June 2019 portfolio update

June saw a recovery after the May mini-selloff, a shame in a way as a few things on the shopping list were starting to have attractive prices. Unfortunately I was a bit sluggish, other people noticed and they started getting bought again. As a result I have quite a bit of dry powder to deploy, I'm sure the crazy gang of Trump, Johnson and Hunt will help the markets move back into buying territory before long.

Portfolio
The portfolio followed the wider markets and bounced back up this month, not with quite the same vigour but I'm pleased with it. The portfolio was up 3.2% compared to my chosen benchmark the Vanguard FTSE All Share Accumulation fund which was up 3.7% over the same period.

June prefect award goes to 888 (888), +24% following a positive trading update and a capital markets event that seemed to keep investors and analysts happy.

The dunce hat this month is with Fulcrum Utilities (FCRM), -15% due to a set of preliminary results that were delayed until July, due to some tricky sums. Unsurprisingly investors didn't react well.

June share purchase: SOM
Somero Enterprises (SOM) sell equipment to help make sure that when you're laying a concrete floor, that it's level. Really level. They are a US based business, with their HQ in Florida, and they make 69% of their money in the US. Despite this they are listed on the London AIM with a market cap around £160m.

They have been in business since 1986 and listed on the LSE in 2006. They have a great set of operating numbers, including over the last 5 years, ROCE averaging over 30%, net margins averaging over 20%, and zero debt. At the start of the year they reported a record order book, and things were looking very rosy, then severe rain hit a number regions in the US and put a halt to that. And as a consequence Somero announced a profit warning that dropped their share price by around 20%.

Somero is clearly a cyclical business, not the sort of defensive investment I would prefer, so I've only taken a small position - effectively recycling cash from the sale of Manx Telecom last month. If you take a look at Somero's results during the financial crisis around 2008/9 they followed the economy rapidly downwards. If the US economy starts to decelerate, or the Trumpy trade nonsense dramatically reduces business capital expenditure, I would expect Somero to suffer. My hope is that the weather impact to the business is an exceptional episode in an otherwise great business, so I jumped on the chance to get a sliver of the business at a discount.