So at the start of this week (Wednesday to be specific) I decided to pile into Carnival Plc. I'd been looking at the price drop on the London market over the weekend (a 19% drop), and trying to work out why the same hadnt happened on the NYSE - until i realised there hadn't been any trading on Monday in the States.
I read some advice from Credit Suisse that said if the price dropped to below $30 in the US, they'd consider it to be a buy - on the basis that it has averaged 16.2x forward price to earnings, but at less than $30 it would be trading at 11.1x - so leaving the possibility of a significant correction.
Anyway, that's the view of the analysts. I'm more interested in the fundamentals of the business, which on Friday afternoon had a market capitalisation of £16 billion - but had previously been worth £20 billion, as I pointed out in a previous post.
Looking at this website, which is good for seeing past dividend payouts, Carnival has been a bit up and down over the years. Even if it all goes tits, I think Carnival will be able to deliver decent yields in the long term - Laura said cruises are a popular cheap holiday, and the figures I have read on the internet show a market that grows and grows over the decades. Given that Carnival owns about 50% of the market, it should be pretty well positioned. Its also exposed to North America, Europe, the UK and sends boats out to the Far East. I can see the Asian market really getting into cruises, and i'd expect Carnival will have a big chunk of that.
Anyway, as with everything I'll keep you updated quarterly. Carnival's up 3.86% since I bought it though :) :) :)
Sunday 22 January 2012
Monday 16 January 2012
What else have I bought?
To fit with all the criteria i.e. high dividend, exposure to lots of markets, acceptable to my fiance (although this one only just), I bought into Tesco at 394p per share. Tesco is an absolute staple - one of those shares that fund manages charge you 1.5% per year of your investment to buy into (where's the value add?!). It's the third biggest supermarket in the world after Walmart and Carrefour, it operates in the UK, California, Thailand, Poland, China and plenty of other countries. It was also expected to pay out 3.8% as a dividend when I boughtthe shares. More later on that.
There's nothing like food in bad economic times - as long as there isnt a significant decline in population, you know people are going to want food and the supermarket is the obvious place to go. Working on this logic, I decided to buy into Sainsbury's too at 295p per share. Sainsbury's doesn't operate outside the UK, so in some ways it failed the diversification criteria. However, it was very acceptable to the fiance because it has a reputation for good business practice (compared to the other supermarkets, at least!), and the dividend yield is expected to be 4.8% - and as I know, diversification is very important (and how glad was I of that mantra come Tesco's January performance!)
Sticking to the so called "defensive" stocks, the next place to go was a company actually producing everyday goods that people had to buy. I went with Unilever, the producer of food, drink, cleaning and "personal care" goods. Its a old company that strikes me as being fairly smooth sailing, if such a thing exists. It owns 52% of a company called Hindustan Unilever which sells the same kind of thing as Unilever to the Indian subcontinent. Tick on the diversification box, and tick with the fiance (great Corporate Social Responsibility i'm led to believe). 2134p a share gives an anticipated dividend of about 3.8%.
The next purchase was Vodafone. This company is so underrated it is unbelievable - it's absolutely massive (the world's largest when measured by revenue), but it's treated like just another mobile phone company. At 174p per share, it should provide a dividend yield of about 3.5% - and given that people keep wanting to talk to each other, I cannot really see how this can change much. But then that's my opinion. The fiance was happy with them too, because she hasnt heard anything too negative in the news (neither have I for that matter).
So food, food, gold, phones - where next? Well, walking round Lancaster around Christmas gave me the answer. I consider Lancaster a fairly stereotypical town, so when you see a lot of people in a stereotypical town wanting to do something, in a low competition environment, it's probably a good sign. Pies. That's right, pies - or in fact Greggs Plc, to be specific. Lancaster has three of them in the pedestrian area, all with big queues, and no really serious chain-like competition. And believe it or not, it is a dividend darling with 26 years of rising dividends. So that may change, but its a good indicator. And the dividend yield at the 507p I bought the shares for is 3.3% - another good one, and no complaints from the fiance (can you believe that Greggs have 1200 shops!?!)
So more food. Quite a lot of food there, so perhaps time for something different? Well, I read about the insurance company Aviva and how it was trading at a discount of around 30% to the assets it held. For those that don't know about insurance companies, the way they work is very simple - you pay them a premium, they invest it in shares, bonds, and other investments, and then try and profit before you take your cash out again in the form of claims. So, if Aviva is trading at a 30% discount to assets, it means you can get a load of shares for a discount of 30%. Obviously this is only useful if you believe that the discount will reduce in the future - which you do if you believe in market efficiency - so there's a lot of growth there. Although, remember, I should be investing for dividends and diversification. Well, at the 311p I bought the shares the dividend was about 9% - that's massive I know, and reflects the fears around the exposure that Aviva has to Europe which is paddling up the metaphorical creek at the moment as fast as its politicians can get upstream. However, Aviva operates in 28 countries of which 6 are in Europe. So it might own a lot of European shares, but I am sure the company knows that and is doing something sensible about it before it all goes Pete Tong. On the basis of all this evidence, the fiance was fairly satisfied.
My most recent share purchase? Well, a certain company announced some terrible earnings in the last few days - and that fitted nicely with my contrarianism. Are you seriously telling me you think that Tesco is suddenly worth 18% less because it didnt sell as much stuff as it thought it would over Christmas? Let me put that in context - you are telling me Tesco is suddenly worth £5.5 BILLION less because it didnt sell as much stuff as it expected in one of its 13 countries? Ok, the UK represents 51% of its stores, but it's hardly going out of business. "Oh, but they made the announcement to prepare you for a reduction in the dividend". They'll have to have really screwed up if they are going to reduce the dividend by 20% and set it back to 2008. Maybe they have, but i don't doubt it'll come bouncing back.
Long post this once, but now everything's up to speed. And how does everyone feel about Carnival, the world's biggest cruise ship company? It sinks £95 million worth of boat and suddenly is worth $3 billion less. They must have had all the company's money on the boat, in non-waterproof boxes. It's the world's largest cruise ship operator, for goodness sakes - their balance sheet (what the company nominally owns) shows $37 billion in assets, and the market only values the company at half that now. I might pile in - need to speak to the fiance first.
Signing off......
There's nothing like food in bad economic times - as long as there isnt a significant decline in population, you know people are going to want food and the supermarket is the obvious place to go. Working on this logic, I decided to buy into Sainsbury's too at 295p per share. Sainsbury's doesn't operate outside the UK, so in some ways it failed the diversification criteria. However, it was very acceptable to the fiance because it has a reputation for good business practice (compared to the other supermarkets, at least!), and the dividend yield is expected to be 4.8% - and as I know, diversification is very important (and how glad was I of that mantra come Tesco's January performance!)
Sticking to the so called "defensive" stocks, the next place to go was a company actually producing everyday goods that people had to buy. I went with Unilever, the producer of food, drink, cleaning and "personal care" goods. Its a old company that strikes me as being fairly smooth sailing, if such a thing exists. It owns 52% of a company called Hindustan Unilever which sells the same kind of thing as Unilever to the Indian subcontinent. Tick on the diversification box, and tick with the fiance (great Corporate Social Responsibility i'm led to believe). 2134p a share gives an anticipated dividend of about 3.8%.
The next purchase was Vodafone. This company is so underrated it is unbelievable - it's absolutely massive (the world's largest when measured by revenue), but it's treated like just another mobile phone company. At 174p per share, it should provide a dividend yield of about 3.5% - and given that people keep wanting to talk to each other, I cannot really see how this can change much. But then that's my opinion. The fiance was happy with them too, because she hasnt heard anything too negative in the news (neither have I for that matter).
So food, food, gold, phones - where next? Well, walking round Lancaster around Christmas gave me the answer. I consider Lancaster a fairly stereotypical town, so when you see a lot of people in a stereotypical town wanting to do something, in a low competition environment, it's probably a good sign. Pies. That's right, pies - or in fact Greggs Plc, to be specific. Lancaster has three of them in the pedestrian area, all with big queues, and no really serious chain-like competition. And believe it or not, it is a dividend darling with 26 years of rising dividends. So that may change, but its a good indicator. And the dividend yield at the 507p I bought the shares for is 3.3% - another good one, and no complaints from the fiance (can you believe that Greggs have 1200 shops!?!)
So more food. Quite a lot of food there, so perhaps time for something different? Well, I read about the insurance company Aviva and how it was trading at a discount of around 30% to the assets it held. For those that don't know about insurance companies, the way they work is very simple - you pay them a premium, they invest it in shares, bonds, and other investments, and then try and profit before you take your cash out again in the form of claims. So, if Aviva is trading at a 30% discount to assets, it means you can get a load of shares for a discount of 30%. Obviously this is only useful if you believe that the discount will reduce in the future - which you do if you believe in market efficiency - so there's a lot of growth there. Although, remember, I should be investing for dividends and diversification. Well, at the 311p I bought the shares the dividend was about 9% - that's massive I know, and reflects the fears around the exposure that Aviva has to Europe which is paddling up the metaphorical creek at the moment as fast as its politicians can get upstream. However, Aviva operates in 28 countries of which 6 are in Europe. So it might own a lot of European shares, but I am sure the company knows that and is doing something sensible about it before it all goes Pete Tong. On the basis of all this evidence, the fiance was fairly satisfied.
My most recent share purchase? Well, a certain company announced some terrible earnings in the last few days - and that fitted nicely with my contrarianism. Are you seriously telling me you think that Tesco is suddenly worth 18% less because it didnt sell as much stuff as it thought it would over Christmas? Let me put that in context - you are telling me Tesco is suddenly worth £5.5 BILLION less because it didnt sell as much stuff as it expected in one of its 13 countries? Ok, the UK represents 51% of its stores, but it's hardly going out of business. "Oh, but they made the announcement to prepare you for a reduction in the dividend". They'll have to have really screwed up if they are going to reduce the dividend by 20% and set it back to 2008. Maybe they have, but i don't doubt it'll come bouncing back.
Long post this once, but now everything's up to speed. And how does everyone feel about Carnival, the world's biggest cruise ship company? It sinks £95 million worth of boat and suddenly is worth $3 billion less. They must have had all the company's money on the boat, in non-waterproof boxes. It's the world's largest cruise ship operator, for goodness sakes - their balance sheet (what the company nominally owns) shows $37 billion in assets, and the market only values the company at half that now. I might pile in - need to speak to the fiance first.
Signing off......
So I cashed in......
That's right, I sold out of all the funds in my pension when the British government decided to start more money printing in late 2011. Enough was enough - share prices would go up for a bit, i'd get my money out, then i'd invest it as I saw fit (without paying someone 1.5% a year).
Having done a bit of research, I opened a Hargreaves Lansdown SIPP - it seemed to be the cheapest provider going for what i wanted, which is the ability to buy into very cheap tracker funds (i.e. those that mimic a certain index) and shares. The fees are pretty simple - a "platform fee" for certain types of tracker funds (between £12 and £24 per year i.e. what you'd be charged by a fund manager for between £800 and £1600 under management, although that doesn't include the tracker fee) - and a 0.5% fee per year on shares, which is capped at £200 per annum (i.e. it starts to decline as a percentage when the total value of shares held gets to over £40,000).
So what then? Time to start buying into some shares. My plan, so you know, is to publish the quarterly performance of my portfolio, and compare that to the FTSE index and how it would rank if I was a fund manager (which I am now, albeit a very small scale one!!!)
All fund managers have some kind of strategy when creating their portfolio. Mine is pretty simple - a focus on contrarian investing (i.e. buy when others are selling), dividend income (so shares anticipated to return more than 3% of their value per annum as dividends), exposure to as many markets as possible, and FINALLY - shares which my fiance agrees make sense to buy.
As at 16th January 2012 I have been buying into shares and funds for seven weeks. The first investment I made was a significant chunk of my total funds (11%ish) into a share that was backed with physical gold. That means that the shares represent gold held somewhere. Being a bit of a sentimentalist, I opted for gold held in vaults in Zurich, Switzerland - I can't think of anywhere better. So the share I went for is called ETF Securities Physical Swiss Gold . What does it do? As the site says:
"ETFS Physical Swiss Gold (SGBS) is designed to offer investors a simple, cost-efficient and secure way to access the precious metals market. SGBS is intended to provide investors with a return equivalent to movements in the gold spot price less fees."
Sounds good to me. And as you know, I am very into fees - for this one, 0.39% per annum (plus that 0.5% that HL charge me per year because it's a share). I am very worried about money printing, and gold is (as all the gold fans will tell you) unprintable by government. Plus it has been going up in value since Gordon Brown sold off most of the UK reserves in the late 90s from around $300 per ounce to $1800 today (i.e. a fivefold increase).
Having done a bit of research, I opened a Hargreaves Lansdown SIPP - it seemed to be the cheapest provider going for what i wanted, which is the ability to buy into very cheap tracker funds (i.e. those that mimic a certain index) and shares. The fees are pretty simple - a "platform fee" for certain types of tracker funds (between £12 and £24 per year i.e. what you'd be charged by a fund manager for between £800 and £1600 under management, although that doesn't include the tracker fee) - and a 0.5% fee per year on shares, which is capped at £200 per annum (i.e. it starts to decline as a percentage when the total value of shares held gets to over £40,000).
So what then? Time to start buying into some shares. My plan, so you know, is to publish the quarterly performance of my portfolio, and compare that to the FTSE index and how it would rank if I was a fund manager (which I am now, albeit a very small scale one!!!)
All fund managers have some kind of strategy when creating their portfolio. Mine is pretty simple - a focus on contrarian investing (i.e. buy when others are selling), dividend income (so shares anticipated to return more than 3% of their value per annum as dividends), exposure to as many markets as possible, and FINALLY - shares which my fiance agrees make sense to buy.
As at 16th January 2012 I have been buying into shares and funds for seven weeks. The first investment I made was a significant chunk of my total funds (11%ish) into a share that was backed with physical gold. That means that the shares represent gold held somewhere. Being a bit of a sentimentalist, I opted for gold held in vaults in Zurich, Switzerland - I can't think of anywhere better. So the share I went for is called ETF Securities Physical Swiss Gold . What does it do? As the site says:
"ETFS Physical Swiss Gold (SGBS) is designed to offer investors a simple, cost-efficient and secure way to access the precious metals market. SGBS is intended to provide investors with a return equivalent to movements in the gold spot price less fees."
Sounds good to me. And as you know, I am very into fees - for this one, 0.39% per annum (plus that 0.5% that HL charge me per year because it's a share). I am very worried about money printing, and gold is (as all the gold fans will tell you) unprintable by government. Plus it has been going up in value since Gordon Brown sold off most of the UK reserves in the late 90s from around $300 per ounce to $1800 today (i.e. a fivefold increase).
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