Archived article

Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

The professionals tell us their biggest winners and losers for 2020 and the stocks exciting them now

In the first of a two-part series Shares invites top fund managers to reveal which stocks they were most pleased with in 2020, which stocks they were most disappointed in, and which they have high hopes for in 2021.

Their answers reveal an interesting mix of names across the market cap spectrum. Recent float, materials company HeiQ (HEIQ), for example, crops up twice in this set of responses. We will follow up with another round of manager insights in next week’s feature.


Most pleased with in 2020: Codemasters (CDM:AIM)

‘We started acquiring shares in racing-focused games developer Codemasters (CDM:AIM) in March 2020 and our average cost stands at 220p a share. The group has benefited from “stay at home” lockdown gamers and achieved a doubling of sales and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) in the first half of its financial year. It is now in a potential bid tussle with industry giant Electronic Arts offering 604p a share, but the original bidder Take-Two is yet to say if it will increase its offer.’

Biggest disappointment of 2020: Churchill China (CHH:AIM)

‘Our fund has long held ceramics specialist Churchill China (CCH:AIM) on the basis of its strong management team and solid market position. Sadly Covid-19 has decimated its customer base and given the ongoing difficulties in the hospitality sector, we struggled to see much upside for a while and were compelled to exit our position.’

Most excited for in 2021: HeiQ (HEIQ)

‘Recent new issue HeiQ (HEIQ) is a Swiss-based materials company – put simply its technology adds functionality to textiles, be it improving cooling, warming or even odour prevention. Moreover, its antiviral surface protection effectively kills off infectious diseases such as Covid-19.

‘HeiQ serves over 300 clients including IKEA where it helps produce curtains to purify the air and Burberry (water resistant trench coats). The UK market has few globally scalable businesses which enjoy high margins and we welcome HeiQ to the portfolio.’


Most pleased with in 2020: Plus500

‘This performed well and as expected. Most volatility hedges decay and have a cost – this has grown and delivered us a good yield.

Plus500 (PLUS) is an online trading platform for retail investors to express short-term views. You should expect online trading platforms to thrive when volatility is high as it was last year, and that’s what it did – revenue up to Q3 was up 200% and operating profit increased 270%.

‘Most equities are inversely correlated with volatility; when volatility goes up it tends to reflect greater investor uncertainty and share prices fall.

‘Plus500’s share price rose by 60% and paid a 7% yield. It helped the portfolio by increasing in value when markets were falling, allowing us to have more capital to redeploy into areas where we saw greater opportunity.’

Biggest disappointment of 2020: Glaxosmithkline (GSK)

‘You might have expected the world’s largest vaccine maker to have prospered in a year like 2020. The year-end increase in market value of dedicated vaccine makers and large pharmaceuticals involved with a Covid-19 vaccine was more than $100 billion.

‘In contrast Glaxosmithkline (GSK) declined in value by c.$22 billion or 25%. Half of its profits come from vaccines and consumer staples – areas where company share price performance has been very strong.’

Most excited about for 2021: EasyJet (EZJ)

‘We have been proponents of holding on to low-cost carriers through the crisis. The vaccine results had a powerful impact on share prices but performance was far from even. The share prices of Wizz Air (WIZZ) and Ryanair (RYA) rose whilst EasyJet (EZJ) was down over 40%.

‘EasyJet is perceived by the market to have had a worse crisis than its peers. I do not think that is justified in reality. There is a lot of pent-up demand for travel – in October, customers were flocking to the Canary Islands when they were open. The longer we are restricted, the more pent up demand will grow. Key competitors have been weakened and capacity is down sharply. The coming years could be very good for EasyJet.’


Most pleased with in 2020: B&M European Value Retail (BME)

‘This is a business which over the years has executed well in the UK with an impressive rollout of new stores, which has clearly widened its target audience as more and more consumers get to hear of them and understand their value offering. The pandemic has materially accelerated their customer footfall further which they are confident of keeping in the future.’

Biggest disappointment of 2020: Science in Sport (SIS:AIM)

‘This is disappointing from a performance perspective rather than the business itself. Considering the headwinds of lockdown affecting their retail channel sales and no sports for large parts of the year they have executed very strongly on their online offering and impressively moved their gross margin up markedly. The hype around The Hut Group (THG) and the valuation investors have put on their Myprotein division has shown the potential for businesses operating in this area.’

Most excited about for 2021: Eagle Eye Solutions (EYE:AIM)

‘Unquestionably the pandemic and the related global lockdowns have forced everyone to do more work and leisure related activities online and I do not believe this trend will suddenly reverse because a vaccine is now being rolled out. For consumer-facing companies, we have long moved on from them just having a website – they now need a much greater level of sophistication in understanding and how they interact with their customers.

Eagle Eye Solutions (EYE:AIM) provides a digital platform that helps companies to deliver incentives and rewards to consumers. Recently major contracts have been announced with blue chip international companies validating their offering beyond just the UK. UK clients include Pret A Manger, JD Sports (JD.) and Sainsburys (SBRY).

‘I am optimistic that businesses operating in this area should benefit as companies prioritise investing in their customer interaction capabilities.’


Most pleased with in 2020: Gear4Music (G4M:AIM)

Gear4Music (G4M:AIM) was one of the best performers for the Smaller Companies Fund. ‘This online musical equipment retailer had been through a tough time, and issued profit warnings, as gross margins were hit by competitive pricing pressures and the struggle to meet demand in 2018/19.

‘However, CEO Andrew Wass put all the lessons learned from this experience in place, and went into 2020 in a strong position, with well-invested warehouses and technology platform, a flexible fulfilment model, and confident pricing that was supported by higher margin own brand products.

‘The company was able to match the extraordinary demand for musical instruments during lockdown and beyond, and competitors haven’t been able to keep up. Analysts upgraded sales and earnings expectations throughout the year. Shares rose 214%.’

Biggest disappointment of 2020: RWS (RWS:AIM)

We held both RWS (RWS:AIM) and SDL, two language translation and technology companies that performed pretty robustly after the initial early sell-off in 2020. An all-share merger was announced in August, which was effectively a takeover of SDL by RWS.

‘The logic is sound – SDL has some fantastic machine learning translation technology, but not the associated high margins owing to a historically bloated cost base.

‘With RWS’s client base across life sciences, IP and big tech, the combination made sense. Initial share price rallies soon petered out, as technical selling weighed on the share prices of both.  It is possible some of SDL’s shareholders could not hold shares in RWS, which is AIM-quoted, and an end-of-year trading statement failed to put the wind in its sails, as management remained (typically) cautious about the outlook and cost savings.’

Most excited about for 2021: HeiQ (HEIQ)

HeiQ (HEIQ) is a textile technology company based in Switzerland, creating some of the most effective, high-performance fabrics available. It is an IP-rich business across multiple patent families and technology platforms to its name.

‘New products and formulations accounted for an astonishing 50% of revenues in the first half of 2020, based principally around Virobloc, a formulation for a fabric which kills viruses and bacteria that come into contact with it, currently in high demand for face masks and other coverings.

‘We made a large investment in the IPO which listed in early December, and despite a strong performance in the share price so far, we remain enthused about the opportunity for what is now our largest holding. HeiQ has an abundance of technology, products to both help reduce carbon emissions and tackle the pandemic, it is founder managed, commercially proven and not aggressively valued.’

‹ Previous2021-01-14Next ›