IT'S AGM time - our first in fact - and a time of trepidation for any new share club. It's been a year since we set it up - and it's time to see how we've done.
From 1 August 1998 to 1 August 1999 the FT-SE 100 rose 4.8 per cent. But we seem to have notched a rather impressive 41 per cent profit on our shares. The shares we still hold rose 25 per cent. But we also sold some shares to take profits - with two big successes.
The Leicester-based engineer Jones and Shipman was taken over within a couple of months of our purchase, giving us a 100 per cent profit. Acorn has been even more spectacular. We bought when the shares were 65p last autumn. They more than quadrupled before Acorn was re-badged as microprocessor wunderkind ARM. ARM shares have since doubled.
We've had other successes. Brooks Service Group, bought only this year, is up 87 per cent. A boring textiles and laundry firm, it's well run and still ridiculously cheap. Oxford Glycosciences, now our biggest holding, is up 143 per cent. Floated only two years ago, it bombed when biotech reversed. But it is a well-run firm with interesting technology. It has only just risen above its flotation price, but we reckon the shares will start taking off as people realise how good it is. Our target for a year ahead is 400p a share.
We have a strategy of targeting well-run firms with solid profits records that have seen their share price fall unfairly, such as AEA Technology: it's up 18 per cent. It had disappointed the City by saying its profits growth would only just meet analysts' expectations. The City, used to thinking of AEA as a hot growth story, took fright. The share price slumped 50 per cent and we piled in. AEA has a collection of some of the UK's most interesting technology projects - in the US it'd be worth billions. We target the share price to hit 500p in the next 12 months.
Bradford Property Trust is also doing well - up 12 per cent - buoyed by the rapid growth in capital prices of the houses and flats it lets to ordinary folk. The UK's biggest residential landlord, it is ideally placed to benefit from today's property boom. We're looking for 500p by the year end.
Wassall, only two months in the portfolio, is already showing a handy 12 per cent profit. A diversified industrial group that became a nifty venture capital outfit investing in undervalued firms, it recently alighted on Allied Carpets and is now in a bidding war there. The UK stock market is full of very uncool firms with great results but dull share prices. Wassall and its ilk are ideally placed to swoop and make a fast profit. Again we have a target of 500p.
Now to our obligatory dogs. We have up to 15 shares at any one time so we reckon that at least a quarter must significantly underperform.
First, step forward AB Airlines. The moral here is not to believe a single word junior employees say about their companies. On an AB flight, a steward told one of our members the airline was going great guns and would be taken over. It all seemed very plausible: the discount airline sector is booming.
Wrong! AB wasn't a discount airline and couldn't compete on price. It was stuffed. Cash was flowing out of the cargo bay and the management couldn't stop it. AB Airlines is an example of what shareholders hate about management. The share price kept sliding. The directors reacted by saying AB was all right, that it was valued below its total assets, and they couldn't understand what was going on. But, within months, the directors admitted it was a disaster and the business was, for all intents and purposes, bust. The shares remain suspended with very little chance of ever getting any money back. We've heard nothing from the administrators, and we've written the shares off.
In America, shareholders would not put up with this. In the US they have class actions. Lawyers get together a bunch of aggrieved shareholders and sue the directors and the company claiming they were lied to. We meek British don't yet do that, but if any AB shareholders are interested then please contact us - we want to sue the pants off AB if someone will back us. AB was only on the stock market for a year and yet it's now all but bust. Shareholders rise up!
Which also brings us to Dialog or Dial-a-Dog as the wags put it. Dialog is no AB. Despite our deep reservations about a) the boss of the company, a rather difficult character called Dan Wagner whom the City hates, and b)the huge debt hanging over it since it bought a US information company, Dialog is an interesting firm. It's got some clever internet-related businesses and some solid, profitable info businesses.
The problem is the debt. Lots of it, more than the company's worth. Which is why we're down 44 per cent on our investment. If Mr Wagner can get it right, deal with the debt, and free up some cash to grow his internet firms, great. But Mr Wagner's calming words better deliver. Or he'll have a lot of angry shareholders on his back.
Finally Transtec. We hoped this would be a Jones and Shipman Mark II, but it's down 36 per cent. Its quite a bit bigger than Jones was but also a Midlands- based engineer with a pretty solid growth record. It also pays out a huge dividend and is well placed to pick up profits from recovering export markets. For some unknown reason its share price has drifted to all-time lows, with no announcement from Transtec.
Another notable non-success has been our new National Lottery syndicate. We put pounds 10 a month on the Saturday lottery. We've won pounds 10 so far.
But two pluses. We have only praise for our brokers, Hargreaves Lansdown's discount service: they charge pounds 10 a deal plus pounds 40 a year for an excellent newsletter, Inside the City. We've never had a problem getting hold of them and they always get us good prices.
Highly recommended is our investment software, Investorease. All the news and stats you'll ever need. At pounds 10 a month, a bargain.
n If you want to contact us, or are an AB shareholder, e-mail us at email@example.com - this also hosts our website with a new facility for other clubs to swap ideas and suggestions for shares - www.theupside.comReuse content