Portfolio Review


Thought it may be interesting to go through the portfolio as a whole – to give my readers a view of the bigger picture.


I can’t say I am entirely happy with it.  I have 3 main problems:

1.  Where to put my money – I run a reasonably concentrated portfolio – usually 10-15 holdings.however I struggle with finding good holdings so need places to park my cash where i can achieve more than inflation but whilst keeping money available for better opportunities.

2.  Stocks which fall in value. Pretty self explanatory really.

3.  Stocks which rise.  If something rises too far or far enough it is likely not to be a good investment any more.  It also throws portfolio weights out of wack.  For example if I have a 10 stock equally weighted portfolio and one triples – it then becomes 30% of the portfolio.  What then?  When I was in the city the commonly cited answer would be rebalance – sell the winner and buy the losers.  I don’t do this.  If a stock has done well and an idea come off then I want it to run to its fullest extent.  I also don’t like buying the losers.  I will, but I don’t like it – ideally everything should go up within a few days of me buying it!  Regrettably reality doesn’t agree with me.  Everything which rises ultimately may need to be sold.  Then I need to find a good home for even more money.

Onto the portfolio (Values as at Friday 4/4/14 close (approx)).

I would group it into the following.  EDF / National Grid and KPN were cash parks – designed to be safe homes for my cash whilst I found a more interesting home.  The template for this was National Grid – I bought in 09 at about £5 and held it up to £6.20 at the end of 2012 when I used the funds to buy a property.  I got a nice 4-6% dividend, plus a 25% profit.  I am not going to get rich doing this, but wont go broke any time soon either.  In late 2011 / early 2012 I was busy quitting jobs / getting a new job / moving house.  I didn’t have a huge amount of time for the markets.  So in light of my National grid success I bought KPN / EDF.  Two dull utility like businesses – few weaknesses due to debt / the Fukushima Nuclear disaster, I thought I had bought at a good price.  I was very very wrong.  Both have halved in value before recovering.  KPN had a rights issue (which I had looked into but thought they didnt need).  Ultimately I have had nice 5% dividends from EDF.  But with a 50% fall then doubling of the stock over the time I have held it it really, really wasnt worth it.  The cash park idea has worked(ish), ultimately I have had better returns than cash, however the volatility has been so extreme I am looking to exit these positions.  The problem is, as ever, I dont know what to do with the money.

My other idea to deploy surplus cash (developed at the same time) was to invest in silver.  At about $40 (its now $20).  I thought it was cheap relative to gold.  Luckily (ish) I closed half this position for a mere 25% loss.  The rest I hold to this day.  Trading in Silver has not been all bad I started buying at $12.  Problem is I was small at that time as I had never really done commodities before – my $40 silver position was large.

I still hold silver as I think it will go back up and I have no better idea what else to do with the money.  I dont want too much in cash – with a 5% trade deficit and 5%+ budget deficit I do not trust sterling.  I have also had bad experiences parking my cash in currency funds like CEW and CCX.  There are no easy answers to this problem.

Stocks I actually had a view on and wanted to hold have generally been much more successful.  For example FFY (ffyfes – bought in 2010 starting at $0.33 – now being taken over at $1.30 – 216% gain vs avg cost (plus solid 5%ish dividends for nearly 4 years).

Lamprell is another success – bought in at 80p, now £1.40 – raised my average cost by buying more recently.

FP. see blog post – again just bought more recently.

Man Group – thought it was undervalued at 80p-90p appear to have been right – now is £1.05.  Company assets / earning power of GLG means there is still upside on this compared to other asset managers – really what it is.  There is a strong balance sheet, surplus capital and free cashflow galore!

Terra Catalyst Fund – Great stock, should have put much more in.  It was an investment trust holding listed equities equal to the market cap and a load of property on the balance sheet – effectively for free.  It has been winding itself up, and much of the lowish risk/ highish return nature of the trade is gone so this is not a home for new money.

Symphony International – posted about here.  Went up a touch, down a touch and is pretty much where I first saw it.  Could be worse.

LCG – still down on when I posted – but only a touch.  Will wait this one out, was disappointed by the results, however one set of bad results does not a bad investment make.

ACHL – Most likely home for new money.  Price down 50% on average cost, however is trading at net cash and just a little operational improvement could mean good things.  The problem is no-one trusts Chinese companies.  Rumours of fraud – but I think these are just that.  I will look into this further in a future post.

PA. – discussed…

I also hold Templeton Frontier Markets and Neptune Greater China Income – again cash parks.  I will exit these when I find better homes for my money.

All in all not terribly happy with the state of the portfolio at present – far too many assets parked or in successful but washed out trades such as Ffyfes / Terra Catalyst.  I recon about 50% of my capital is in these positions.  Its not all a loss as they do dampen volatility and lower the risk of the portfolio, however this is not really what we should be about. Time to get back on the wagon and find better stocks!


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