So you have UNDER-PERFORMED during 2021? What now?

The market has been flying during 2021. The iShares FTSE 100 accumulation ETF (CUKX) is up +17.2% YTD and you would think such buoyant conditions would lead to even greater gains for smart stock-pickers.

I am not quite sure that has been the case.

The Stockopedia 2021 Stock Picking Challenge provides a broad view of private-investor performances through its 3,285 entries.

Only 895 entries (27.2%) have CUKX-beating YTDs of +17.3% or more. Indeed, 1,592 (48.5%) entries have YTDs of less than 0%.

That compares to Stockopedia’s 2020 Challenge, when just 652 of 2,153 entries (30.3%) scored less than 0%.

If you have lagged the FTSE’s +17.2% this year, you are not alone. For example, the funds of superstar investors Nick Train and Keith Ashworth-Lord have not kept up with the index, with Finsbury Growth & Income up +4% YTD and Buffettology up +8% YTD.

Of course, a rising market failing to lift your hand-picked shares during one particular year does not spell total disaster. Your portfolio may have outperformed in the past and may now be just ‘pausing for breath’.

The recent results from Finsbury Growth & Income reassured its shareholders this was the case:

"Despite the recent underperformance, under Nick Train’s management the Company has performed strongly against its benchmark in 16 of the 20 years and has continued to outperform over the last three, five and ten years.

The return over the year under review reflects relative underperformance in a period in which the market has rewarded companies with prospects for rapid recovery from the effects of the pandemic as opposed to those businesses which we own: businesses that offer consistent growth."

Mind you, Nick Train has nonetheless doubled-checked what he owns in the trust:

"After a 12-month period of disappointing NAV performance Shareholders will not be surprised to read that I have engaged in some navel-gazing.

As always in such circumstances I come back to the companies to which we have committed your capital. I ask myself - how are the companies performing as businesses (which is not necessarily the same as how their share prices are performing)?

Because of the paramount importance of individual holdings in a strategy like the Company’s we have chosen to give an account below of the reasons why we own each of those 17 holdings."

He then follows with a quick write-up on each of his 17 major holdings.

So one action to take if you have under-performed could be to make sure your companies are still doing well and your under-performance is likely to be temporary.

But if you have a great long-term track record, do remember that market conditions can change over time and what has worked well in the past may not work so well in the future. Buying quality growth shares on P/Es of 15x five years ago may have since delivered wonderful gains, but buying the same quality growth shares at 30x today may not yield similar returns.

Your 2021 under-performance could of course be due to owning a few hefty fallers. Perhaps looking deeper into the accounts, asking tougher questions about your holdings and no longer relying on the opinions of others might help minimise trouble :point_down:

Or maybe a new year means a completely new strategy.

Terry Smith’s Fundsmith had a good 2021 (+21% YTD) and a good ten years (+490%). Adopting a high-profile winning style when yours has under-performed can be very tempting:

But do you have Terry Smith-like investment skills? Probably not, and so the obvious way to get Terry Smith-type returns is to just own Fundsmith.

The problem with strict adoption of guru investing styles is they change the way they invest. After dismissing Amazon a few years back, Terry Smith recently bought in:

It’s a bit like Buffett ignoring tech stocks, then buying Apple. His way of thinking evolved. You have to evolve your thinking, too, and not just base your entire stock-picking on what a super-investor said/bought years ago.

Adopting a strict Terry Smith approach (or anybody else’s) is a short-cut that probably will not work for you. By all means use Terry Smith or whoever as a starting point, but eventually devise your own approach from there by working out which shares have done well for you in the past, and why.

Once you know what has worked for you personally, you can then define some guidelines that can help you identify similarly successful shares in the future. That all takes a bit of time and effort, but you will in turn stand a much better chance of viewing under-performing years/shares as buying opportunities rather than a red alert for radical action.

You can always review your 2021 portfolio here :point_down:

…because you may find the writing process clarifies your investment thinking. Nick Train presumably thought so when when compiling his 17-stock review.

Finally, one absolutely guaranteed way to ensure you never underperform the market in any year… simply hold a tracker :slight_smile:



Hi Maynard, ok, I’ll break cover - wrt your question I am glad to say I had a surprisingly good 2021 (c.+40-45%) driven mainly by large positions in:

  • PPHE (that recovered - now sold),
  • SVS (recently halved)
  • SOM (now my largest position),
  • SDI (& and JDG, now sold)
  • Tracsis
  • SAG
  • FUTR
  • and some good US stocks (Broadcom, SS&C, Fortinet - now sold).

I held/hold no resource stocks (which I ignore) and little in financials bar small positions in CLS (property), PMI, Jarvis, IG Group, Plus500 and Equals (all trading/ broking/asset mgt type stocks).

It kind of makes up for my 2020 which was flat (0%) in the end, a lacklustre result compared to some who were more adept at riding the CV winners than myself whilst I rode PPHE (my largest holding) all the way down with some SSPG for good measure :slight_smile:

My portfolio is a fairly slow moving mix of asset lite, quality-value and quality-momentum stocks - quality being good FCF generation and a high return on capital (fcf/tangible assets or tangible capital employed) and value a good FCF yield ie FCF/EV. I tend to buy more of whichever is generally working best at the time.

I confess if my returns were lousy I’d probably have spared my blushes. But it’s good to celebrate the wins in life when they happen to balance out the losses, which I’ve had plenty of in the past like everyone. Also, given the fine example you set with the forensic and transparent reporting of your own portfolio for everyone’s enjoyment, I should not abstain from a brief comment like this!

The “problem” with such a good year is it does leave you wondering if much of the portfolio is overvalued/going to mark time and thus looking for fresh ideas - hence selling down SVS & SDI.

I added Ipsos, Arch Capital (a long term compounder in insurance), Jupiter and Goodwin recently but none are large - the latter was just in time to catch the weak TU but I may add more at these lower levels.

I’m currently wondering if SUS, STB, BELV, LTG, Odet (a play on Bollore, see seeking alpha article and French hidden champions on fintwit who has a lot of interesting ideas though most are unfamiliar names), Trinet, or SCHO (-uw) are worth buying.

I agree that it’s hard to find good quality UK stocks that aren’t on nosebleed valuations these days.

Are you thinking of making any/many changes to your own portfolio in 2022?


PS Re odet/bollore, this is a good article:

Vincent Bollore may be seeking to crystallise value across his complex net of businesses by selling of his and pieces and using the cash to buy back shares. This would seem a good way to boost value.


A happy new year to everyone.

My small company portfolio is as follows.

No. Name
1 Andrews Sykes
2 Anpario
3 Calnex Solutions
4 Dignity
5 Fevertree Drinks
6 Inspiration Healthcare
7 PZ Cussons
8 Solid State
9 System1
10 Tatton Asset Management
11 XP Power

They have been bought over a number of years and are held across an ISA and direct dealing accounts. Apart from PZ, most holdings are broadly similar. Performance in the year was c. 25% (I have not consolidated and counted). I am slightly in the Terry Smith camp that measuring performance over one lunar cycle is slightly mad. I will review over 3, 5 and 7 years to determine if I do “outperform” and whether that out performance is worth the time. More subjectively, I would like to feel I am getting better. If I fail those tests, I would simply sell and transfer the proceeds into my investment trust portfolio, which has outperformed (UK and World indices) for over a decade.

My approach is as set out in other posts, but generally, I look for growth companies with an EV between £50m and £150m that: I feel I can understand, have strong insider ownership/management, I believe will exist in a broadly similar form in 10 years with the potential to be at least three times bigger with attractive financials (e.g. revenue growth, margins and cash generation). With limited time, this approach is great at defininig what I won’t do and doesn’t require constant monitoring/tweeting.

In relation to the individual holdings, as you’d expect in a concentrated portfolio, returns have been driven by some strong performers such as Tatton, Solid State and System 1. The more interesting decisions can be categorised as follows:

  • Long term successes that are now outside my original parameters (e.g. Fevertree and XP). Sell or hold? Don’t get 100 baggers by selling good companies, but I don’t want a huge portfolio. I will hold for now.
  • Business performance (rather than share price) is pedestrian. Anpario’s major shareholder has sold over the years and the management team seem to be settling into a low/steady growth sinecure without committing to any ambitious goals. This is in stark contrast to explicit ambitions from System 1, Tatton, Solid State and, arguably, Calnex. (The Management giving shareholders a clear idea of where we are all going (vision/strategy), is possibly the subject of another post.) I want to keep the portfolio manageable, at 10 or so. I suspect a review will lead to an Anpario sale.
  • PZ was a small “initial holding while I did the research”. More exciting opportunities cropped up and I still have not completed the research. This was an experiment that I won’t repeat. Do the work and then transact or not. I may miss an opportunity, but I won’t own something I don’t feel understand properly. PZ is a complicated turnaround that could produce a very attractive multinational skincare business, but the share price has fallen and I don’t know whether to sell, stick or twist. In contrast, Dignity is well below my purchase price, but I have an investment thesis and next year we will find out if this holds.
  • New purchases – Andrews Sykes and Calnex were bought over the last few weeks. The acquisition rationales were very different. [Maynard, I know you have written on both and own AS.]

I have managed to avoid any disasters this year, but have had some good ones in the past including: Enteq (oil and gas monitoring minnow operating in the US but with most senior management in the UK – where could it go wrong?); Velocity Composites (supposed industry attractions led me to overlook a management feud and horrible unit economics); and, Hayward Tyler (beware businesses run by corporate financiers – poor M&A and operational execution. The shrewd managers at Avingtrans recovered some of my losses when they took it over).

Hope this is helpful.



Hi Steve

Thanks for the write-up and well done with your portfolio!

Agreed. 2020 saw a lot of portfolios do well on the back of Covid winners, and 2021 saw a lot of portfolios do well on the back of Covid-recovery winners. Not quite sure how 2022 will now play out.

A number of quality/growth shares have been going sideways for a few years now…

…as their earnings catch up with their share prices. Not as easy to make money today with quality shares at 30x versus, say 15x, several years ago. So the last few years of super gains from certain stocks I think will be harder to repeat.

Fresh ideas are important to keep the momentum going, which I recognise from System1 dominating my own portfolio’s performance last year. Trouble is I can’t find those sorts of opportunities every year! I also believe too much chopping and changing a portfolio can hinder returns as sometimes marginal decisions are made.

Right now I am not thinking of making any changes to my portfolio. I suspect any change will be a top-up of an existing holding.



Hi Maynard

Happy NY to you and thanks for the comments.

I’m intrigued by your position sizing of System1 vs rest of the portfolio. Seems like you are willing to bet the farm/ranch (or at least a quarter of it) on it. I believe you have had large positions like this in the past, LSE?, but I haven’t seen anything this big in your portfolio before.

I start feeling queasy above 10% since I lack the certainty to go much higher than this, or conviction that an idea is so much better than my 2nd biggest position. My current largest position is SOM at 9%.

Kind of makes me think I should have some of it, even a small one, given you know it well, have a cautious approach to risk and yet are willing to over-size/run it, caveated by “DYOR”
of course.



Hi Steve

Be careful, as that the year-end position size was not deliberate. The weighting has been skewed somewhat, as SYS1 shares gained during H2 while my largest and third largest positions at the half-year fell back during H2. The weightings were rather different just six months ago:

And the weightings could change a lot in the next six months.

I am happy to keep things as they are for now. We are always told to buy with conviction, put out a bucket when it is raining gold, etc, and then run our winners, do nothing, etc. I look back at many of my shares (Tristel, LSE etc) and think what could have been had I just held on. Yes, holding on will mean an oversized position, but that comes with the territory if you want to hold multi-baggers. You could argue the management teams of many of my shares have vastly oversized positions in their companies, and if they are happy to hold, then perhaps outside investors should be too. But I recognise I could be completely wrong with SYS1, with the risk that entails for my returns.

LSE from memory climbed to a 40% position. I should have allowed it to become a lot more given the strength of the business and my circumstances at the time (nearly 20 years ago!).


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