Tag: Creston

  • Plastics Capital (PLA)/ Creston (CRE)

    Small pair

    As I mentioned last post, while looking over my portfolio I thought it'd probably be prudent - at long last - to take another look at Creston and Plastics Capital. Both are companies which have been with me since 2011, and their fate is something of a sorry one. They originally had weights of about 5-6% in a portfolio with more stocks than I now particularly like holding, and since the rest of portfolio happily appreciated while both CRE and PLA hovered around the same, they now occupy about 3% each in a portfolio with only 11 shares. They haven't done that badly, to be fair - PLA is up 15% pre-dividends and CRE about 20%, but that's hardly an exciting return for a small cap share over the last couple of years.  The last paragraph of my last post most or less sums up my thoughts:

    I'm not averse to having such small holdings, but given their size I haven't taken the care I should do with considering them. I'm very much of the opinion that too much diversification simply dampens returns, so I want to either reaffirm that I like the shares - and therefore buy more - or decide that holding them simply because they haven't done much and I haven't given them much thought is a fool's errand, and therefore sell. Expect a post on that soon!

    So, without further ado, a short section on each of the offenders, and what I'm planning to do with them. (more…)

  • CRE, PLA

    The grand finale

    The last two stocks to be looked at again: Creston and Plastics Capital. They are the smallest positions in my portfolio, and also among the two smallest by market cap. Below I've linked the rest of the series, as well as what serves as an introductory post:

    Post 1 Post 2 Post 3 Post 4 

    And without further ado..

    Creston

    I still don't know about Creston. I bought it quite quickly as I wanted to stick my cash into something (probably a failing of mine) and skipped the usual long deliberations I go through. Relative to both their historic earnings and their forecast earnings, they're undoubtedly cheap - a P/E of something like 6. There's been a lot of complicating factors in that picture, though, and I seem to have lost some of my conviction on the shares. Perhaps it's just because they've relatively flatlined. (more…)

  • Friday Reading

    Bids and ex-Bids

    Two interesting stories this week that I want to touch on - one relating to a big management shakeup, and the other to a possible impending takeover. I find these some of the most interesting parts of the investing world, since you can often tell a lot about all the parties involved when things get dicey.

    The first, then, relates to the sage around Victoria. Victoria is a manufacturer/distributor of carpets and floor coverings, and a stock that's been trading well in the 'value' ranges for a rather long time. My first post, here, documents the back and forth RNS statements when the requisitioners - a group trying to wrest control of the board ( and therefore the business) - launched their assault. In that post, I probably took the 'easy' approach in forming my opinion - since the stock had been performing pretty uninspiringly for such a long period of time, I leant towards favouring a management shakeup that might improve returns. I softened a few weeks later after a rather persuasive email from a reader who presented an alternative point of view and after having read the ongoing dialogue. Anyway, it was a good passage to watch - and the requisitioners duly took control of the board, as expected, and replaced many of the members.

    Fast forward to now, and here's the bit that caught my eye - an RNS this week detailing a directorate change, again. I thought things had settled down! Far from it; as it turns out, 3 of the non-executive directors appointed by that long (and perhaps damaging) requisition process have now left the company. By the sounds of it, from a shareholder point of view, it's difficult to side with anyone but the remaining directors. Have a read: (more…)

  • Friday Reading

    A Round of Results

    Four this week, which I'll briefly run over - 3 are in my portfolio, and one isn't but is a familiar name!

    Cranswick

    Cranswick's first period of the year provided no surprises, with sales up 7.4%. There's no direct reference to margins, but they do note that:

    There were further modest increases in pig prices during the period, albeit they remain below the peak of last summer.  The impact has been absorbed through increased volumes and continued operating efficiencies.

    Which makes it sound as if, given no big jumps again in pig prices, margins should be at least stable at the levels seen last year. Debt is down through the group's cash generation, there's still a lot of headroom, and the company finalised the appointment of Adam Couch to CEO given the stepping down of the incumbent, Bernard Hoggarth. Couch comes from inside the company, with Hoggarth staying on part time, which probably says a lot about the business. No large movement in share price means I'll keep holding on to them. Though they're at the expensive end of my portfolio, they're hardly expensive relative to the wider market given their long and consistent history of profitability.

    Creston

    Creston reported a drop in revenues, more or less expected since the trend was reported not long ago by management. Frankly, there's not a great deal of meat or the statement or news - caution as usual given the environment. The slight dip in share price doesn't really change the bigger picture, which is that the company is cheap relative to earnings but has some question marks over a) how and whether profits will flow through to shareholders and b) how well they'll continue to hold up. The position I have is the smallest in my portfolio by a pretty wide margin. (more…)

  • Twelve for 2012

    Part Two

    With six of my stock choices briefly explained here, I conclude my twelve for 2012 in this post. The format for my last picks is exactly the same as for my first - I want to explain them briefly, simply, and without too much jargon. If you want a more detailed analysis, of course, I did do full posts on all these companies - just use the search bar above right or tags at the bottom to find them!

    Howden Joinery

    Howden Joinery, makers of predominantly kitchens and fittings, have a very low cost business model and growth which is both deceptively recession-proof and surprisingly strong. Due to Howden's approach to selling to the trade instead of consumers, stores tend to 'mature' over time as they increase in account holders - something which is still driving growth even before store expansion. On top of that, though, Howden is continuing to pursue growth in the vein of its existing model - cutting out the expensive high street stores customer-facing sellers need, and allowing themselves to focus on margins, which continue to be very strong. French expansion is on hold at the minute due to the uncertainty, but the business seems solidly run and consistently profitable since their troubled beginning.

    Cranswick

    Cranswick make sausages and meat products, and were memorably described in one of my very early blog posts thus:"This seems like a Buffettesque company. I think the company will slowly accrete value." That's a description I probably agree with as, through various cycles of pork selling prices, Cranswick has continuously grown and remained profitable. In fact, they've grown revenue year on year for the last 10 years, and almost grown profit consistently for that same period. The balance sheet is extremely conservative, the management seem the same, and so the question always came down to valuation; and at a P/E of below 11 an extremely safe, consistent grower whose margins had been slightly squeezed seemed a solid bet. (more…)

  • Plastics Capital (PLA), Creston (CRE), Character (CCT)

    A round of news

    With 3 sets of results out this week, I thought I'd pull together a quick post showing how 3 of my picks are holding up. Plastics and Character have been in the portfolio since inception, with Creston a later addition in a sector (media) I found attractive. The headline result would be one of positivity, with all three companies showing year-on-year improvements in profits by some measure; though that is probably more a testatement to managements' fantastic statistical manipulation than great performance! Market reaction has been varied, as ever, and there are obviously many factors at play here; but given the minute P/Es all three companies are trading on, a continuation or  improvement in their profitability is exactly what I expect and hope to see. It follows that if their other issues are sorted, they'll probably be due for a re-rating; as well-financed growing companies rarely trade on low single digit P/Es.

    Plastics Capital

    http://www.investegate.co.uk/article.aspx?id=201111300700139973S&fe=1

    - Revenue down 0.3% - Operating profit down 3% - Profit before tax up 10.5% - Reported pre-exceptional profit down 9.2%

    A rather mixed set of statistics, and I've put the most borderline of the three sets of results first. Their niche plastics business has been impacted by the recession and earthquake related supply-chain issues as the core issue of less demand fed through to their products, but the chairman was quick to point out that the business is growing in one sense; new business is compensating for less volume in existing business, which will hopefully provide a good basis for recovery whenever that golden day does come. The business's niche focus and market dominance in a number of very specific products means that they have a very low rate of attrition, as customers rarely have a great deal of choice, and long-standing relationships presumably are prohibitively expensive to change. (more…)