53.5% Total Return for the Year
This post is pretty much complete but I will tidy it up over the next few days. I hope you like it.
I began the year pretty sanguine about where the stock market would go. I am an arch remainer and believe that Brexit is a disaster for the UK economy. I therefore anticipated that this would translate into lower stock prices. This has not been the case or at least not in the stocks in which I have been invested.
At the beginning of January, I was 19.5% in cash, not because of any sense of impending doom but because I am cautious about deploying my funds but when I do I tend to place large chunks in a small number of stocks and invest further as the price moves up.
I end the year with just 3.2% of my portfolio in cash.
Most of my holdings at the end of the year I had at the start but have topped up during the year as the price strengthened. It has been a year of steady progress but with most of the gains being made in the first 8 months.
I was up 69% on the 8th September.
I sold out of five holdings that I had at the beginning of the year
CCT I only held for a month and so hardly counts as something I held. I simply sold because I actually did not know why I bought in the first place. Something I am still occasionally guilty of but less and less so as time goes on. It was fortuitous as I sold at 502p and the stock now stands at 435p
This is one of the few stocks that I have held, sold, bought back in to and then sold (I think it might be the only one). This was a mistake.
It is one of those stocks that re-enforces my belief that one of the few edges that the Private Investor has is to invest with a long time horizon. I first purchased back in February 2013 at 154p. I only invested £1,500 initially (the amounts I invested in those days were much smaller than now).
There followed three more buys at around the 250p and 270p mark, a nice stream of dividends as well. I then sold out in July 2016 at 476p, probably because of post referendum jitters. And while this was not the low, I should have continued to hold as the price is now around the 680p mark. DTG has a stock rank of 95 over at Stockopedia and is classed as a Super Stock.
LAM was my play on the low oil price but after 8 months of holding I decided that resource stocks are not for me, as they are subject to so many outside influences. In this instance it was a good call. I sold for a minute profit (£200) at 98p and the price has now fallen to 79p but it has been strengthening of late.
I have soft spot for ALY, as she was an acquaintance of my step grandmother and it looked like an greatly undervalued company in July 2016 and still undervalued in November 2016, when I bought some more. The market continued to disagree with me and I sold out in April 2017 for 44% loss. It was not a large holding at about 1% of the portfolio. The market still doesn’t like ALY as it currently stands at 7.7p and Stockopedia categorises it as a Value Trap.
This was an out and out trade. Very few stocks do I purchase with a short term horizon or rather do I have conviction to purchase with the view to making a short term profit.
I am convinced that one day the Estate Agency Market in the UK will be disrupted by the internet. I am not convinced either way as to whether that Purple Bricks will be the one to do it.
But in 2017 the market seemed to get the bit between the teeth as far as PURP was concerned and I road the price up from 155.8p (15/12/2016) to 408p and 381p when I sold out in early June to book a £19,172 profit on a £12,785 investment in less than 6 months.
I may or may not have the confidence to try and repeat trades like this again. It represented 4% of my portfolio at the time, so while not a huge position it was not without its downside risks.
So I finish the year with a total of 14 holdings; 11 I held at the beginning of the year and three (IQE, XLM and TAP) I purchased during the year. The breakdown as a percentage of portfolio as follows:
Stock VALUE AT 30/12/17 %age of Folio
BOO £63,920 12.87%
FEVR £57,585 11.60%
TET £55,637 11.20%
BVXP £51,401 10.35%
XPP £43,355 8.73%
XLM £39,309 7.92%
AIR £33,155 6.68%
SOM £31,451 6.33%
IQE £29,139 5.87%
ACSO £22,785 4.59%
DIS £18,363 3.70%
AVAP £15,646 3.15%
AVON £12,812 2.58%
TAP £6,389 1.29%
I continue to run a concentrated portfolio with with my 5 largest holdings representing 54% of the portfolio and 75% of the portfolio being made up by just 9 holdings. I still believe that if you can’t name every stock in your portfolio, know what they do, have a good idea of the latest news on the company and where they are heading then you have too many stocks. I don’t think you can do that as a part time PI with more than 15 at most 20 stocks.
Though meaningless I was hoping to end the year on £500,000 but as it was I finished just shy of this figure. But to say the least I am not disappointed with this years figures.
A total return this year of £172,865 and in percentage terms a 53.543% on my portfolio value at 1st January 2017. This compares with 34.19% in 2016 and 22.00% in 2015.
What do I attribute the above increases to.
- Riding my winners. I did not (and to be honest I was never tempted to) take quick 20% profits when they arose.
- Don’t make things too complicated. I think if one over analyse a stock one will always find a reason not to invest.
- Ignore drawdowns. That is Mr Market just messing with your head.
It may be hubris but I feel my mistakes were ones of omission (thumb sucking as Buffett would say) than commission.
I have been a long term bull of AMZN (and a long term fan of the company) but did not initiate a position of any size.
I was a bit late to the party on this one but now have an 8% position in my portfolio and about the same in wife’s. This holding is up 45% in 6 months.
Likewise I was late to initiate a holding but over two to three years I expect stellar things from IQE.
My key principles were reinforced
• Long Term Horizon
• Trade infrequently
• Concentrated portfolio
• Continue reading
• Keep looking for ideas
• Record why you buy (you won’t remember!)
• Record various metrics (including Stockranks)
I am going to resist making predictions for the coming year. Predictions are notoriously tricky especially when about the future. I will be more than happy if I achieve 15% in 2018 but I have some ideas that may enable me to improve on that.
However I will take a leaf out of John Rosier over at John’s Investment Chronicle (I can highly recommend subscribing, at £150 a year it is very good value) and give a brief overview of each of my stocks and where they might go in 2018.
This maker of mobile ticketing and virtual queuing solutions finished the year ahead 31%. The stock trades on a pretty racy FPE of 55 but the market for its product is enormous. There are competitors but management have executed well over the past five years with sales up 300% and I believe company will continue to grow sales but also that new markets are very likely to open up for their offering. I will continue to hold through 2018.
This is my oldest holding, with my first purchase made in October 2012, back in the days when I knew less than I do now about what I am doing! It came to my attention through Lord Lee’s column in the FT and he has owned it continuously since 2003. It is has performed well for me and I see nothing to change my mind that this is a good company offering a niche serrvice. A threat that has been mentioned is that they could be “taken out” by an app but my experience is that the wealthy would rather make a quick phone call or use an agent and I don’t see an “UberAir” coming on the scene any time soon. A core holding with a near 4% dividend yield.
This aircraft leasing company is perhaps misunderstood by the market. The company continues to grow steadily (it has tripled in size in five years and profits have quadrupled)but the share price has managed “only” a 2.7 fold increase, so I think there is more upside over the coming years.
This is one of my small holdings and lower conviction holds. That said it enjoys a Stockrank of 91, has great OM, ROA, ROCE and ROE figures. I think AVON could be a steady riser over the medium term but if I was looking for funds to redeploy AVON might be the one to go.
BOO really needs no introduction. Boohoo actually ended the year up “only” 38.9% but my holding is up 318% and the gain sitting in Boo represents a fifth of all my gains. Stockopedia’s computer has reclassified BOO as a “Falling Star”. I think in five years time the Stockopedia computers will be proved to have been wrong. Happy to hold with it representing 13% of my portfolio.
BVXP is up 83% this year and my holding 102% (first purchased made in October 2015 but with top ups along the way). Most of the gains in 2017 were achieved in the first nine months of the year and since September the share has pulled back about 17%. I think partly because the price has been driven up on speculation and also because income stream from one of its products is about to drop out.
I remain firmly convinced that this is one of the greatest small caps on the London Stock Exchange.
I was in the short term a bit late on this one. I bought 23 shares for my son’s JISA back in January 2014 and with currency movements he is showing a healthy 80% gain. I think long term (10 years+) DIS will out perform the market. My only concern is that with a lack of deployable funds, would it be better invested elsewhere? TAP?
This £2.5bil market cap is up 94% this year and has 10 bagged over the past five years and my original purchase is up 5 fold in the 27 months that I have held it. So what of the future? Coke turnover is around £1bill a quarter so with FEVR sales at around £133mil the company seems to have a lot of head room to grow.
The company trades on a very punchy FPE of 59 but the company has always managed to grow into its projections and OM(34.9%), ROA(29.1%), ROCE(41.7%) and ROE(42.7%) are all sparkling and gives me confidence to stay with the stock.
A new holding this year, with my initial purchase made in July and two subsequent purchases at the end of October. I have not done as much research on this as I should have and will rectify this this month.
Somero is a manafacturer of laser guided floor screeding equipment for commercial spaces in larger volumes. The stock continues to score well under Stockopedia’s Stockranks system, with an overall rank of 94 and trades on a low multiple of 14, is dividend paying and OM(27.4%), ROA(29.5%), ROCE(54.6%) and ROE(41.4%) all indicate a quality business and on top of all that shares in issue continue to drop.
There are concerns that the business is cyclical and that the next recession will bring problems but the company sits with the equivalent of 25% of sales in cash sitting on the balance sheet and I am confident that the company can ride out any economic storm that comes along. Very happy to have this as a long term hold.
My newest holding bought just before Christmas. It is a small holding at around 1% of the portfolio.
Another core holding for me. This company has an in demand product protected by IP and management is predicting growth in demand and will be moving to a new site in the U.K. and are expanding their base in Florida. Stockopedia rates it as a Falling Star but over what period I don’t know. Another stock that I think in five and ten years time will prove the Stockopedia computers wrong and be substantially ahead of where it is now and of the market.
Another dodgy internet advertising stock or growth engine?
This is one of my favourite stocks, which I have held for almost 6 years and has rewarded me hansomly. It is one of those stocks that I wished I had bourght more of back in 2012 but then I was still learning and taking things cautiously. I am still happy how I played things.
I hope to blog a bit more than in the past but this will depend on a few things.
Anyway thanks for reading and Happy Investing in 2018.