May 2025: Performance, Trades, and Commentary

Probably my best ever month of gains. Two sells, no buys, and three notable company updates this month. #HAT , #PGH , #CAM , #BEG , #RNK

Performance Summary of The Boon Fund

May: +10.3% vs +3.6% (FTSE All-Share Benchmark)

YTD: +8.6% vs +6.5%

Since Jan 2021: 13.9% yearly IRR

Wow, I have had one of my best months EVER, something I would not have bet on at the start of May. The improving markets helped, but the main drivers were some share-specific news.

This +10.3% outperformance has also been achieved despite being 28% cash at the start of the month and rising to 32% at the end! If only I’d gone fully invested…

Anyways, some notable rises and fallers this month:

Rank #RNK $RNK.L rose by +48% as the market finally priced in the upcoming reforms to the gambling legislation, that was flagged well in advance by the company, and was a major part of my buying thesis back in July 2024 (FINALLY came good). I’ve got a deeper update below in the Portfolio Commentary section on all the extra profits to come from the new legislation.

James Cropper #CRPR $CRPR.L rose by a whopping +111% as the markets realised it wasn’t going to breach covenants, as well as renewed optimism around new green hydrogen projects in the UK. This was a pleasing quick gain, as I only bought a month ago in April, having flagged up both points in my in-depth buy post of James Cropper. I think it still has more to go; my fair value here is 400p+, and its currently around 300p. Given the rebounding optimism and hype around Green Hydrogen (search for HAR1 and HAR2), this could really soar way above that 400p fair value, if they announce a contract or two.

Sosandar #SOS $SOS.L rose +50% on no news…. probably was just way oversold, and benefited from a positive momentum in UK consumer sentiment in the last few months, as well as the spring weather that couldn’t get more perfect (for fashion dress retailers like Sosandar).

Across my portfolio, every one of the 17 shares gained in May, except for Robert Walters #RWA $RWA.L. This is one of the biggest unrealised losers in my portfolio at the moment. It lost -8.4% in May. Having bought at 295p in Jan25, I topped up at 219p in Mar25, and the shares ended May25 at 207p. I haven’t written about my buying thesis yet, so maybe I should soon. In short, it has a rock solid cash position, shown it can nimbly cut costs to match revenue declines, has a leading brand name and client relationships, and unless jobs cease to exist or employees cease their desires to move jobs, it should see a bounceback to normal trends. AI is the key concern here; but I haven’t been able to find concrete evidence that executive recruiters are being disrupted by AI in a big way yet.

Maybe the market is already pricing in a world where robots take over all jobs. Then the likes of Robert Walters will be obsolete! Image Source: Microsoft Copilot

Looking forward, shares I’m closely monitoring

Where do we go from here into June? I feel that markets are complacent about the impact that tariffs are going to have, even if TACO plays out and the majority of tariffs are watered down. They won’t go to zero and will still be a big tax even at 10%. In addition, all US companies have changed their behaviour somewhat since Liberation Day - either pausing or scrapping investment, loading up on inventory, freezing hiring, etc. All these will have an upcoming impact, regardless of what happens to the final tariff rate. Think of the “bullwhip effect” coming out of COVID that caused the Inflation chaos. Could there be a similar “bullwhip effect” of company reactions to Liberation Day, yet to arrive but will in the coming months? Like a tsunami… it takes time for it to reach, and by the time it does there is nothing you can do to stop the destruction.

The Boon Fund is somewhat insulated, with many defensive or counter-cyclical holdings, as well as a more UK domestic focus with very little US exposure. I will continue to buy shares if they reach prices that are tempting. I flagged up THG #THG $THG.L in my latest Shares I Looked At This Week post, and it is getting to an entry point price I can’t resist. Albeit I’m wary that the shorters are continuing to up their bets there, ever so slightly.

Rio Tinto #RIO $RIO.L is another share on my watchlist that has gotten to an interesting price. I held this before in 2021-2022, making a slight capital gain and collecting lots of chunky dividends. I’ve not done deep research, given its large cap nature, but it does feel like a good cyclical point to enter, given that commodities is now very out of flavour in the financial media and therefore off the radar for retail investors. All that new military equipment being built over the next few years, and the factories that need to be built to build them - won’t they need metals?

I am also tempted to top up System1 #SYS1 $SYS1.L as the price has gotten to a ridiculous 400p low. I rate the chance of a strategic USA acquirer (adtech SaaS or marketing agency) snapping this tiddler up at >50% sometime this year. The big fly in the ointment, of course, is that System1 has put all its growth eggs into the USA basket. With the Trump tariffs, company marketing budgets are probably under threat. My checks through my marketing network does suggest some lower sentiment and probably budget cautiousness. However, System1 keeps recruiting more salespeople and account management people in the USA, which you wouldn’t do if new client onboarding is slowing down. So a mixed picture. Maybe if it gets meaningfully below sub-400p, I will have a small top-up.

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Portfolio Trades

Only two sells this month! No buys.

SELL ALL: H&T Group #HAT $HAT.L

My first takeover offer this year! It was a bittersweet one as I only managed to buy a fifth of the size that I wanted, refusing to buy more when the price went up ~5% above my buy threshold. Should have just sucked it up and paid it… as it rose +90% due to a takeover offer from a strategic buyer from the USA.

The price offered (660p) was ALOT higher than my fair value (500p+) so I am definitely happy with the outcome here. Especially as I only bought three months ago in Feb25, so that was a quick gain.

SELL PARTIAL: Personal Group #PGH $PGH.L

I decided to bank some gains here, and sold just over half my stake. My initial investment thesis from Apr24 has largely played out and now accepted knowledge in the market. I’ve crystallised a +68% capital gain with some dividends too. The current price is c280p, but I think there’s a very strong chance it can get to 330p, and some chance of 380p+, hence why I’ve decided to only sell partial and not fully, to retain some upside. It has a winning sales growth formula in its insurance arm; all they need to do is keep adding lots of field sales agents. The blue collar workers it targets are the highest beneficiaries of the big minimum wage rise in April, so with more money in their pocket, the smart ones will opt to buy some insurance. I wouldn’t be surprised if we see the next trading update with a modest beat to forecasts. Their other main division, a SaaS platform to manage employee benefits and perks, has also launched a “version 2.0” last year, so should see some strong growth too in client sign-ups this year. So firing on all cylinders. Its no surprise that many investors have cottoned on and driven the share price higher in the last few months.

The big risk? A loss of a big client. They don’t disclose the size of their clients as a percentage of revenue, but I suspect some of them might be like 5%-15% of total size. The mitigating factor here though is that the existing insurance policies sold are with individuals, and those keep running until cancelled, so the revenue decay is gradual rather than a cliff.

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Portfolio Commentary

» Camellia #CAM $CAM.L

The company announced a Tender Offer to distribute some of the returns from the BF&M insurance sale. It was disappointing - only offering buy up to 12.5% of shares outstanding, at a 5400p price that was a small premium.

The largest controlling shareholder, Camellia Foundation (52% shareholder) and all the Directors have elected not to participate in the tender. I guess they believe that the company is worth much more than 5400p? This will probably get Camellia Foundation closer to the 75% mark, which raises the risk of a potential delisting, given that they look like don’t have any intention to sell in the short or medium term.

The latest InvestorMeetCompany presentation on the new Value Enhancement plan was disappointing. Barely any details, just very broad strategic strokes and slides that could have been done by a first year MBA student. It all makes sense, but I get the feeling that they believe their Operations are already well-performing, and that they have just had bad luck with the Bardsley acquisition in the UK, as well as market driven headwinds across their various crops and geographies.

Clearly market forces have been challenging. Management stated an ambition of the Value Enhancement plan to get back to 5% ROCE; my rough calculations show that if they manage to, that could be a 400-450p EPS (after the Tender offer), and therefore the current share price (5200p) is still well in excess of 10x PE, which is high for an agricultural business.

The investment case here therefore lies on whether management can grow top-line revenue, as well as hit >5% ROCE. If there is a revenue recovery of say 20%, then we get an EPS around 480-540p; better in terms of the current 5000p share price valuation.

Further shareholder returns looks off the cards for the rest of the year, bar the dividend which looks 99% sure, giving a 5% yield this year.

My conservative NTAV calculations is at 8800p, and the current SP is at a whopping 40% discount. They should be able to realise greater than book value for the property sales (Linton Park, London, Bristol) as well as their “Heritage Assets” like paintings and collectibles. So I’m loath to sell anything less than a 15% discount to my-conservative-NTAV, which is a 7,500p share price target I’m hoping for. I bought in at 5000p and this would represent a 50% gain, plus being paid 5% dividends while waiting. So I will continue to hold, and did not take part in the tender offer at 5400p.

» Begbies Traynor #BEG $BEG.L

Their FY25 trading update came out, and showed some pleasing revenue growth rates of +12%. While acquisitions do cloud the picture, in this case the organic growth rates were strong for both divisions. Business Recovery was +11% growth, and Property Services +7% growth. It seems that H2 had good growth momentum that carried on from H1 (+12% and +8% respectively).

Headcount in both divisions are now +9% YoY and +7% YoY, so they are banking on continued growth in FY Apr26. I had a check of their open vacancies, and in Business Recovery it is at the highest number of vacancies compared to the last 24 months. In Property Services, it was the same story. So looks like they are still recruiting strong going into FY26, so current trading and pipeline visibility must be good.

Indeed, they mentioned in their commentary for Business Recovery that “… increased fee pipeline on appointed cases underpins continuing growth into FY26”. My checks of their insolvency appointments suggest that they have won quite a number of cases in the last 6 months. In Administrations, which are larger fees, they’ve won +14% more cases in the last 6 months to Apr25 compared to the prior 6 months.

There was, however, no commentary in the trading update, on the pipeline or short term trading prospects for Property Services. A purposeful or accidental omission?

I think brokers are currently underestimating the EPS for FY26. They have only a 0.15p increase to 10.65p. However, my calculations show that if there is an undemanding 7% increase in revenues YoY, that could result in an EPS of 11.25p. When brokers started covering FY26 back in 2023/24, they had estimated 11.3p, so this seems definitely within the realm of possibility.

In fact, one of the brokers, Canaccord state in their latest report “we see the risk to (our 10.5p for FY26) forecasts being to the upside”.

The bear cases? There is quite a few.

• The first is that while revenues grew +12%, adj PBT only grew +7%. Poor operational gearing. We will have to wait till the full results are published to see why, but this is disappointing.

• Sequential growth between the two halves was low. Revenue was +0% HoH, adj EBITDA actually went backwards -4%! There might be seasonality at play here, but I note that in the last few years, they have always had a stronger H2 than H1.

• Very high contingent consideration payments still being made. £4.1m in H1, £5.2m in H2…! Despite the slowdown in acquisitions within the past year. This sucked up a big chunk of the £19.4m FCF generated in the year. And don’t forget, there has already lots of new shares issued to the vendors of the acquisitions! Equity Development, in their latest note, estimate that there is still another £13m of contingent consideration to pay out until Dec27…! It does feel that maybe Begbies Traynor paid too much for their acquisitions?

I think there is little downside in the next 6 months here at Begbies, and a more than 50% chance that we see an upgrade to EPS earnings for FY26. However, organic growth is firmly in the single digit range, and it looks like investors are not keen on their acquisition growth model, and unlikely to re-rate this to a higher premium. In the past, this would have traded on a 12-15x PE, for the acquisition premium as well as the counter-cyclical premium. That would be a SP of 130-170p. Can Begbies get either premium rating back? Otherwise it would probably languish in the 8-10x PE, which is 85-110p share price, the range it is trading at now.

I continue to hold as a counter-cyclical balance in my portfolio, and for the decent dividend (4%+) to keep me somewhat rewarded. I’ll probably pick up more if it dipped below 90p, and my sell target here is 140p or more.

» Rank #RNK $RNK.L

It is really pleasing when an investment thesis all starts to come true, isn’t it? All that hard work to research, analyse, create a point of view, calculate valuations…

In this case, the core plank of my Rank thesis took a year to come to fruition! Last July, it seemed imminent that reforms to the gambling legislation was due, but then it was delayed due to the elections. It was a painful few months to wait, but the government have now released a draft bill (updated 16 May) before it goes to vote in July time.

Rank’s own response and positive impact assessment (14 May) now means my thesis is fully priced into the market. The shares are now at 125p, well up from the 70p I bought in at.

Note, however, that the government had an update to the draft proposal a few days after Rank’s assessment. I’m 99% sure that the key difference here was one additional change that was not in the first draft, but was in the 16th May draft. And this change might have an even bigger impact on Rank’s profits.

This change relates to, quoting the gov.uk webpage:

Machines in arcades and bingo halls: allowing a 2:1 ratio of Category B to Category C and D gaming machines in arcades and bingo halls, implemented on a device type basis.

I believe that this is going to be a gamechanger for the Mecca Bingo Halls that Rank owns. They have spent the last 3 years restructuring Mecca so that it is now slightly profitable. Very difficult, given the decline in Bingo as a hobby.

Now that they are allowed to have more Category B slots in each Mecca Bingo, which has higher maximum bet per spin and so generates much more revenue per day, they can increase revenue per square foot without increasing any of their fixed costs, so all that Net Gaming Revenue falls to the bottom line. In fact, it doesn’t even need capex as all they need to do is update the software on the slot machine to accept a higher bet and have a higher prize structure!

This, I think, isn’t being priced in by most Rank investors yet. They have all read the Rank release on the 14th May, which talks about Casinos and more slots there. There are 51 casino venues and 51 bingo venues in Rank. So the bingo venues could have equal power to produce a profitability uplift.

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