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QV portfolio in great shape and 74 constituents that are timely to buy now

July 31, 2020

Periodically I go through the QV for Shares portfolio (a table of all the shares ever recommended since the service was launched in July 2017 with Games Workshop @ 1356p as the first recommendation). The performance is good. The average gain on all recommendation is over 46pc, which compares with a UK stock market that is down significantly over the same period.

All the shares in the portfolio have been chosen as 3G + magic growth stars and most of them have performed accordingly. It soon becomes obvious if shares/ companies are losing the plot (think NMC Health or Wirecard AG) and those shares should be sold. The idea is to have an all-star portfolio, not a mostly stars but with some duds portfolio.

A second idea, which I have is to add to winners while neglecting/ selling losers. Over time this has the effect that even if you don’t sell anything you end up with the bulk of your money in strong performers.

A third idea, which further reinforces the idea of investing more money in your best performers, is that we are in a long-running bull market. I am thinking particularly of US shares in this respect. The Nasdaq 100 index, shown above, has been climbing strongly since 2009 and has shown staggering gains since the mid-1980s. I expect this trend to continue for the foreseeable, albeit with interruptions – mostly ladders but there will be some snakes.

Last but not least the portfolio should be forward looking, which these days means mostly about technology. The world is being disrupted on a massive scale and at an accelerating rate. It makes obvious sense to invest in shares in companies doing the disrupting rather than the ones being disrupted.

The answer to which category a business falls in to will usually be obvious. Most things in investment are obvious if you (a) take the trouble to look and (b) act on what you find. It should also be borne in mind that it is not easy to change from a business being disrupted into one doing the disrupting. If you are waiting for Marks & Spencer to turn into Amazon you could be waiting a long time.

A new feature of investment which is becoming increasingly common is that the best investments may be in companies which are not easy to understand. I am not entirely joking when I say that I have an increasing bias to businesses which I find hard to understand. This is why I spend a lot of time trying to discover metrics of performance beyond the old standbys of earnings and dividends to identify winners.

This explains my interest in what I call the battle for territory. Successful companies are often not that bothered about profits and dividends at least in the short run but they are very interested in becoming bigger and in winning market share. If you construct a portfolio entirely composed of companies winning market share you should do very well. This is partly because the market share winners these days are so often companies, which are disrupting traditional industries.

Think of companies about which I have written recently. Carvana is disrupting the US used car market by offering customers an entirely new way of buying cars which can be done entirely online up to the point of delivery. Zoom Video Communications is disrupting the very way in which we engage with each other. It is hard to imagine a much bigger market or a business having a more dramatic impact. The competition is ferocious but that is why it takes an outstanding business to win market share.

Tesla is disrupting the transportation market initially by providing us with less carbon intensive vehicles but ultimately by turning transport into a service industry where we pay a daily or maybe even a monthly amount for a package of vehicle, insurance, maintenance and energy consumed.

Games Workshop is different. It is not so much disrupting an industry as creating one but what is apparent is that it is using ever more technology to achieve its goals. In that sense you could say that Games Workshop, led by Kevin Rountree, since 2015, is disrupting itself. The products are very much the same but in other ways the company has changed out of all recognition since 2015 and a very visible manifestation of this is that it is becoming much bigger – more factories, more warehouse space, more employees, more trade distributors, many more followers on social media, more and better videos to engage with its customer base, more media partners, which all come together to drive higher sales.

This could be a golden rule. If a company is not becoming bigger, ideally with every passing year, why should it become more valuable as reflected in a rising share price. Almost the first thing I look at with any potential investment is whether the business is growing, ideally so rapidly that it is gaining market share from its rivals, which brings me back to the battle for territory.

My ideal portfolio consists entirely of companies, which are gaining territory as expressed by one or more metrics that exemplify that success. All the companies featured below are winners in this territorial battle but also look timely to buy because their healthy fundamentals are joining forces with attractive price action.

Note that I always take a long-term view. What I am saying is buy these shares because they are heading higher. I am not saying that will necessarily happen tomorrow although I have noticed that if you get the long term right that often leads to good performance in the short run as well. I am also a fan of big portfolios. This creates interest in terms of news flow because there will always be something happening. It also helps spread the risk although I am not concerned with diversification as an objective.

Abbott Laboratories/ ABT Buy @ $99
Accenture/ ACN Buy @ $221
Activision Blizzard/ ATVI Buy @ $82
Advanced Micro Devices/ AMD Buy @ $76.50
Apple/ AAPL Buy @ $409
Bandwidth/ BAND Buy @ $142
Best of the Best/ BOTB Buy @ 1580p BILL Buy @ $92
Bio-Techne/ TECH Buy @ $273
Bitcoin/ XBT Buy @ $1131
Boston Beer/ SAM Buy @ $790
Cadence Design Systems/ CDNS Buy @ $107
Carvana/ CVNA Buy @ $152
Chegg/ CHGG Buy @ $79
Chipotle Mexican Grill/ CMG Buy @ $1135
Cloudflare/ NET Buy @ $40.50
CoStar Group/ CSGP Buy @ $830
Coupa Software/ COUP Buy @ $299
Croda International/ CRDA Buy @ $5730p
Crowdstrike/ CRWD Buy @ $111
Datadog/ DDOG Buy @ $92
Dexcom/ DXCM Buy @ $427
Docusign/ DOCU Buy @ $211
Epam Systems/ EPAM Buy @ $282
Etsy/ ETSY Buy @ $116
Facebook/ FB Buy @ $250
Fastly/ FSLY Buy @ $93
Ferrari/ RACE Buy @ $178
Fisher & Paykel/ FPH Buy @ A$33
Five9/ FIVN Buy @ $117
Futu/ FUTU Buy @ $33.50
Fiverr/ FIVR Buy @ $91
Globant/ GLOB Buy @ $170
GSX Techudu/ GSX Buy @ $89
Horizon Therapeutics/ HZNP Buy @ $60.50
IDEXX Labs/ IDXX Buy @ $390
Intuitive Surgical/ ISRG Buy @ $675
Livongo Health/ LVGO Buy @ $124
Logitech/ LOGI Buy @ $72
London Stock Exchange/ LSE Buy @ 8450p
Lululemon Athletica/ LULU Buy @ $320
MercadoLibre/ MELI Buy @ $1094
MSCI Inc/ MSCI Buy @ $370
Nasdaq Inc/ NDAQ Buy @ $129
Nvidia/ NVDA Buy @ $420
Okta/ OKTA Buy @ $215
PayPal/ PYPL Buy @ $194
Peloton Interactive/ PTON Buy @ $66
Pinduoduo/ PDD Buy @ $90
Pool Corporation/ POOL Buy @ $312
Prologis/ PLD Buy @ $103
Renishaw/ RSW Buy @ 4800p
Repligen/ RGEN Buy @ $147
S4 Capital/ SFOR Buy @ 340p
S&P Global Inc./ SPGI Buy @ $345
Sea Limited/ SE Buy @ $120
ServiceNow/ NOW Buy @ $430
SolarEdge Technologies/ SEDG Buy @ $174
Splunk/ SPLK Buy @ $205
Square Inc/ SQ Buy @ $128 Inc/ STMP Buy @ $250
Synopsys/ SNPS Buy @ $195
Team17/ TM17 Buy @ 600p
Teladoc Health/ TDOC Buy @ $230
Tractor Supply/ TSCO Buy @ $141
The Trade Desk/ TTD Buy @ $445
Twilio/ TWLO Buy @ $270
Veeva Systems/ VEEV Buy @ $260
West Pharmaceutical Services/ WST Buy @ $268
Wingstop/ WING Buy @ $155 WIX Buy @ $285
Yougov/ YOU Buy @ 800p
Zebra Technologies/ ZBRA Buy @ $275
Zscaler/ ZS Buy @ $127

One of my strongest rules is run your winners, cut your losers. The recommendations above are all about that strategy, adding to positions with great fundamentals and strong share price performance.

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