A to Z of the FTSE 250
An ongoing guide to all the companies in the UK mid-cap index
Welcome to a whistle-stop tour of the FTSE 250. I’m going alphabetically through the index. No financials or valuations, just a quick take on the business. What does it do? How does it make money? Does the business model make sense? The first part of a wider investment approach that you can read about here. Bookmark this page as I’ll be updating it regularly and will link to other write-ups I see.
🟢 Positive 🔴 Negative 🟡 Neutral
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This is not investment advice. It is my opinion only and is not a recommendation to buy or sell any stock. You should do your own research and invest according to your own financial circumstances.
🟢 4IMPRINT
Mkt cap: £1.4bn | Revenue FY23: £1,327m | Net income FY23: £106m | Latest price
4imprint is a leading direct marketer of promotional products, which means they sell the corporate swag that companies give out at conferences, away days and team building events (branded water bottles, t-shirts, stress balls and the like). They have a huge catalogue of products and act as middleman, with products shipped direct to customers from suppliers, and end-manufacturer, owning a large distribution centre in Wisconsin that adds custom logos to apparel. The stock has been one of the best performers in the FTSE and the strategy as set out – consolidating a fragmented market in the US and Canada, where they make 98% of revenues – looks to have a long way to run. Key risks are a general economic downturn in which marketing and swag budgets quickly get cut. Also intrigued as to why private equity hasn’t been knocking at the door.
4imprint – contrarian compounder (Sweet Stocks, February 2024)
4imprint group – UK small cap play (Investing with Wes, January 2025)
Last updated: 24 November 2024 | Back to Top
A
🟡 ABERDEEN
Mkt cap: £3.2bn | Revenue FY24: £1.37bn | Net income FY24: £248m | Latest price
Finally, common sense prevailed. Formed from the 2017 merger of UK asset manager, Aberdeen Investments, and insurance company, Standard Life, Aberdeen lost its way along with its vowels, when it rebranded as Abrdn in 2021. Widespread derision ensued and its share price steadily drifted down, not helped by years of cost cutting, CEO changes, and persistent outflows. Recent results - and bringing back its vowels - are positive signs but Aberdeen remains a mid-sized manager focused on active strategies in public markets, in a world where passive management and private markets still reign supreme. UK asset managers of this kind, stuck between global mega managers and specialist boutiques, are still a difficult buy right now. The good results and the reversion to common sense on the name have bumped this up to neutral for me but concerns on long-term growth remain.
Last updated: 11 March 2024 (Negative to Neutral) | Back to Top
🟡 AJ BELL
Mkt cap: £1.9bn | Revenue FY23: £218m | Net income FY22: £68m | Latest price
One of the largest UK investment platforms (brokers) with just over £80bn in assets and 500,000 customers, AJ Bell serves both advisors and retail investors. It doesn’t have the brand recognition of Hargreaves Lansdown among UK retail investors, but it’s cheaper for basic shares and funds trading, and people are noticing, with customer numbers steadily growing in recent years. AJ Bell makes money from dealing fees and account/platform fees – the latter being a fixed annual charge on assets. The tailwind from interest earnings on cash deposits, which bolstered profits in 2023, has abated, but continued growth is expected in the UK investment platform market, albeit with more competition as more upstart trading apps enter it. Platform fees, a feature of the UK market that doesn’t exist in the US, could be vulnerable. Private equity is kicking around, with AJ Bell’s big competitor, Hargreaves Lansdown, in the middle of a £5.4bn public to private takeover by a consortium of CVC, Nordic Capital and Abu Dhabi Investment Authority.
Last updated: 25 November 2024 | Back to Top
🟢 ALFA FINANCIAL SOFTWARE
Mkt cap: £644m | Revenue FY23: £102m | Net income FY22: £24m | Latest price
This London headquartered firm is a provider of software to auto and equipment finance companies (i.e. firms that either lease or issue loans to customers to purchase cars and other equipment). Its Alfa Systems 6 software is an end-to-end product designed specifically for asset finance that manages all sales, origination, contract and asset management processes for the likes of CarMax and Toyota Financial Services in the US, as well as the asset finance arms of various banking groups. The software takes between six to 18 months to set up – so it’s a long sales cycle and high barrier for a firm to adopt it, but once set up it is deeply integrated into the firm’s operations. In line with industry trends, Alfa has switched from charging a large up-front fee to license and install its software, to hosting the software on cloud infrastructure and charging a recurring subscription fee for access. The product and growth trajectory look solid, and the company attracted private equity interest last year - EQT pulled out of a bid, while Alfa pulled out of discussions with Thomas Lee. It’s a rare UK tech company, albeit in a niche market. Interested in the strength of its offer versus competitors, why the PE bids failed, and what the numbers look like.
Last updated: 25 November 2024 | Back to Top
🟢 ALPHA GROUP
Mkt cap: £961m | Revenue FY23: £110m | Net income FY22: £89m | Latest price
Pitched as part fintech, part consultancy, Alpha Group was founded in 2010 to help companies manage foreign exchange risk. The FX risk management business accounts for roughly two thirds of sales and makes money by developing and then executing hedging strategies for clients. It operates a “matched-principal brokerage model” – clients enter a contract with Alpha Group to buy or sell currency (via spot, forward or option contracts), and Alpha Group immediately enters a matching trade with a bank. The group earns money from the difference in pricing (margins) on these matched contracts. Since 2020, the FX business has been supplemented by an alternative banking business that offers banking solutions to fund managers (e.g. private equity firms).
Alpha Group listed on London’s junior AIM market in 2017, and in April 2024 transferred to the main market of the LSE to improve visibility and liquidity – a successful story amidst much negativity on UK capital markets! Alpha Group looks like more of a traditional FX brokerage than its fintech and consultancy branding suggests, but London has always been a global centre for this, and the company appears to have a good foundation to scale after investing in platform development and back-office infrastructure in recent years. Risk management is paramount in this industry – whether in managing client data or managing margin calls on its FX derivatives exposures with banks.
Alpha Group (Undercovered and Undervalued, July 2024)
Last updated: 25 November 2024 | Back to Top
🔴 AO WORLD
Mkt cap: £614m | Revenue FY24: £1.04bn | Net income FY22: £25m | Latest price
AO used to stand for Appliances Online, which sums up what the company does. It’s one of the UK’s largest electrical retailers with a 16% market share in major domestic appliances (fridges, freezers, washing machines) and 30% share online. Listed in 2014 the proceeds from the IPO were used to fund an expansion into continental Europe that didn’t go quite to plan. AO shut down its German business in June 2022 and is now solely focused on the UK. Its previous go-for-growth strategy has also been replaced by one focused on profitability and cashflow following a cash crunch in 2022 that necessitated a £40 million equity raise. I’ve bought a fridge, washing machine and dryer from AO and they provided great stock and a great service – delivered quickly, fully installed, old appliance removed. The trade-off I got hounded for a year after by their sales department trying to sell me appliance insurance. AO earns a commission on these sales, which in 2022 accounted for 14% of revenues. Other services added another 10%, with the rest coming from actual product sales. The business seems to have weathered some troubles and emerged with a tighter, more focused strategy. But this is a tough industry with competition from Amazon, John Lewis and the like. While AO’s brand presence has risen a lot, gaining and sustaining market share likely doesn’t come cheap.
Last updated: 7 November 2024 | Back to Top
🔴 ASHMORE GROUP
Mkt cap: £1.2bn | Revenue FY24: £205m | Net income FY22: £94m | Latest price
Another mid-sized UK asset manager albeit with a clearer niche in emerging markets and an Antipodean heritage. Ashmore manages around $50 billion in assets, down from a peak of over $90bn in 2019. Most of this is in emerging market debt strategies, with only 13% in equities. It’s an active manager, and as with Abrdn, active management in public markets is not where the action is, although this is perhaps less stark on the fixed income side. Yet even here emerging market assets are a tough sell in a fragmenting world with multiple wars, a strong dollar and a fragile Chinese economy. Outflows have slowed in recent quarters, but this isn’t a buy and hold prospect given its exposure to emerging market trends, lack of scale, and average long-term performance. If I want emerging markets, I think I’ll just an ETF.
Last updated: 25 November 2024 | Back to Top
🔴 ASTON MARTIN LAGONDA
Mkt cap: £872m | Revenue FY23: £1.63bn | Net income FY23: £-228m | Latest price
A storied British brand. An iconic design. An IPO disaster. Aston Martin Lagonda has been a shocking investment since it listed in 2018 and a turnaround that never seems to happen. The story at IPO was that Aston Martin would expand its line-up by launching an SUV à la Lamborghini; and lean into its brand à la Ferrari. But the IPO itself served mainly to cash out private equity investors and the turnaround leading up to it was built on a dodgy foundation. In 2020 Canadian billionaire Lawrence Stroll took a controlling stake in what seemed a good fit. Stroll’s background is in re-building two tired but iconic brands, Tommy Hilfiger and Michael Kors, and he has a personal passion for cars, including a son who is an F1 driver for the Aston Martin team (the F1 team is only sponsored by not owned by the publicly listed group). Still, a rights issue followed in 2022, albeit with support from some deep-pocketed investors, including Saudi Arabia’s Public Investment Fund. Mercedes-Benz AG and the Chinese automaker Geely also own large stakes. Aston Martin does now seem to have the pieces in place – a range of updated models, new showrooms, better brand awareness – but a profit warning off the back of supply chain issues and weakness in China recently sent the shares tumbling again. As a quality pick it doesn’t make the cut. As a take a punt on a continued brand revival it could be worth a look.
Deep:Dive Aston Martin Lagonda (ShowMeTheValue, December 2024)
Last updated: 25 November 2024 | Back to Top
🟡 AUCTION TECHNOLOGY GROUP
Mkt cap: £548m | Revenue FY23: £135m | Net income FY23: £17m | Latest price
Here’s a niche, technology for running auctions online. And no, not ebay; instead, those dinky auction houses scattered across UK market towns, occasionally seen on daytime TV. ATG originally stood for Antiques Trade Gazette, a print publication that became a bible of sorts for UK antique dealing, before finding its footing in the first dotcom era with the launch of the-saleroom.com. A management buy-out, private equity ownership and some M&A later, and ATG emerged at IPO in 2021 as an online auction marketplace and services provider. The company now runs eight separate digital marketplaces connected to 3,900 auction houses globally, across two main business segments: arts and antiques; and industrial & commercial (e.g. consumer surplus & retail returns). It also offers a “white label” technology platform that auction houses use to offer live and timed bidding auctions on their own web sites; and is moving into “value-add” services like shipping and payments. ATG earns revenue from commissions on sales via marketplaces, auction fee payments, and value-add services. The story is one of consolidating a fragmented market that is behind the curve on digital selling, but the stock has disappointed since IPO after failing to meet growth expectations – rather than clipping along at a high single digit growth rate, total transaction value declined in 2023. TA Associates, the private equity firm that took it public, sold down a 5% holding earlier this year, but retains a 12% stake along with Blackrock and Capital Group. Call me a cynic, but I’d guess it was floated on puffed-up numbers. It’s come down to earth in price, and while questions on industry growth remain, I’m not ruling it out entirely.
Last updated: 25 November 2024 | Back to Top
B
🟡 B&M EUROPEAN VALUE RETAIL
Mkt cap: £3.66bn | Revenue FY24: £5.48bn | Net income: £367m | Latest price
B&M is a recent fallen angel from the FTSE 100 after falling somewhat out of favour with investors. It’s a big-box discount retailer with 86% of revenues coming from over 700 stores in edge of town locations and retail parks across the UK, supplemented by a smaller French business and UK food retailer. The company’s motto is “everyday low price”, with prices consistently 15-20% below the major supermarkets; it does this by offering a limited range of products sourced direct from manufacturers (aka, buying cheap stuff from Chinese factories), frequently changing the products it sells, and operating no-frills, and what can feel like no-staff, stores. A deep-discount retailer should do well in the current economic climate, but B&M hasn’t been able to meet the inflated expectations set after an early pandemic sales boom. Like-for-like sales in its UK stores were down close to 4% at the latest update in November, and as the company rents all its stores, lower sales plus fixed lease payments are not a pretty picture. Although store openings continue apace, I’m not convinced – or know enough – about the long-term growth prospects here.
Last updated: 7 January 2025 | Back to Top
🟢 BABCOCK INTERNATIONAL GROUP
Mkt cap: £2.67bn | Revenue FY24: £4.39bn | Net income: £165m | Latest price
One of the major UK defence contractors, Babcock hit some rough times a few years back but has been shoring up its balance sheet since, while benefitting from a global rise in defence spending. The company’s focus is on support services, providing technical, engineering and training support, including to the UK’s nuclear submarine fleet, and military communications network. UK defence accounts for ~60% of group revenue – and Babcock is the second largest supplier to the UK MOD, behind BAE Systems. Its international business includes providing military fighter pilot training in France, and a frigate programme for the Polish Navy. Past mistakes seem to centre on veering too far away from its defence core, with a venture into helicopter transportation to and from oil rigs proving costly. It also got caught up in an attack from an activist investor called Boatman Capital, although they seem to have gone quiet since 2019. I like the industry for the simple reason that I can only see defence spending rising. But I don’t know if this is the best option among UK defence picks, especially as it appears a perennial value trap. To be explored further.
Last updated: 25 November 2024 | Back to Top
🟢 BAKKAVOR
Mkt cap: £840m | Revenue FY23: £2.20bn | Net income FY23: £54m | Latest price
I’d never heard of Bakkavor until I started living in north-west London and found myself cutting through the semi-industrial hinterlands of Old Oak Common. There lies Bakkavor’s London distribution centre, from which it churns out ready-made meals, pizzas, salads and desserts, that sit on the shelves of all major grocery retailers. The company is originally Icelandic but now generates ~85% of revenues in the UK, with the remainder split between the US and China. The founders still own half the shares, alongside US fund manager LongRange Capital, which in early 2024 bought a 20% stake previously held by Baupost (of Seth Klarman, my book sells for $2,500 fame). This is a high revenue, low margin business, as may be expected for one of the major suppliers to the fiercely competitive UK supermarket sector, and as the market leader in the UK its growth prospects here look limited. The company was also hit hard by rising inflation which ate into profit margins, although by closing two production sites it has reduced its cost base. As a leader in its field, Bakkavor feels worth a closer look. A key question is how it manages its international operations, which have big potential, but have so far not delivered.
Last updated: 5 December 2024 | Back to Top
🟡 BALFOUR BEATTY
Mkt cap: £2.4bn | Revenue FY23: £7.99bn | Net income FY23: £197m | Latest price
Talking about high revenue, low margin businesses, Balfour Beatty is the UK’s largest listed construction company but is still a minnow by global standards (France’s Vinci has a market cap of $60 billion). Profits tanked in 2020 due to Covid, and recovery was held back by poor performance on private residential developments in London, where fixed-price contracts met high-cost inflation. The company has said it will no longer bid on fixed-price contracts and as of end 2023 they represented only 18% of the order book, down from 50% in 2018. Group revenue is split roughly 50/50 between the US and UK, with the UK business skewed more towards government. 78% of UK revenues in 2023 came from the UK government, and 91% of the UK construction order book is from public sector and regulated industry clients; in the US, 51% of 2023 revenues came from the US government. Medium-term growth hangs on a new UK government wanting to invest more in infrastructure, and Balfour being a key player in building that. Greater visibility on projects, a resurrected private finance initiative, and the government accepting higher margins for contractors (not prioritising cost above all else) could all be opportunities. Keeping an eye on as UK infrastructure spending plans develop.
Last updated: 5 December 2024 | Back to Top
🟡 BALTIC CLASSIFIEDS GROUP
Mkt cap: £1.7bn | Revenue FY24: €72m | Net income FY24: €32m | Latest price
Enough of high revenues and low margins, this business is the polar opposite, with the P/E ratio to prove it. Baltic Classifieds listed in 2021 and operates classified ad portals across Lithuania, Estonia and Latvia for cars and homes (think Rightmove and AutoTrader equivalents). It’s unglamorous but outrageously profitable, generating a 78% EBITDA margin. These margins and growth rates come at a high price, so the key is whether expectations continue to be met. It’s neutral for me because the company is headquartered in the Baltics and makes 100% of revenues there. Hard as I try, I can’t find a British connection – and as this is The UK Investor I am looking for “somewhat” British companies.
Last updated: 6 December 2024 | Back to Top
🔴 BANK OF GEORGIA
Mkt cap: £2.4bn | Net income FY23: £1.39bn | Latest price
Its headquarters look like they inspired one of Dubai’s newest hotels, but as a London listed business this feels like a relic of another era. An IPO from 2007, back when London was the venue of choice for dodgy emerging enterprises out of the former Soviet Union. I’m not looking at this closer because however well-run it may be, or however cheap, in the current geopolitical climate I want nothing to do with a bank whose operations are in Georgia and Armenia.
Last updated: 5 December 2024 | Back to Top
🟡 A.G. BARR
Mkt cap: £698m | Revenue FY24: £400m | Net income FY24: £39m | Latest price
A.G. Barr is best known as the manufacturer of Irn-Bru, Scotland’s other national drink, a fizzy bright-orange alternative to Coke. Unfortunately, there’s only 5 million Scots so Coca-Cola it is not. But it is a solid domestically focused UK business with over 140 years of operating history. Soft drinks (including Irn-Bru) accounted for 87% of sales in 2023 with cocktails (25%), and other, which is mainly MOMA oat milk (3%) making up the rest. Irn-Bru is the company’s beating heart, with diversification into other brands (Rubicon, Rio, BOOST) coming from acquisitions. Acquisitions seem have been funded by cash, leaving a strong balance sheet. The company issued a huge profit warning in 2019 following problems at Rockstar energy drinks (it was the UK distributor, but the contract was terminated in 2020) and the impact of the UK’s sugar tax. Cost inflation then also hit hard, although this now seems to be behind it. It’s not an exciting business but it should offer fairly stable long-term exposure to the UK consumer. Question is whether there are better options offering the same thing.
Last updated: 6 December 2024 | Back to Top
🔴 BELLWAY
Mkt cap: £2.92bn | Revenue FY24: £2.38bn | Net income FY24: £131m | Latest price
If you’re into UK housebuilders, there are a lot of listed ones to choose from. Bellway is somewhere between the third or fourth largest, and in 2024 completed 7,654 units (which puts into context the scale of the government’s target of building 1.5 million homes by 2030…) But housebuilder is a bit of a misleading term in the UK, as these companies are in large part landowners. Most companies sit on large banks of land and their expertise is as much in finding land and taking it through the laborious planning process, as it is in building a house. The game is to develop just enough plots to maintain a steady price i.e., there is no incentive here to build the million plus homes the country needs. This business model stems from land being so expensive in the UK – a recent study found that, on average, over 70% of the value of homes in the UK is the value of the land – and the UK planning process being so incredibly difficult. Bellway itself is less focused on London and the South East than some of its rivals, and so less exposed to high mortgage properties that may be more sensitive to interest rates. All these companies are however a play on the interest rate cycle, as evidenced by most stocks in the sector falling sharply as yields have risen in the past six months. There is a positive policy backdrop to building more housing in the UK, with significant planning reforms in the works. But I can’t quite work out if this is good or bad for the listed housebuilders, who have built their businesses on the back of a broken system. There also seems a fair risk of new taxes on land banks that aren’t developed, and/or “use it or lose it” development rights on existing sites.
Last updated: 8 January 2025 | Back to Top
🟢 BLOOMSBURY PUBLISHING
Mkt cap: £567m | Revenue FY24: £343m| Net income FY24: £32m | Latest price
I have to admit, this is a better business than I thought it would be. Bloomsbury is a leading independent publishing company in the UK, with a presence in the US, India and Australia too. Established in 1986 by Nigel Newton, who remains CEO to this day, it is most famous for launching JK Rowling on to the world, and still benefits from a healthy stream of Harry Potter-related royalties (revenues from each book sale are split between the author and publisher subject to contract). In recent years it struck gold again, picking up Sarah Maas’ fantasy fiction series, which having sold 40 million books, I probably should have heard of before. The consumer publishing business accounts for 73% of revenues, and academic and specialty publishing make up the remainder. I’d naively assumed publishing would be a low margin, volatile business; but operating margins of ~12% aren’t awful, and the Potter IP and other historic titles provide a stream of cash to reinvest into new authors and titles. Plus, the academic business is a counterpoint to the more volatile consumer one. Physical book sales have also been steadily growing, despite coming off pandemic highs, helped by a revival in bookstores. With the Potter tailwinds, Bloomsbury has delivered solid year over year results and entered the FTSE 250 earlier this year. It looks like a good business, but a key question is how Potter dependent is it? Operating profits in 2024 were almost all from the children’s trade section suggesting dependence remains high. The good news is that, for now, popularity does too - Harry Potter and the Philosopher’s Stone was the No.1 bestselling book in the UK in 2024 for the first time since 2002.
Last updated: 17 December 2024 | Back to Top
🟡 BODYCOTE
Mkt cap: £1.19bn | Revenue FY23: £803m | Net income FY23: £87m | Latest price
Bodycote is the world’s largest and “most respected” provider of heat treatment and thermal processing services, which for the non-engineers among us, means what exactly? Well, a turbine blade in a jet engine operates in an extreme environment, with temperatures higher than the melting point of the base nickel alloy material. Bodycote provides several solutions to protect the blade: hot isostatic pressing to densify and strengthen it; vacuum heat treatment for further strengthening; and, finally, the application of a thermal barrier coating. In short, Bodycote is one of those small, specialised manufacturing firms that are integral to larger industrial supply chains. The downside of that is its fate is closely tied to those larger industries, which currently means tailwinds from aerospace (30% of revenues) but headwinds from automotive (22% of revenues). The company is a long-time London listed stalwart, but its share price has gone sideways over the years. Covid hit hard, with cratering demand and cost inflation eating into operating margins. A new CEO joined in March 2024 and immediately scrapped a new enterprise software rollout that had not gone well. The firm recently announced a new strategy, organising itself into two clear divisions, and setting goals of mid-single-digit revenue growth through the cycle and expanding operating margins to >20% by 2028, from ~16% today. It’s a semi-turnaround story then, albeit my impression isn’t of a bad business, just a middling one.
Last updated: 21 December 2024 | Back to Top
🟡 BREEDON GROUP
Mkt cap: £1.5bn | Revenue FY23: £1.49bn | Net income FY23: £106m | Latest price
Breedon terms itself a vertically integrated construction materials group, which means in practice that it produces aggregates, asphalt, concrete and cement. Aggregates is the term for gravel, sand, and other crushed stone that is quarried out the ground and used as the base for building foundations and roads. Breedon now has c.14 billion tonnes of these reserves from more than 100 quarries across the UK, Ireland and now the US. It also runs two cement plants, over 200 ready-mixed concrete plants and more than 50 asphalt plants. Revenues are fairly balanced across the four segments, growing at a 19% CAGR since 2011 from consistent M&A activity, including 17 “bolt-on” transactions and four major acquisitions. In March 2024, Breedon completed its largest transaction, the $300m purchase of BMC, a mid-west US aggregates, asphalt and concrete producer. BMC is Breedon’s first acquisition in the US and has been pitched as a beachhead into the market, providing a platform for further bolt-on transactions and growth. All this M&A has been largely debt funded but current levels look manageable, and the company seems to have integrated new operations well. However, its current share price is close to 2017 levels so there is a question on how much value has been created. Breedon clearly has big ambitions – and the BMC acquisition, as well as a move in its share listing from AIM to the main London market, are testament to that. Building materials is also a notoriously fragmented industry and the likes of CRH have had great success in scaling across the Atlantic. There are potentially also structural growth drivers in the UK from new housing and infrastructure. All those positives are offset by concerns on the cyclicality of the construction industry in general, and for Breedon specifically, how the BMC integration plays out.
Last updated: 7 January 2025 | Back to Top
🟢 BRIDGEPOINT
Mkt cap: £2.95bn | Revenue FY23: £321m | Net income FY23: £71m | Latest price
Bridgepoint is a UK-founded, European-focused private equity (PE) shop with a 40+ year history, and a track record that places it among the top PE performers. Post-IPO in 2021, AUM has more than doubled to $73 billion and the company has diversified into other business lines, building a private credit arm and acquiring Energy Capital Partners (ECP), a US-focused energy infrastructure firm. Its USP is a laser focus on middle market companies, which fly below the radar of large mega-cap firms, and which it sources via a large, established network of specialists across four sectors – advanced industrial, healthcare, services, and technology. The ECP business is focused on power and is the largest private provider of generation assets in the US. Bridgepoint’s shares soared on initial listing in July 2021, before tanking amidst rising interest rates, and concerns over its ability to exit current investments. Underlying performance has nevertheless remained strong with fee income almost tripling over the last three years. I’m no private equity cheerleader – rather than being a radically better form of ownership, I tend to think the industry’s value creation is based on tax breaks, fewer disclosure requirements, and investor’s desire to avoid mark-to-market. But there’s no denying that private assets continue to grow and grow, and in any industry, there are the good, the bad, and the ugly. Bridgepoint is among the good – or at least the smartest – which is where I want my money to be. Concerns are less about the company and industry, more about how much of the value filters through to shareholders, rather than being siphoned off at fund level and through performance-related pay. Having listed only a quarter of shares at IPO, there is also a question of whether secondary placements will weigh on the share price as lock-up periods continue to expire.
Last updated: 30 December 2024 | Back to Top
🔴 BURBERRY
Mkt cap: £3.27bn | Revenue FY24: £2.97bn | Net income FY24: £271m | Latest price
Burberry, along with Mulberry, is one of only two London-listed luxury brands, and while its trench coats and check remain timeless wardrobe staples, the company itself seems to lurch from one turnaround to another in five to ten-year cycles. From the Royal Family in trench coats in the 80s, Burberry took a nose-dive down the class spectrum in the 2000s when it became associated with chav culture. A turnaround ensued and the brand leaned into a modern but British aesthetic. In recent years though it attempted a move upmarket into lucrative leather goods that proved costly. The dividend was suspended, a new CEO joined in July, and the new strategy is focused on lowering prices, cutting costs and leveraging the band’s British heritage. Unfortunately, there’s a fair amount of cleaning up to do, including getting rid of a lot of excess inventory. I’m sure Burberry will right the ship as they’ve done it before, but the question is how much that will cost and what the longer-term growth prospects are. There are only so many trench coats that one person can buy. Burberry is also an increasingly rare breed of being a luxury brand that isn’t part of a large conglomerate. It’s a bit of a red flag to me that there hasn’t been more takeover interest.
Last updated: 3 December 2024 | Back to Top
🟢 BYTES TECHNOLOGY GROUP
Mkt cap: £1.00bn | Revenue FY24: £207m | Net income FY24: £47m | Latest price
Bytes is a rare software business in the FTSE 250, but this is a slightly misleading categorisation, as its business is IT services, rather than software development. Bytes is a reseller, meaning it sits in the middle of developers and customers, which are UK businesses and the public sector. It pays money to the software companies (Microsoft is the most important, accounting for 50% of gross profits) to license and resell their products, and receives money from customers for providing these applications, mainly via subscription-based payments. Why don’t organisations just buy direct? Well, Bytes knows its customers and can offer tailored solutions across different vendors and products. The company listed at the end of 2020 and operates two divisions: Phoenix, which it acquired in 2017 and has some chunky contracts with the NHS and HMRC, and Bytes Software Services, which focuses on corporate clients. There is a lot of talk of AI and cyber security driving growing IT spending, although the shares haven’t benefitted from any AI-induced euphoria. Instead, stock performance has been sideways since IPO, not helped by an abrupt CEO departure last year after some dodgy share dealing. It’s far from exciting, and there doesn’t seem much buzz around it. But it has grown respectfully and because customers pay Bytes, before Bytes pays vendors, it generates a lot of cash along the way.
Last updated: 13 January 2025 | Back to Top
C
🔴 C&C GROUP
Mkt cap: £561m | Revenue FY24: £1.65bn | Net income FY24: £-114m | Latest price
England, Summer 2006. The sun was shining, the World Cup was happening, the idea of pouring a bottle of cider over a pint glass of ice arrived. No longer was cider for tramps and teenagers; Magners was cool. And C&C was the Irish company that produced it. Eighteen years later though and the high hopes of that summer haven’t been met. C&C got ahead of itself, sales growth didn’t materialise; the stock price cratered and has gone sideways since. Today, C&C is part alcoholic beverage producer – brands include Magners, Blackthorn and the Scottish lager, Tenant – and part beverage distributor. It’s an unexciting market with few growth drivers absent some Guinness-esque revival in Magners consumption. After languishing for years there are some catalysts for change: a small US-based activist investor called Engine Capital is a shareholder and has driven the appointment of an ex-investment banker board member. A restructuring/sale/spin-off is clearly in its sights. A new CEO has also joined, although this is the fourth one in four years. It’s a turnaround / value play, but not one for me.
Last updated: 23 January 2025 | Back to Top
🟡 CARNIVAL
Mkt cap: £2.7bn | Revenue FY24: $25bn | Net income FY24: $1.9bn | Latest price
£25 billion in revenue is not what you normally find in the FTSE 250. But Carnival Corporation & plc, the world’s largest cruise line company, and owner of the P&O and Cunard brands, is still recovering from the complete collapse in its business during covid. Cruise operations were suspended for over a year and the company was forced to raise billions of debt to cover the cash shortfall. Since then, the rebound has been strong. 2024 revenues hit at an all-time high, and guidance remains strong through 2025. Cruising is having a revival, with new ships and a younger generation on board. The main risk is that the debt on the balance sheet leaves little room for error should an economic downturn knock sales. But it’s impressive to me how well Carnival navigated the pandemic, when its UK/Panama-incorporated structure excluded it from major US government support.
Last updated: 23 January 2025 | Back to Top
🟢 CHEMRING
Mkt cap: £880m | Revenue FY24: £510m | Net income FY24: £40m | Latest price
Chemring feels like it should be doing better than it is. It’s a defence specialist at a time when geopolitical tensions are rising, and the world is rearming, with a record order book stretching out ten years. But it’s been knocked off course by some legacy problems at a US factory and in its US order book. A London listed company for over 50 years, Chemring made its name manufacturing decoys for radar systems (aka chaff, aka the stuff airplanes throw out to avoid being detected by radar). It remains a leader in countermeasures with over 65% global market share. It also has a niche energetics business (which “I think” is high explosive stuff that goes into rockets and missiles), and a Sensors and Information segment. Countermeasures and Energetics currently make up 90% of the current order book; Sensors and Information only 10%. Perhaps no surprise given the materiel expended in Ukraine and the Middle East. Still, the weakness in the future Sensors order book has weighed on the share price. But finding a good defence company investment is a no-brainer to me in today’s world and Chemring might be a chance to buy in to this growth trend at a reasonable level.
The Best Defense is a Good Offense (FT Alphaville, 25 February 2025)
Last updated: 23 January 2025 | Back to Top
🟢 CLARKSONS
Mkt cap: £1.3bn | Revenue FY23: £640m | Net income FY24: £86m | Latest price
British merchant banks of global importance may have long disappeared, and the London Stock Exchange withered away versus the US, but there are some things the City of London remains a world leader in. One is insurance, and one is shipping. Clarksons is a 166 year old shipbroker, that styles itself as a global leader in maritime consultancy and shipping services, but in which the core broking business of matching shipowners with charterers, and buyers with sellers, accounts for ~80% of revenues. Clarksons has been consistently profitable and cash generative over the years, weathering the inevitable cycles in global shipping, and profiting from volatility in shipping rates. In what feels like a rare exception in the FTSE 250, it also pays its CEO well. Long time CEO Andy Case took home £10 million plus in 2023, well above even FTSE 100 CEO levels. But having come from finance, where plenty of people can make that with a lot less responsibility, I’m not opposed to high CEO pay. I’m more worried by how little your average FTSE 250 CEO makes.
Last updated: 28 January 2025 | Back to Top
🟡 CMC MARKETS
Mkt cap: £633m | Revenue FY23: £333m | Net income FY24: £47m | Latest price
CMC is a financial spread betting firm, and spread betting is mostly a quirk of UK financial markets that emerged in the 1970s when an unemployed stockbroker noticed an opportunity to allow people to bet on the price of gold without owning it. At the time it was illegal to trade gold purely for speculative reasons. The stockbroker went on to found Investors Gold Index, now known as IG Index. CMC was founded as a competitor to IG in 1989 and they remain the two big players in the UK. It’s a curious world – not quite investing, not quite gambling, and it only exists because of tax breaks. For tax purposes, spread betting is treated as gambling, and there are no taxes on gambling wins or transactions in the UK. Why? Some combination of not being worth the bother, easier to tax the profits on gambling firms, gambling taxes being regressive, and effective industry lobbying. The founder of CMS is also a top Conservative donor so that probably helped. CMC, along with IG, present themselves as professional financial firms, and both are regulated by the FCA. They stay away from targeting the man on the street (presumably to avoid attracting government attention) but CMC’s turnover remains 65% retail. Its strategy to diversify away from spread betting to become a more traditional investment platform looks sensible, as there is always a risk that tax rules may change, and the growth of spread betting looks limited. But it remains a betting company and that has weighed on its valuation with exposure to volatile retail investment trends.
Last updated: 4 February 2025 | Back to Top
🟢 COATS GROUP
Mkt cap: £1.5bn | Revenue FY23: £1.4bn | Net income FY23: £74m | Latest price
Coats Group is a global market leader in apparel threads, structural components (insoles and other bits of shoes, etc.) and threads for footwear, with over 15,000 employees, serving more than 30,000 customers. It’s a business with 250+ years history, all the way back to the beginning of the industrial revolution and the emergence of the UK as a textile powerhouse, with Paisley, Coats’ hometown in Scotland, a global centre. Coats long ceased to manufacture at scale in the UK – and shut down its last facility small facility in 2022 – but it remains a British headquartered company. Manufacturing is now spread across Eastern Europe, Asia and Mexico, with revenue 59% from Asia, and 76% from apparel and footwear. It was taken private by Guinness Peat Group in 2003, then relisted in 2015. Its long heritage has been somewhat of a curse given a sizeable pension liability that has had to be managed over the years. In 2022 it completed a partial buy-in with Aviva, and switched off deficit repair payments, freeing up cashflow. The goal is to de-risk and get the pension off the balance sheet – the sooner the better, by the sounds of it. Shares have re-rated after hitting the doldrums in 2022 and 2023 as destocking hit sales. As a global industrial leader, but far from a household name, it feels worth a closer look.
Last updated: 5 February 2025 | Back to Top
🟡 COMPUTACENTER
Mkt cap: £2.4bn | Revenue FY23: £6.9bn | Net income FY23: £200m | Latest price
This is a similar, if less exciting version of Bytes Technology. Whereas Bytes, and other rival Softcat, focus on small to medium sized businesses in the UK, and sell software, Computacenter focuses on large enterprises and sells a lot of hardware globally. It sources the hardware, designs the systems, pieces the products together, then services and maintains them, making it the largest technology Value-added Reseller (VAR) headquartered outside the US. Revenues are substantial, reflecting its global footprint, and are quite evenly split across the UK, Germany and France, and the US. But margins are thin, particularly on the technology sourcing component of its business that includes the hardware sales. This means it makes c.4x the net income of Bytes on c.33x the revenue. So, it’s much less profitable, or the accountings different, or some combination thereof. IT spending slowed in recent years after pandemic highs, and in October, Computacenter mentioned a cautious corporate spending environment holding back sales in the US. January’s update was far more buoyant on the US outlook, and 2024 turned out to be a record year. A solid, if low margin, unexciting business.
Last updated: 5 February 2025 | Back to Top
🟢 CRANSWICK
Mkt cap: £2.7bn | Revenue FY24: £2.6bn | Net income FY24: £113m | Latest price
Formed in the early 1970s by farmers in East Yorkshire to produce animal feed, Cranswick now owns 800,000 pigs and 6.4 million chickens, and is a vertically integrated producer of premium pork and poultry, plus other food and pet products. The focus is high quality, fresh foods, with 77% of sales to UK retailers, 5% to food service, 14% to manufacturers, and 4% exported. The core of the company is pigs and pork, and Cranswick has been consistently buying up smaller producers, while upgrading its production facilities. The company prides itself on 34 years of consecutive dividend growth, has little debt, and total returns for shareholders have been impressive over the last few years. It’s unexciting but solid, although certainly not cheap after the recent run of good performance. One to explore relative to other food staples like Bakkavor.
Last updated: 3 February 2025 | Back to Top
🔴 CREST NICHOLSON
Mkt cap: £462m | Revenue FY23: £658m | Net income FY23: £18m | Latest price
Another British housebuilder, another to avoid. See Bellway for further thoughts on the sector, as for Crest Nicholson, it’s one of the smallest and weakest housebuilders of the pack. Bellway took a look last year but walked away from the merger; and Crest just delayed its annual results so auditors can better assess the financial impact of improving fire safety in previously developed tall buildings. Not exactly confidence inspiring. The hope is that either a new CEO can right the ship, or another suitor will come looking, but neither seems a given.
Last updated: 3 February 2025 | Back to Top
🟡 CURRYS
Mkt cap: £1.1bn | Revenue FY24: £8.5bn | Net income FY24: £165m | Latest price
Currys is well known as the UK’s go-to for electrical goods and appliances. Its stores are a fixture in retail parks across the country, although it now styles itself as an omnichannel retailer of products and services, with 38% of sales coming online. Lesser known (to me at least) is that Currys has operated in the Nordics for the last 25 years under the Elkjøp brand, and the region accounts for 41% of revenues, with the remainder coming from the UK. The company took a big profit hit in 2023, a combination of a write down on goodwill from the merger of Carphone Warehouse and Dixons in 2014 which created the group, and weaker demand. A depressed valuations opened it up to takeover bids, with Elliott Management, the US hedge fund best known as a take no prisoners activist investor, throwing in an offer in March 2024. The board refused to engage and it’s not clear what Elliot’s plans were. Currys is showing signs of having turned a corner, but the business is still tied to consumer strength, and in the UK that remains worryingly weak. Add to that it it’s a fiercely competitive space with razor thin margins (the target for EBIT margins is 3%).
Last updated: 20 February 2025 | Back to Top
D
🔴 DELIVEROO
Mkt cap: £2.1bn | Revenue FY23: £2bn | Net income FY23: £-32m | Latest price
I have two claims to fame vis-à-vis Deliveroo. The first is that the founder was in my MBA class. I didn’t know him personally but credit where credit is due – it took an American to recognise how awful London’s food delivery options were and do something about it. The second is that I was on a call with the Chancellor on the day Deliveroo listed (with many others on an entirely unrelated matter) and heard him bemoan how the market reaction (the stock tanked) was a disgrace to the UK. Maybe not those words, but certainly that sentiment. My (unvoiced) thought at the time was - isn’t food delivery just a bad business? That was five years ago, and I’d been reading a lot of articles like this. But as an investment Deliveroo hasn’t done much since, so either the UK market has got it wrong for five years, or food delivery isjust a bad business. A big part of why it’s a bad business is that there aren’t clear economies of scale. It’s a point-to-point model in which food needs to be picked up at a restaurant and delivered to someone’s house. Absent mass deployment of drones, which still seems far away, that requires a person, and people don’t come cheap. Commissions and delivery fees are therefore high so either the restaurant, which itself operates on wafer thin margins, bears the cost, or the consumer, who is fickle and price sensitive, does. Neither wants to. Deliveroo itself looks small, with fierce competition from JustEat takeaway.com, now the largest food deliver platform in Europe, and UberEats. The investment play is to wait for a takeover – especially now the founder/CEO no longer has a blocking vote via Class B shares, as these expired in April 2024. DoorDash took a look around that time, and Amazon continues to hold a large stake, but a concrete approach is yet to materialise.
Last updated: 20 February 2025 | Back to Top
🟢 DISCOVERIE
Mkt cap: £548m | Revenue FY24: £437m | Net income FY24: £16m | Latest price
Discoverie has an appealing business model. It designs and manufactures unique, custom electronic components, via a decentralised, capital light business model that combines organic growth with a healthy dose of M&A. Its underlying businesses sell into five target markets - renewable energy, transportation, medical, industrial and connectivity, and security – to customers that include Vestas in wind turbines, ABB in electrical equipment, and Abbott in medical devices. The strategy is engineering and design led, and the key is that the components it produces are a small part of total cost for customers (they part of a much bigger, more complicated piece of equipment) but they are unique, giving Discoverie a certain level of pricing power that it says it is doing better at capitalising on. Growth comes from winning new business and pull-through demand on underlying products. Growth is also perhaps why the stock has languished in recent years. Sales have not yet recovered to March 2020 levels, despite continued M&A activity, which the company attributes to the pandemic fall, disrupted supply chains and now industrial destocking. But on the positive side operating margins have steadily improved and the business model looks sound. I’m generally not into turnaround stories but this could be an attractive entry point should top-line growth recover.
Last updated: 24 February 2025 | Back to Top
🔴 DIVERSIFIED ENERGY COMPANY
Mkt cap: £668m | Revenue FY23: £868m | Net income FY23: £758m | Latest price
Another odd one for the FTSE 250. A US company, founded by Rusty Hutson Jr, whose destiny with a name like that could only have been as an oilman. Or a cowboy. Or Nascar driver. Or banker, which is what he did before buying a small, old gas well in West Virginia in 2001, and then buying tens of thousands more across the Appalachian Basin. Diversified Energy listed on AIM in 2017 because, according to Hutson, “we weren’t big enough at the time to float in the US. And I didn’t want to go down the private equity route because I didn’t want to work for somebody else.” DEC moved to the main market in 2020 and in 2023 dual-listed on the NYSE. The boom bust nature of upstream energy plus zero UK connection means it’s not for me.
Last updated: 24 February 2025 | Back to Top
🟡 DOMINOS PIZZA
Mkt cap: £1.1bn | Revenue FY23: £680m | Net income FY24: £115m | Latest price
This the UK outpost of US-based Domino’s Pizza. It owns the exclusive master franchise rights for Domino’s in the UK and Ireland, where it operates stores under sub-franchise agreements. I’d naively thought that pizza delivery may be more of a consumer staple, but the business is more cyclical than imagined. That may be because there are plenty of options to trade both up and down. Of late, UK consumers have been trading down and cost-of-living plus cost inflation have troubled Domino’s. It’s business model however remains appealing: asset light and highly cash generative, with a perpetual agreement with the US mother ship that renews so long as performance targets are met. Performance relies on expanding the number of stores so there is a question of how saturated the market is. Domino’s thinks there is a plenty of growth as people value hot food and fast delivery from close locations, so current store areas can be “split”. It’s the UK’s leading pizza delivery business and the franchise model should kick off a steady-stream of cash year-on-year. It’s a little surprising then that the stock hasn’t done better in recent years – requires more digging to know if that’s an opportunity or a red flag.
Domino’s Pizza Group (The Long View, August 2024)
Last updated: 2 March 2025 | Back to Top
🔴 DOWLAIS
Mkt cap: £934m | Revenue FY23: £4.86bn | Net income FY24: £-501m | Latest price
Another one bites the bust. Dowlais is a spin-off of Melrose plc, the British industrial acquirer, which nabbed the storied engineering firm GKN in a hostile takeover in 2018. Melrose spun-off the GKN automotive, powdered metallurgy and hydrogen businesses in 2023 under the Dowlais name, although independence didn’t last long. US-based American Axle and Manufacturing had a $1.44 billion bid accepted by the Dowlais board at the end of January and the transaction is now winding its way through shareholder and regulatory approval, expected to complete by the end of 2025. I have no idea if this is a good business, but it’s red because it’s now a merger arbitrage trade rather than a long-term investment.
Last updated: 2 March 2025 | Back to Top
🔴 DR. MARTENS
Mkt cap: £661m | Revenue FY23: £877m | Net income FY24: £69m | Latest price
Somewhere in the mid-90s I bought a pair of DMs in purple suede. I also had a knock-off black pair for school. Or maybe those were knock-off Kickers. But those purple suede boots, offset against that yellow stitch, oh how I loved them. Yet fashion moved on, and I distinctly recall those DMs going from the height of cool to the height of naff. Such is the vagaries of what’s in vogue or not, and such is why I have a sceptical view of Dr. Martens as a brand and business. Purchased in 2013 by private equity group Permira, Dr. Martens share price is down over 85% since it returned to public markets in 2021. Major operational and inventory management issues have plagued the company with five profit warnings in the last three years. A turnaround value-play perhaps, but for me it still feels too much of a one-trick pony and too at the whim of fashion trends. I feel the same way about Birkenstock and wouldn’t invest in that either.
Last updated: 2 March 2024 | Back to Top
🟡 DRAX
Mkt cap: £2.3bn | Revenue FY23: £8.1bn | Net income FY23: £561m | Latest price
Towering 374 feet over North Yorkshire lie the 12 cooling towers of Britain’s biggest power station, Drax, and with them a micro-history of UK energy policy. Drax the company owns Drax the power station, plus a portfolio of wood pellet production plants in North America and some small UK renewable assets. Drax the power station opened in 1975 and was the UK’s most advanced coal-fired plant. Energy generation was privatised in 1990 and by 1999 Drax had been acquired by US-based AES Corporation. That went pear-shaped, the group was restructured, and Drax Group listed on the LSE in 2005, by which stage it had begun to transition away from coal to biomass. That transition is now complete – and critics would say it’s come at a huge cost to the UK taxpayer with questionable environmental benefits. I don’t intuitively like energy generation as a business, but Drax enjoys more protection from boom bust market forces via a contract-for-difference that guarantees a minimum power price through 2031. I also think energy security will continue to grow in importance – and security of supply rather than net zero will be the primary policy concern – which should provide long-term support for Drax’s operations.
Last updated: 2 March 2025 | Back to Top
🟡 DUNELM
Mkt cap: £1.97bn | Revenue FY24: £1.7bn | Net income FY23: £151m | Latest price
My impression of Dunelm is that it’s a bit tired. There was a time when it seemed to be the go-to place for home bargains in out-of-town retail parks but that seems to have faded. Yet it remains the UK’s no.1 homewares retailer, and while sales growth has slowed, it’s a higher margin business than I imagined. Gross margins (revenues minus cost of goods sold) are over 50%; and operating margins (including administrative costs and overheads) are still ~13%, which seems pretty good for mass retail (compare that to UK supermarkets and electrical retailer Currys at ~3-4% operating margins). The Adderley family retains a 37% ownership stake in the company, despite selling 5% in October to “diversify their portfolio”. Further selling of this position could place downward pressure on the stock, and the company also needs to manage the departure of its long-term CEO.
Last updated: 3 March 2025 | Back to Top
This is not investment advice. It is my opinion only and is not a recommendation to buy or sell any stock. You should do your own research and invest according to your own financial circumstances.
ChemRing: energetics are things like detonators and launching propellants. Less boom more bang and whoosh.
C&C reminds me of being a kid, drinking Club Orange at my grandparents' house!
Just had a look at the current C&C line-up...some nice beers in there, amongst the ciders, like Innis & Gunn.
Thanks for the trip down Memory Lane!
I used to hold Carnival, but I sold because of the balance sheet after Covid - although the company is fundamentally weaker now, can't deny the stock has gone well over the last few years