The STRIDE Blog

#11 Little Acorns: 16.1% up on holdings before 'Santa Rally'

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We are seasonal creatures who love a tradition and never more than at Christmas. Even in countries with December summers so hot it's a challenge to chill poolside cocktails, Santa still appears in his fur trimmed suit, his beard sprayed with aerosol snow. Our love of seasonal habits also stretches to the markets, with a Christmas hike in stock prices as traditional as eggnog, tinsel and tartan socks.

So this is Christmas

2015 was a year of huge ups and downs for the financial world. After the disastrous summer for markets across the globe, October and November were months of recovery. Now, after another period of volatility, many believe we are looking forward to a notable Santa Rally.

Certainly, after my portfolio hit another high of around 15% in November, it has levelled off at 12.8% (after my high fees and a full 16.1% on holdings ex-cash), reflecting negative market activity over the past few days. It's still smashing the market though and I'm watching a few companies very closely now as share prices continue to flatline.

At the end of one of the most volatile years on record, I am wary of this year's traditional Santa Claus Rally. Rising share prices occur on average between December 15th and January 6th, and can be attributed to anything from seasonal optimisim, federal bank predictions, tax news, product trends or oil prices.

Whatever the reason, the S&P 500 has gained an average of 2.13 per cent during this period and has been recorded as profitable 80 per cent of the time, since 1950. The Nasdaq has posted a similar frequency of success, gaining an average of 3.17 per cent during this period since 1971.

Will tradition prevail? Rather than hope for a seasonal rise, I'm more interested in the dip that usually precedes it. There could be some great Christmas gifts in there for the value investor if we start hunting for bargains now.

My Christmas List

In the spirit of seasonal generosity, I've decided to share some favourites from my target list with you. These businesses represent great value opportunities. They are well established with great growth records. They are very strong, with STRIDE scores and financials that demonstrate they are well run. They trading well below their consider buy prices and pay dividends.

Sprue Aegis 

LSE AIM : SPRP

Sprue Aegis designs and sells innovative smoke and carbon monoxide alarms, plus other safety related products.

STRIDE's valuations have recently increased for this business thanks to its latest financial report. Currently trading at around £3, this is undervalued by almost £1. It's plain to see from the chart below just how this business has consistently grown since 2010 and, from its modest operating expenses, how well it's run. SPRP's impressive STRIDE scores reflect the strength of this business and it currently pays a 2.6% dividend.

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Playmates Toys 

Hong Kong Stock exchange : 869

Based in Hong Kong and the USA, this company was founded in 1966. It works with well known brands such as Teenage Mutant Ninja Turtles and Star Trek, to create high quality, safe, and innovative toys.

Currently trading at around HK$1.85, STRIDE's consider buy is HK$2.39 with a fair value of HK$2.97. STRIDE adjusted its valuations of this business upwards in September following release of figures. The next financial report is due at the end of December and, I'm expecting it to be good news based on the balance sheet chart and STRIDE scores and other ratings below. 

Playmates toys also pays a fantastic current dividend of 8.52%.

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Little Acorns Portfolio Summary

Overall value: $133,139.31 (12.8% up after fees and including cash)

Holdings: $108,105.03 (16.1% up)

Cash balance: $25,034.28

Biggest gainer - ATOSS  Software: 116%

Biggest loser - FT Group: -67%

My latest email update below. Merry Christmas and see you all in 2016.

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Topics: STRIDE, International Investing, Little Acorns Portfolio

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