Ideas of the Week Review 2022

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Each week, this magazine publishes two investment ideas we think readers will find interesting.

Occasionally, these are ‘sell’ ideas, which can be interpreted as an argument for existing investors to exit a holding, or (for the more risk-tolerant) a short thesis. But the complications, costs and potentially unlimited downsides of short-selling mean that, historically, we have been more selective with our bearish calls. And given our leaning towards long-term investing strategies, and the tendency of markets to gradually rise over time, ‘buy’ ideas predominate.

It has been a few years since we referred to these buy and sell ideas as ‘tips’. To some ears (this editor’s among them) the word carries the grubby nod-and-a-wink connotations of the betting shop, or – somewhat more seriously in a country governed by Market Abuse regulations – a City type with their ear to a bit of inside gossip.

That was never our intention, and was part of the reason why we rebranded the section as investment ideas, which we like to think of as prompts for further research.

But their performance still matters. Returns, after all, are the reason why someone invests in the first place. And reviewing our ideas’ performance is always a worthwhile endeavour: by looking back at our reasons for selecting each  we can try to use hindsight to pick apart our biases.

Our collective headline performance created a mixed picture in 2022. Between 13 January and 16 December this year, we published 98 ideas, 86 of which were buys. In aggregate, they lost value, falling by an average of 3.9 per cent. Factor in inflation, currently hovering in the double digits, and the real-terms loss is compounded.

Ideas of the week performance 2022

Ideas Av. Performance Index Av. Out/Underperformance
Buys (86) -6.3% -5.8% -0.5pp
Sells (12) 13.6% -1.3% 14.9pp
All -3.9% -5.3% 1.4pp
Source: FactSet, accurate to 21/12/22. Simple sterling-based price returns. 

Our buys struggled, declining by an average of 6.3 per cent in simple price terms. Several well-reasoned ideas that tried to anticipate or reflect changing consumer sentiment – baker Greggs (GRG), discounter B&M European Value Retail (BME) and bus operator National Express (NEX) to name three – fell flat. Compared to the indices from which each stock idea was drawn (or used as a benchmark in the case of fund ideas), the buys’ collective performance was a bit worse. The average underperformance, also before dividends, was -0.5 percentage points.

But our investment writers, alert to the unending sell-off in risk assets throughout 2022 (and habitually cynical at the best of times), were full of sell ideas this year. In the event, we published 12, quadruple the number in 2021. Two-thirds were in positive territory by 20 December – which is to say the prices of the shares we wrote about fell, as expected – and the average return was 13.6 per cent, a full 14.9 percentage points ahead of their benchmarks.

This meant our 98 ideas beat their indices by an average of 1.4 percentage points in 2022. Plenty of caveats, including the hidden dealing costs of shorting and the exclusion of dividends in our calculations, of course apply. But given the backdrop (which in case readers need further reminding, was a horrible year for equities) this isn’t a terrible result.

Still, we should be clear on what exactly it is we’re measuring here. Our outperformance represents a hypothetical investor who doggedly deploys an equal amount of capital into two investment ideas each week, for 49 straight weeks. It might be a system, but it’s also a slightly odd way to invest.

Then again, this drip-feed approach would have insulated our share picker from the worst of the market pain. Pity any soul who, flush with cash and looking to finally get into stocks at the end of 2021, threw caution to the wind and put it all into a generic share index fund. Sometimes, timing really does matter; as the tables at the end of this article show, the worst-performing ideas skew towards the start of the year, in large part because that was when markets started tanking.

We can also be broadly happy with our ideas’ relative return distribution. Fifty-seven per cent of our ideas outperformed their benchmarks since their publication, and just one stock – hydrogen hopeful ITM Power (ITM) – lagged its index by more than 40 percentage points.

There were no knock-out performers or multi-baggers during the year, but nor were there many across the entire market, meaning we would have been particularly lucky to find one. More notable, however, is that our three best-performing ideas, in terms of both absolute and relative returns, were sells.

Of these, two – Ocado (OCDO) and Amazon (US:AMZN), which fell 50 and 40 per cent, respectively – were of a piece: much-hyped winners of the previous two years, with the technology and distribution networks to meet our pandemic-charged appetite for online ordering. This year, both companies have suffered as a mixture of waning consumer confidence and rising input costs chipped at or erased already thin margins. Growth stocks may have fallen out of fashion this year, but it is debatable whether investors now view these businesses’ consumer-facing arms as growth engines at all.

Size was also a big factor in determining the relative performance of our ideas. Selections from the FTSE 100 or large-cap overseas names failed to beat their benchmarks on average, whereas ideas drawn from Aim or the FTSE Small index – source of a combined 36 ideas in the year – were well ahead.

Accounting for this is difficult. Anecdotally, there is greater price discovery at the junior end of the stock market, because most investors and analysts focus on the largest and therefore best understood businesses. In theory, this could provide our writers with an edge in their hunt for outperformers. But a lack of coverage doesn’t explain why our small-cap ideas did a lot better than their indices on average, given the stocks in question were subject to the same indiscriminate selling pressure in the junior markets.

My best guess is that a value lens helped. Relatively few of our small-cap ideas this year involved the kind of rollicking ‘sink or swim’ growth stories to which retail investors sometimes flock. When optimism is shot, and corporate newsflow is routinely downbeat, that’s probably a smart stance.

Sticking with a cautious approach – and placing a greater focus on value than growth or recovery narratives – feels like a good place to start for our regular ideas in 2023. With any luck, UK benchmarks will also be less tough to beat, but we shouldn’t count on it. And in any case, what ultimately matters to active stockpickers is outsized positive returns, not index-hugging. Mean reversion – an inevitable product of producing almost 100 ideas each year – makes this a tough ask, but we can but try.

More caution might be needed with our greatest source of idea success, too. While highly leveraged companies with weak growth prospects could become an increasingly important source of sell ideas – as they were in the case of cruise operator Carnival (CCL) this year – we will need to be guarded against sudden improvements in risk sentiment.

The room we give to ideas focused on bargain-basement investment trusts and funds, which brought mixed success in 2022, is likely to increase, mind. That might also be a smart way to cast our ideas net more widely over international markets. While I recognise readers’ ever-growing interest in the investment cases of overseas shares, we have to allocate our resources as smartly as possible. Plus, if there is any edge to our writers’ weekly ideas, it is likely to be found in their knowledge of and contact with the companies they cover day in and day out.

2022 Buys
Name TIDM/ISIN Tip Date Index Out/Underperformance Performance
Serica Energy SQZ 13/01/22 Aim All-Share 41.3% 11.4%
Bloomsbury Publishing BMY 10/02/22 FTSE Small Cap 35.2% 19.5%
Keywords Studios KWS 20/01/22 Aim All-Share 32.6% 3.7%
CVS CVSG 23/06/22 Aim All-Share 31.9% 24.7%
Alpha Financial Markets Consulting AFM 03/11/22 Aim All-Share 28.0% 29.5%
Craneware CRW 08/09/22 Aim All-Share 23.9% 18.5%
Energean ENOG 31/03/22 FTSE 250 23.6% 11.2%
Games Workshop GAW 13/04/22 FTSE 250 22.5% 10.9%
Central Asia Metals CAML 31/03/22 Aim All-Share 22.4% 1.3%
Foresight FSG 28/07/22 FTSE Small Cap 20.8% 15.8%
Centrica CNA 03/03/22 FTSE 100 20.8% 22.6%
International Biotechnology Trust IBT 17/02/22 FTSE Small Cap 20.0% 6.1%
Bank of Ireland BIRG 24/11/22 FTSE 250 18.1% 13.0%
Ricardo RCDO 22/09/22 FTSE Small Cap 13.6% 13.1%
Wincanton WIN 10/03/22 FTSE Small Cap 13.5% 7.1%
Ergomed ERGO 27/10/22 Aim All-Share 13.0% 14.5%
Eli Lilly and Company US:LLY 07/07/22 FTSE World (£) 11.6% 9.7%
Abcam ABC 11/08/22 Aim All-Share 10.8% -0.6%
Kenmare Resources KMR 17/02/22 FTSE Small Cap 10.4% -3.5%
Aberforth Smaller Companies Trust ASL 31/05/22 FTSE 250 9.6% 0.5%
Ten Entertainment TEG 29/09/22 FTSE Small Cap 9.4% 15.0%
Antofagasta ANTO 17/11/22 FTSE 100 8.6% 8.9%
NatWest NWG 24/02/22 FTSE 100 8.4% 10.6%
Sureserve SUR 25/08/22 Aim All-Share 7.6% -1.1%
Nvidia US:NVDA 01/12/22 FTSE World (£) 7.4% 2.9%
Novo Nordisk US:NVO 08/12/22 FTSE World (£) 7.2% 4.8%
Mobius Investment Trust MMIT 28/04/22 FTSE Small Cap 6.9% -3.3%
AstraZeneca AZN 15/09/22 FTSE 100 6.5% 7.7%
Biogen US:BIIB 13/10/22 FTSE World (£) 6.5% 3.8%
Paragon Banking PAG 11/08/22 FTSE 250 6.3% -2.1%
Janus Henderson Absolute Return Fund GB00B5KKCX12 17/03/22 FTSE 250 6.3% -5.3%
Begbies Traynor BEG 15/09/22 Aim All-Share 6.0% 0.7%
SThree STEM 20/10/22 FTSE Small Cap 5.0% 11.5%
Lindsell Train Global Equity IE00BJSPMJ28 23/06/22 FTSE World (£) 3.9% 6.7%
Liontrust Asset Management LIO 30/06/22 FTSE 250 3.4% 2.8%
Legal & General LGEN 10/11/22 FTSE 100 3.1% 3.0%
Lloyds Banking LLOY 06/10/22 FTSE 100 3.0% 8.4%
Just JUST 03/02/22 FTSE 250 3.0% -12.6%
International Public Partnerships INPP 01/12/22 FTSE 250 2.6% -1.8%
Greggs GRG 27/01/22 FTSE 250 2.4% -12.8%
Ryanair  IE:RYA 07/04/22 FTSE World (£) 2.2% -3.5%
Gateley GTLY 28/07/22 Aim All-Share 2.2% -7.9%
Tate & Lyle TATE 24/02/22 FTSE 250 2.1% -6.3%
Watches of Switzerland WOSG 12/05/22 FTSE 250 2.1% -2.7%
NCC NCC 19/05/22 FTSE 250 1.9% -3.9%
Coats COA 07/04/22 FTSE 250 1.6% -10.3%
City of London Investment Trust CTY 03/11/22 FTSE 250 1.2% 3.6%
ITV ITV 24/11/22 FTSE 250 0.8% -4.3%
Invesco Physical Gold ETC SGLP 30/06/22 FTSE World (£) -1.5% 0.1%
Alpha International ALPH 10/11/22 Aim All-Share -2.2% -4.5%
OSB OSB 26/05/22 FTSE 250 -2.4% -10.8%
AG Barr BAG 21/07/22 FTSE Small Cap -2.4% -6.2%
Ashmore ASHM 13/01/22 FTSE 250 -2.5% -21.8%
Halma HLMA 15/12/22 FTSE 100 -2.9% -3.6%
US Solar Fund USF 08/09/22 FTSE Small Cap -4.0% -6.5%
Costain COST 01/09/22 FTSE Small Cap -4.3% -6.1%
Ecora Resources ECOR 04/08/22 FTSE Small Cap -4.3% -10.2%
Smurfit Kappa SKG 05/05/22 FTSE 100 -5.6% -7.4%
Tritax Big Box Reit BBOX 17/11/22 FTSE 250 -5.8% -8.8%
JPMorgan Global Growth & Income JGGI 29/09/22 FTSE Small Cap -6.3% -0.7%
Nestle  CH:NESN 19/05/22 FTSE World (£) -6.5% -5.5%
Admiral ADM 18/08/22 FTSE 100 -7.8% -10.1%
Alphabet US:GOOGL 06/10/22 FTSE World (£) -9.1% -14.5%
Cairn Homes CRN 22/09/22 FTSE 250 -10.4% -9.3%
Empiric Student Property ESP 18/08/22 FTSE Small Cap -10.5% -17.8%
Fresenius SE DE:FRE 24/03/22 FTSE World (£) -10.6% -16.2%
River and Mercantile UK Micro Caps RMMC 03/02/22 Aim All-Share -12.5% -37.2%
First State Japan Focus GB00BWNGX432 20/01/22 FTSE World (£) -13.1% -15.8%
Auction Technology ATG 14/07/22 FTSE 250 -17.5% -17.1%
Intertek ITRK 26/05/22 FTSE 100 -18.0% -20.6%
GSK GSK 05/05/22 FTSE 100 -18.8% -20.6%
Melrose Industries MRO 07/07/22 FTSE 100 -18.9% -16.4%
Supermarket Income Reit SUPR 14/07/22 FTSE 250 -19.2% -18.9%
Lundbeck DK:HLUN.A 10/03/22 FTSE World (£) -19.9% -20.3%
Wickes WIX 09/06/22 FTSE Small Cap -20.7% -29.4%
Anglo American AAL 21/04/22 FTSE 100 -21.3% -24.7%
Industrials Reit MLI 16/06/22 FTSE Small Cap -22.4% -25.7%
B&M European Value Retail BME 17/03/22 FTSE 100 -25.8% -26.0%
UK Commercial Property Reit UKCM 21/04/22 FTSE 250 -25.9% -38.3%
Vistry VTY 09/06/22 FTSE 250 -26.4% -34.0%
Keystone Law KEYS 27/01/22 Aim All-Share -27.1% -51.4%
National Express NEX 24/03/22 FTSE 250 -30.0% -41.3%
Inspired INSE 31/05/22 Aim All-Share -32.4% -48.2%
Adidas DE:ADS 16/06/22 FTSE World (£) -33.2% -28.4%
Embracer SE:EMBRAC.B 03/03/22 FTSE World (£) -38.9% -40.1%
ITM Power ITM 28/04/22 Aim All-Share -52.7% -71.7%
Average -0.5% -6.3%
Source: FactSet, accurate to 21/12/22. Simple sterling-based price returns. 
2022 Sells
Name TIDM Tip Date Index Out/Underperformance Performance
Marshalls MSLH 12/05/22 FTSE 250 58.5% 53.7%
Ocado OCDO 13/04/22 FTSE 100 52.8% 50.0%
Amazon.com US:AMZN 10/02/22 FTSE World (£) 43.1% 39.9%
Motorpoint MOTR 04/08/22 FTSE Small Cap 30.2% 24.4%
Carnival CCL 25/08/22 FTSE 250 27.7% 24.0%
Just Eat Takeaway.com JET 08/12/22 FTSE 250 10.0% 8.5%
JD Wetherspoon JDW 13/10/22 FTSE 250 6.4% 16.0%
IWG IWG 15/12/22 FTSE 250 5.4% 3.5%
Fevertree Drinks FEVR 01/09/22 Aim All-Share -9.9% -14.6%
Hochschild Mining HOC 20/10/22 FTSE Small Cap -12.9% -6.4%
Abrdn ABDN 21/07/22 FTSE 250 -14.2% -20.1%
Balfour Beatty BBY 27/10/22 FTSE 250 -18.2% -15.6%
Average 14.9% 13.6%
Source: FactSet, accurate to 21/12/22. Simple sterling-based price returns (positive performance represents price fall).