2019-08-01_Shares_Magazine

01 August 2019 | SHARES | 19

ŵŝdžĞƌƐŵĂŬĞƌ Fevertree Drinks (FEVR:AIM) and

ƉƌŽƐƉĞĐƟǀĞƉŽƚĂƐŚƉƌŽĚƵĐĞƌ Sirius Minerals (SXX) ͘

All were trading at a 10% or more discount to

ƚŚĞŝƌϮϬϬͲĚĂLJŵŽǀŝŶŐĂǀĞƌĂŐĞǁŚĞŶǁĞƐĐƌĞĞŶĞĚ

ƚŚĞŵĂƌŬĞƚĨŽƌŽƉƉŽƌƚƵŶŝƟĞƐ͘ŵŽǀŝŶŐĂǀĞƌĂŐĞŝƐ

something which helps you see the wider trend in

a share price and smooth out the impact of short-

ƚĞƌŵǀŽůĂƟůŝƚLJ͘

WHY HAVE THE SHARES FALLEN?

^ŚĂƌĞƉƌŝĐĞƐĐĂŶĨĂůůĨŽƌĂůůƐŽƌƚƐŽĨƌĞĂƐŽŶƐ͘

ƚƟŵĞƐŽĨŵĂƌŬĞƚƉĂŶŝĐ͕ƐĞůůŝŶŐĐĂŶďĞďŽƚŚ

ĚŝƐƉƌŽƉŽƌƟŽŶĂƚĞĂŶĚŝŶĚŝƐĐƌŝŵŝŶĂƚĞ͘

tĞƚŽŽŬĂĚǀĂŶƚĂŐĞŽĨƚŚŝƐƐŝƚƵĂƟŽŶǁŚĞŶǁĞ

added electronic equipment manufacturer Halma

(HLMA) to our Great Ideas ƉŽƌƞŽůŝŽĨŽůůŽǁŝŶŐ

ǁŝĚĞƐƉƌĞĂĚƐĞůůŝŶŐŝŶKĐƚŽďĞƌϮϬϭΘ͘

tĞƌĞĐŽŐŶŝƐĞĚŶŽƚŚŝŶŐŚĂĚƵůƟŵĂƚĞůLJĐŚĂŶŐĞĚ

about what was an extremely good business and

ƌĞĐŽŵŵĞŶĚŝŶŐďƵLJŝŶŐĂƚάϭϮ͘ςϮ͘ƐǁĞǁƌŝƚĞƚŚĞ

ƐŚĂƌĞƐƚƌĂĚĞĂƚάϮϬ͘ϭϭ͕ƌĞƉƌĞƐĞŶƟŶŐĂƐŝŐŶŝĮĐĂŶƚ

ŐĂŝŶŽŶŽƵƌĞŶƚƌLJƉƌŝĐĞ͘tĞǁŽƵůĚŶŽƚŶĞĐĞƐƐĂƌŝůLJ

expect all of our ideas to generate returns on this

ƐĐĂůĞďƵƚĚŽƵďůĞͲĚŝŐŝƚŐĂŝŶƐŝŶĂLJĞĂƌĂƌĞĂƌĞĂůŝƐƟĐ

ƉŽƐƐŝďŝůŝƚLJŝĨƐĞŶƟŵĞŶƚƚŽǁĂƌĚƐŽƵƌůŝƐƚŽĨŶĂŵĞƐŝŶ

ƚŚŝƐĂƌƟĐůĞƐŚŝŌƐ͘

ƵLJŝŶŐƐƚŽĐŬƐĂƚĂŶĂƉƉĂƌĞŶƚĚŝƐĐŽƵŶƚĚŽĞƐŶ͛ƚ

ĂůǁĂLJƐǁŽƌŬĂŶĚǁĞĚŽŶ͛ƚĂůǁĂLJƐŐĞƚŝƚƌŝŐŚƚ͘dŚĞ

ƐĂŵĞǁĞĞŬǁĞŇĂŐŐĞĚ,ĂůŵĂ͕ǁĞĂůƐŽŚŝŐŚůŝŐŚƚĞĚ

ƚŚĞƉŽƚĞŶƟĂůŝŶƟĐŬĞƟŶŐƚĞĐŚŶŽůŽŐLJĮƌŵ Accesso

(ACSO:AIM) ĂŶĚŝƚƐƐŚĂƌĞƐĐŽŶƟŶƵĞĚƚŽĨĂůů͘

/ŶǀĞƐƚŽƌƐŶĞĞĚƚŽƌĞŵĂŝŶĂůŝǀĞƚŽĐŚĂŶŐĞƐƚŽ

ƚŚĞŝŶǀĞƐƚŵĞŶƚĐĂƐĞ͕ǁŚĞƚŚĞƌƚŚĞƐĞĂƌĞĚƌŝǀĞŶďLJ

ŝŶƚĞƌŶĂůĚĞǀĞůŽƉŵĞŶƚƐŽƌĞdžƚĞƌŶĂůĚĞǀĞůŽƉŵĞŶƚƐ͘

QUALITY CONTROL IS NEEDED

^ŝŵƉůLJƐĐƌĞĞŶŝŶŐĨŽƌĐƵƚͲƉƌŝĐĞƐƚŽĐŬƐĚŽĞƐŶ͛ƚ

necessarily mean each one on the list is worth

ďƵLJŝŶŐ͘&ŽƌĞdžĂŵƉůĞ͕ŽŶĞŶĂŵĞĂƉƉĞĂƌŝŶŐŽŶŽƵƌ

ůĂƚĞƐƚƐĐƌĞĞŶŝŶŐĞdžĞƌĐŝƐĞŝƐŚĞĂůƚŚĐĂƌĞƉƌŽǀŝĚĞƌ

NMC Health (NMC) ĂŶĚƚŚĞƌĞĂƌĞǀĂůŝĚƌĞĂƐŽŶƐĨŽƌ

ƚŚĞĚĞĐůŝŶĞŝŶŝƚƐƐŚĂƌĞƐ͘

&ŽƵŶĚĞĚŝŶϭεϳρ͕EDŝƐƚŚĞůĂƌŐĞƐƚŚĞĂůƚŚĐĂƌĞ

ƉƌŽǀŝĚĞƌŝŶƚŚĞhŶŝƚĞĚƌĂďŵŝƌĂƚĞƐĂŶĚŽǁŶƐ

ĂŶĚŽƉĞƌĂƚĞƐŽǀĞƌϮϬϬŚŽƐƉŝƚĂůƐĂĐƌŽƐƐŵŽƌĞƚŚĂŶ

ϭρĐŽƵŶƚƌŝĞƐ͕ƚƌĞĂƟŶŐŵŽƌĞƚŚĂŶΘ͘ρŵƉĂƟĞŶƚƐ

ĞǀĞƌLJLJĞĂƌ͘

/ƚƐƐŚĂƌĞƐĂƌĞĚŽǁŶκκйĨƌŽŵƚŚĞŝƌƉĞĂŬŝŶ

August 2018 and there has been an increase in the

‘short interest’ since late 2018, meaning that hedge

ĨƵŶĚƐĂŶĚŽƚŚĞƌŝŶǀĞƐƚŽƌƐĂƌĞƉůĂĐŝŶŐďĞƚƐƚŚĂƚƚŚĞ

ƐŚĂƌĞƐǁŝůůĨĂůůĨƵƌƚŚĞƌŝŶǀĂůƵĞ͘

ĂƚĂĨƌŽŵƐŚŽƌƩƌĂĐŬĞƌ͘ĐŽ͘ƵŬƐŚŽǁƚŚĂƚƚŚĞ

percentage of the company’s shares being used for

ƐŚŽƌƚƐĞůůŝŶŐŚĂƐƌŝƐĞŶĨƌŽŵϬ͘ρйŝŶEŽǀĞŵďĞƌϮϬϭΘ

ƚŽκ͘ϳϯйŽŶϮϬ:ƵůLJƚŚŝƐLJĞĂƌ͘

dŚĞŶĞŐĂƟǀĞƐƚĂŶĐĞƐĞĞŵƐƚŽďĞĚƌŝǀĞŶďLJ

ƚŚĞĂĐƋƵŝƐŝƟǀĞŶĂƚƵƌĞŽĨƚŚĞĐŽŵƉĂŶLJ͛ƐƐƚƌĂƚĞŐLJ

and suspicions it has grown too fast and that

ĂĐƋƵŝƐŝƟŽŶƐĂƌĞŵĂƐŬŝŶŐƉŽŽƌŽƌŐĂŶŝĐŐƌŽǁƚŚ͘

/ŶǀĞƐƚŵĞŶƚďĂŶŬ:ĞīĞƌŝĞƐŚĂƐĂůƐŽƌĂŝƐĞĚĐŽŶĐĞƌŶƐ

ĂƌŽƵŶĚĐŽƌƉŽƌĂƚĞŐŽǀĞƌŶĂŶĐĞ͕ŽƉĂƋƵĞĂĐĐŽƵŶƟŶŐ

ĂŶĚƐƵƉƉůLJĐŚĂŝŶĮŶĂŶĐĞ͘

hƉƵŶƟůůĂƐƚLJĞĂƌŝŶǀĞƐƚŽƌƐƐĞĞŵĞĚŚĂƉƉLJƚŽ

ĐŚĂƐĞƚŚĞƐŚĂƌĞƉƌŝĐĞƵƉƚŽάκϭ͕ǁŚŝĐŚŵŽǀĞĚ

further than the fundamentals, thus increasing the

ǀĂůƵĂƟŽŶŽĨƚŚĞďƵƐŝŶĞƐƐ͘dŚŝƐĐƌĞĂƚĞĚĂǀŝƌƚƵŽƵƐ

cycle whereby the company could buy companies

ƚƌĂĚŝŶŐŽŶůŽǁĞƌŵƵůƟƉůĞƐƚŚĂŶŝƚƐĞůĨĂŶĚ

announce that the purchase was instantly ‘earnings

ĞŶŚĂŶĐŝŶŐ͛ĨŽƌƐŚĂƌĞŚŽůĚĞƌƐ͘

ƐƚŚĞƐƚŽĐŬƐŚĂƐĨĂůůĞŶŵŽƌĞƚŚĂŶƚŚĞ

ĨƵŶĚĂŵĞŶƚĂůƐĂŶĚƚŚĞƐŚĂƌĞƐŚĂǀĞďĞĐŽŵĞ

ĐŚĞĂƉĞƌ͕ƚŚĞĚLJŶĂŵŝĐƐŽĨ͚ĂĐĐƌĞƟǀĞŐƌŽǁƚŚ͛ŵĂLJďĞ

ŵŽƌĞĚŝĸĐƵůƚƚŽĂĐŚŝĞǀĞ͘

Share prices

can fall for

all sorts of

reasons

“

“

We all love

a bargain