TET, BOO sold, KWS bought

This week I made some further sales to my portfolio as two more stocks crashed through my stop losses: Boohoo and Treatt. I also bought a small initial position in Keywords Studios, a share I’ve been interested in buying for a while.

I sold out of Treatt on Monday for a 19% profit. The business appears to still be doing well but the valuation is quite high and likely has room to fall further.

I sold Boohoo on Friday for a 250% profit as the price has continued to fall. I’m a bit annoyed that I let the price fall by more than 20% before selling. Boohoo has been my best performing investment and I think I was in danger of getting over-attached to it. The valuation is still high despite the recent fall in price and I think volatility in the share price is likely in the near term. I still think it is a great business but think best for me to leave Boohoo on the watchlist for now and reassess whether to reinvest at a later date. As a result of these sales my portfolio is now about a third in cash, which is the highest it has been for a while.


New holding: Keywords Studios

I have bought a 3.3% holding in Keywords Studios. Keywords Studios supplies a variety of services to the computer games sector, having originally specialised in localisation services, which relate to translation and cultural adaptation of game content. Keywords has a very acquisitive strategy and is trying to consolidate the currently very fragmented sector. It appears to be able to buy many of these very small businesses at reasonable prices and further gains from a lot of cross selling opportunities by doing this.


I think Keywords is a good quality business:

  • Business economics: Keywords has reasonable returns on capital (16% last year) though I think these are likely understated by the acquisitions it keeps making. The business generates a lot of cash and has decent margins.
  • Track record: Keywords has listed recently and doesn’t have a very long track record but has been growing for the last few years.
  • Competitive advantage: Keywords seems like a business likely to have a sustainable competitive advantage but to be honest I am a little uncertain. It is growing as a collection of small specialist businesses, many of which appear likely to have competitive advantages from developing expertise and focusing on specialist niches. This has given it access to a lot of customers and opportunities for cross-selling its services. It is aiming to develop a reputation by being able to offer reliable end to end services for video games makers.
  • Growth prospects: it is mainly the growth prospects that make Keywords seem attractive. It is operating in a market with fast growing demand. There seems to be a lot of opportunity to consolidate the industry and continue to expand internationally.


The valuation seems cheap to me given the growth prospects. The momentum of the underlying business and recent news flow is excellent. Share price momentum is OK – the share price has fallen from recent highs but remains in an uptrend.



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