Share Tips Update: Entain, Live Nation Entertainment, Fabasoft, Smith-Midland

We have been riding the market up to record highs in the US and Japan, with many of our larger cap picks being lifted by the positive sentiment. Sadly some of our Japanese picks still dragged their heels a little during the rally in Tokyo stocks in February. I’m hoping for better things from them in the weeks ahead.

Talking to investors in February, there still seemed a lot of caution and indeed frustration out there. Caution because there is still a perceived high level of geopolitical risk in the world (e.g. the war in Ukraine), which is driving the ongoing interest in gold (but not so much in gold miners). Frustration because the small cap market, including resources stocks, is failing to rally up. This was a big theme at our recent Beyond the Channel investor event in November.

Our venture portfolio seems to consist of both big winners and big losers at the moment – there seems no middle ground. While patience is a requirement for mining stocks, I have been slowly reducing our exposure in the sector, with Sage Potash being the latest stock to be cut.

Entain LON:ENT

James Coffey added Entain for his FTSE 350 list on the back of its positive momentum trajectory. This is the FTSE 100 gambling company, previously known as GVC, which has been steadily accumulating some very important components in the UK and international gaming sector. Business bought and/or merged with include the likes of BWIN (the owner of PartyPoker) and Ladbrokes. Entain has now also created BETMGM, a joint venture with MGM. Like our other pick in this space, Gaming Realms, Entain could be very well positioned to capitalise on the further legalisation of the massive US gaming market.

Live Nation Entertainment, Inc NYSE:LYV

Our resident US stock picker Raine Lahtinen doubled down on Live Nation last month. He has been a fan of the US stock for quite some time. It is a producer of live music concerts which operates through three segments: Concerts, Ticketing, and Sponsorship & Advertising. While the stock has been lagging the S&P 500, Raine is anticipating a “positive surprise” from Live Nation on the back of what he calls revenues in the “money quarter”. The target price for the stock was set at $128.

Fabasoft Group [Frankfurt XETRA: FAA]

The artificial intelligence sector is red hot at the moment, but most of the investment is focusing on a small number of heavily over-priced US tech stocks. Austria’s Fabasoft Group could be more of a slow burn, but it has some very interesting technology, and is ranked as the software firm with the highest R&D intensity in the Austrian tech market at the moment (according to an EY study). Its e-Gov suite is considered one of the leading products for digital workflow in Europe. I also like the look of Fabasoft’s Mindbreeze Inspire platform, which helps corporations get a much better consolidated knowledge of what they know, and what they don’t know.

Smith-Midland NASDAQ:SMID

US concrete maker Smith-Midland was added in early February as we bought into a rally that had seen the stock rise over 70% in six months to 5 February. Some commentators think Smith-Midland stock is over-priced, but I am taking the view that there is something of a paradigm shift happening in US construction sector thanks to the Inflation Reduction Act. Smith-Midland owns concrete plants in the eastern United States, and specialises in pre-cast concrete products. I estimate that there will be considerable demand for these – e.g. as state governments carry out mandated safety improvements to highway barriers over the next few years.

Sold in February: Borussia Dortmund, Sage Potash

So how are our picks getting on?

James Coffey’s FTSE 350 portfolio

*Prices as of close of play on 28 February 2024

Raine Lahtinen’s US stocks portfolio

*Prices as of close of play on 28 February 2024

Tactical trading portfolio

These are shorter term equity and commodity trades which we can see playing out within one to three months. We will sometimes keep these on longer if the trade is still quite range bound but we are anticipating further upside. These trades have the tightest risk parameters.

*Prices as of close of play on 28 February 2024

Longer term buy and hold portfolio

These are positions where we see a longer term growth scenario, usually in the small to mid cap space, but sometimes larger companies. We will typically be keeping these stocks on the list for at least six months and often longer. Consequently our risk tolerance is higher for these positions than for the trading list.

*Prices as of close of play on 28 February 2024

Venture portfolio

These are companies which we see as having long term and considerable growth prospects. Due to their size and the nature of the business they are in, we feel that our normal risk management constraints should not be applied to these stocks.

*Prices as of close of play on 28 February 2024