3 UK shares I bought in 2020: and what happened next?

For me, like for all investors, 2020 was a very different, indeed difficult, year. Nobody in the UK has invested through a time quite like it. Yet the challenging time has given me (and I hope many other investors) the chance to learn, find new companies that can flourish and to adapt investing styles. I did. I learnt a lesson about investing for yield and am returning back to a growth at a reasonable price strategy, with one eye being kept on dividend growth. I was overly focused on yield at the expense of other considerations.

As dividends were slashed across the board my investing style changed. 2020 was a year where I invested in different shares from the usual. For example, I bought and sold both Team17 (LSE: TM17) and Intermediate Capital Group (LSE: ICP) very profitably. I still hold Diageo (LSE: DGE) shares within my SIPP as they are a long-term compounder and so consequently I’m happy to hold for a long time.

In this article I’m outlining a bit more about these shares, all of which I rate very highly. I don’t think it’s strange to say I still like the former two, and yet have sold them; that’s because the large gains in a small timeframe made it hard not to want to lock in the gains.

The gaming company

It’ll be no surprise to any reader of this blog that gaming has been a winner from the pandemic. Share prices in the sector had an amazing 2020 and M&A activity in the sector could keep pushing shares like Team17 higher.

About Team17

Team17 is a games producer and publisher, producing its own titles and also working with third parties. It’s award-winning and one of the founders is still CEO and has a significant shareholding. It has amassed a portfolio of over 100 games in its 30 years or so existence.

Why did I buy the shares? 

I bought the shares on the basis of its strong fundamentals and rapid growth. These were the key considerations for me. The fact gaming boomed during the pandemic was an additional bonus, which really helped drive the share price after I bought into the shares.

What’s the latest from the company?

A recent trading update revealed that the business continues to be shooting the lights out and is very growth-focused. It acquired Golf With Your Friends for a total consideration of £12 million. The acquisition will be satisfied wholly in cash, with an initial payment of £9m and a further £3m paid within 12 months.

Results-wise, the group delivered full-year results with year on year revenue and adjusted EBITDA growth of c34% and c36% respectively.

Intermediate Capital Group: the great combination of Covid recovery and income

This was another share that did very well for me. It’s a FTSE 100 company so the level of share price growth in 2020 was surprising and shows just how many bargains there were for investors in around April 2020 after the worst of the stock market crash.

About Intermediate Capital Group

It’s an asset manager focusing on institutional clientele, so that would be pension funds and such like. It operates across four asset classes – corporate, capital markets, real assets and private equity solutions.

Why did I buy the shares?

I bought the shares for a combination of the income which was over 4% at the time of purchase, which given all the dividend cuts seemed good and I thought asset managers might be relatively safe in the recovery phase of the pandemic. So I like the industry as well and how Intermediate Capital Group markets itself.

On top of that, I just thought the share price sell-off was indiscriminate and overdone. Therefore, based on solid fundamentals I thought Intermediate had a good chance of bouncing back from the March 2020 stock market fall.

What’s the latest from the company?

Just today (28th Jan 2021) actually the company put out a Q3 trading update. Total assets under management (AUM) increased 2% during the quarter to €47.2bn. The asset manager stated that fundraising for the full financial year is expected to exceed €6bn, significantly ahead of management’s initial expectations. The group will announce its annual results for the year ended 31 March 2021 on 8 June 2021.

Diageo: yet to shine

I hold onto my Diageo shares as they look to recover. The recovery in the share price hasn’t been anywhere near as strong as the business is more affected by Covid than either Team17 or Intermediate Capital Group. Hopefully that headwind will pass I the coming month as the vaccine rollout continues.

About Diageo

Diageo is a well known beverages producer. It owns brands such as Captain Morgan, Guinness and Johnnie Walker. The drinks are sold in more than 180 countries.

Why did I buy the shares?

This was a share bought for its long-term potential to compound. I think its brands act as a moat and it has pricing power (in usual times), allowing it to grand out year over year profit and dividend growth. I think the quality of the business and management mean it’ll do well and I can leave it in my SIPP without worrying about it.

What’s the latest from the company?

Diageo also updated investors today. Given the context of Covid-19, its figures for the six months to the end of 2020 were probably better than expected. The results showed that organic growth in sales of 1%, but overall net sales declined because of unfavourable currency movements. The group did particularly well in North America. The interim dividend increased 2% to 27.96 pence per share.

Investing through 2020 has taught me a lot and changed my view on how I want to invest going forward. I’ll give more credence to growth and focus less just on dividend yield. Though dividends remain an important consideration.

I think 2021 will be a better year – despite fears bubbling up of another stock market crash – and I hope to rebuild my portfolio. I think all three of these shares are good companies and I may well rebuy into the former two and in the future add to my Diageo holding.

If you like this article, you may also like the previous one on three UK listed artificial intelligence shares.

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