Thursday 26 January 2012

Portfolio Prices back up and running.

Okay so I have managed to get the prices to update again on the Portfolio updates page. Seems that sometime after I initially set them up Google has changed something in the way it recognises a ticker specifically the full stop.
So RR., NG., AV., BP., BG., BA., are now recognised in Google Finance as a 2 letter ticker minus the full stop.
As mentioned previously in New Portfolio Updates page.,  I have been experimenting with the Google Finance functions as a means to pull in live prices and also use this page (accessible from the list above: Home; Calculators; Portfolio Updates), as a quick storage of all my monthly portfolio updates.


Page links:
- Portfolio Updates.
- New Portfolio Updates page.

Wednesday 25 January 2012

Apple hits $468.95 in After hours trading.

Apple @ $420.41, -$7.00 (-1.64%) as at close of play 24 January 2012
or,
Apple @ $451.20, +$30.79 (+7.32%) as at close of "after hours" play 24 January 2012
or,
Apple @ $451.90, +$31.49 (+7.49%) in pre-market play 25 January 2012.

After hours trading!
Whats that all about then? I can't say its something I understand but is obviously something that goes on and seems to have some kind of official support in the US (and other markets) where the majority of Company reporting seems to be after hours.
The reason I say it seems to have some official support is that I have found a page on the NASDAQ Exchange's site which covers after hours trading in individual shares, in this case Apple (http://www.nasdaq.com/symbol/aapl/after-hours).

I have also enclosed a screenshot but using the link you can see 321 pages of trades starting at 16:00 hours where the first "after hours" price was $420.64, through to 19.59 with a closing "after hours" price of $451.20.
The intervening period actually saw a low of $419 and a high of $468.95.

Click to enlarge, back to return


Click to enlarge, back to return
So there obviously is a process to trade "after hours" and a not insignificant 6,171,114 Apple shares were traded (the chart volume rising steeply at 16:50ish and then running flat to the end of the session).
It also looks like the time period may be restricted to 4 hours (16:00 to 19:59).
To add to the puzzle a little more this then seems to feed a "pre-market" where (at the time of writing) 24,176 shares have been traded with a low of $449.15 and a high of $452.10

Click to enlarge, back to return.
The pages also contain the following extract:
"Investors may trade in the Pre-Market (8:00-9:30 a.m. ET) and the After Hours Market (4:00-6:30 p.m. ET).
Participation from Market Makers and ECNs is strictly voluntary and as a result, these sessions may
offer less liquidity and inferior prices. Stock prices may also move more quickly in this environment.
Investors who anticipate trading during these times are strongly advised to use limit orders.
Data is delayed at least 15 minutes. Nasdaq.com will report pre-market and after hours trades.
Pre-Market trade data will be posted from 8:15 a.m. ET to 7:30 a.m. ET of the following day.
After Hours trades will be posted from 4:15 p.m. ET to 3:30 p.m. ET of the following day."

So it seems there is a potentially more volatile way of trading some shares outside of normal market hours and that there "may" be less liquidity as not all Market Makers and Electronic Communications Networks may be participating. 
In the case of the NASDAQ: "After-hours trading is only shown if the stock if it is a component of the Nasdaq-100 Index."

Just as an aside the way I understand Market Maker's and ECN's is that:
- ECN's act a little bit like price comparison websites taking prices set by multiple market makers, matching them with buy/sell req and charging a commission on the trade whereas;
- Market Makers (certainly traditionally) are actively setting bid and offer prices and may be looking to influence volumes, liquidity, and directions (sells or buys) with their price and spread strategy. They also make their money on the spreads!

I assume that these are all risk warnings and that the vast majority of individual investors won't have a means of trading in these periods (or want to) but it is interesting and a little disconcerting as a share price could equally be collapsing in after hours trading.
It obviously provides some visibility on opening prices but looks to be more of a playground for the more privileged, influential, and high net-worth investors and institutions.

Related article links:

Tuesday 24 January 2012

Apple blows away Q1 Forecasts with Record Quarterly Sales and Profits.

Apple has blown away estimates for Qtr 1 profits with a record $13.06bn (2011: $6bn) on revenues of $46.33bn (2011: $26.74bn).
Average estimates from analysts were for profits of $10.14bn on revenues of $39bn (http://www.bloomberg.com: Apple Posts Record Quarterly Profit, Sales).

The company has always stated that this would benefit from being a 14 week quarter but the numbers are huge. International sales contributed 58% and the sales breakdowns by key products were:

- 37.04 million iPhones (+128% over last years Q1)
- 15.43 million iPads (+111%)
- 5.2 million Macs (+26%)
- 15.4 million iPods (-21%)
- Gross margins of 44% (2011: 38.5%)

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s CEO. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.” (http://www.apple.com: Apple Reports First Quarter Results)

Unfortunately, in a session already dampened by Greek debt concerns, and with the statement coming after trading had closed, the shares have fallen back with the market so we shall have to wait and see what might come tomorrow.
Apple @ $420.41, -$7.00 (-1.64%)

Related articles:
http://www.apple.com: Apple Reports First Quarter Results

Earlier posts:
- IPhone and Android: Q1 and Xmas sales expectations!

Two that got away: BMW and Afren.

Strange old start to the year with my portfolio once again having a push at new highs but the air of caution that I felt in the run-up to Christmas (and limited funds) has possibly seen my miss out on a couple of investments that I had been looking for an "in" on.

The first, Afren, has jumped following a new oil exploration find and a step up in production from exisiting developed wells.
Delays in production ramp up have dented the full year figures somewhat as the annualised barrels of oil produced per day came in at 19,200 with an average selling price of $109.
But, the rate achieved in the last quarter was 53,200 leading to estimates (in the trading statement) for 2012 of an average 42,000 - 46,000 boepd (barrels of oil equivalent per day).
The share had jumped from the 80p region to 130p (the 52 week high is 171p) but have since come back to 116p following Mondays Trading statement and Operations Update (http://www.afren.com: Investor Relations).

I find oil producers a little easier to understand than pure explorers who invariably have a speculative asset but not the funds to realise it.
Afren still looks to be on a trend of cashburn (2010 Cash $140m from 2009 Cash $321m) with 2012 capital plans at a similar level to 2011.
But the company stated that there was still $321m in hand in their 2011 half year results. And, with production and revenues expected to double, the company looks set for a 2012 forecast P/E of just 5.5 times earnings.
The company's 2011 full year results are due on the 27 March so depending where the oil price is heading over the next couple of years it continues to be one I am keeping an eye on.


The share price of BMW also seems to be climbing following release of record trading numbers from its Rolls-Royce division, expectations of a good year for the parent company, and a positive stance on Germany's financial strength and exports.

In the case of BMW the shares have climbed from a low 50 Euro level and 4% forecast yield to a recent high of 63.88 Euro's and a lowering yield of 3.6%.
A lot to like about BMW not least of which is the brand name and resilient global sales.
There has been some increase to borrowings through the last few years and margins have suffered but inventories have been kept under control and the company seems set for a big increase in profits and a resumption of its trending performance up to 2008.

Along with other major manufacturers China presents a big opportunity for BMW particularly, in my opinion, where the Mini and 3 Series are concerned.
Like most German exporters BMW does seem to be benefitting from the Euro's exchange rate so a downside risk is that any return to the DM will probably make their products less competitive due to the perceived financial strength of Germany.

As it is my concerns around the Euro have held my hand as it does not seem to have weakened to a level that seems relative to the risks. 
All a bit of a balancing act though and the appreciation in BMW's share price does seem to have negated what might have seemed a reasonable depreciation of the Euro. 
As such, it looks to have got away from me unless the Eurozone hits another speedbump.

Article links:

Thursday 19 January 2012

Tesco profit warning; What would Warren Buffett do?

Tesco @ 325.95p, +4.95p (+1.54%) as at 16:14.

For those of us asking ourselves:- What would Warren Buffett do in this situation? The following article on Sharecast shows us:

"LONDON (SHARECAST) - Warren Buffett, a major American investor, has filled his trolley with £350m-worth of shares in Tesco's, the UK's largest supermarket chain.

The news did not come as much of a suprise as the business mogul owner of investment vehicle Berkshire Hathaway had said towards the end of 2011 that if Tesco's share price fell he would buy up more shares.

After the £5bn nose-dive in Tesco's shares last week, following the firm's worst festive period in 20 years, Buffet has stayed true to his word and stocked up, significantly increasing Berkshire Hathaway's stake from 3.6% to 5.1%.

Buffet previously purchased 34m Tesco shares at 371p each in September of last year." 


In the wider investment community. I note that AlphaValue downgraded Tesco to add from buy, but raised its price target to 402.90p from 401.40p. 
I know that the increase to the price target is miniscule but it seems quite bizarre really and I'm not sure how that works?


Article link:
- http://www.sharecast.com: Thursday broker round-up - UPDATE

Tuesday 17 January 2012

IPhone and Android: Q1 and Xmas sales expectations!

Apple @ $419.81, -$1.58 (-0.37%).

Interesting reads on Iphone and smartphone uptakes in the last 3 months.
The following article on http://www.appleinsider.com: Apple's iPhone 4S propels iOS smartphone market share to 43% in Oct., Nov. 2011, suggests that iPhone sales in the US have been given a strong push with the release of the 4S and IOS 5 and may have had up to 43% of smartphone sales in the 2 month period ending Nov 2011 (26% in the previous quarter).
Over the same period sales of Android handsets may have fallen from 60% to 47% which still makes the smartphone market a 2 horse race in the US (and probably the world over).
Interesting that Apple seem to have taken the top 3 places in the sales charts over this 2 month period which could point to the appeal of a cheaper iPhone and/or the release of IOS 5. 
Either way the article suggests that the older version of iPhone have outsold the latest 4 S competitor, the Samsung Galaxy S II. 

Smartphones share of the handset market has also continued to grow and could now be at 67% of US handset sales.
But this is only October and November, so with December still to be added to the numbers what is the general expectation?
Well, Google's Andy Rubin reported 3.7m activations over Christmas Eve and Christmas Day (I think that's worldwide), versus a prior daily average of 700,000  but, 

"Flurry Analytics reported that 6.8 million new iOS and Android devices were activated on Christmas Day, implying 353 percent growth compared to earlier in the month".

and,
"Apple is widely expected to report soaring iPhone sales when it announces its December quarter results on Tuesday, Jan. 24. The consensus estimate among a poll of professional analysts stands at 29.74 million, while the average forecast among independent analysts and bloggers is 33.4 million units".

Remembering that iPhone sales in the last quarter fell to 17.1m (from a record 20m in Q3), and actually disappointed analysts and investors hyped expectations, it looks like there could be a another record busting sales figure in the first quarter of this year. 
Lets hope that this time, the company's view and analysts expectations are a bit more in tune, and that the results put a little more of a deserved premium back into the share price which I can picture starting with a 5!


Related articles:

Earlier posts:

Sunday 15 January 2012

My first dividend of 2012 (and 2011 dividends in profile).

Reassuring to hear the metaphorical thud of a dividend hitting the doormat already this year.
The thud in question came from Rolls-Royce, my largest portfolio holding and there is another one due next week from National Grid.

Seeing that I am starting to view dividends as a very important element of my strategy and they contributed 3.84% last year, I thought that I would try to profile the dividends that I did receive for any pattern or notable points.

Click to enlarge, back button to return.
Click to enlarge, back button to return.
Click to enlarge, back button to return.
Hmmm, the first noteworthy point is the contribution from (and heavy dependency on) my two largest holdings: Rolls-Royce and National Grid, which has meant January, July, and August are the biggest grossing months.
Totaling 1.92%, the dividend from these 2 holdings made up exactly half of the total 3.84% yield received.
There is no contribution yet from recent addition Vodaphone. The first dividend from which is due to come through in February of this year with the added bonus of a special dividend courtesy of the company's holding in Verizon Wireless.

So, despite the variable monthly profile, the healthy start in January and the cumulative profile to Sept (with 80% of dividends received by then) gave my portfolio a good start to the year whilst providing some steady gains throughout.

For me there is a lot to like about dividends as they are an actual cash return for shareholders to manage as they see fit.
Once given, and the share price adjusted, the monies received are no longer subject to the whims of the stock market (or the failings of management), so can't fluctuate based upon emotion and greed.
Added to other dividends an investor has some freedom to choose how to re-invest the proceeds which might be to support a strategy of diversification. 
Re-investing means that the portfolio can be grown by actual no of shares and holdings in addition to any capital growth.
Whichever way is chosen, dividends from re-invested dividends from re-invested dividends serves to bring compounding growth to a portfolio which is something I am aiming for.

A little concerned about the disproportionate contribution from Rolls-Royce and National Grid though, which might lead me to increase the size of other holdings (like Vodaphone) to even things out a bit more.

Back to 2012 though, and that metaphorical thud onto the doormat. 
It looks like being another good start to the year (with dividends from Rolls-Royce, National Grid, and Vodaphone) and its going to be interesting to compare 2012 with 2011, with the forecast yield likely to increase, and the effect of any portfolio changes along the way.

Monday 9 January 2012

Strategy for the Euro?

The following question has been raised in a comment from ritsut:
 
"Market commentators are becoming more vocal about Greece bombing out of Euro, have you got a strategy should the euro change in some way?"

I can't claim to have a properly thought out strategy per se should concerns over the fate of the Euro escalate to fruition.
But I do have a number of large cap European companies with global reach that I would like to add at the right price so am looking for either the current doom laden media coverage to drive down European markets or for the value of the Euro itself to better reflect the region's perceived weakness against other currencies to make my sterling funds stronger. 

Beyond that, and rather than second guess the outcome, I am trying very hard to ignore the wider noise and media commentary that seems to stir up the fear and volatility acting as a day to day drag on markets.
I am still strongly of the opinion that we are in the midst of a rare opportunity to pick and mix well established, and successful companies who's resources and management will enable them to ride out this storm, probably coming out stronger and leaner.
This might not be immediately realised in their share prices but, I would expect them to go on to accelerate profits over the longer term when this extended credit crunch is eventually consigned to minor trough in the historic graph.

From a company earnings perspective, and as an investor, I am less concerned about the headline of  a "recession" than I might once have been.
By the time a technical recession has been declared (2 consecutive quarters of contraction), it might already be in the past. 
The real key is how companies manage their balance sheets with slowing growth prospects.
That's not to say that the effects of recession won't be detrimental to some companies (particularly in fashion fickle sectors like retailers) but I am in no doubt that it causes more pain to affected individuals and families than companies.
Unemployment is just one of the tools by which companies re-balance their costs, capacities and cashflows.

So in the main I will continue to look for companies in "relatively" resilient long term industries with good cash management. These are also likely to hold some form of competitive advantage, monopoly or global footprint.

With the US economy starting to look more positive it might prove the most profitable hunting ground for opportunities.

Recessions aside that leaves the fate of the Euro and the EU as the unknown.
As a currency the Euro has been flawed from the beginning.
If you think that the UK has a North-South divide, and/or areas of poverty and unemployment, it serves to highlight the varied effect and impact of government policies (whichever party) on different regions: jobs; taxes; interest rates etc. 
I am not an economist but It seems madness to try to manage these issues over such a disparate range of countries like an artificially expanded Europe with such strongly embedded cultural traditions, and an unequal range of skills, values and industries?
When you think about it it seems amazing that it has lasted long enough to be affected by something as seismic as the current crisis but that probably has more to do with subsidies and handouts rather than an evolving together of shared goals.
I would go so far as to suggest that the make up of the Euro and the ambition of the EU has created this problem with unrealistic expectations of wealth amongst member states. Couple this with seemingly cheap easily accessible credit and we are where we are!

Can anyone successfully argue that the values, strengths, determination, and work ethic of a Germany has been replicated in Greece?
When asked I couldn't easily bring to mind a major industry in Greece apart from tourism. Although I have subsequently read that shipping is its major export industry.
In my uneducated opinion Greece desperately needs to devalue its currency against its trading partners to give it some competitiveness but it can't because it is shackled to the Euro which has held up remarkably well.
Recent history also bears this out with Iceland quickly recovering from the woes of 3 years ago and Russia's own recovery following its partial default in the late 1990's.

Having said that, one of the biggest mysteries of the current crisis for me is the relative strength of the Euro against other currencies, but this might say more about the perceived risk of contagion to overseas holders of European debt.

It would be a positive if the crisis could be contained with Greece's exit (with hindsight this should have been agreed and managed months ago) but with little sign of a tangible plan or collective political will to resolve the EU's sovereign debt problems, it seems unlikely that the EU can now fix itself.
Instead, if we, and they, are very lucky, growth will come from elsewhere to save the Euro whilst the stronger players manipulate the crisis to increase their influence and executive control.
If there is any fall-out from an implosion of the Euro, or the EU for that matter, the debts and losses will need to be absorbed somewhere and that is the crux of the problem for markets and investors. 
In some bizarre mix of Russian Roulette and Pass the Parcel who will be left with it all when the music stops?

These are all macro concerns rather than company specific though.
Trade will continue (in my opinion) it is just at what level and whether this will force a re-rating of profit margins, costs and expectations due to the unknown quality of fledgling currencies from bankrupt states, and the resulting liabilities that would take place following default.  
It would also be a surprise if the rebirth of any individual sovereign currency in the current situation was not unplanned, chaotic, and probably shambolic.

Of course, Darwinian like, this will still throw up "premium" companies though and one company's failure is another company's opportunity. 

To summarise then, I am not looking to drastically re-position my portfolio or run for cash. 
Instead I will trust that the portfolio's investments will retain strong company specific performances, continue to pay-out a relatively decent level of dividend, and come through this.
Meanwhile I hope to take advantage of the situation by re-investing dividends into more pieces of my jigsaw should opportunities present themselves.


Fingers and toes crossed anyway.

Wednesday 4 January 2012

Warren Buffett's top 30 holdings.

Interesting find here on Stockpickr.com which apparently details Warren Buffett's 30 largest holdings as at 30 Sept 2011.
Couple of missing investments appear to be Tesco and Bank of America although it might depend what form the individual investments take and whether or not they are held directly or possibly via a secondary vehicle.

Sunday 1 January 2012

December 2011: Portfolio Update.

Well the final score on the door for the year is an 11.7% gain after finding a further dividend received from Tesco in the portfolio. 
As mentioned in my quick summary yesterday (2011 FTSE close.), it is a very satisfying performance given the backdrop of turmoil and uncertainty which has seen the FTSE100 finish the year down 6.68% on its 31 Dec 2010 milestone of 5971.01.
A gain of 11.7% (which includes 3.84% of dividends) means that the portfolio has outperformed the FTSE 100 by an impressive 18.38% (11.7% - (-6.68%)). 
Even discounting dividend gains this would be 14.54%.

By virtue of their weighting the biggest gains came from R-R and National Grid but for different reasons.
R-R recovered from last years A380 - T900 problems with:
- a joint acquisition, with Daimler Benz, of a sector leading diesel manufacturer in Tognum
- the realisation and restructuring of its interest in IAE (Rolls-Royce update: IAE stake sale and new joint venture.)
- a new joint venture with UTC to develop engines in the 120 - 200 seater range.
National Grid seemed to give investors a relatively safe haven with its UK monopoly, inflation linked profits, and generous dividend policy.

Elsewhere, Apple, Morrisons and William Hill contributed steady gains whilst 2 of the recent newcomers: GE and Vodaphone, have also managed to make noticeable contributions since their addition.

In the disappointing corner were:
- Aviva which gave up the strong gains from the first half of the year amidst EU sovereign debt concerns, particularly Italian bond concerns;
- William Hill which after putting on good gains seemed to shoot itself in the foot with internal turmoil and politics at its Israeli based operation.
- BAe and Centrica both continue to disappoint with little momentum in the share price for the last couple of years other than a steady deterioration.
For comparison purposes I also note the headlines declaring Neil Woodford's return to the top of the pile in his sector (http://www.thisismoney.co.uk: Neil Woodford back as top dog - the best income funds of 2011 and what they invested in).
The article declares that the flagship "Invesco Perpetual High Income fund had a total return of 6.19 per cent from the start of 2011 to 21 December".
Interesting that my own holding of dividend re-invested Accumulation units shows a full year advance of 8.51%.
More interestingly (and unintentionally), the article details 6 shared holdings with my portfolio which are: Vodaphone; BAe; Rolls-Royce; BG; Tesco; and Centrica.
But, I also note that one of his biggest sales was National Grid.

Famously, the fund also has large holdings in Pharmaceuticals and Tobacco (of which I have none as yet) and these appear to have driven the fund higher this year.
I have continued to keep a holding of High Income units in the portfolio (despite being disappointed by them) but it continues to be on watch and should I add a Pharma or Tobacco company then it is highly likely that I will sell them. Unless of course the fund returns to its previous out-performance.

Looking forward, the forecast yield (if maintained of course), on the portfolio has risen to 4.06% which I see as a foundation for portfolio gains in 2012.
 
Merchant Adventurer's Index







Forecast 1 month 2011 24 mnth

Price % holding Div. yield % gain % gain % gain
R-R 746.50p 32.00% 2.33% 2.40% 19.82% 54.40%
National Grid 625.00p 17.83% 6.29% 0.08% 13.02% 15.15%
Aviva 300.80p 7.11% 8.93% -3.50% -16.04% -14.08%
Inv. Perp. High Inc. *** 513.74p 6.80% 3.73% 4.33% 8.51% 21.59%
BP 460.50p 4.37% 3.85% -0.05% -1.09% 5.79%
Apple ** $405.00 4.31% 0.00% 7.07% 26.03% 115.10%
IG Group 476.90p 3.27% 4.56% -1.02% -6.49% 58.51%
Morrisons 326.20p 2.67% 3.31% 1.30% 21.90% 28.92%
BG Group 1376.50p 2.61% 1.08% 1.32% 6.21% 26.28%
William Hill 202.80p 2.45% 4.66% 0.35% 18.80% 18.60%
General Electric ** $17.91 2.43% 2.74% 13.74% 17.86% 17.86%
Microsoft ** $25.96 2.39% 2.33% 9.98% 0.10% 16.11%
Centrica 289.30p 2.35% 5.27% -4.14% -12.76% -8.40%
SSE 1291.00p 2.31% 6.18% -1.83% 5.39% 12.17%
Vodafone 178.90p 2.25% 7.18% 3.89% 11.02% 11.02%
Tesco 403.45p 2.09% 3.84% -0.43% 1.14% 1.14%
BAE Systems 285.10p 1.85% 6.53% 4.17% -13.61% -10.69%
Cash
0.91% 0.00%











100.00% 4.06%






1 Month 1 Year 24 Mnth
Virtual Portfolio gain (incl. Dividends)

1.78% 11.70% 41.21%
FTSE gain (excl. Dividends)

1.21% -6.68% 2.94%
- 1 month gain   5505.42 - 5572.28




- YTD gain         5971.01 - 5572.28




- 24 month gain 5412.88 - 5572.28











Transactions:





08/12/2011 Divs William Hill @ 2.9p per share


13/12/2011 Divs Microsoft @ 10.81p per share


20/12/2011 Divs BP @ 4.47p per share


23/12/2011 Divs Tesco @ 4.63p per share









Notes: 





*     US Dividends are adjusted for exchange rate and 15% withholding tax
**   Sterling : Dollar exchange rate = £1: $1.5537 as at 30/12/11

***  Invesco Perpetual Accumulation units (Dividends re-invested). Yield shown is based upon most recent payments.


Picking up the graph the profile of my portfolio's performance has maintained a strong similarity to the FTSE100 but small incremental differences in favour of the portfolio has allowed it pull ahead.
Over 2 years the portfolio is now showing a gain of 41.2% whereas the FTSE100 is up just 2.94% over the same period.

Click to enlarge, back to return.

Looking ahead, Tuesday sees everything start all over again and January might also herald a good start to the year for the portfolio with dividends coming in for R-R, National Grid and Vodaphone.
But, beyond that it looks like 2012 is going to be another difficult year with much the same rhetoric about inflation, the Euro, and sovereign debt doing little to allay fears.

I am still considering next steps for 2012 but seem likely to maintain a similar strategy, albeit with a little housekeeping should the opportunity arise.
There also looks to be an ongoing opportunity to further diversify into US markets and should the Euro ever appear to better reflect current events then I am sure that I can find a place for some large cap Europeans as well.

So, a steady, satisfactory 2011. Lets hope that a benign 2012 will provide further gains.



Related article:

- May 2011: Portfolio Update
- April 2011: Portfolio Update