Update No. 172 – 18/07/14

I have been struggling a little the last few weeks for interesting insights to include as part of the weekly price update. Both the benchmark & EGP hit new highs this week, I guess that’s something…

This is in part because the business of the administrative component at this time of year diverts my efforts and also because the market is unusually quiet at the moment. I usually rely on June/July for some updates by the companies we hold and follow with a view to holding in the future. The finance media refer to this part of the year as ‘confession season’, with the implication that many companies need to ‘confess’ that they have failed to meet what were probably overly ambitious guidance’s given earlier in the year, given they will shortly announce results.

I generally think of the season as ‘upgrade season’, because the companies we invest in tend to have ‘low-key’ CEO’s who are more prone to understatement than hyperbole. There has been a dearth of such updates in either the positive or negative for stocks we own. Dicker Data released an update this month that whilst not particularly attractive for FY14 provides an unusually bright outlook for FY15. In my experience, David Dicker is of the ‘understated’ type, so based on previous form, I’d tend to think of the guidance as a likely base for FY15 expectations. Should that prove to be the case, the stock, which on FY14 earnings (due mostly to costs for the recent ‘company-changing’ acquisition) will be one of the most ‘expensive’ we’ve ever owned on a trailing P/E basis looks compellingly cheap.

Other than that, the only performance announcements on my radar screen came from a couple of stocks we were very close to owning, but these positive announcements have caused significant re-ratings of their prices and me to kick myself for moving so slowly. I am trying to eliminate a couple of positions first, and being quite particular about the prices at which I will do it. As I said in the FY14 report, I would like to reduce the number of stocks we hold a little this year, so we may have missed a couple of good opportunities. The wonderful thing about the market though, is you can be sure there will be plenty more if you just keep your eyes peeled. And I will – Tony Hansen 18/07/2014

EGP Fund No. 1 Pty Ltd. Up by 1.18%, trailing the benchmark by 1.35% since July 1^st. Since inception, EGP Fund No. 1 Pty Ltd is Up by 72.33%, leading the benchmark by 40.00% all-time (April 1^st 2011).

^{*1 after 31May 2013 dividend of 2.333 cents per share plus 1.000 cent per share Franking Credit & 31 May 2014 Dividend of 7.000 cents per share plus 3.000 cent per share Franking Credit}

^{*2 calculated based on dividends reinvested}