Just a quick note for subscribers (or anyone else who might be interested) to expand on a couple of post results transactions (one sale and a replacement purchase) which I have put through outside of the normal monthly schedule which subscribers will have seen on their Scores file in the transactions tab.
The sale involved a fairly recent purchase Argentex (AGFX) which I felt was slightly marginal / contrarian at the time given their track record. Their results came in shy of forecasts, which had been downgraded along the way, continuing a long line of disappointments from this Company.
It not this however that prompted me to push the sell button. It was their decision to change brokers and their year end. As part of this on the results call they kept referring to the Singers numbers (the new broker). It turns out that these numbers to the new year ends of December 2022 & 2023 were substantially below the existing forecast to March 2023, with those numbers only recovering towards the previous March 2023 number by the end of 2024.
This struck me as the latest in a long line of disappointments and it seemed to me that they were trying to disguise what was, effectively a profits warning, by changing their year end. Now this is probably on the back of the investment they are making in people, IT and new countries for their operations which may of course lead to more success for them in future. It is also possible I suppose that they are trying to get forecasts down to a level that they think they can beat, so they can over deliver for a change in the future.
So I guess if you trust them to deliver on their promises by making a success of these investments then I guess it could still do well in the long run for the patient contrarian. I was not prepared to take that risk & I had sold my own personal holding too. So as I would expect the Score to fall as and when the downgrades get reflected in the consensus I felt it only right to sell it for the Scores portfolio and another family account which mirrors the Scores trades.
To replace that I added a stock Appreciate (APP) which I bought personally earlier in the year as a value/ recovery/ growth play. It has popped up in the top decile of the Scores post their own final results and some upgrades that they have seen since then. It has performed relatively well this year in a difficult market but still looks pretty good value. So despite it being somewhat overbought in the short term, again as I hold it personally I was happy to add it to the Scores portfolio and another of our portfolios.
Appreciate is quite a strange / small Corporate gift & Christmas saving company and as such is probably not to everyone's taste or a marmite stock. It is however under new management and also recovering post pandemic and as they look to reap the rewards of their own IT investments and a move to more digital offering.
Please see the attached note for more details of the business and the outlook etc. I note from this that the estimates that are included in this Company sponsored research of 4.56p & 5.92p for March 2023 & 2024 respectively are some way ahead of the current consensus forecasts of 4.2p & 5.4p. This suggests that there could be scope for further upgrades on top of the 4 to 5% upgrades that we have seen already.
This of course assumes that they can hit those forecasts, but again one would think that they would be happy with them, although this one has disappointed in the past, it does seem to be on a recovery track. Annoyingly they have today put out an announcement that the CEO is leaving abruptly at the end of July 2022, although he will remain available to advise the Group until January 2023 apparently. This comes shortly after the CFO stepped down and seems quite short notice for a CEO to be going, although they go onto thank him & say they are confident of performance going forward.
Which at least might suggest nothing untoward operationally, but begs questions about what has really gone on here or if it is the new Chairman seeking to make an impact on the Group as they move onto the next stage of their Growth strategy. I guess only time will tell on that but the shares have consequently been marked down by 10% or so this morning on the back of it. It doesn't seem to change the story, although we'll obviously have to wait and see what calibre of people they get to replace those executives who have left recently.
So I'm certainly not going to panic out on the back of this & the falls today could be a good buying opportunity as the shares are still cum their 1.2p interim which is worth a useful 4.4% on todays lower price. While the full year yield could be a useful 7.5%, although obviously you'd have to do your own research and make your own assessment of how much the management change bothers you or if you'd prefer to wait and see who they get. For what it is worth, technically they have now come down to a decent looking support level - if only I'd waited a day or to the end of the month to push the button!