The wonderful thing about Tigger

02.08.17

One of the great things about having the Amphora proprietary algorithm is that it not only highlights relative value across individual producer vintages, but across particular sectors and indeed the whole market. When we are assembling a wine investment portfolio from scratch we first of all work out the sectoral weightings in accordance with the investor’s particular risk profile, then once we drop down into the sector itself we use the algorithm as a stock picking tool, customarily targeting optimal relative-value selections.

At times like this it is also interesting to see which wines have underperformed over specific time frames, for example, since the market bottomed in 2015 or since it accelerated post 23rd June last year. There may well be reasons for shorter term underperformance, of course. If, for whatever reason the price of a wine had moved in advance of the chosen start-date, perhaps in response to a Parker re-grade, it might seem to be good value, but that “good value” might evaporate once you stretch the time frame.

All investment decisions ought to be made after aligning a series of considerations, rather than following the old ‘70s broking maxim: “have a lunch, and buy a bunch”. We note with interest, therefore, that several stars are aligning around Eglise Clinet at present.

Eglise Clinet is a Pomerol and sits in the same sector as the likes of Vieux Chateau Certan, Trotanoy, and Evangile, at a considerably different price point to Le Pin and Petrus, the two iconic Pomerols. We have discussed this sector at length in the past focussing especially on the anomalous pricing of many of the 2008s.

Two different things interest us currently with regard to Eglise Clinet: recent underperformance, and high algorithmic value. Glancing through how well so many wines have done over the last 12 months, poor old Eglise Clinet seems to be loafing along behind with its tail between its legs, as the chart below attests:

Eglise Clinet

Obviously the 2004 and 2011 have done decently on a 12 month view, but they are all underperforming the Liv-ex 100 over 2 years, (the light blue line at the top) and by quite a considerable margin. With reference to our earlier point about time frames, you can see from the table below the graph that the only wine to show much of a leg over 5 years is the 2003, and that has flattened considerably since.

When we look at the algorithm, narrowed down to wines from Pomerol, we notice that various vintages of Eglise Clinet occupy the top 10 positions as offering relative value. The above wines actually represent the top 5, in other words, from a relative value perspective every one is a bargain.

We thought it high time therefore to look more closely at some of its peer group comparables, taking account of scores, prices and, of course, production levels, where we shall begin, because Eglise Clinet’s annual production is tiny! As most people may be aware, the aforementioned Le Pin knocks out about 600 cases, only 200 more than Domaine Romanee Conti, whilst Petrus makes around 2,500.

It is difficult to argue that if you have something of high quality, scarcity is going to push its price up. Scarcity of indifferent quality is irrelevant, obviously, because there would be no demand, so the ideal combination would be high quality, and not much of it.

It is fair to say that because the plots in Pomerol are so much smaller than in many other appellations, not so much of it is produced. A First Growth might make 12,000 cases and a Second Growth about 20,000 (cosmic generalisations by the way, but it gives an indication of scale), so let’s have a look at a few Pomerols:

Vieux Chateau Certan: 4,000-5,000 cases.

Evangile: 2,000-3,000 cases.

Trotanoy: 2,250 cases.

Eglise Clinet: 1,000-1,500 cases.

On average, therefore, Eglise Clinet produces about half as much wine as Petrus, annually. That is not a lot at all, and considerably less than its peers, clearly.

When it comes to quality, as measured by Wine Advocate scores since the run of the century, we find that Eglise Clinet holds its head up in both on-vintage and off-vintage years. In off-vintage years since 2000 (2001,2002, 2003 – unequivocally “off” in Pomerol with a vintage score of 84 – 2006, 2007, 2011, 2012, and 2013), the average scores are as follows:

Eglise Clinet: 94

Evangile: 90.5

Vieux Chateau Certan: 92.7

Trotanoy: 92

 

Similarly when we focus on on-vintage years (2000, 2005, 2008, 2009, 2020, 2014, 2015), we find:

Eglise Clinet: 97

Evangile: 96.9

Vieux Chateau Certan: 96.6

Trotanoy: 96.

It seems unarguable that Eglise Clinet is hitting the target when it comes to quality, outperforming, and comfortably so in off-vintage years. An average off-vintage score of 94 is terrific, by the way. Here’s what Robert Parker has to say about the 96 point 2006:

“One of the greatest wines of the vintage is, not surprisingly, from proprietor Denis Durantou. A remarkable effort in every sense, the 2006 Eglise Clinet is not far off the quality of the prodigious 2005.”

If what we are looking for is scarcity and high quality, (and we are!), then Eglise Clinet has both in abundance. The highest scoring vintages on the algorithm are 2004 and 2011. Here are the score and price comparisons for the above four wines for 2004:

Eglise Clinet  94 points £900
Vieux Chateau Certan 93.5 points £1080
Trotanoy 89 points £1080
Evangile 93 points £1020

For the 2011:

Eglise Clinet  95 points £980
Vieux Chateau Certan 91 points £1050
Trotanoy 92.5 points £1050
Evangile 89 points £890

Go forth, my friends, and multiply your holdings in this excellent and undervalued producer