It certainly was for Aviva shareholders yesterday, when the share price dropped by 7.54% - which I took as a buying opportunity.
As per my last, I am off on honeymoon for a month at the end of the week so I wanted to get some more shares into my portfolio beforehand. I considered quite a few weird and wonderfuls, but something I am trying to increasingly consider is those companies that already exist in my portfolio - new is not always better once a certain level of exposure to different areas has been achieved, and I did buy those shares for a reason.
So, why more Aviva? Well, the share price dropped significantly, and the company binned its CEO and is now talking about "hoping" to maintain its dividend (just shy of 10%) whilst intending to dispose of underperforming businesses and get focussed. Sounds like a good long term plan, and with a 40% discount to assets held I am pretty happy to hold more.
What else was under consideration? Well, Caretech is up 25% since I bought it in late May. I also thought very seriously about an electronics company called XP Power which is being widely tipped and has a 4.6% historic yield based on today's price. They seem to be very good at what they do, but I am going to wait until the share price drops to sub 950p before I pick any of those up (i just feel that's about the right amount to pay).
Anyway, I am gone now until the end of August. I wonder what the market will do whilst I am away....
Tuesday 24 July 2012
Saturday 7 July 2012
Let's print some money....
No, not a reference to the Bank of England's latest smack-addict announcement to dump more money into the economy to the cost of all those who have spent time accumulating into savings and pensions (thanks guys!)
Actually, it's a reference to my latest stock selection - De La Rue - which prints money in over 150 currencies (there are 182 in total). That's a pretty strong start - it looks like market dominance to me. And in this era of money-printing, it has to be a classic "picks and shovels" stock selection. How could a selection like this go wrong? Well, we could all move back to barter or base metal currencies, but I am afraid that I don't see that happening.
Is it a good company? Well, the Wikipedia entry says that "the company was recognized by Hermann Simon as a role model for other small to medium sized business in his book Hidden Champions". Good for him. More importantly, other than market dominance, let's look at that driver of long-term market returns: dividends. It looks pretty good - okay, back in the mid to late 00s there were a lot of special dividends making it very attractive, but now it still yields around 4.28%.
Laura's a big fan - this months run-through of stock options was pretty pointless, as it was the only one she wanted me to buy.
What am I thinking about next? Well, i'd like to get some more Aviva stock because I think the announcements to sell off all the crappy business bits and focus on the profitable bits, makes sense. Sounds a bit like Jack Welch's approach to GE in the 1980s. I just had a look at their preference shares as well, although these only seem to yield 8.5%ish - and I don't think the company is going to the wall just yet.
Oh - final bit of good news. I said that I had opted out of the state second pension (last tax year was the last opportunity) - well this last week I got a decent rebate which has done a good job of bolstering my cash war chest. I am probably going to pull my next investment date forward by a few days - and probably drop back into a monthly cycle again. I am off on honeymoon at the end of this month, so I'll probably get back into the market a couple of days before that.
Actually, it's a reference to my latest stock selection - De La Rue - which prints money in over 150 currencies (there are 182 in total). That's a pretty strong start - it looks like market dominance to me. And in this era of money-printing, it has to be a classic "picks and shovels" stock selection. How could a selection like this go wrong? Well, we could all move back to barter or base metal currencies, but I am afraid that I don't see that happening.
Is it a good company? Well, the Wikipedia entry says that "the company was recognized by Hermann Simon as a role model for other small to medium sized business in his book Hidden Champions". Good for him. More importantly, other than market dominance, let's look at that driver of long-term market returns: dividends. It looks pretty good - okay, back in the mid to late 00s there were a lot of special dividends making it very attractive, but now it still yields around 4.28%.
Laura's a big fan - this months run-through of stock options was pretty pointless, as it was the only one she wanted me to buy.
What am I thinking about next? Well, i'd like to get some more Aviva stock because I think the announcements to sell off all the crappy business bits and focus on the profitable bits, makes sense. Sounds a bit like Jack Welch's approach to GE in the 1980s. I just had a look at their preference shares as well, although these only seem to yield 8.5%ish - and I don't think the company is going to the wall just yet.
Oh - final bit of good news. I said that I had opted out of the state second pension (last tax year was the last opportunity) - well this last week I got a decent rebate which has done a good job of bolstering my cash war chest. I am probably going to pull my next investment date forward by a few days - and probably drop back into a monthly cycle again. I am off on honeymoon at the end of this month, so I'll probably get back into the market a couple of days before that.
Sunday 1 July 2012
Portfolio .... break it down
Before next week, when I make my next selection, it seems to make sense to take a "strategic view" of the fund as it stands - in order to improve decision making going forwards.
Hargreaves Lansdown is good in this respect, as it has a fairly rudimentary portfolio analysis tool. So what does it say?
The portfolio breaks down as follows between equities, funds and cash:
Funds 32.5%
UK Shares 33.4%
Cash 31.4%
So I realise I haven't spoken much about my cash holding on here to date. I do have a substantial amount which I am holding back, on the basis that I still believe Europe is going to experience a shock event in the coming months. Cash provides "optionality" - that is, it gives me the opportunity to do things. I don't include it in my calculations at the moment, other than the interest it throws off, but this isn't a big concern for me right now - over time it will dimish as a portfolio constituent. If that's not an approach you agree with, divide my dividend by two-thirds and my TER by two-thirds - frankly, the optionality is more important over the long term than the short term impact of the cash.
Industry Breakdown
A nice graphic here showing I am very much skewed towards consumers. The financial services are my Aviva and IG Group holdings - not the banks (another bad week for those guys!)
Market Capitalisation
Interesting breakdown here - for some reason I either hold very big companies or relatively small companies. It would probably be worth reviewing how this sits alongside the FTSE at some point, although that's not a task for this evening.
So what?
So what does this all mean? I am heavily exposed to consumers, which might not be the best with a long period of sluggish growth coming up - although that said, a) I aim for companies that have exposure to as many markets as possible and b) we do live in a consumer society. Buying shares in companies that sell things people need (soap) rather than want (foreign holidays) seems quite defensible to me.
What does concern me is how low my exposure is to "technology", although if I dig into this what does it actually mean? I am not too sure as the whole holding is via my SWIP All Share Tracker fund. Really, this is an area I know and so should be able to make good decisions about.
A positive? "Big" companies tend to be defensives because they sell things loads of people need - so having 44% of my shareholdings in companies in the top two categories seems like a positive to me.
Decision making
Being hard on myself, I really need to make sure that shares I buy as the work goes soggy sell things everyone needs, in as many places as possible. What does this bring to mind? The basics - soap, telecommunications (especially if they are selling TV which people will sit at home and watch), utilities, nice and cheap generic medicines - all that kind of thing.
However, given I have a buy-and-hold-for-the-next-30-years strategy, I have the opportunity to be contrarian - maybe I should buy into something I know has long term value which other fund managers will be avoiding on the basis they know it is likely to ruin their next few quarter's performance figures. Say.....oil rig manufacturers, shipping companies, PIIGS shares etc
Lots of options for the long term investor at the moment - I'll go through my short list and update you once the next purchase has happened.
Take care.
Hargreaves Lansdown is good in this respect, as it has a fairly rudimentary portfolio analysis tool. So what does it say?
The portfolio breaks down as follows between equities, funds and cash:
Funds 32.5%
UK Shares 33.4%
Cash 31.4%
So I realise I haven't spoken much about my cash holding on here to date. I do have a substantial amount which I am holding back, on the basis that I still believe Europe is going to experience a shock event in the coming months. Cash provides "optionality" - that is, it gives me the opportunity to do things. I don't include it in my calculations at the moment, other than the interest it throws off, but this isn't a big concern for me right now - over time it will dimish as a portfolio constituent. If that's not an approach you agree with, divide my dividend by two-thirds and my TER by two-thirds - frankly, the optionality is more important over the long term than the short term impact of the cash.
Industry Breakdown
A nice graphic here showing I am very much skewed towards consumers. The financial services are my Aviva and IG Group holdings - not the banks (another bad week for those guys!)
| Consumer Services | 28.3% | |||||||
| Financials | 16.3% | |||||||
| Consumer Goods | 15.0% | |||||||
| Telecommunications | 12.7% | |||||||
| Health Care | 8.6% | |||||||
| Oil & Gas | 6.0% | |||||||
| Utilities | 6.0% | |||||||
| Basic Materials | 3.9% | |||||||
| Industrials | 2.9% | |||||||
| Technology | 0.5% | |||||||
| Non-Classified | 0.2% | |||||||
Market Capitalisation
Interesting breakdown here - for some reason I either hold very big companies or relatively small companies. It would probably be worth reviewing how this sits alongside the FTSE at some point, although that's not a task for this evening.
| >£50bn | 27.4% | |
| >£20bn and <£50bn | 16.8% | |
| >£10bn and <£20bn | 8.9% | |
| >£5bn and <£10bn | 12.5% | |
| >£1bn and <£5bn | 10.4% | |
| >£250m and <£1bn | 6.9% | |
| <£250m | 16.3% | |
| Unknown | 0.8% |
So what?
So what does this all mean? I am heavily exposed to consumers, which might not be the best with a long period of sluggish growth coming up - although that said, a) I aim for companies that have exposure to as many markets as possible and b) we do live in a consumer society. Buying shares in companies that sell things people need (soap) rather than want (foreign holidays) seems quite defensible to me.
What does concern me is how low my exposure is to "technology", although if I dig into this what does it actually mean? I am not too sure as the whole holding is via my SWIP All Share Tracker fund. Really, this is an area I know and so should be able to make good decisions about.
A positive? "Big" companies tend to be defensives because they sell things loads of people need - so having 44% of my shareholdings in companies in the top two categories seems like a positive to me.
Decision making
Being hard on myself, I really need to make sure that shares I buy as the work goes soggy sell things everyone needs, in as many places as possible. What does this bring to mind? The basics - soap, telecommunications (especially if they are selling TV which people will sit at home and watch), utilities, nice and cheap generic medicines - all that kind of thing.
However, given I have a buy-and-hold-for-the-next-30-years strategy, I have the opportunity to be contrarian - maybe I should buy into something I know has long term value which other fund managers will be avoiding on the basis they know it is likely to ruin their next few quarter's performance figures. Say.....oil rig manufacturers, shipping companies, PIIGS shares etc
Lots of options for the long term investor at the moment - I'll go through my short list and update you once the next purchase has happened.
Take care.
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