June 2025: Performance, Trades, and Commentary

Another good month, with only one buy (THG) and sell (TIME) out of the portfolio. I analyse updates from RNK, MTVW, and RWA, as well as share four companies I have my eye on...

Performance Summary of The Boon Fund

May: +3.7% vs +0.3% (FTSE All-Share Benchmark)

YTD: +12.7% vs +6.8%

Since Jan 2021: 14.7% yearly IRR

Another good month for returns, right after my best ever month. It does feel like animal spirits are slowly coming back, and while the FTSE All-Share only rose +0.3% in June, the MSCI World Index gained 4.2%, driven largely by the US markets. Who would have predicted back in April with the Tariffs, Ukraine, Iran, Big Beautiful Bill, rising long treasury yields all weighing on investor sentiment. Goes to show that the markets are always unpredictable!

Where do we go from here? I have my personal bearish views that the Tariff impacts are still to be felt, and the Big Beautiful Bill scares the bond and currency markets sufficiently that we’ll have a bit of a wobble at some point. But I also know that I have my own “bear” bias on this topic and am no expert on either topic.

So I’ll just keep doing what I do best and focus on finding good share opportunities to invest in. My goal isn’t to predict what will happen macro-wise, but just focus on beating the FTSE All-Share index.

Specifically in the UK, the AIM100 still looks like the ideal place to focus on. Despite its Growth-focus, it now yields 3.41% dividends on (mean) average, compared to 3.15% for the FTSE-100. It only trades at 3.1x P/B value, compared to 3.6x for the FTSE100. And there is a 19.5% forecast EPS growth rate, compared to 10.7% for the FTSE100. And AIM companies are being picked off weekly by takeover predators, so there’s then an outsized chance of juicy takeover premiums too. Plenty of the Boon Fund gains in the past have been generated by takeover premiums; I’ve been lucky to have one or two every year, despite my concentrated holdings (c15 shares usually).

Currently, my portfolio is 31% cash, similar to end of May (32%) and it is a position I think is too high long-term. Very few shares on my watchlist got to acceptable prices in June, so I’ll have to be a bit more patient.

A reader had commented recently that I hardly flag up any positive recommendations. By nature, I have a very critical eye, so I tend to spot all the negative aspects of a share quicker than the positives. I find this serves me well, as I can always get the positives by reading the broker notes and other investor writings. The negative view on a share is much, much harder to find.

I am very selective in what I buy, as I only add 5-10 new positions to my portfolio every year. I am also very selective in my watchlist of 50-ish shares, as I do this in my spare time after my day job.

What this means is that when I write about a share, it is on my watchlist, otherwise I wouldn’t have done the deep research. The fact that it is on my watchlist means I see potential from making money from that share. I need three things before I invest - EPS Growth Potential, Balance Sheet Comfort, and An Emerging Story. The last one is crucial - I’m not just looking for a company that can grow their EPS. I am also looking for situations where the PE valuation will expand. The intersection of EPS growth and PE expansion is the sweet spot I’m looking for, where 40%+ share price gains within 2 years is possible, which is my internal hurdle rate for choosing what to invest in.

I try to find companies where the Investing Story is not so exciting currently, but where I can see it changing in the future, and therefore drives that PE ratio expansion.

So ergo - while I am not here to recommend any shares, you can assume that any shares I talk about, is on my selective watchlist, and therefore one that I’m likely to buy, when it meets all three criteria above.

My three criteria is like the X-Factor… only shares that satisfy all three make it into my portfolio! Source: Microsoft Copilot

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Looking forward, shares I’m closely monitoring

I keep looking at Rio Tinto #RIO $RIO.L as a possible buy, having flagged my interest in last month’s report. But resisting to do so as I know that I have very little knowledge of the mining sector. Also as a mega large cap (£69bn), I know there is a huge information asymmetry between myself and the hundreds or thousands of investment funds globally who track it on their watchlists.

Rio Tinto is at lows that making it very tempting to bottom fish. I believe in an emerging thesis that the huge military expenditure earmarked for the next decade will drive huge demand for iron ore and other metals (this is an example of the third criteria I look for - An Emerging Story). But it is, of course, a very slow moving demand trend over a decade, with the first few years the slowest bits. So what to do? If this was a small cap, I would have probably taken the plunge. But I’m second-guessing that smarter, better resourced investors than me have run the rule and concluded the current low share price is fair value.

A few more companies on my watchlist that are in turnaround situations look like they are moving in the right direction, but not quite there yet to be the right balance of reward/risk. Synthomer #SYNT $SYNT.L has spent the last two years on life support, with challenging sales and a huge debt pile. Some green shoots of top-line sales recovery and a new strategy focusing on higher margin, advanced chemicals.

But they’ve now had to secure a further covenant holiday from the banks, so it looks like another 18 months or more of being in the danger zone, balance sheet wise. I think the sum of parts here is probably greater than the current EV. The company is selling off non-core, non-crown jewel divisions at the moment, but I think they might be forced to consider a bigger break-up at some point, to get their balance sheet in order. This might also unlock some equity value. The current market cap of £150m for a c£2bn revenue company, which should be making a decent 7-15% operating margin… that’s a ridiculous bargain territory.

PZ Cussons #PZC $PZC.L is another company undergoing transformation. It has been trying to shed non-core divisions. It managed to exit its JV in Nigeria, but then didn’t manage to sell the St Tropez brand. Some debt is being paid down, which is good. It trades (at 10x PE) at a vast discount to other listed FMCG / Consumer Defensives companies.

The key problem is that PZC is too sub-scale. Investors give a high rating to Consumer Defensives companies like Unilever and Reckitt because they are very diversified, so earnings are more predictable. I think PZC will always stay at a big discount just because they are too dependent on a few brands. The only way to get to a higher rating is to become bigger with more brands.

PZC would make a nice bolt-on for a larger company. Even at a 40% premium (ie 14x PE) it is still less than the 20x PE some of the big Consumer Defensive giants trade at. However, there is no takeover potential here, as the founding family concert party have a majority control of the shares, and seem unwilling to consider a sale as an option.

If PZC manage to demonstrate that they can get good sustained growth in their portfolio brands, the shares could re-rate quite nicely to a 13-15x PE, on top of any EPS upgrades. Hence why I keep tracking it for now, to see signs of that.

Topps Tiles #TPT $TPT.L had a really good Q3 trading update. What makes it so stellar is the economic backdrop - most other home improvement companies are still struggling, consumer discretionary spending is still fragile, and home moves / new homes volumes are still muted. So I definitely think they are doing something right to outperform the market. They have been quietly outperforming the market for a few years now, actually. Steadily increasing their market share. Yet their SP are at multi-year lows, and now yielding a decent 7%+ dividend. I had a buy trigger at 35p; missed out buying when it dipped below that for a few days, and now its 37-38p after the Q3 update. I will be doing a deep dive into TPT next week, and could very well decide to buy some at the current price.

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Portfolio Trades

Only two trades this month, one buy and one sell.

» BUY: THG (The Hut Group) #THG $THG.L

I did a detailed write-up on THG when I bought. I picked up a medium sized position (5-10% of my portfolio) here at c24p. The AGM Trading Update validated my hypothesis, that MyProtein has some very good sales growth momentum behind it, which should turbo-charge EBITDA this year and make the Deb/EBITDA ratio look much better come year end. It is now trading at 32p, so am already up c30% in just a few weeks.

It is my biggest holding now, and despite the low market sentiment towards it, I think it is a pretty safe bet.

My thesis still stays the same. There’s accelerating growth from their MyProtein division and the debt position is now dealt with and rapidly improving. There are plenty of buyers sniffing around that I’d be surprised if there were no more offers to buy THG or parts of it. 60p+ is where I think it can go.

The fly in the ointment? There were 6 shorters when I bought and THG was in the top 10 most shorted list in the UK. It has now come down to only 4 shorters and 2.3% and out of the top 25, which I can live with. I always have to question myself, me doing this investing gig in my spare time… what have I gotten wrong or missed compared to these six institutions, all of whom have full time teams looking at this? So that is the potential red flag here. But I have got strong conviction that everything is lining up nicely here for THG, and we will see increasingly better results and more balance sheet strength in the quarters ahead.

» PARTIAL SELL: Time Finance #TIME $TIME.L

With the latest Time Finance trading update showing rapidly slowing growth in the Gross Lending Book and Unearned Income, I decided to exit my very successful investment here.

Having bought in between 16p-23p in 2021 and 2022, I topped up further along the way, and sold out between 60p-63p. As it was fairly illiquid, I had to take several days to sell out, and after month end in early July, I disposed of the last of my holdings.

This has been one of the most successful investments for me, a 3-4 bagger. Kudos to Time Finance management for having spotted an opportunity in SME lending, and going after it and as a result achieving their 3 year plan sooner than they expected. They’ve grown the top-line, improved operating profit margins, even reduced bad debt and arrears percentages despite the rapid growth in the lending book. They have consistently beaten broker forecasts in the past year or two, leading to continuous EPS upgrades.

There is a new 3 year strategic plan now in place. More of the same stuff: keep growing asset financing, invoice financing for SMEs. But for me, my worry is the major slowdown in the Gross Lending Book and Unearned Income metrics. Both of which are leading indicators for revenue and profits in the next 12 months.

There are plenty of investors who have invested for the high growth, and some of them will be jaded and impatient in the next two quarters when revenues, profits rise only by low single digit percentages, and TIME stop beating broker forecasts. I think the shares will probably go sideways or even down for the next 6 months or more. If things dip back to the 40p mark as it has recently, I might be tempted to open up a position again.

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Portfolio Commentary

» Rank Group #RNK $RNK.L

Last month, I mentioned that changes to gambling legislation was finally getting on the legislative agenda. Now it has been confirmed - and starts 22nd July. This will allow Rank to increase the number of slot machines in its casinos. We should see quite a big step-change in revenues and profits from their Grosvenor casinos division.

Brokers haven’t really upgraded their EPS forecasts yet officially, so there is likely to be a further surge up in the share price when they do.

Shore Capital, one of the joint brokers, estimates this could add 3p to EPS. The forecast for FY Jun25 just ended was only 8p, so this is quite a substantial step up in profits.

I think Rank should easily be trading at more than 230p. While most investors favour online casinos instead, I actually favour Rank because of its offline arm. New land-based casino licenses are almost impossible to get now in the UK, so there is a natural moat, especially with the increasing adult population and inbound tourism. The government is also cracking down on online gambling, which will drive more hardcore gamblers to land-based casinos. Limits are higher, and there are less restrictions. In this situation, Online is not always better than High Street.

However, Rank is also exposed to online gambling, as a substantial portion of their revenue comes from their online operations. So there is that trade-off to consider.

Regulation-wise, now that the government have passed their big gambling legislative update, I expect there to be a stable no-change environment for the next 2 years at least. The only risk I can see on the horizon is Rachel Reeves increasing gambling taxes in her Autumn Budget. One to keep an eye on.

» Mountview Estates #MTVW $MTVW.L

Disappointing FY results out, and as usual, very short on details. We’ll have to wait for the full Annual Report to get all the details.

I really do need to do a full write-up here on Mountview given it is one of my long-held positions. But if you’re interested, Maynard Paton has been publishing very detailed commentary on Mountview Estates for years. His view is that the NAV is closer to 16,900p compared to the sub-10,000p it trades at currently. It is a special situation, as Mountview mainly holds Assured Tenancy properties, which have tenants paying well below market rents. Landlords have limited avenues for eviction. But when a tenant leaves (usually through death), it can be sold as a “normal” property. So the value of the property is far higher when vacant, compared to with a sitting AT tenant. And that is how Mountview have been generating lots of good returns for shareholders in the last decade or so.

I hold because the 5%+ dividend currently is quite stable and compensates for opportunity cost. It is trading below book-value NAV, and far below realistic present-day-value NAV. Looking at the historic 10-year trend of share price premiums to NTAV that have been possible, I think at some point this could go from the current 6% discount to NAV to 20% premium to NAV. NAV will also steadily rise as more AT tenants vacate, and properties are sold at a big premium to book value. 13,000p is my target sell price here, from 9,750p currently. However, it might take a few years to get there, or never.

There is also a small outsized chance that Mountview changes its strategy and disposes its AT property portfolio in a bulk sale to a trade buyer. It won’t realise the full value (16000p+ Maynard Paton estimate) but maybe in the range of 12,000p to 14,000p.

» Robert Walters #RWA $RWA.L

The woes here continue… with the share price continuing to drift down, now at 180p, far below my 290p initial purchase in Jan25 and 218p top-up in Mar25. I definitely jumped in too early. It is also one of my top 5 positions, so has been a painful drag on my portfolio performance.

Talking to other investors about the recruitment sector, AI is immediately cited as why they aren’t interested in recruitment. On the surface it makes sense - if a HR department can use an AI to sift through all the CVs and identify the best candidates, then external recruiters aren’t required right?

I think of it in a different way. HR departments are rarely tech savvy. Those of you who have worked in large corporate environments - how often have you loved the Corporate Intranet, the various HR systems for Expenses, Annual Leave, Policies? I’d say probably none of you. Companies do not think about HR when allocating Tech and R&D budgets. So why would a cutting-edge technology like AI make its way successfully into HR departments?

More likely, the external recruiters like Robert Walters will invest in AI. Each Fee Earner will be able to handle more roles, so more profit for the Recruiters, or fees will be slashed for the clients (HR departments).

This makes it even more attractive for HR departments to outsource recruitment to external recruiters; high fees has always been the sticking point. HR teams hate to have a big recruiting team and would rather prefer to outsource it, because recruiting volume is very lumpy and unpredictable. When a company is doing well, there might be tons of vacancies opened. In struggling times, new headcount is often frozen.

Success of AI for a specific workflow also requires a good volume of structured data. A company might hire 2 data analysts for example a year. A recruiter will have hired hundreds across all the clients in a year. Which one has better training data for AI to better identify the best data analyst out of the hundreds of CVs sent in?

But I know I am very much a contrarian position here, against the vast majority that believe AI will make external recruiters redundant.

I keep doing the sums, and even with a modest recovery of 10% of revenues from current lows, a conservative assumption of 4% operating margin (they can easily do 5%+), I struggle to see less than 30p EPS as a conservative earning potential in the years ahead. The current SP (180p) is assigning a PE of 6x, which is crazy.

The company has demonstrated that it has no balance sheet danger with its cash pile. It is also very operationally nimble, able to slash headcount and costs in-line with the revenue decline so far.

I am very tempted to have a bit of a top-up at the current levels! But am I just catching a falling knife? I tried catching the falling knife at 290p when I thought it was a bargain, and also at 218p. Do I just have a blind-spot here with Robert Walters, and should cut my losses and not throw any more good money into the pit?

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