April 2025: Performance, Trades, and Commentary

Only one trade this month amidst all the volatility! I also have a look at which companies will be beneficiaries of the Tariffs, and which will be losers

Performance Summary of The Boon Fund

April: -0.5% vs -0.6% (FTSE All-Share Benchmark)

YTD: -1.5% vs +2.8%

2024 : +11.8% vs +5.7%

A whipsaw month! The steep plunge of the markets at the start of the month saw The Boon Fund outperform the FTSE All-Share for about a week, until the recovery happened. So I end the month roughly similar to where I started, 4.2pp behind the index.

I should have deployed more of my 30% cash pile during that plunge, as many shares I was tracking tripped my buy alerts. However, a combination of a hectic week at work as well as a bearish personality meant I stayed on the sidelines, apart from one buy, which hasn’t quite turned out such a good buy yet (more on that below).

Where to go from here? I sense there is a lull before the storm. Indexes have recovered almost fully or more. Yet, it is hard to see Trump reversing back to the status quo before, as it would be a great embarrassment. Maybe we see a low level of 10-20% of tariffs. However, consumer and business confidence is already shot. You just have to see the profit warnings and downgrades from the USA airlines; travel is the most discretionary area of spend, and that cutback has started already. Other categories might follow. All bull markets require Confidence, and so if that has disappeared, the best you can hope for is a flat market. If that’s the most positive case of staying invested at the moment then cash seems a better place, with a 4-5% interest yield. Especially as the negative scenario is a recession and a market correction.

Is my portfolio geared towards a recession? Bits of it, such as:

• Begbies Traynor #BEG $BEG.L - Insolvency practitioner and commercial property auctioneer. Both will benefit.

• Mountview Estates #MTVW $MTVW.L - super discount to NTAV. Winner in a recession if residents can’t pay and are evicted - the Regulated Tenancy properties see a huge increase to market value, faster than waiting for tenants to die or leave naturally.

• Spectra Systems #SPSY $SPSY.L - long term contracts with central banks. Cash printing might dip in a recession, but is fairly resilient.

• Nichols #NICL $NICL.L - fairly resilient - cheap product (Vimto) and people still need a small treat once in a while, even in a recession.

• H&T #HAT $HAT.L - pawnbroker, will see a surge in demand.

• 30% of my portfolio value is currently in cash

But I also have some very exposed names, such as :

• Time Finance #TIME $TIME.L - lender to SMEs. Very very risky in a downturn.

• Robert Walters #RWA $RWA.L - executive recruitment. Volumes will be hit.

• Rank #RNK $RNK.L - gambling, especially in-person casino gambling.

• System1 #SYS1 $SYS1.L - their ad intelligence platform to help companies with their brand advertising will see diminished demand; marketing budgets always the first to be cut.

• Cavendish #CAV $CAV.L - there goes any hope of a recovery of the IPO market.

What to do? Radically changing my investment strategy to respond to Tariffs is probably not the right thing. My goal isn’t to generate positive returns all the time. It is to beat the FTSE All-Share consistently every year, and let the compounding do its magic. After a +67% return after 4 years (2021-2024) compared to the FTSE All-Share at +22%, I can take a down year.

I have belief that that the shares I have in my portfolio, will do better than the average company in the index. I would be foolish to keep hold of them if short term pressures emerge; so these days I’m keeping an eagle eye on the Exposed list above, to cut loose.

However, the next few months are going to be interesting. Trump is now moving into his next phase: instead of looking at Tariffs by country, he’s going to look at Tariffs by industry. The Film industry just got slapped with a potential 100% tariff. How practical is a Film tariff to enforce? What’s the probability the final tariff is at 100%? Who knows! But my commiserations to anyone holding Facilities by ADF #ADF $ADF.L or ITV #ITV $ITV.L as both are going to get clobbered this week.

One day, there will be a movie made about this time of Tariffs. I tried using Google Pixel Studio to create a movie poster of a film called “Everything made in America” with the producer Donald Trump. Unfortunately this is what I got….

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Portfolio Trades

Just one trade in April!

BUY: James Cropper #CRPR $CRPR.L

I wrote up a detailed post on why I am bullish on James Cropper. My view on the company hasn’t changed since I bought in early April, so there’s nothing more to add. I am, however, annoyed that despite all other shares having recovered, I am underwater on my 157p buy price. Still, I believe this could double or more easily, so what’s a 10-15% temporary loss.

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Portfolio Commentary

There were some updates that came out on a few portfolio holdings. Here are my thoughts below.

In the coming weeks, I’ll be writing up on some of the shares on my watchlist I have relooked at in the past month, especially those that have released a market update.

» Sosandar #SOS $SOS.L

The company uses the word “Inflection Point” in their latest Trading Update. Indeed, it does look like it has:

• Q3 (Oct24 to Dec24) revenue was -15% YoY

• Jan25 was -10% YoY

• Feb25 was -20% YoY (exception says company)

• Mar25 was flat YoY, and

• Apr looks like positive YoY.

The past year has been one of a huge strategic shift by the company. They had very boldly decided to wean themselves off the drug of discounting; an especially hard thing to do in the fashion industry. Indeed, the rest of the industry is still addicted to it; the British Retail Consortium says “fashion price deflation” was a major driver for keeping inflation low in Mar25.

But is their new full-price model more profitable? H2 did £1.3m PBT on £21m of revenues. Last year’s H2 did £1.5m PBT on £21.5m of revenues. Singer the broker, in their updated note, says that new store openings incurred one-off costs of £0.4m in H2, so that’s actually more like £1.7m adj PBT for H2. So better than the £1.5m YoY, on similar revenues.

The fashion industry has probably shrunk since H2-23. So arguably, a strong result YoY for Sosandar, likely gaining market share.

So where do we go from here? Singer kept their FY Mar26 forecasts unchanged, which calls for adj PBT going from £0.9m to £1.5m, a whopping increase. Revenues are expected to increase +24% to drive this profit growth.

It’s sounds like a stretch - even with more new stores, as well as the NEXT homeware licensing income kicking in from Autumn 2025.

In addition, the latest Barclays consumer trends data shows that Q1-25 (Jan-Mar) saw a recovery of sales volume, c+3%, for Clothing Retailers. In value terms, it was c+0.3%, so price deflation is still happening.

I take a different view of FY26; I think revenue growth will be muted, of +10% instead of Singer’s +24%. However, I think Sosandar will be able to squeeze more operating margin. More owned stores and website sales (higher margin, full price) than 3rd party (Next, M&S, etc). In addition, the Trump tariffs will make their sourcing of clothing much cheaper. Both production costs and also shipping costs.

My own calculations show that at a +10% revenue growth a 7% operating margin (they have achieved this historically too) we can get a 0.87p EPS. Higher than the 0.5p EPS that Singer have. This puts the current 6p share price at a 6.9x PE, which for me is cheap, if you believe there is further growth to come.

Further growth above +10% does look possible; there are two main avenues. The first is the continued roll-out of the store network. They seem confident that it is profitable, as they have now gone up to 6 stores from the initial 3.

The second is international distribution; they have proven the model in the UK via M&S, NEXT, etc. So why not do it with more partners globally? This seems logical and capital light, saving it for the store roll-out in the UK.

Hence I can easily see Sosandar’s share price doubling or more in the next year, as the brand gets back to YoY growth numbers, and shows excellent gross margins and operating margins, the fruits of its full price strategy. In addition, there will also be the store growth story, and possibly an international growth story too. This is a winning combination to interest and excite investors.

I am now at my maximum position size given the low liquidity here; otherwise I would have topped up more after this trading update.

» Spectra Systems #SPSY $SPSY.L

FY results to Dec24 were released, and the SP is about 5% lower. Their results aren’t the easiest to read; very condensed and economical use of words. One has to really know the company, and read things thrice, to understand.

I have been invested here since 2021, from around 140-160p, up to the highs of 250p, and now back to 200p. The dividends (c4-5%) have helped me stay patiently interested. This company moves slowly, given all their contracts are super long term.

Therefore, any major re-rating rests on the outlook statements - can they land a whopper contract? They did that in 2023-2024 with the sensor development and manufacturing contract with a central bank. Hence the huge EPS jump for FY Dec24 and FY Dec25.

The question is what’s next to keep the EPS momentum going? Brokers have FY26 EPS contracting by -30% as the sensor manufacturing contract ends…!

There are three main growth opportunities here:

#1 - A multi-year maintenance contract with the central bank they are manufacturing sensors for, to be announced imminently

#2 - Use of their covert optical materials (primarily used in banknotes) into “industrial applications” combined with smartphone verification technology

#3 - Selling polymer substrate materials for the first time to a central bank

Now, #1 is pretty much in the bag. The central bank is not going to get maintenance of sensors that were built by Spectra, from anyone else. Just a matter of waiting for that signature to be signed. This isn’t in any of the broker forecasts for FY26 yet! So expect an EPS upgrade.

I rate #1 opportunity as a 95% chance.

#2 has already been validated with an industrial partner for tax stamps, and the company is already talking about “scaling up production”, so it seems more than a 50% chance they will win some contracts in this area? It is mentioned five times in the FY results.

I rate #2 opportunity as a 70% chance.

#3 is the big one if they can crack it. They are looking to break the duopoly of CCL and De La Rue. The latter just got a takeover bid (more of that later). First, they need to be added to the “qualified” list of suppliers of a central bank. They have been waiting for this from a Middle East Central Bank since last year; it was meant to come in Q4, so that they could take part in Q1 tenders. They still haven’t gotten it. And they say they expect it sometime in 2025 now. So earliest they might win a tender is end of 2025. I think revenues from polymer, at the earliest, might be 2027 onwards. However, just winning a contract here, would re-rate the valuation towards a 20x+ PE from the current sub-10 PE.

I rate #3 opportunity as a 25% chance.

So where does this leave us?

Given the three opportunities and the high likelihood of two of them, I think the FY26 EPS forecast of 22.7c stands a strong chance of being upgraded.

I’m not knowledgeable or smart enough about their business to quantify what #1 and #2 might be worth in terms of EPS.

But even if I bearishly use the 22.7c (17.0p) broker forecast for some calculations... when the two contracts come through, investors will re-rate this again to a growth share. Spectra has consistently been able to get a 23x+ PE valuation in the past. If I further take a haircut here to say 20x, given we’re projecting out to FY26, that’s a potential share price of 340p, once opportunities #1 and #2 are in the bag. Representing a 65% gain from the current share price.

So I continue to hold here; I see the current SP weakness as just stale bulls exiting because of the time it is taking for the opportunities to crystallise. I will also be looking to top up on any share price weakness here.

PS - a trump card (no pun intended!) here is that Spectra’s HQ and manufacturing facilities are based in Rhode Island, USA. I wonder if they are now able to pick up more contracts from non-USA based competitors?

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