Computer gamer leads the winners in our tips of 2019
WHAT a momentous year 2019 has been! Almost the entire year was dominated by incessant wrangling over Brexit. Politicians prevaricated and the country suffered. The uncertainty lifted just in time to give markets a pre-Christmas boost.
The road ahead may be tough but, at least with Boris Johnson, there is a determined driver at the wheel.
Many companies have proved remarkably resilient, as evidenced by their stock market performance. The FTSE 100 index is filled with big international businesses and it rose 16 per cent to 7,644 in 2019.
The more domestically-focused FTSE 250 index did even better, rising 29 per cent through the year to 22,059, with a particular bounce after the Election result.
Smaller AIM-listed companies are often hardest hit by economic uncertainty but they too made progress. The AIM All-Share index rose 13 per cent to 954.
The strong performance clearly helped the Midas column’s recommendations. Even so, many beat the indices by a decent margin. Now it is time to look at our three top tips for 2019, made last December, to see how they fared.
1 Team17
FIRST prize goes to AIM-quoted video games specialist Team17. This was our top recommendation for 2019, made at this time a year ago, so it is particularly gratifying to see the shares more than double in value to £3.82.
The company, based in Wakefield, West Yorkshire, has had a tremendous year. Run by Debbie Bestwick, a gaming enthusiast since the age of seven, Team17 creates its own games and helps budding entrepreneurs to do likewise, sharing in the proceeds once new titles are launched.
Bestsellers include Overcooked, where chefs have to overcome obstacles to prepare their dishes, and the Worms series, featuring worms at war. Over the past 12 months, several new games have been added to the roster, including The Survivalists, launched just three weeks ago, where players are shipwrecked on desert islands and have to train monkeys to stay out of trouble.
Even though Team17 has amassed a portfolio of more than 100 games, Bestwick keeps a close eye on costs, ensuring that launches are not just successful but profitable.
Last month, the group revealed that 2019 figures would be ahead of expectations, with brokers now forecasting a 31 per cent rise in turnover to £57million and a 47 per cent surge in profit to £17.5 million. Further growth is expected in 2020, albeit at a less heady pace.
2 3i Group
THE FTSE 250 private equity firm 3i invests in private businesses, helps them improve and sells them, ideally at a handsome profit. The company has proved its mettle this year and the shares have risen more than 40 per cent from £7.95 on December 30, 2018, to £11.03 today. Chief executive Simon Borrows pays a decent dividend too, 35p this year, forecast to rise to 36p for the 12 months to March 2020.
3i has investments in 35 firms, including a Dutch cut-price gym chain, an American medical device maker and the British bespoke tourism group Audley Travel.
The company also owns around a third of infrastructure specialist 3i Infrastructure, which has enjoyed good growth this year. Doing well in private equity involves knowing how to improve businesses and support management teams. But it also involves clever sourcing, finding firms with potential and not paying too much for them.
Under Borrows, 3i has developed a reputation for financial discipline, which has stood it in good stead and helped the firm deliver steady returns through the years.
MIDAS VERDICT: Shares in 3i have done well but the private equity environment is tough. Competition for new deals is fierce and global economic prospects are uncertain. At £11.03 the stock seems fully valued, so investors should reduce their holdings. 3 Motif Bio
BIOTECH firm Motif Bio is developing a new antibiotic called Iclaprim. But the shares have been an unmitigated disaster, tumbling from 28p when Midas recommended them exactly a year ago, to less than a penny today.
The reason behind this terrible performance is sad but simple. Iclaprim was expected to gain approval from the Food & Drug Administration. But in February the US watchdog said further tests were needed before it could give Iclaprim the go-ahead.
Motif Bio shares sank on the news and have fallen further since, as chief executive Graham Rumsden has tried but failed to get the business back on its feet. Motif Bio is now being wound down, with all assets, including Iclaprim, being put up for sale. Rumsden hopes another firm will take over Motif Bio’s listing on AIM. If that does not happen by the summer, the group will be forced to delist.