Portfolio Review - January 2026
YouGov
In total, at the time of writing, my YouGov position is down 45.53%, making it my worst performer by a fair margin. There are multiple explanations for this, but the combination of a challenging macro environment and some fairly substantial operational missteps have hit the share price hard.
The decline in marketing spend is an external factor that has impacted the whole of the sector. Predicting when (or if) this will reverse is challenging, but history tells us that eventually it will, and YouGov is well placed to capitalize when it does. This reduced spending has suppressed renewal rates, leading to lower pricing power, and compressed margins.
Looking at the company specifically, there have been several missteps. Firstly, the appointment of Steve Hatch as CEO was a strategic error from the board. He was intended to bring a degree of commercialization but clearly took focus away from key areas of the business, namely innovation and product development. Innovation was a key factor in the previous success of the business, with products such as BrandIndex driving strong revenue growth in recent years; this optionality is part of what you pay for when you buy shares in a company like YouGov.
Secondly, the decision to acquire GfK’s consumer panel was poorly timed given a) the cyclical downturn mentioned above, and b) the high-interest rate environment at the time; YouGov borrowed €280 million to finance the transaction at the peak of the interest rate cycle. These are difficult moves to explain and likely another reason why Steve Hatch has been replaced.
Evaluating my own performance within this investment, the cyclical challenges that marketing budgets face during times of economic uncertainty is a factor that I should have understood. This was simply inexperience and naivety. The capital allocation errors are less obvious, but perhaps here too there should have been more weight placed on the key person risk (the likelihood that the founder and CEO Stephen Shakespeare would retire). I perhaps also could have been better at judging whether the acquisition made financial sense, and exiting the position earlier, before the decline had reached its current level.
I am going to hold onto this investment because I think that the core tenets of my thesis remain intact. YouGov has a more engaged panel than the rest of the industry, has invested more in ensuring the quality of data that it produces, and has leveraged these to provide more unique insights to customers. These competitive advantages allow YouGov to build innovative solutions to customers’ problems, leveraging fixed data and panel investments that have been made already. I expect the business to continue to take market share, and to benefit from the cyclical upswing as marketing budgets rebound.
Tracsis
Tracsis is another one that has endured a slightly challenging macro environment over the past couple of years. Whilst rail, the company’s primary end market, is not cyclical and should therefore be somewhat immune to the reduced spending seen elsewhere in the economy, there are still external factors that are impacting the business. Within the UK, the uncertainty around nationalization is leading to reduced investment, with operators unwilling to invest long-term for improvements they are unlikely to benefit from. In the company’s other markets, the general level of uncertainty is leading to longer sales cycles and reduced long-term investment.
Within the UK, Tracsis’ largest market by far, a large portion of the spending is already from public bodies, in particular National Rail. This has experienced significant funding shortages and has impacted profits in the RCM business. The hope is that as public investment in railways increases, and nationalization continues to take shape, this investment will trickle down to Tracsis.
The company itself is performing well. It has recently won a contract to provide PAYG ticketing across National Rail which should start to contribute meaningfully to revenue in 2026. There have also been several changes to the operational structure of the business which should benefit the company as it grows. Finally, the company has a new CEO. Whilst his public market track record is limited and it is therefore difficult to judge him, I certainly feel the time is right for change.
Overall, this is another one that is worth keeping as far as I am concerned. It is one of those investments where the fundamentals of the business seem somewhat disconnected from the share price. Whilst the performance in recent years has not been good enough, the business is still winning new contracts and retaining work from existing customers; I believe this reinforces the fact that the company’s products are market leading. It is also on the right side of a number of long-term tailwinds, so the name of the game here is patience.
Big Technologies
Of all my investments, this has been the most challenging by far, despite my actual losses from the position being minimal. The company is currently embroiled in a legal dispute with the founder and ex-CEO Sara Murray. She is alleged to have connections to a number of offshore vehicles which owned roughly 17% of the shares at the time of IPO. If this turns out to be true, it would push her shareholding above 30% and put the company in breach of rule 9 of the takeover code. The company itself is also being sued by a group of former shareholders who accuse the company of using follow-on clauses to push them out at much lower valuations than the IPO (a settlement has now been agreed on this).
What is frustrating here is that the company itself is performing well. It has recently won new contracts in Lithuania, Latvia, Pierce County (Washington) and Prince Edward Island (Canada), with the largest of these capable of reaching €6m over the course of three years. The company is also investing heavily in new technology, with a partnership signed with a US-based company to provide their AlcoTag technology. They are also in the process of developing a new product called AlcoBreath, with the unit capable of measuring the level of breath alcohol whilst offering face recognition and GPS tracking.
Overall, the share price is being held back by the overhang from the litigation, whilst also being supported by the performance of the underlying business. I have already taken losses from the negative reaction by shareholders towards the litigation, so bailing out now doesn’t seem to make much sense to me. Going forward, this is certainly a lesson learnt; sometimes there is a very good reason why the price declines following bad news!
Kitwave
For a business that I would see as relatively stable, the share price has been volatile. The most recent cause of this was the company’s interim results which reported fragility in the destination leisure sector, part of the company’s higher-margin foodservice division. This, combined with the impact of higher employers’ national insurance contributions and investment in expanding operations in the Southwest of England led to revisions for the company’s operating profit.
Kitwave’s business, particularly its retail and wholesale divisions but also the newly expanded foodservices, would generally be seen as non-cyclical. The impact from reduced destination leisure volumes is therefore likely to have been a warning to investors that Kitwave is not immune from the effects of the wider economy. In my opinion, however, the company’s performance has not declined to a point that I would see as concerning. Revenue on a like for like basis was up 3.1% at the interim period, with gross profit up by 1.1% from the previous period; operating margin was down slightly, impacted by the effects mentioned above. Given the integrations of new acquisitions, as well as several operational changes taking place, I think the company has performed strongly.
At the current price, I think the risk in this position is priced very attractively. The retail and wholesale divisions offer consistent revenue, with potential outperformance from the foodservices division giving exposure to higher margin sales. The company also offers a 5% dividend and whilst this is not something that I generally look for, it does provide some access to returns irrespective of investor’s perceptions of the business or UK market. This is one that I intend to keep and possibly add to in the coming weeks. The warm weather and improved summer trading (1.2% GDP growth in the sector during August), means that we should expect to see improved performance in the next set of financial results.
Finseta
Finseta is probably my riskiest position, primarily due to the size of the business and the stage of life that it is in. As is always the case however, it is also probably the one with the greatest upside potential. To manage the risk in this case I have kept the position size smaller than the other shares I own, but it still makes up circa 5% of my fairly concentrated portfolio.
The business itself is going through a challenging period at the moment. As an international payments provider with a focus on HNWIs, they have been hit by HNWIs leaving Britan. More importantly, however, volatility, and particularly that of the US dollar has meant reduced payments activity as clients look to defer larger transactions. Whilst this is a temporary headwind, it has had a significant impact on the business and its revenue growth.
The company’s most recent trading update has reported a large increase in revenue from corporate clients, making up 57% of FY25 revenue compared with 41% in FY24. This greater contribution from businesses does mean lower gross margins (61% vs 65.7%), but it does provide the business with access to a more consistent an less cyclical source of revenue. If the company’s HNWI segment can return to growth, then the combination of stable revenue at lower margins and less stable revenue at higher margins, will create a more balanced company with greater revenue visibility. Corporate clients, and in particular the company’s new muti-currency corporate card solutions has the potential to also allow the business to scale much more rapidly.
Overall, this is certainly a position that I intend to hold onto. The share price response to the most recent trading update was muted, suggesting that despite the mixed bag, this was one investors felt was worth hanging onto; I intend to do the same.
Gamma Communications
Excluding the recent tick-up in the company’s share price, likely driven by a mixture of solid trading update and the company’s share buyback program, Gamma’s share price has declined from a 52-week high of £14.94 to a low of £8.67. Whilst in and of itself this is not a particularly remarkable decline, it is in the context of the company’s solid results. Of course it isn’t results that necessarily matter, but how these tie into investor’s expectations, and it would appear that investors had fairly high expectations for this one. Peak to trough equates to a 41% decline, fairly significant for a company that has still managed to grow revenue at double digits and increase its gross margin.
There are a few possible reasons I have for the disconnect that I currently see between fundamentals and the company’s share price. The first is the weakness in its UK market; in particular the promise of the PSTN switch off and the supposed influx of new customers that has failed to materialise. This may have been a key tenet of investor’s theses for this company, and the endless delays may have been too much for some investors. The other reasons are more structural, with the company’s recent transition to the main market causing forced sales by AIM focussed funds. Gamma is particularly susceptible to this given a significant percentage of its shareholder base is institutional (98.3%).
This move to the main market should be beneficial in the long-term, with greater exposure to larger institutional buyers. In the short-term however, the company has gained exposure to a different investor base at a time when its performance is behind historical levels. In addition, the company was a favourite for managers running AIM focussed small-cap funds because of its consistency and stability; now amongst the larger companies that make up the main market it is likely to be seen as less of a sure bet.
My focus here has been much more on the perceptions towards the business, and much less on the actual fundamentals. That is not because I don’t see the fundamentals as a crucial factor, but more because I see there is such a large disconnect between the two. I believe the these for this remains unchanged, but the recent drop in price makes for a tempting entry point.