Listed Companies

Middleton Enterprises holds core, strategic, positions in HomeServe plc and Utilitywise plc.

Portfolio Strategy

The company also actively manages an investment portfolio.

The objective of this portfolio is to achieve long term CAGR in excess of 10%. The annual target is to generate a total return in excess of the benchmark, FTSE All Share Index.

The portfolio includes a selection of 8-12 high conviction stocks. The investment strategy is growth at a reasonable price, with a long term perspective.

Portfolio Performance 2016-17

Report on the 2016/17 Financial Year

The portfolio generated a total return of 23.5% in the year ending March 2017. In comparison, the FTSE All Share gained 17.8%.

The year was filled with plenty of macroeconomic events that caught investors’ attention, including Brexit and the US presidential election. Our strategy of ignoring the macroeconomic noise and stick to investing in high quality businesses allowed us to outperform the market for the fourth consecutive year. However our decision to avoid commodity related and financial businesses presented us with a tough challenge of beating the benchmark.

Our best performer in the year was an IPO we bought into last year, Mimecast. The email security company’s share price gained 164% in the year. Dot Digital, a new addition during the year, gained 63% and MasterCard, a company we have been invested in for several years, gained 37% in the year.

One of the cornerstones of our portfolio over the last several years ran into some unexpected trouble, as NCC Group lost 47% of its value. There were no other notable losses during the year, which is reflective of both the market conditions and our prudency in investing in only the best businesses.

Towards the back end of the year, we bought into the IPO of Global Benefits Group. GBG is a health-insurance business focused on the emerging markets with a market cap of less than £200m. We also purchased shares in a long time portfolio constituent, Dominos.

Portfolio Performance 2016-17

Report on the 2015/16 Financial Year

The portfolio generated a total return of +20.9% in the year ending March 2016. In comparison the FTSE All Share lost -7.3%.

The collapse in oil & commodities prices and Chinese economic uncertainty provided investors with plenty of obstacles throughout the year. Our decision to stay clear of such areas and focus on high quality businesses allowed us to outperform the market by a considerable margin. In our portfolio; Mortgage Advice Bureau gained +103%, Google +42% and RightMove +41%.

Our position in Barclays lost 40% following a tough Q4 for UK banks. This was followed by a decision to cut dividends while undergoing another round of restructuring. Shares in the FTSE 100 financial services firm have since started to recover in a strong start to the new financial year.

We bought into the IPO of Mimecast, the cloud-based email security and management firm. We have followed the company for several years as a private business and decided to make an investment following their listing on the NASDAQ.

We mentioned in our report last year that we intended to reduce our exposure to managed funds. This reallocation was largely completed during the year. The decision has so far proved a good one, as the direct investments in individual businesses have significantly outperformed the performance generated by managed funds.

Portfolio Performance 2015-16

Report on the 2014/15 Financial Year

The portfolio generated a total return of +8.7% in the year ending March 2015. In comparison the FTSE All Share gained 3.0%.

Equity markets were volatile but finished the year broadly flat. However, some high quality businesses continued to outperform. In our portfolio; Dignity gained +39%, Mastercard +24% and Rightmove +23%.

We bought into the IPO of Mortgage Advice Bureau. The company has a solid track record of growth and high cash generation. The Mortgage Market Review and recovering house transaction volumes are positive structural drivers.

Petrofac lost -12% as the price of oil and gas collapsed. We sold this position due to the uncertain outlook for the sector. Vertu Motors was down -8% in the period, but has gained some positive momentum since the yearend.

We have taken a portfolio decision to reduce our exposure to managed funds and increase investment in direct equities. This strategy is expected to be more volatile but should generate higher returns in the long term.

Portfolio Performance 2014-15

Report on the 2013/14 Financial Year

The portfolio generated a total return of +29% in the year ending March 2013. In comparison, the benchmark FTSE All Share Index gained +5%.

Macro-economic themes included the Fed tapering QE, depreciation of Japanese Yen, a selloff in Emerging Markets and a buoyant UK housing market.

Direct equities returned +44%. Notable positive contributions came from IT security provider, NCC Group (+40%) and house builder, Bellway (+29%). Loss making trades included International Personal Finance (-19%) and Centrica (-13%).

The biggest equity positions in the portfolio at the year-end were;

  • Bellway = 7%
  • Google = 7%
  • Domino's Pizza = 6%

Managed funds contributed +8% return with relatively low volatility.

Portfolio Performance 2013-14