-2
PRV	Porvair	906	4,999	5,925	19
QTX	Quartix	3,285	7,296	5,880	-19
RSW	Renishaw	234	6,227	7,324	18
RWS	RWS	2,790	9,199	4,280	-53
SOLI	Solid State	1,780	1,028	2,403	134
TET	Treatt	763	1,082	3,067	183
TFW	Thorpe (F W)	4,362	9,711	13,784	42
TSTL	Tristel	750	268	3,188	1,088
TUNE	Focusrite	2,020	14,128	5,454	-61
VCT	Victrex	292	6,432	2,520	-6

Notes:
29 November: Reduced Cohort, added more FW Thorpe
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 £198,443 today
£30,000 invested in FTSE All-Share index tracker accumulation units would be worth £87,870 today
Objective: To beat the index tracker handsomely over five-year periods
Source: SharePad, close on Friday 29 November 2024.

Richard Beddard is a freelance contributor and not a direct employee of interactive investor.

Richard owns all the shares in the Share Sleuth portfolio except Tristel.

See our guide to the Decision Engine and the Share Sleuth Portfolio for more information.

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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