Portfolio update 19 July 2025
Weekly news and trading intentions featuring LON:CHRT, LON:OCDO, LON:TRST
Please bear in mind when reading this post that I own shares the stocks mentioned, which likely distorts my perspective. Also, the following content represents my personal views only and is not investment advice. Please see the about page for my disclosure policy.
The UK investing portfolio, UK trading portfolio and Australian portfolio pages are all up to date as at COB on Friday.
On Tuesday, Trustpilot Group (LON:TRST) provided a trading update. Revenue and ARR were both up 21% in constant currency terms for the first half of the year. Bookings were up 17%, also in constant currency, which is a healthy rate given the economic uncertainty created by Trump’s tariffs.
Management is guiding for an adjusted EBITDA margin of 14% for the year, up from 11.4% last year. Adjusted EBITDA excludes share based payment, which were $9.5 million last year (versus $24.5 million adj EBITDA), up from $7.2 million (versus $15.5 million adj EBITDA) in the prior year. I expect that as the business scales, these share based payments will become less significant as a proportion of profits.
One of the major contributors to share-based payments comes from the Restricted Share Plan (which is not for executive directors). As you can see, it does not appear to be growing uncontrollably:
Source: Trustpilot 2024 Annual Report
I continue to think that Trustpilot has a large global opportunity which provides the potential for many years of high growth. I also think that profit margins will continue improving, and I don’t believe that this potential is fully priced in (Price/ARR of 5.3, 80%+ gross margins) because it is a company that divides opinion.
On Wednesday, Cohort (LON:CHRT) released its full year results for the year ended 30 April 2025. Cohort is my largest position having been on a glorious run over the past two years:
Source: ShareScope
According to Stockopedia, Cohort trades on a forward PE ratio of 26.5. This may seem high, but there are two factors which make me think it is reasonable:
UK defence spending is going to increase from its current level of 2.3% of GDP to 3.5% by 2025, plus a further 1.5% on areas related to defence.
Management reckons it can raise operating profit margins from 10.2% in 2025 towards “low to mid-teens percent within the next three to five years.”
I think this is a very well run group as evidenced by the fact it has increased dividends in every year since its IPO in 2006 (well before the current defence spending boom).
Management sold some stock into the price spike which followed Wednesday’s results release. I don’t blame them, they’ve all been involved since the beginning and this is their first major payday. They also retained most of their shares. The sales did completely undo the share price pop, though.
On Thursday, Ocado Group (LON:OCDO) announced its half year results to 1 June 2025. The share price reaction was quite spectacular and I feel fairly smug having bought shares on Wednesday.
But I shouldn’t, because I did not buy because I thought that the upcoming results were going to be significant. I bought because I believe that the company is misunderstood and mispriced. You can read about why, here.
Still, a couple of data points contained within Thursday’s release provided some confirmation that I am on the right track.
Firstly, volumes across Ocado’s entire Customer Fulfilment Centre (CFC) network rose 23% over the prior period. This goes some way to validating the Technology business which has experienced a couple of years of slowing growth with some partners pausing CFC roll-outs.
Secondly, Ocado Retail is the fastest growing supermarket in the UK and clocked 16.3% revenue growth. Only 1.4% of this was from higher prices which compares to broader grocery inflation of 3.1%. In other words, Ocado Retail is squeezing the competition on price.
I could write a lot more about Ocado, but I am going to restrict myself to one more point for the sake of brevity.
A “module” is a unit of capacity in a customer CFC which consists of material handling equipment (robots) and software. When Ocado sells a “module” to its technology customers it pays for the equipment and receives contracted longterm recurring revenues. Each module costs Ocado up to £8 million in capital. Each module also generates up to £4 million in annual revenue (£3.6 million current average including older installations) at roughly 75% margins.
I mention this because there seems to be a view that Ocado is a capital intensive, low return business.
It is uncomfortable to hold a position that is so divergent to the overwhelming consensus which includes some very good investors. I am probably wrong, but I expect to make a lot of money if I am right and will sell as soon as I perceive that the facts no longer support my thesis.
I lived in Australia for 12 years and spent 11 of those years investing in the ASX. I have now been back in the UK for three years and have been focused on LSE shares in that time.
It is clear to me that investing culture is quite different between the two countries. Australians are more optimistic, risk tolerant and wealthy than the British.
When I was investing in Australia, I worked with an investor who bought quality shares that were much more expensive than I was comfotable with. I thought he was naive and that the market would come for him one day, but I was wrong. In fact, his thinking on investing and markets was superior to my own and his highly impressive returns have endured.
I find myself owning similar stocks in the UK to those that he owned in Australia. The price differential between the UK and Australia specifically for these types of businesses is stark. I think that this is a function of British culture and I intend to continue exploiting the arbitrage.
I think the arbitrage will persist because the culture will not change. For example, the British have been looking down on “crass” Americans for decades. But the British are entirely dependent on Americans for their own defence, and spend most of their lives giving their attention to American companies. Companies which emerged from a venture capital industry that could never be born in risk averse Britain, and companies which in many cases incurred years (sometimes decades) of losses to win share.
None of this is to say that there aren’t many valid ways of consistently making money in markets. It is just a (partial) explanation of my own way.
Yes, agree uk investing is definitely risk - averse. Look at uk small caps, people willl pile into a stock like filtronics as long as the results are absolutely guaranteed- with tied in contracts etc. But good/ great companies stay on low / very low p.e.s because people would rather have their money in massive market cap ftse companies, of lower quality and fundamentally worse businesses but where people feel safer. If there is any element of uncertainty about a company's future , even if the business is very decent, people get nervous fast.