logo-loader

Joseph Piotroski’s value investment strategy showing some promise

Our portfolio of nine AIM companies which passed all of Piotroski’s checks is still in the red, but it has clawed back most of its initial losses

indifferent smiley face
The portfolio needs to get a move on if it wants to outperform the market

Just before Christmas, you may recall that we started a new stock screen which was trying out Joseph Piotroski’s investment strategy.

As a quick recap, the Piotroski F-Score is a type of value investing, much like Benjamin Graham’s or Warren Buffett’s strategies, but less famous.

READ: Is Joseph Piotroski’s investment strategy better than Warren Buffett's?

It is a set of nine rules that tries to identify underlying improvements in companies’ fortunes, looking at things such as strong liquid balance sheets, increasing profitability, and operating efficiency.

For every box a company ticks, it gets a point. The more ticks, the better the value of the stock and vice versa (supposedly).

When we ran the screen back in November, only nine AIM firms passed all of Piotroski’s checks: metal basher Braime Holdings PLC (LON:BMTO); egg-free cake shop chain Cake Box Holdings PLC (LON:CBOX); billing systems firm Cerillion PLC; tech group Cohort PLC (LON:CHRT); blood test manufacturer Ekf Diagnostics Holding PLC (LON:EKF); Falkland-focused FIH Group Plc (LON:FIH); zinc miner Griffin Mining PLC (LON:GFM); chocolatier Hotel Chocolat Group PLC (LON:HOTC); and security systems specialist Synectics PLC (LON:SNX).

We invested £1,000 in each company – give or take a few pence – although the value of the portfolio took an immediate hit from some wide spreads and dealing fees.

Ticker

Company

Shares owned

Initial cost of shares*

Initial cost per share

Current bid price

Current value

Change

% change

BMT

Braime

60

£1,000

1,650p

2,100p

£1,260

+£260.00

+26.0%

CBOX

Cake Box

550

£1,000

180p

155p

£852.50

-£147.50

-14.8%

CER

Cerillion

682

£998.90

145p

163p

£1,111.66

+111.66

+11.3%

CHRT

Cohort

230

£999

430p

365p

£839.50

-£159.50

-16.0%

EKF

Ekf Diag.

3,640

£1,000.08

27.2p

30.4p

£1,106.56

+£106.48

+10.6%

FIH

FIH Group

330

£1,000

300p

270p

£891.00

-£109.00

-10.9%

GFM

Griffin Mining

916

£999.28

108p

100p

£916.00

-£83.28

-8.3%

*includes £10 dealing fee

  • Cash: £3.74
  • Value of portfolio (inc cash): £8,963.96
  • Starting value of portfolio (Nov 2018): £9,000

Recovering its losses, but more needed

The plan was, as it still is, to leave the portfolio alone for 12 months, by which point it has hopefully outperformed the general market, as has happened when others have used this method in the past.

After the first quarter, we’re still in the red but the stocks have generally done ok which means we have clawed back most of those initial spread- and fee-related losses which wiped £540 from the portfolio’s value.

Braime is the star performer despite its radio silence since the end of September. Perhaps that’s a tactic other AIM companies could employ going forward…

Cerillion has also performed well, aided by a major new contract win with a US-based telecoms provider worth £6.3mln (US$8.3mln).

A slew of contract wins hasn’t managed to offset a weak set of half-year results from Cohort, while Cake Box has struggled from the knock-on effect of the Patisserie Valerie saga.

We’ll take another look at the portfolio over summer, when it will hopefully have made a bit more progress.

It needs to get a shift on though, with the AIM All Share, and markets generally, enjoying a resurgence so far in 2019 after the torrid end to last year.

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Stobart Group PLC reports ' strong strategic and operational first-half...

Stobart Group (LON:STOB) CEO Warwick Brady and CFO Lewis Girdwood highlight what they believe to be the 'significant growth potential' within its aviation division and in particular at London Southend airport. Passenger numbers at the airport increased by 41.8% to 1.2 million in the six...

2 days, 9 hours ago

3 min read