I thought that July was bad but that was just an entrée. So much for enjoying a relaxing August on holiday without a thought for my portfolio. Instead the Burford short-attack kicked me in the nuts and made me re-consider whether I should be investing in individual companies at all. The problem is not so much the companies themselves as the emotional strain attached to a whip-sawing share price and a fire-hose of news telling me just how messed up the global economy really is. And that's without considering our own self-inflicted attempt at market destruction in the UK. Just a terrible month then with little to redeem it.
Purchases
Burford Capital Bought at 1366p - August 19
Yeah. No. Really let's not go there. Probably one of the most spectacularly ill-timed trades in the history of the market and all because I was about to go on holiday. Let's move on.
Things I thought about buying (but didn't)
None.
Sales
Bodycote Sold at 694p - August 19 - 23.8% loss
After the weak interim results last month I came to the conclusion that the business was just facing headwinds from too many directions. The problem, as I see it, is that economic conditions are fragile on several fronts and Bodycote is rather dependent on the automotive market. In addition profits fell by 6% in H1 and yet FY expectations are for a drop of just 1.8%. Given a year-long decline in expectations, from 56.65p to 53.79p, I suspect that this number will continue to steadily fall throughout H2. In this way BOY may avoid putting out an actual profit warning but they'll still end up making less profit than in 2018. Anyway I've decided to cut my losses.
RM Sold at 237p - August 19 - 1.2% loss
With RM I've been expecting its growing divisions to more than offset declines elsewhere but it seems that this is a more challenging prospect than expected. RM Resources provides over half of all sales (and a smaller fraction of profit) with these both falling sharply due to the challenging UK market. RM Education offset this decline somewhat with profits growing 19%, despite a 6.5% drop in sales, due to lower costs and higher margins. In addition RM Results also grew sales and profits although from a lower base. However there's a timing issue at play here with IFRS15 adoption boosting the…
