AIM IHT Update 10 – February 2018

Today’s post is the regular monthly update on the AIM IHT portfolio.
Contents
The rules
First, the rules:
- A maximum of 50 AIM stocks, designed to shelter money from IHT.
- Relatively safe (for AIM): the goal is capital protection, not strong growth – it’s a “Safe AIM tracker”.
- Racier AIM stocks can be found in the SmallCap AIM Growth Portfolio (SGAP).
I use Stockopedia to implement the following selection criteria:
- No financials, property companies, miners or energy stocks.
- No market caps below £50M.
- No loss-making companies (PE missing)
- Risk Rating of Conservative / Balanced / Adventurous (3 from 5).
- Positive or Neutral Stock Style.
- Stock Rank above 50, sub-Ranks all above 20.
- PE below 20 (ideally) or 25 (hopefully).
Last month
At the end of January, the portfolio was up 3.0%.
- It held 49 stocks.
- The January action was to sell Conviviality and Safestyle, and to replace them with Majestic Wine and Craneware.
AIM IHT Update 10 – This month
As of 28th February – after another bumpy ride – the portfolio is now up by 1.1%
- That’s not great, but it has looked worse during the month.
Here’s the chart:
And here’s the regular warning that the vertical scale runs only from 98% to 104% of the original capital.
- The red line (initial cash invested) creeps up each month as I manually add the dividends.
Here’s the style analysis – it’s still a Small Cap Blend portfolio:
Here’s the Health analysis – not much has changed:
Here are the Ratios relative to the market:
- The PE remains is up to 14.9 from 14.7
- EPS growth is up again to 11.3% from 10.6%
- The PEG has fallen back to 2.4 (still too high) from 2.7
- The dividend yield remains at 3.0%
- The dividend cover is up again, to 2.8x from 2.7x
Another mixed bag this month.
The Sector analysis shows another slight improvement:
- Consumer Cyclicals are down from 33.9% to 32.9%
- But Industrials are down from 28.6% to 28.5%
Here are the sectors relative to the market:
And here are the position weights:
The lower limit is 1.6%, to reflect a 2% initial weighting with a 20% stop loss.
- The upper limit is 4%, to reflect a doubling of the initial position (at which point I will consider top-slicing).
Three stocks are below the lower limit.
Bad stocks
We have two rules for weeding out bad stocks:
- Share price fall of 20% (stop loss).
- Stockopedia score below 50 (or sub-ranks below 20).
Here are the six stocks in the portfolio that have fallen more than 10%:
- GATC, EBQ and EMIS need to be sold.
Here are the stocks with the ranks equal to or below 60:
- QTX scores below 50.
- VCP has a value sub-rank of less than 20.
- Further up the table, CRW also has a value rank of less than 20.
- QTX and JHD have negative styles (Falling Star).
- There are no negative styles further up the table.
Of these four stocks, CRW has a good chart:
VCP’s is OK:
QTX’s chart is acceptable:
But JHD has a fairly ropey chart:
If we didn’t already have three sell candidates for this month, I would think about getting rid of it.
- I still might, if I can find four good replacements.
Replacements
As always, getting rid of a poor stock depends on finding a better one.
As in January, I ran the low volatility screen that I’ve been working on for the new Defensives portfolio, but it didn’t return any AIM stocks.
Gold list
The Gold List is a list of stocks that have appeared in professional IHT portfolios.
- It has 91 stocks on it.
Those with Stock Ranks above 90 – or even above 80 – are all mostly already in the AIM IHT portfolio.
Those that are not are in the SmallCap AIM portfolio instead:
- NAHL
- DWHT
- NWF
- IGR
WJG (stock rank 88) is the first one that’s not in either portfolio, bu the chart is mediocre.
- GHH (84) is another possibility, but that’s currently in the Defensives portfolio.
- SAA (82) is not in any portfolio, and will probably be bought (the chart looks good, too).
- STAF (81) is another potential candidate, but it’s classified as Speculative & Contrarian – so it would be a better fit for the SmallCap AIM (SGAP) portfolio.
It seems that this month’s replacements (other than SAA) will be from the SGAP.
- So I’ll need in turn to find some replacements for those before I make the changes.
IHT Clock
We are aiming to save 40% of IHT over a 24-month qualifying period.
- So to come out ahead, each month the portfolio needs to fall by less than 1.67%.
We are now 5.1 months into the qualifying period.
- Which means that we can afford to be down by 8.4%.
We are actually up by 1.1%, so we are 9.5% ahead of target.
- This translates to 1.8% per month, or 45% over two years.
In January we were 9.9% ahead of target (2.4% per month, or 55% over two years).
- So we’ve fallen back slightly, though things are still fine.
Hedging
We’ve missed the boat on hedging for now – the tiny gains we have at the moment put me off making the laborious arrangements.
If we can get back to 3% or 4% ahead, I will look at using spread bets with 10x effective gearing (10% stop-losses) for protection.
- To hedge the 40% of IHT gains would only require an extra 4% in capital.
There is no good proxy for the portfolio, so I will need to use a selection of the stocks within the portfolio (assuming that I can open short positions on them).
- I still need to research how many bets we need to be reasonably safe, and what is the smallest size of bet I can place on such stocks.
The cash for the hedging is now available, so I might get around to it in March.
That’s it for today.
- It’s been a turbulent month, but things are better at the end than in the middle.
The project remains more than on track.
Until next time.