Month in Review: September 2018

Broker optimism towards London-listed firms bounced back to new highs in the last month, while tipster sentiment declined over the same period. The proportion of buy ratings made by brokers jumped from 66.5% in August to 72.9% in September, while sell ratings decreased from 6.7% to 4.4% of all tips. In contrast, the number of buy ratings from tipsters dropped from 64.4% to 61.2% over the course of the month, while sell ratings accounted for 25.5% of all tips (up from 23.16% in August, but still below sell signal levels earlier in the summer). Tipsters were considerably less active this month, with brokers accounting for 65% of the 1,300+ new tips tracked by Stockomendation.

There was also a considerable shift in the sectors that tipsters focussed on this month. Whereas the Mining sector has dominated in previous months, Support firms attracted the most tipster focus in September. This was influenced by an increase in tips placed on companies such as Ashtead Group (AHT) and Paypoint (PAY). For brokers, the top five sectors remained the same with Tourism & Leisure attracting the most attention, driven by an influx of mixed ratings on J.D. Wetherspoon (JDW) and buy ratings towards Greene King (GNK).

Brokers were most active in Tourism and Leisure Services...

...while tipsters switched focus from Mining to Support firms

Brokers performed particularly well in the Leisure Products sector (average tip performance = +18.1%); due in part to five ‘buy’ ratings by brokers – such as Jeffries and Peel Hunt – made on Frontier Developments (FDEV) earlier this month. All five ratings have achieved performance of more than 30%. However, broker ratings for IT Hardware (-5.7%) and Electronic & Electrical Equipment (-3.6%) firms performed poorly. In the latter case, this was mainly due to new ‘hold’ tips on Xaar (XAR), whose shares plunged after a second profit warning.

Tipsters saw success in IT Services (+4.3%) and Industrial Chemicals (+3.8%). Steve Moore of ShareProphets was the top performer in IT Services, with his tip to avoid Oneview Group (ONEV) on 11th September followed a drop of 46.1% in share price. Edmond Jackson of Interactive Investor’s ‘risky buy’ tip on Beeks Financial Cloud Group (BKS) has also performed extremely well (+36.1%). However, tipster didn’t perform so well in IT Hardware, with average new tip performance of -7.7% this month.

The top three tips this month were all made by Steve Moore of ShareProphets: his tips to avoid Oneview (ONEV), avoid Foot Asylum (FOOT) and sell TLA Worldwide (TLA) have all produced performances greater than 40% so far.

Finally, the most-frequently tipped companies differed between tipsters and brokers in September. ITV (ITV) attracted the highest number of broker ratings (12 tips), while Redt (RED) was the most frequently tipped company amongst tipsters (6 tips).

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Disclaimer: The contents of this article should not be considered financial advice. All information correct as at 26th September 2018.