Performance so far


Since the start of 2012 I have:

Gained 2.94% (excluding dividends and costs) of my investment - and the market is up 26.30% according to Google Finance

Been rated in the 65th percentile of all listed Trustnet.com OEIC managers (including dividends and costs - assuming that the market-average 1.6% per annum TER is charged across the board)

Achieved an average yield of 1.44% (averaged over the last twelve months) - compared to a market average of 2.8% (according to Digital Look).

Invested in a way that should deliver a pension around 48% of the value of my current income, based on current annuities and growth rates

Thursday 13 December 2012

Let's go twos

My latest purchase(s) took place last night. 

It took the usual shortlisting approach, followed by the application of the new analysis model (which i've rejigged to double-weight the dividend cover and dividend yield values).

Interestingly, the top stocks were two I have had question marks over for some time - but which fitted my recent thinking well.  I have been fascinated by the gold price vs. gold miner stocks valuation deviation for some time now - and off my shortlist analysis I ended up with African Barrick Gold miles ahead of the rest of the pack.  Why?  Well, quite a few reasons actually:
  1. It has a dividend cover average between last reporting year and next of 6.9 - that's right, 6.9 i.e. it could afford to pay out seven times its dividend out of profit
  2. It has insane dividend growth over the last, current, and (anticipated) next reporting periods - 131% per period
  3. The normalised EPS growth is the same as the dividend growth story - 375% over the last three reporting periods
  4. Free cash flow as a percentage of the turnover is 30% - nearly as high as my other purchase
It currently yields 2.6%, which is lower than the target, but with so much room for future growth based on the cover.

I bought this as a way of staying in gold but diversifying away from my Swiss Physical Gold ETF - let's see how it does.

The second stock I bought into was another of my existing holdings - IG Group - one of my most sucky purchases since this project started.  As of two days ago, it was my poorest performing share - down around 12% on the purchase price.  So why get involved in this sob story of a share?  Well, it's fundamentals look good.  It has suffered this year as trading volumes are down - pretty standard for a trading platform provider during settled markets - if there are no significant share price fluctuations, what's the point in speculating as to the direction of share prices?  You'd have to put up huge sums for small returns.  Is this going to last?  History is against it!

So why are the fundamentals so great?
  1. The dividend yield is 5.27%, well ahead of my target of 3% - it's cover is ok at 1.69, so there's room for it to drop
  2. It's a £1.5bn company, which has sales of £400m and £228m in the bank and debt of £40k - that's right, it has seven months worth of sales as cash, and owes next to nothing to anyone.  The retail world would have to cease trading in financial products to screw this company as things currently stand
  3. It's in 89 countries - great global exposure, so any government mucking around with retail trading laws should, on their own, have a fairly limited impact on this company
So there you go - good money thrown at my worst performing share, and an African gold miner - i must be contrarian (or insane).  Only time will tell!  In eighteen days i'll be able to give you an idea of where my contrariness (or insanity) has taken my future!
Posted by at No comments:
Subscribe to: Posts (Atom)