Growth Portfolio continues upward trend

The market was unchanged on balance in the past few weeks and the portfolio has outperformed it. As so often happens, however, most of the outperformance has been down to a superior performance from constituent, on this occasion Tristel (TSTL) (. It was up by around 5.5% over the period. London & Stamford Property (LSP) also performed well.
 
The portfolio is now 39.9% up since inception (up 36% last time), a four percentage point gain. The market, as measured by the FTSE 100 (UKX) index, is now down by 4.7% versus around 4.6% down last time round), a fractional decline.

On a total return basis - in my view this is still the best comparison with the portfolio's performance - the market is up by 27.5% since inception, versus a gain of 29.6% as of last month, a small decline.

There have been no dividend payments since the last review. There have been several items of news from portfolio companies, in the shape of trading statements and results announcements. These have driven share price performance in large measure.

Tristel, for example, produced results for the year which were solid rather than spectacular, with turnover up 15% and pre-tax profits up by 6%. A hike in the full year dividend of nearly 10% suggests optimism for the future, however.

Export sales were strong and there have been several events since the year-end which augur well for the current year, including a licensing deal in the US with Clorox, new product acquisitions, and the establishment of an operation in China.

One of the strengths of Tristel is that its products are low ticket items and used constantly to stop potential infections in hospitals. So, although straitened spending in, for example, the NHS might theoretically have an impact on the business, in practice this looks unlikely. Management continues to be confident about the outlook for the remainder of the current year.

Tristel is the portfolio's largest constituent by some margin, and although it has been loss-making for us for some time, it is now almost back up to the price we paid at the outset. I think there is more to come from it, and although we may need to trim the holding at some stage for reasons of portfolio balance, for the moment we can, I think, hold on with confidence.

NCC Group (NCC) also delivered a positive trading statement, suggesting revenue ahead by around a quarter in what is traditionally the quietest time of the year, and with both divisions performing well and management anticipating that the companies is 'well on track to deliver another strong year, in line with expectations…'.

This about all you can wish for in a trading statement and it is a little hard to see quite why the market reacted to the statement in such a subdued fashion. I view the recent weakness in the shares as more of a technical response rather than cause for any undue concern. It is possible the market got a little ahead of the game in terms of expectations for the full year, perhaps anticipating something more bullish - hence the subsequent negative reaction.

At Avarae, the price has drifted fractionally. The AGM is due in the next week or so and is expected to nod through the changes I referred to in last month's comment, to allow the completion of the share buyback announced a few months ago.

Once this is out of the way, I expect a little more attention to focus on the substantial discount to net asset value on which the shares currently stand. As an indication of the confidence I have in this company and its advisers, I recently doubled up my personal holding - so I have more than an academic interest in the outcome.

Given the recent bout of weakness in the market, there is no need to add any new stocks to the Portfolio at this stage.