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
682
£998.90
145p
163p
£1,111.66
+111.66
+11.3%
CHRT
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.