Horizon started covering this British gaming stock in January 2019, shortly after building our own position. Back then it was trading at £30.20 per share (which was our averaged purchase price that month), and our average cost a month earlier in December 2018 was slightly lower at £28.33.
At the time of our initial trade, Games Workshop subsequently accounted for 40% of our portfolio, our single largest holding, indicative of our personal conviction and belief that this was a great company trading at a fair price in what at the time (and this remains to this day) was a relatively expensive and inflated market. It’s been our top pick through 2018 for subscribers of our newsletter.

Fast forward to January 2020 and GAW is trading at £61.10, not including dividends which account for circa 50% of profit distribution. Games Workshop is up well over 100% since our first public recommendation twelve short months ago, which is, to say the least, exceptional performance.
Moving through 2020, our opinion is that Games Workshop is now trading at an elevated level. However, the success story through 2020 is likely to continue leading to potential short-term upside as we have seen through the course of 2019. That said, it would not be unwise to start taking profits and trimming down the size of this holding – depending on how attractive other propositions are beginning to look.

To add further context, Horizon now recommends trimming around 30% of this holding as we see other companies trading at highly attractive valuations. This leads us neatly onto our second stock to watch, WPP.

2. WPP

We continue to talk about WPP favourably for all the reasons we highlighted back in February 2019 when we started building our position, and over the last 12 months this stock outperformed our expectations all along the way.


(Google Finance, 2020)

Despite being up over 30% when including dividends (which remain impressive), we continue to add to our position in WPP as it remains relatively well priced considering the current level of (in our opinion) the market, which we deem as elevated.

The firm continues to meet core operating metrics, and has faced up well compared to disappointing results from peers Publicis. As such, our belief in the current management team remains firm, and again this is in spite of the media coverage given to Martin Sorrell and his public lack of conviction in the current team moving forward.

A few other key notes on WPP: 

  1. Dividends remain high, and well covered.
  2. This business throws off a lot of cash – it does not have a large capex component in FCF spend.

The industry is in decline, but it is far from terminal – the core business remains profitable and the lack of glitz and glamour provides investors with better entry points in terms of core value than might otherwise be the case.


It’s been a great year for ATVI considering the slower pipeline, as the release of World of Warcraft Classic feeds through to the bottom line for investors. Since our initial recommendation in early 2019 ATVI is up just north of 27% driven primarily by the release of Classic and Call of Duty.
Moving through 2020 ATVI has a firmer line up of new releases, much in line with competitors such as EA. In short, 2020 is likely to be a great year for the industry, pleasing gamers and investors alike.

Call of Duty provided further catalysts for 2019 growth, with the mobile version hitting 100m downloads and the desktop version being well received, which indicates good things ahead of this title in the e-sports arena through 2020. Substantial investment during Q4 should kick start the progress markets expect to see moving through the next year, but is likely to detract from earnings during Q1 2020.

Overall, we are maintaining our current position in ATVI – we have always said 2020 is the year to watch, and we did not expect substantial movement during 2019. In hindsight, 2019 turned out to be an excellent entry point and we remain confident in performance moving through 2020.

MetricActivision BlizzardElectronic ArtsTake-Two Interactive
Forward P/E 23.5621.9424.62

(Finviz & Google Finance, 2019)

However, as industry analysts continue to point out – ATVI is trading relatively expensively compared to peers, as highlighted in the metrics above. This is not a material headwind at this time, as the metrics remain in the ballpark of expectations and the quality and quantity of releases through 2020 remains a key driver for continued growth.

This article contains opinion analysis and judgements from the author that should not be taken as a guarantee. Past performance is not indicative of future results.