National Grid @ 683p, -10p (-1.44%).
Rumour mill, grind, grind, grind......
No sooner has GE Capital (GE's Financial Arm), returned to some kind of health and been given the green light to resume dividends to its parent (again some kind of sign that capital liquidity levels are better balanced with liabilities), than rumours are now circulating that GE Capital could be a buyer (then a seller), of National Grid in order to acquire the US based operations of the UK utility.
The following report from www.thisismoney.co.uk: MARKET REPORT: Sparks fly again on National Grid amid takeover rumours suggests that a bid "well North" of £9 per share is being mulled over which was enough to drive the shares up to a peak in the last week of £6.93.
The seller bit extends to a sale of the UK operations, possibly to Hong Kong billionaire Li Ka Shing who has previously acquired Northumbrian Water, and Wales and West Utilities.
Quite rightly US media (investing.businessweek.com: BRIEF: GE Capital touted in National Grid buyout [Times Union, Albany, N.Y.]) are questioning why GE Capital might want to purchase utility assets despite GE being invested in what it calls "smart grid" technologies that might enhance electric grids.
And whilst I think it a little far fetched (more likely to just buy the US operations from NG), it would be an interesting conclusion to my ownership of National Grid, particularly if the bid were to be "well North" of £9 per share.
£9 itself represents a 31% premium to Friday's closing price which would go some way to compensating my portfolio for the significant loss of the dividend that NG currently delivers.
Interesting that my portfolio also holds GE although with a weighting of 2.44% and yielding 2.7% it does not have anything close to the influence that National Grid currently has as my second largest holding, representing 17.29%, and yielding 5.98%.
Still only vague rumours though (but very specifically naming GE Capital), and from just one source at this stage, which might be more to do with a change in the market winds, but it would have an impact on my current portfolio strategy.
At £9 (or more), it could be a strategy altering jar of jam today, in exchange for the current thick layer of jam my portfolio receives on an annual basis.
And whilst a jar of jam today might initially seem to be a handsome reward, you also have to look at such as Li Ka Shing and ask why he is a billionaire and why he might be willing to exchange a financial premium to invest in utilities (he isn't the only one), for an consistent ongoing revenue stream.
If you also look around and see how many individually quoted utilities are left on the FTSE it really puts a question mark over the succession of UK Governments that have allowed prized assets to fall into foreign ownership and exposed our national energy security.
It doesn't give a regulator too much to play with either.
And how many consumers, unhappy with rising energy costs, initially held shares in their regional utilities but were happy (at the time), to have made a profit when the companies were taken over.
They have probably paid that small profit back many times over, and year on year, in rising tariffs .
So the biggest loss might just be my current strategy as I couldn't easily replace NG's strengths and qualities particularly on the pre and post rights issue terms that I acquired them at and their weighting in my portfolio.
Not a problem for today but still food for thought.
Related article links:
- www.thisismoney.co.uk: MARKET REPORT: Sparks fly again on National Grid amid takeover rumours
- investing.businessweek.com: BRIEF: GE Capital touted in National Grid buyout [Times Union, Albany, N.Y.]
Related posts:
- August 2012: Portfolio update.
Sunday, 30 September 2012
Wednesday, 19 September 2012
Aviva ex.dividend today (forward look on dividends).
Aviva @ 329.8p, -15.1p (-4.38%)
I was a little concerned to see Aviva down this morning, and wondered if the shares were back in the doghouse after a number of brokers/analysts issued some form of downgrade yesterday following the share price's appreciation over the last few weeks.
As usual, more than one of the downgrades was accompanied by an "increase" to the target price (http://www.sharecast.com: FTSE 100 movers: Aviva falls on downgrade), but in this case I would presume that they are gently and effectively "applying brakes" to any expectations of rapid appreciation at this time, in order to prevent an overshoot of their targets.
Anyway, the shares actually went ex-dividend (which I had forgotten was due), with a 10p per share interim payment due on the 16th of November.
IG Group @ 448.9p, -20.3p (-4.33%).
Similarly, IG Group also went ex-dividend (19th Sept. - ex dividend date - IG Group/Aviva). This time with their final dividend of 16.75p per share which will be paid out on the 23rd of October.
So I also thought that I would give my portfolio a sweep and see what other ex. dividend and payment dates might be coming up.
Ex Div. Company and payout Payment date
25 July SSE @ 56.1p per share 21 Sept
16 Aug Microsoft @ 20c per share 13 Sept
08 Aug BP @ 8c per share 25 Sept
19 Sept Aviva @ 10p per share 16 Nov
19 Sept IG Group @ 16.75p per share 23 Oct
20 Sept GE @ 17c per share 25 Oct
26 Sept Morrison @ 3.49p per share 05 Nov
26 Sept Centrica @ 4.62p per share 14 Nov
17 Oct BAE @ 7.8p per share 30 Nov
24 Oct Rolls-Royce @ 7.6p per share 04 Jan.
24 Oct William Hill @ 3.4p per share 07 Dec.
13 Nov Microsoft 23c per share 15 Nov
?? Oct Tesco @ ?? ?? Dec.
?? Nov National Grid @ ?? ?? Jan
?? Nov Vodafone @ ?? ?? Feb.
Always makes me feel a bit better.
Dividends have a key role in the make up, strategy, and performance of my portfolio, as they provide both a return (forecast return of 4.11% as at last update - August 2012: Portfolio update.), and new funds for me to invest (re-invest) as they mount up.
In turn this gives my portfolio a compounding "boost" as re-invested funds generate their own returns.
So despite just completing my last bull period for dividends (2012 Dividend bull period update to the update (to the update!) etc. etc.), I can already see the next one which will peak in Jan with my second largest holding, in National Grid, forecast to make their payout.
Then again Aviva, and Rolls-Royce are due to payout in November and December.
And so on and so forth!
Related article links:
- http://www.sharecast.com: FTSE 100 movers: Aviva falls on downgrade
Related posts:
- 19th Sept. - ex dividend date - IG Group/Aviva
- August 2012: Portfolio update.
- Portfolio Updates.
- Jam today, not tomorrow (or at least twice a year anyway).
- 2012 Dividend bull period update to the update (to the update!) etc. etc.
- My first dividend of 2012 (and 2011 dividends in profile).
I was a little concerned to see Aviva down this morning, and wondered if the shares were back in the doghouse after a number of brokers/analysts issued some form of downgrade yesterday following the share price's appreciation over the last few weeks.
As usual, more than one of the downgrades was accompanied by an "increase" to the target price (http://www.sharecast.com: FTSE 100 movers: Aviva falls on downgrade), but in this case I would presume that they are gently and effectively "applying brakes" to any expectations of rapid appreciation at this time, in order to prevent an overshoot of their targets.
Anyway, the shares actually went ex-dividend (which I had forgotten was due), with a 10p per share interim payment due on the 16th of November.
IG Group @ 448.9p, -20.3p (-4.33%).
Similarly, IG Group also went ex-dividend (19th Sept. - ex dividend date - IG Group/Aviva). This time with their final dividend of 16.75p per share which will be paid out on the 23rd of October.
So I also thought that I would give my portfolio a sweep and see what other ex. dividend and payment dates might be coming up.
Ex Div. Company and payout Payment date
20 Sept GE @ 17c per share 25 Oct
26 Sept Morrison @ 3.49p per share 05 Nov
26 Sept Centrica @ 4.62p per share 14 Nov
17 Oct BAE @ 7.8p per share 30 Nov
24 Oct Rolls-Royce @ 7.6p per share 04 Jan.
24 Oct William Hill @ 3.4p per share 07 Dec.
13 Nov Microsoft 23c per share 15 Nov
?? Oct Tesco @ ?? ?? Dec.
?? Nov National Grid @ ?? ?? Jan
?? Nov Vodafone @ ?? ?? Feb.
Always makes me feel a bit better.
Dividends have a key role in the make up, strategy, and performance of my portfolio, as they provide both a return (forecast return of 4.11% as at last update - August 2012: Portfolio update.), and new funds for me to invest (re-invest) as they mount up.
In turn this gives my portfolio a compounding "boost" as re-invested funds generate their own returns.
So despite just completing my last bull period for dividends (2012 Dividend bull period update to the update (to the update!) etc. etc.), I can already see the next one which will peak in Jan with my second largest holding, in National Grid, forecast to make their payout.
Then again Aviva, and Rolls-Royce are due to payout in November and December.
And so on and so forth!
Related article links:
- http://www.sharecast.com: FTSE 100 movers: Aviva falls on downgrade
Related posts:
- 19th Sept. - ex dividend date - IG Group/Aviva
- August 2012: Portfolio update.
- Portfolio Updates.
- Jam today, not tomorrow (or at least twice a year anyway).
- 2012 Dividend bull period update to the update (to the update!) etc. etc.
- My first dividend of 2012 (and 2011 dividends in profile).
Tuesday, 18 September 2012
FTSE 100 @ 5841.79, -51.73 (-0.88%)
I see I spoke too soon about markets recovering but, as suggested in a previous post (Jam today, not tomorrow (or at least twice a year anyway).), it already looks like there is a partial retreat, from growth and cyclical sectors, and a tentative dip of the toes back into the relative safe havens of those sectors seen as defensive, with utilities, pharmas, consumables, and tobacco holding against the tide.
Funny that, despite not liking uncertainty, it does seem that there are market participants that desire a certain volatility which is frequently provided by media.
Perhaps that is the difference in this case i.e the uncertainty provided by politicians and central bankers, as opposed to the less tangible hype provided by news agencies.
One can (in theory at least), have a tangible effect on the conditions and environment in which markets operate, whereas the other is more rhetorical and provides an emotional roller coaster for an audience and the more vulnerable section of private investors (whose behaviour might then provide a predictable volatility for better backed traders to capitalise on).
Anyway back to the trenches.
I see I spoke too soon about markets recovering but, as suggested in a previous post (Jam today, not tomorrow (or at least twice a year anyway).), it already looks like there is a partial retreat, from growth and cyclical sectors, and a tentative dip of the toes back into the relative safe havens of those sectors seen as defensive, with utilities, pharmas, consumables, and tobacco holding against the tide.
Funny that, despite not liking uncertainty, it does seem that there are market participants that desire a certain volatility which is frequently provided by media.
Perhaps that is the difference in this case i.e the uncertainty provided by politicians and central bankers, as opposed to the less tangible hype provided by news agencies.
One can (in theory at least), have a tangible effect on the conditions and environment in which markets operate, whereas the other is more rhetorical and provides an emotional roller coaster for an audience and the more vulnerable section of private investors (whose behaviour might then provide a predictable volatility for better backed traders to capitalise on).
Anyway back to the trenches.
Sunday, 16 September 2012
Stimulus, musings and portfolio all time highs.
FTSE100 @ 5915.65, +95.63 (-1.64%)
Interesting end to the week with my portfolio touching new all time highs on Thursday then again on Friday.
Exciting times driven by the previous weeks proposed intervention by the ECB with its unlimited bond purchase program (Super Mario powers up the markets with bond purchase program!), then ratification by the German parliament, and then latterly by the US Federal Reserve's announced of a third round of quantitative easing.
Friday's action saw my portfolio finish up a heady 4.94% in the month to date and 18.61% in the year to date.
Current events also look to be having a loosening effect on investor's attitudes to risk and could provide a boost for markets in the last quarter of the year and the run up to Christmas.
Significantly, this attitude can be seen in Friday's list of risers on the FTSE 100, with mining related companies occupying all 10 positions in the lists.
I say significant as it suggests a rotation of funds out of presumed defensives into other cyclical and growth sectors. But as mentioned previously I am not about to make wholesale changes to my portfolio on the back of it (Jam today, not tomorrow (or at least twice a year anyway).).
This helped the FTSE 100 finish up 1.64% on Friday, 3.57% in the month to date, and 6.16% in the year to date.
As posted (BAE takes off on proposed merger with EADS!), I'm not so enamoured of the recent BAE/EADS announcement though, but it looks like neither is anyone else outside of the 2 company's.
Sunday newspapers also seem to be reporting that BAE jobs are under threat if the merger doesn't go forward, but no-one seems to trust that job losses won't occur if the merger goes ahead so probably not the most calculated argument to make.
Apple's iPhone 5 was finally announced to mixed reviews but by all accounts the company's pre-order inventory seems to have sold out within an hour. An outcome that pushed the shares to new highs of $696.98 (closing at $691.28), and could yet lift the shares even higher as Christmas comes onto the horizon.
Media reports also point to a further announcement in October which, its suggested, could be the latest iPad/iPad mini.
That could be my Christmas list sorted!
Related posts:
- Super Mario powers up the markets with bond purchase program!
- August 2012: Portfolio update.
- Jam today, not tomorrow (or at least twice a year anyway).
- BAE takes off on proposed merger with EADS!
- Part 2: BAE takes off on proposed merger with EADS!
Interesting end to the week with my portfolio touching new all time highs on Thursday then again on Friday.
Exciting times driven by the previous weeks proposed intervention by the ECB with its unlimited bond purchase program (Super Mario powers up the markets with bond purchase program!), then ratification by the German parliament, and then latterly by the US Federal Reserve's announced of a third round of quantitative easing.
Friday's action saw my portfolio finish up a heady 4.94% in the month to date and 18.61% in the year to date.
Current events also look to be having a loosening effect on investor's attitudes to risk and could provide a boost for markets in the last quarter of the year and the run up to Christmas.
Significantly, this attitude can be seen in Friday's list of risers on the FTSE 100, with mining related companies occupying all 10 positions in the lists.
I say significant as it suggests a rotation of funds out of presumed defensives into other cyclical and growth sectors. But as mentioned previously I am not about to make wholesale changes to my portfolio on the back of it (Jam today, not tomorrow (or at least twice a year anyway).).
This helped the FTSE 100 finish up 1.64% on Friday, 3.57% in the month to date, and 6.16% in the year to date.
As posted (BAE takes off on proposed merger with EADS!), I'm not so enamoured of the recent BAE/EADS announcement though, but it looks like neither is anyone else outside of the 2 company's.
Sunday newspapers also seem to be reporting that BAE jobs are under threat if the merger doesn't go forward, but no-one seems to trust that job losses won't occur if the merger goes ahead so probably not the most calculated argument to make.
Apple's iPhone 5 was finally announced to mixed reviews but by all accounts the company's pre-order inventory seems to have sold out within an hour. An outcome that pushed the shares to new highs of $696.98 (closing at $691.28), and could yet lift the shares even higher as Christmas comes onto the horizon.
Media reports also point to a further announcement in October which, its suggested, could be the latest iPad/iPad mini.
That could be my Christmas list sorted!
Related posts:
- Super Mario powers up the markets with bond purchase program!
- August 2012: Portfolio update.
- Jam today, not tomorrow (or at least twice a year anyway).
- BAE takes off on proposed merger with EADS!
- Part 2: BAE takes off on proposed merger with EADS!
Wednesday, 12 September 2012
Part 2: BAE takes off on proposed merger with EADS!
BAE Systems @ 363.60p, +34.90p (10.62%)
EADS @ Eu 28, -Eu 1.67 (-5.63%).
Right OK, in my first post on this subject (BAE takes off on proposed merger with EADS!) I broke off by saying I needed to look at the charts as well as reviewing what information is currently available.
So here goes.
EADS 2 day chart (Digitallook):
BAE Systems 2 day chart (Digitallook)
So EADS actually fell today but BAE "surged".
As to the clues. Well at this stage we are told that the venture will be 60:40 in EADS favour.
And currently, with EADS at 28 Euros a share, and 826.93m shares in issue, the company has a market capitalisation of around Eu 23,154m.
An exchange rate of £1: Eu1.2494 converts that to £18,532m.
Whereas BAE, at 363.6p and 3249.31m shares in issues, has a capitalisation of £11,814.49m.
And although its still very early days yet (since the public announcement anyway), combining the 2 companies at these values, assuming no other premium or cost savings, results in a market capitalisation of £30,346.49m.
We're also told that the venture will be 60:40 in EADS favour so, at the current closing values, we can see that BAE's 363.6p puts it somewhere in the region of 38.93% of the combined group's capitalisation (£11,814.94m / £30,346.49m).
So now I can at least see the reasoning behind BAE's surge today to achieve that 60:40 parity, which makes it an unrewarding exercise for anyone looking to buy into the venture ahead of the merger without first getting an idea of any premium that could be attached from planned efficiencies, patents, or combination of technologies.
But, for myself as an existing shareholder the post merger value now looks to have been immediately priced in, excepting any change in exchange rates or movement in either of the 2 companies share prices.
What I really need then, is for EADS share price to stay as it is, or, better still, appreciate, in order for BAE's share price to then also appreciate back towards the 40% proposed proportion of the new venture.
Worryingly, EADS share price moved down today though.
Similarly, and perhaps more likely in the current climate following Mario Draghi's plan to put a floor under European state borrowing costs (Super Mario powers up the markets with bond purchase program!), if the Euro were to strengthen then that would also increase EADS value and, presumably, also pull up BAE's share price to restore the 40:60.
Of course things could also go the other way. EADS might depreciate and/or sterling might strengthen!
So in summary and considering a possible exit strategy, at 363.6p, BAE already looks fully valued on the 60:40 proposal and is therefore dependent upon a premium revealing itself, or an appreciation in EADS capitalisation (either through perceived value or via the Euro).
Disappointingly, this assumption of a "full" valuation is only in context of the proposed 60:40 and not BAE's individual prospects given its current lowly 9 times forecast pe and ranking as the world's 3rd largest military contractor (on 2011 revenues).
To be honest at this point, it really feels they are selling out cheaply to EADS.
I also question EADS motives given the company's recent inability to negotiate a place on the top US Aerospace Industry lobbying group due to the group's restrictions on company's with government ownership.
EADS argument being that it "should be allowed to take a seat alongside flagship UK firms Rolls-Royce RR.L and BAE Systems".(http://trading.selftrade.co.uk: UPDATE 1-Airbus fights exclusion from U.S. aerospace lobby).
Given that this announcement only came on the 5th September it can only be co-incidental and not a reason in itself for EADS to seek a merger.
Will it subsequently lead to BAE's exclusion I wonder?
Really not too happy about the prospect at this stage though.
Related articles:
- http://www.sharecast.com: BAE surges on possible tie-up with EADS
- http://otp.investis.com: Stmnt re Share Price Movement
- http://en.wikipedia.org: EADS
- http://trading.selftrade.co.uk: UPDATE 1-Airbus fights exclusion from U.S. aerospace lobby
Related posts:
- BAE takes off on proposed merger with EADS!
- Super Mario powers up the markets with bond purchase program!
- August 2012: Portfolio update.
- BAE: 2011 Preliminary Results.
EADS @ Eu 28, -Eu 1.67 (-5.63%).
Right OK, in my first post on this subject (BAE takes off on proposed merger with EADS!) I broke off by saying I needed to look at the charts as well as reviewing what information is currently available.
So here goes.
EADS 2 day chart (Digitallook):
BAE Systems 2 day chart (Digitallook)
So EADS actually fell today but BAE "surged".
As to the clues. Well at this stage we are told that the venture will be 60:40 in EADS favour.
And currently, with EADS at 28 Euros a share, and 826.93m shares in issue, the company has a market capitalisation of around Eu 23,154m.
An exchange rate of £1: Eu1.2494 converts that to £18,532m.
Whereas BAE, at 363.6p and 3249.31m shares in issues, has a capitalisation of £11,814.49m.
And although its still very early days yet (since the public announcement anyway), combining the 2 companies at these values, assuming no other premium or cost savings, results in a market capitalisation of £30,346.49m.
We're also told that the venture will be 60:40 in EADS favour so, at the current closing values, we can see that BAE's 363.6p puts it somewhere in the region of 38.93% of the combined group's capitalisation (£11,814.94m / £30,346.49m).
So now I can at least see the reasoning behind BAE's surge today to achieve that 60:40 parity, which makes it an unrewarding exercise for anyone looking to buy into the venture ahead of the merger without first getting an idea of any premium that could be attached from planned efficiencies, patents, or combination of technologies.
But, for myself as an existing shareholder the post merger value now looks to have been immediately priced in, excepting any change in exchange rates or movement in either of the 2 companies share prices.
What I really need then, is for EADS share price to stay as it is, or, better still, appreciate, in order for BAE's share price to then also appreciate back towards the 40% proposed proportion of the new venture.
Worryingly, EADS share price moved down today though.
Similarly, and perhaps more likely in the current climate following Mario Draghi's plan to put a floor under European state borrowing costs (Super Mario powers up the markets with bond purchase program!), if the Euro were to strengthen then that would also increase EADS value and, presumably, also pull up BAE's share price to restore the 40:60.
Of course things could also go the other way. EADS might depreciate and/or sterling might strengthen!
So in summary and considering a possible exit strategy, at 363.6p, BAE already looks fully valued on the 60:40 proposal and is therefore dependent upon a premium revealing itself, or an appreciation in EADS capitalisation (either through perceived value or via the Euro).
Disappointingly, this assumption of a "full" valuation is only in context of the proposed 60:40 and not BAE's individual prospects given its current lowly 9 times forecast pe and ranking as the world's 3rd largest military contractor (on 2011 revenues).
To be honest at this point, it really feels they are selling out cheaply to EADS.
I also question EADS motives given the company's recent inability to negotiate a place on the top US Aerospace Industry lobbying group due to the group's restrictions on company's with government ownership.
EADS argument being that it "should be allowed to take a seat alongside flagship UK firms Rolls-Royce RR.L and BAE Systems".(http://trading.selftrade.co.uk: UPDATE 1-Airbus fights exclusion from U.S. aerospace lobby).
Given that this announcement only came on the 5th September it can only be co-incidental and not a reason in itself for EADS to seek a merger.
Will it subsequently lead to BAE's exclusion I wonder?
Really not too happy about the prospect at this stage though.
Related articles:
- http://www.sharecast.com: BAE surges on possible tie-up with EADS
- http://otp.investis.com: Stmnt re Share Price Movement
- http://en.wikipedia.org: EADS
- http://trading.selftrade.co.uk: UPDATE 1-Airbus fights exclusion from U.S. aerospace lobby
Related posts:
- BAE takes off on proposed merger with EADS!
- Super Mario powers up the markets with bond purchase program!
- August 2012: Portfolio update.
- BAE: 2011 Preliminary Results.
BAE takes off on proposed merger with EADS!
BAE Systems @ 363.60p, +34.90p (10.62%)
EADS @ Eu 28, -Eu 1.67 (-5.63%).
I would much rather be looking at iPhone 5 and its potential to boost Apple's earnings but the potential merger between EADS and BAE looks more pressing, particularly as I hold BAE in my portfolio (August 2012: Portfolio update.).
Really not sure I can understand the logic of the BAE EADS merger which is obviously now at quite a mature stage of negotiation.
Amidst the bureaucracy and difficulties previously seen BAE sold its 20% stake in Airbus in 2006, in a move that it was presumed would make it a more attractive proposition to partnerships and contracts in the US.
At the time, a late intervention by EADS, in releasing an announcement on delays to the A380 program also caused controversy by subsequently bringing down the value of the 20% stake as well as opening the EADS executives to accusations of insider dealing following executive share sales prior to the announcement.
According to Wikipedia (http://en.wikipedia.org: Noël Forgeard), the then CEO, Noel Forgeard, "made a 2.5 million Euro profit on the sale of EADS shares,[1] with his children earning 4.2 million Euro, just weeks before news of Airbus A380 delays was released.[2] Forgeard denied
any wrongdoing, claiming that he was a scapegoat in the matter.[3]
Forgeard resigned as CEO of EADS on 2 July 2006 and was replaced by Christian Streiff.[4]"
Thats not to say that BAE hasn't also had its share of controversy given various SFO investigations and accusations of incentives.
But back to the present, reports suggest that BAE will hold 40% of the enlarged group and that it would retain a dual listing in London and Paris (http://www.sharecast.com: BAE surges on possible tie-up with EADS).
However, the group will have a unified board management structure.
Yeh right I've heard that one before!
Sensitivity, ring fencing, national interests. Even putting aside the history of executive feuding, political conflict, and accusations of subsidies and insider dealing, it really does sound like an unwieldy bureaucratic nightmare waiting to happen.
You can just see the scheduling of "summits" ahead of any decision can't you.
Surely it must also put paid to BAE's US ambitions given the constant war over subsidies between Boeing and Airbus.
Given that the BAE statement came out after, and in response to the share price surging (http://otp.investis.com: Stmnt re Share Price Movement), the news was obviously leaked and being acted upon by somebody so perhaps the insider dealing is a hard habit to kick.
Looking forward, it also looks like there will be a hit to BAE shareholders with all this talk re. different dividend payout philosophies.
As mentioned already, it looks like negotiations are fairly well advanced as well, which probably won't give me the time or information to properly consider the situation.
The shares have gone up though, which in the short term is good (they might yet deflate), but BAE doesn't go ex dividend until the 17th October.
And 7.8p per share represents 2% of the current share price of 363.6p.
To be fair though, there just isn't enough information to make a comfortable judgement here but my overriding perception is negative given EADS history, bureaucracy, and politically motivated roots.
The tentacles of control and proposed government interests don't suggest anything to me of a competitive, commercially astute organisation.
I actually can't even think of BAE in that light yet given recent results (BAE: 2011 Preliminary Results.), but it has at least taken steps and as a stand alone entity it can exercise some ambition and control over its own destiny whilst attempting to make itself a world class manufacturing organisation.
As it stands I worry that, despite protestations of centres of excellence and leading technology the new organisation might be nothing more than a political football to be bounced around the various governments and/or shareholders as it has been in the past (see corporate governance - http://en.wikipedia.org: EADS).
I'm not overly optimistic on the prospects then for what could be a gargantuan organisation but I will have to try to keep an open mind in the coming days and weeks in the hope that a more positive chink of light can be thrown on the venture.
If it could succeed then it would certainly create some kind of monopolistic defence/aerospace organisation in Europe and rank alongside US rivals.
Perhaps picking the bones from some of the old pearls of investment wisdom might provide me with some direction here:
- "buy on the rumour, sell on the fact" or
- "its better to travel than arrive".
I've just had another thought though, which I will follow up in a second part to this post, regarding how this might pan out but need to take a look at the charts and re-read what we know now (Part 2: BAE takes off on proposed merger with EADS!).
Related articles:
- http://www.sharecast.com: BAE surges on possible tie-up with EADS
- http://otp.investis.com: Stmnt re Share Price Movement
- http://en.wikipedia.org: EADS
Related posts:
- August 2012: Portfolio update.
- BAE: 2011 Preliminary Results.
- Part 2: BAE takes off on proposed merger with EADS!
EADS @ Eu 28, -Eu 1.67 (-5.63%).
I would much rather be looking at iPhone 5 and its potential to boost Apple's earnings but the potential merger between EADS and BAE looks more pressing, particularly as I hold BAE in my portfolio (August 2012: Portfolio update.).
Really not sure I can understand the logic of the BAE EADS merger which is obviously now at quite a mature stage of negotiation.
Amidst the bureaucracy and difficulties previously seen BAE sold its 20% stake in Airbus in 2006, in a move that it was presumed would make it a more attractive proposition to partnerships and contracts in the US.
At the time, a late intervention by EADS, in releasing an announcement on delays to the A380 program also caused controversy by subsequently bringing down the value of the 20% stake as well as opening the EADS executives to accusations of insider dealing following executive share sales prior to the announcement.
According to Wikipedia (http://en.wikipedia.org: Noël Forgeard), the then CEO, Noel Forgeard, "made a 2.5 million Euro profit on the sale of EADS shares,[1] with his children earning 4.2 million Euro, just weeks before news of Airbus A380 delays was released.[2] Forgeard denied
any wrongdoing, claiming that he was a scapegoat in the matter.[3]
Forgeard resigned as CEO of EADS on 2 July 2006 and was replaced by Christian Streiff.[4]"
Thats not to say that BAE hasn't also had its share of controversy given various SFO investigations and accusations of incentives.
But back to the present, reports suggest that BAE will hold 40% of the enlarged group and that it would retain a dual listing in London and Paris (http://www.sharecast.com: BAE surges on possible tie-up with EADS).
However, the group will have a unified board management structure.
Yeh right I've heard that one before!
Sensitivity, ring fencing, national interests. Even putting aside the history of executive feuding, political conflict, and accusations of subsidies and insider dealing, it really does sound like an unwieldy bureaucratic nightmare waiting to happen.
You can just see the scheduling of "summits" ahead of any decision can't you.
Surely it must also put paid to BAE's US ambitions given the constant war over subsidies between Boeing and Airbus.
Given that the BAE statement came out after, and in response to the share price surging (http://otp.investis.com: Stmnt re Share Price Movement), the news was obviously leaked and being acted upon by somebody so perhaps the insider dealing is a hard habit to kick.
Looking forward, it also looks like there will be a hit to BAE shareholders with all this talk re. different dividend payout philosophies.
As mentioned already, it looks like negotiations are fairly well advanced as well, which probably won't give me the time or information to properly consider the situation.
The shares have gone up though, which in the short term is good (they might yet deflate), but BAE doesn't go ex dividend until the 17th October.
And 7.8p per share represents 2% of the current share price of 363.6p.
To be fair though, there just isn't enough information to make a comfortable judgement here but my overriding perception is negative given EADS history, bureaucracy, and politically motivated roots.
The tentacles of control and proposed government interests don't suggest anything to me of a competitive, commercially astute organisation.
I actually can't even think of BAE in that light yet given recent results (BAE: 2011 Preliminary Results.), but it has at least taken steps and as a stand alone entity it can exercise some ambition and control over its own destiny whilst attempting to make itself a world class manufacturing organisation.
As it stands I worry that, despite protestations of centres of excellence and leading technology the new organisation might be nothing more than a political football to be bounced around the various governments and/or shareholders as it has been in the past (see corporate governance - http://en.wikipedia.org: EADS).
I'm not overly optimistic on the prospects then for what could be a gargantuan organisation but I will have to try to keep an open mind in the coming days and weeks in the hope that a more positive chink of light can be thrown on the venture.
If it could succeed then it would certainly create some kind of monopolistic defence/aerospace organisation in Europe and rank alongside US rivals.
Perhaps picking the bones from some of the old pearls of investment wisdom might provide me with some direction here:
- "buy on the rumour, sell on the fact" or
- "its better to travel than arrive".
I've just had another thought though, which I will follow up in a second part to this post, regarding how this might pan out but need to take a look at the charts and re-read what we know now (Part 2: BAE takes off on proposed merger with EADS!).
- http://www.sharecast.com: BAE surges on possible tie-up with EADS
- http://otp.investis.com: Stmnt re Share Price Movement
- http://en.wikipedia.org: EADS
Related posts:
- August 2012: Portfolio update.
- BAE: 2011 Preliminary Results.
- Part 2: BAE takes off on proposed merger with EADS!
Tuesday, 11 September 2012
Jam today, not tomorrow (or at least twice a year anyway).
Bit of a mixed bag of things going on at the moment which I am guessing is down to a bit of a "risk-off" psychology following Mario Draghi's ECB announcement last week (Super Mario powers up the markets with bond purchase program!), which provided an instant pick me up to the FTSE and the rest of global markets.
This has subsequently led to a slew of articles suggesting the start of a new bull market and asking if the time is now right to exit equity income shares.
Conversely to all this is todays "risk on" situation with markets retreating ahead of the German parliamentary vote on the constitutional legality of the ECB's proposals.
It sort of feels that topically current articles such as these are tapping into the current psyche of markets, and investors, whilst targeting and acting as confirmation for many investors that this really could be the case.
Looking around I can see a number of perceived defensive shares retreat just as other shares perceived to be more geared to bull markets enjoy a trading session or two in the sun.
The combination of a few planted seeds of doubt (BAT's, National Grid etc), and articles creating a sense of missing out seems to be enough to push a number of shares into the shadows whilst investors swing back into banking, mining etc.
As it stands I think that its too early to understand if things have bottomed out but as with the markets themselves, rotating and pivoting around the average, diversification is an important consideration in any portfolio.
What do I mean, well a headline index such as the FTSE is effectively an aggregated measure of the averaged performance of the companies that make up the index and at any one time a proportion will perform above the average, some might be on the average, and a number will underperform the average as sentiment, support and investment leaves some and migrates to others.
So it could be said that the FTSE indices themselves reflect the averaged performance of a diversified sample of companies.
The current valuation of a portfolio acts in the same manner by reflecting the averaged underlying performance of each investment.
It would be wonderful, and wildly optimistic, if one could select the single share that will outperform all others and put all of one's funds into that.
I for one am not clever enough or have the appetite for that level of risk (not anymore at least).
But back to the question at hand, am I going to start bailing so called income shares for the apparently impending bull market.
No is the short answer, as I believe that they continue to have their place in the diversification and strategy of any portfolio. And, you can almost guarantee that as investors rotate out of them today, many will rotate back into them tomorrow, following any change in sentiment again that might knock confidence.
I'm not even sure that I could narrowly class them as just income shares, rather that they have mature proven business plans, strong cashflows, and are certainly more focussed on shareholder returns than others which is a massive plus for me these days.
They might have a lower level of growth than some, but many also have lower annual investment needs and strong defendable market positions, so are sharing profits and returning capital to investors on a regular basis rather than giving speculatively inflated promises of jam tomorrow (whilst taking out rapidly inflating salaries, bonuses etc. etc. in the meantime).
Significantly though, in many cases, sustainable growing dividends are also inextricably linked to a company's steadily growing cashflows. And, just as often, a strong balance sheet enables these company's to continue paying dividends even should profits "blip" for a year or so.
Jam today, not tomorrow (or at least twice a year anyway)!
Also recognising that I am neither clever enough, lucky enough, or have the risk appetite these days, I can't see that I will ever "get in first" on a share as the herd migrates.
But with a little patience I might still be in an investment when the herd migrates back effectively creating a pseudo first in opportunity as a company comes back into fashion/requirement.
I am also more and more convinced that whatever the trends, sentiments, and support for companies/sectors/markets might be currently, they do little more than provide short term changes in direction and/or volatility.
But even these horizons or situations just lead into the next one, and the next one, and the one after that.
And once connected these short term periods create a larger one and much like plotting time phased points on a graph there will be an overall trend be it upwards, downwards or sideways.
For me there is also a danger to be recognised that, with financial markets these days seeming to be dominated by a short term "trading" mentality (supported by the speed of light immediacy of information and trading systems), this can often give rise to overwhelming hair triggered emotions of fear, and greed, which can cloud logical decision making.
For myself then, and my philosophy, I am trying to concentrate on a longer horizon (or at least longer than some of these short term periods of volatility), with a hoped for upward trend hidden within the short term ups and downs that traders, and computers require to make small margins over and over again.
You can't see the woods for the trees and you can't see the trends for the ups and downs!
After all it seems at times that some analysts recommendations (typically sells) are geared for periods of 3 months or less as by the time they are published the targeted shares have already hit a support and seem ready to start recovering again which creates the happy coincidence (for someone), of small, private (and less privileged), investors such as myself selling into willing buyers before the shares fully recover in time for the next buy recommendation.
As I have mentioned before, it seems that between journalists, analysts, traders, and media, everyone has a vested interest in what they are saying or doing (as, of course, do I).
The journalist wants to sell articles and create a readership (sell advertising), the analyst wants to sell and create a dependency from clients (commissions), traders want to make money from volatility, and news channels hook viewers by creating drama and headlines e.g dum, dum, dum - "FTSE registers triple digit fall today" goes the headline (actually less than 2% though).
So everyone has a vested interest and motive but it is good to ask yourself what this is.
Is it the same as your own, and that being answered, you have a better chance of understanding if the information provided affects the overall trend of an investment across the horizon that you have chosen to invest over.
In that way you can still move from point A to point D (in your horizon), whilst hopefully being able to ignore what might be happening at B and C (as long as it doesn't fundamentally change the prospects of the company, of course).
After all A to D is your horizon and should hopefully provide the overall trend that you, as an investor have invested in, be it in a single company, a sector, or the markets as a whole.
B and C then become background noise and incidental volatility.
If anything taking a contrarian view again, this vested interest or "fashion" seeking exit of certain shares and sectors is what effectively creates renewed buying opportunities in much the same way that recent falls in mining and financials created a buying opportunity there just prior to this recent bounce and flirtation with recovery.
So the pendulum swings both ways thereby creating short term volatility and buying opportunities in all companies.
But you do need to pick and understand the investments that suit your goals, psychology, and realistic attitude to risk.
Definitely understand your personal horizons, and try not be over influenced by everything that is being thrown at you to tempt, and scare. you from your chosen path.
Finally, coming back to equity income (or dividends), these can at least help breed patience.
But if you are focussed on capital gains then a friend of mine came up with the interesting viewpoint that, you can discount your original purchase price by any dividends received (they are a return of capital after all).
More and more this seems to be my philosophy anyway.
Wish me luck.
Related posts:
- Super Mario powers up the markets with bond purchase program!
This has subsequently led to a slew of articles suggesting the start of a new bull market and asking if the time is now right to exit equity income shares.
Conversely to all this is todays "risk on" situation with markets retreating ahead of the German parliamentary vote on the constitutional legality of the ECB's proposals.
It sort of feels that topically current articles such as these are tapping into the current psyche of markets, and investors, whilst targeting and acting as confirmation for many investors that this really could be the case.
Looking around I can see a number of perceived defensive shares retreat just as other shares perceived to be more geared to bull markets enjoy a trading session or two in the sun.
The combination of a few planted seeds of doubt (BAT's, National Grid etc), and articles creating a sense of missing out seems to be enough to push a number of shares into the shadows whilst investors swing back into banking, mining etc.
As it stands I think that its too early to understand if things have bottomed out but as with the markets themselves, rotating and pivoting around the average, diversification is an important consideration in any portfolio.
What do I mean, well a headline index such as the FTSE is effectively an aggregated measure of the averaged performance of the companies that make up the index and at any one time a proportion will perform above the average, some might be on the average, and a number will underperform the average as sentiment, support and investment leaves some and migrates to others.
So it could be said that the FTSE indices themselves reflect the averaged performance of a diversified sample of companies.
The current valuation of a portfolio acts in the same manner by reflecting the averaged underlying performance of each investment.
It would be wonderful, and wildly optimistic, if one could select the single share that will outperform all others and put all of one's funds into that.
I for one am not clever enough or have the appetite for that level of risk (not anymore at least).
But back to the question at hand, am I going to start bailing so called income shares for the apparently impending bull market.
No is the short answer, as I believe that they continue to have their place in the diversification and strategy of any portfolio. And, you can almost guarantee that as investors rotate out of them today, many will rotate back into them tomorrow, following any change in sentiment again that might knock confidence.
I'm not even sure that I could narrowly class them as just income shares, rather that they have mature proven business plans, strong cashflows, and are certainly more focussed on shareholder returns than others which is a massive plus for me these days.
They might have a lower level of growth than some, but many also have lower annual investment needs and strong defendable market positions, so are sharing profits and returning capital to investors on a regular basis rather than giving speculatively inflated promises of jam tomorrow (whilst taking out rapidly inflating salaries, bonuses etc. etc. in the meantime).
Significantly though, in many cases, sustainable growing dividends are also inextricably linked to a company's steadily growing cashflows. And, just as often, a strong balance sheet enables these company's to continue paying dividends even should profits "blip" for a year or so.
Jam today, not tomorrow (or at least twice a year anyway)!
Also recognising that I am neither clever enough, lucky enough, or have the risk appetite these days, I can't see that I will ever "get in first" on a share as the herd migrates.
But with a little patience I might still be in an investment when the herd migrates back effectively creating a pseudo first in opportunity as a company comes back into fashion/requirement.
I am also more and more convinced that whatever the trends, sentiments, and support for companies/sectors/markets might be currently, they do little more than provide short term changes in direction and/or volatility.
But even these horizons or situations just lead into the next one, and the next one, and the one after that.
And once connected these short term periods create a larger one and much like plotting time phased points on a graph there will be an overall trend be it upwards, downwards or sideways.
For me there is also a danger to be recognised that, with financial markets these days seeming to be dominated by a short term "trading" mentality (supported by the speed of light immediacy of information and trading systems), this can often give rise to overwhelming hair triggered emotions of fear, and greed, which can cloud logical decision making.
For myself then, and my philosophy, I am trying to concentrate on a longer horizon (or at least longer than some of these short term periods of volatility), with a hoped for upward trend hidden within the short term ups and downs that traders, and computers require to make small margins over and over again.
You can't see the woods for the trees and you can't see the trends for the ups and downs!
After all it seems at times that some analysts recommendations (typically sells) are geared for periods of 3 months or less as by the time they are published the targeted shares have already hit a support and seem ready to start recovering again which creates the happy coincidence (for someone), of small, private (and less privileged), investors such as myself selling into willing buyers before the shares fully recover in time for the next buy recommendation.
As I have mentioned before, it seems that between journalists, analysts, traders, and media, everyone has a vested interest in what they are saying or doing (as, of course, do I).
The journalist wants to sell articles and create a readership (sell advertising), the analyst wants to sell and create a dependency from clients (commissions), traders want to make money from volatility, and news channels hook viewers by creating drama and headlines e.g dum, dum, dum - "FTSE registers triple digit fall today" goes the headline (actually less than 2% though).
So everyone has a vested interest and motive but it is good to ask yourself what this is.
Is it the same as your own, and that being answered, you have a better chance of understanding if the information provided affects the overall trend of an investment across the horizon that you have chosen to invest over.
In that way you can still move from point A to point D (in your horizon), whilst hopefully being able to ignore what might be happening at B and C (as long as it doesn't fundamentally change the prospects of the company, of course).
After all A to D is your horizon and should hopefully provide the overall trend that you, as an investor have invested in, be it in a single company, a sector, or the markets as a whole.
B and C then become background noise and incidental volatility.
If anything taking a contrarian view again, this vested interest or "fashion" seeking exit of certain shares and sectors is what effectively creates renewed buying opportunities in much the same way that recent falls in mining and financials created a buying opportunity there just prior to this recent bounce and flirtation with recovery.
So the pendulum swings both ways thereby creating short term volatility and buying opportunities in all companies.
But you do need to pick and understand the investments that suit your goals, psychology, and realistic attitude to risk.
Definitely understand your personal horizons, and try not be over influenced by everything that is being thrown at you to tempt, and scare. you from your chosen path.
Finally, coming back to equity income (or dividends), these can at least help breed patience.
But if you are focussed on capital gains then a friend of mine came up with the interesting viewpoint that, you can discount your original purchase price by any dividends received (they are a return of capital after all).
More and more this seems to be my philosophy anyway.
Wish me luck.
Related posts:
- Super Mario powers up the markets with bond purchase program!
Thursday, 6 September 2012
Super Mario powers up the markets with bond purchase program!
FTSE 100 @ 5777.34, +119.48 (+2.11%).
MIB @ 15780.32, +652.24 (+4.31%)
IBEX 35 @ 7862, +368 (+5.91%)
So the ECB President continues to show that he is indeed a man of action (unlike his neutral predecessor), and, in his comparatively short tenure (v. the sovereign debt crisis), appears to be trying to deliver on his promise to "do whatever it takes to preserve the Euro", by announcing the ECB's intention to intervene in the short term bond markets (1 - 3 years) with an "unlimited bond purchase program".
MIB @ 15780.32, +652.24 (+4.31%)
IBEX 35 @ 7862, +368 (+5.91%)
So the ECB President continues to show that he is indeed a man of action (unlike his neutral predecessor), and, in his comparatively short tenure (v. the sovereign debt crisis), appears to be trying to deliver on his promise to "do whatever it takes to preserve the Euro", by announcing the ECB's intention to intervene in the short term bond markets (1 - 3 years) with an "unlimited bond purchase program".
"Draghi said that the purchases, known as Outright Monetary Transactions, will “enable us address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro.” (London close: Markets celebrate ECB bond-buying plan).
Crucial to perception of the ECB's determination is the "unlimited" aspect of the program which seems fully intended to deter speculators.
More eagerly awaited than the upcoming summit, the ECB President's announcement today, coupled with comments by German Chancellor Angela Merkel that appeared to support the unlimited bond purchase plan as being within Draghi's mandate, was enough to push the FTSE to a 119 point gain (2.11%).
Better still were the respective 5.91% and 4.31% gains in Spain and Italy as the most likely and immediate beneficiaries of the program.
So lots of exuberance and expectation in the market jumps today which itself might be enough to keep the borrowing costs of Spain and Italy in check.
What Mario Draghi does appear to have cottoned onto is that perception is often reality, or reality is often perception, and almost from his first day on the watch the ECB President has not shied away from the Euro conundrum and has at times seemed to be the one man intent on delivering more than words and platitudes.
My own portfolio benefitted to the tune of 1.74% today with the biggest individual gain of 5.31% coming from Aviva, as you would expect, given the nature of the announcement and Aviva's own speculated exposure to European sovereign debt.
Aviva @ 344.90p, +17.40p (+5.31%)
Its still early days but today's gains feel much better than the scalpings that some of my portfolio holdings have taken in the last few days with:
- Rolls-Royce on concerns that airlines might be belt tightening (http://www.bloomberg.com/news/2012-08-23/eads-rolls-royce-fall-on-qantas-decision-to-cancel-boeing-787s.html),
- Vodafone on broker Bernstein downgrade to market perform, and then,
- BP following news reports that the US Dept of Justice is proposing to "throw the book" at BP with a charge of gross negligence contributing to the Macondo Gulf of Mexico disaster (War of words heats up ahead of BP's court case).
And whilst the FT reports that the rig owner, Swiss owned Transocean, also remains implicated it seems bizarre that the contracted company responsible for the allegedly incorrectly mixed cement, Halliburton, does not seem to be?
At least all 3 took part in today's rally.
- Rolls-Royce on concerns that airlines might be belt tightening (http://www.bloomberg.com/news/2012-08-23/eads-rolls-royce-fall-on-qantas-decision-to-cancel-boeing-787s.html),
- Vodafone on broker Bernstein downgrade to market perform, and then,
- BP following news reports that the US Dept of Justice is proposing to "throw the book" at BP with a charge of gross negligence contributing to the Macondo Gulf of Mexico disaster (War of words heats up ahead of BP's court case).
And whilst the FT reports that the rig owner, Swiss owned Transocean, also remains implicated it seems bizarre that the contracted company responsible for the allegedly incorrectly mixed cement, Halliburton, does not seem to be?
At least all 3 took part in today's rally.
Rolls-Royce @ 834p, +6p (+0.72%)
Vodafone @ 179p, +2.5p (+1.42%)
BP @ 431.45p, +7.6p (1.79%)
But, as already mentioned, it is early days (no action yet!), and far too early to know if this is the turning point for the Euro but, the 6th September 2012 could yet go down in the history books as the day that Super Mario drew a line of no retreat and rallied his resources to rescue the Euro.
For myself I only hope that the reality matches the renewed expectation and puts a much needed first foundation in place for a return to economic stability.
Related article links:
- http://www.sharecast.com: London close: Markets celebrate ECB bond-buying plan
- http://www.sharecast.com: The ECB shows its hand: Unlimited bond purchases
- http://www.bloomberg.com/news/2012-08-23/eads-rolls-royce-fall-on-qantas-decision-to-cancel-boeing-787s.html
- http://www.sharecast.com: War of words heats up ahead of BP's court case
Related post:
- August 2012: Portfolio update.
- http://www.sharecast.com: London close: Markets celebrate ECB bond-buying plan
- http://www.sharecast.com: The ECB shows its hand: Unlimited bond purchases
- http://www.bloomberg.com/news/2012-08-23/eads-rolls-royce-fall-on-qantas-decision-to-cancel-boeing-787s.html
- http://www.sharecast.com: War of words heats up ahead of BP's court case
Related post:
- August 2012: Portfolio update.
Tuesday, 4 September 2012
August 2012: "following Woodford" update.
Taking a quick look at how the "Woodford Way" experiment is developing, I can see that the recent choppy volatility of August has given the Invesco Perpetual Fund the opportunity to retake second place ahead of the similarly managed Edinburgh Investment Trust (also Invesco Perpetual and also Neil Woodford).
As things stand though, as at the end of August, all 3 options to "follow Woodford" are ahead of their starting valuations on the 14 March 2012.
The 3 picks received a dividend during August, from Vodafone, and continues to lead the pack with an overall gain of 4.10%, down from 5.02% last review.
All 3 of the "3 picks" continue to be in the top 10, and the top 3 sectors, of Invesco's High Income fund so there is no reason to review the line-up of the 3 picks.
But as mentioned last month, within the top 10/top 3 sectors: BAT's trails Reynolds; Glaxo trails AstraZeneca; and Vodafone trails BT.
The only other sectors represented in the High Income Fund's top 10 are consumer goods through Reckitt Benckiser, and Manufacturing / Aerospace with BAE Systems
As at 31.08.12
And how does the chart look?
So 2 of the 3 options fell back in the month but the Invesco Perpetual High Income fund did move ahead to show a 2.62% gain from 2.02% seen at the end of July.
As mentioned previously one of my grumbles with this fund is its often odd movement despite the market's apparent guiding direction.
Some of this can be explained simply by the delay in unit pricing which often takes place the following day. But even that doesn't seem to explain it all.
Regardless the fund was the only one to make further progress during August which keeps things interesting as the trial slowly develops.
Looking forward I might add a "relative" line to the chart for the FTSE's performance as a basis for understanding just how "defensive" these options really are.
As things stand though, as at the end of August, all 3 options to "follow Woodford" are ahead of their starting valuations on the 14 March 2012.
The 3 picks received a dividend during August, from Vodafone, and continues to lead the pack with an overall gain of 4.10%, down from 5.02% last review.
All 3 of the "3 picks" continue to be in the top 10, and the top 3 sectors, of Invesco's High Income fund so there is no reason to review the line-up of the 3 picks.
But as mentioned last month, within the top 10/top 3 sectors: BAT's trails Reynolds; Glaxo trails AstraZeneca; and Vodafone trails BT.
The only other sectors represented in the High Income Fund's top 10 are consumer goods through Reckitt Benckiser, and Manufacturing / Aerospace with BAE Systems
As at 31.08.12
| Qty | Price | Value | % Gain. | |||
Inv. Perp. High Income |
1110.14 |
5.55 |
6156.64 |
2.61% |
||
| Residue | 0.00 | |||||
| Dividends | ||||||
| Total | 6000 | 6156.64 | 2.61% | |||
Edinburgh Investment Trust |
1182.00 |
5.08 |
5998.65 |
-0.02% |
||
| Residue | 0.43 | |||||
| Dividends | 141.84 | |||||
| Total | 6000 | 6140.92 | 2.35% | |||
3 Picks |
||||||
| BAT | 61.00 | 33.02 | 2013.92 | 0.70% | ||
| Glaxo | 138.00 | 14.25 | 1966.50 | -1.68% | ||
| Vodafone | 1191.00 | 1.82 | 2161.67 | 8.08% | ||
| Residue | 3.68 | |||||
| Dividends | 100.52 | |||||
| Total | 6000 | 6246.28 | 4.10% | |||
| Transactions in the month: | ||||||
| Invesco Perp. High Income | N/A | |||||
| Edin. Inv. Trust | N/A | |||||
| 3 Picks | ||||||
| Vodafone | 01/08/2012 | Div | 77.06 | |||
And how does the chart look?
 |
| Click to enlarge, close to return. |
So 2 of the 3 options fell back in the month but the Invesco Perpetual High Income fund did move ahead to show a 2.62% gain from 2.02% seen at the end of July.
As mentioned previously one of my grumbles with this fund is its often odd movement despite the market's apparent guiding direction.
Some of this can be explained simply by the delay in unit pricing which often takes place the following day. But even that doesn't seem to explain it all.
Regardless the fund was the only one to make further progress during August which keeps things interesting as the trial slowly develops.
Looking forward I might add a "relative" line to the chart for the FTSE's performance as a basis for understanding just how "defensive" these options really are.
Earlier related posts:
- July 2012: Following Woodford update.
- June 2012: Portfolio Update.
- July 2012: Following Woodford update.
- June 2012: Portfolio Update.
Monday, 3 September 2012
Gadgets and Gizmo's expected soon: iPhone 5 etc.
Interesting line up on CNN of the 7 best gadgets and gizmos coming this fall.
Article leads with iPhone 5 and iPad Mini but others as well.
Elsewhere rumours suggest that iPhone 5 will be announced on Sept 12 to hit the stores 9 days later.
Related article links:
- http://money.cnn.com: 7 best gadgets and gizmos coming this fall
Article leads with iPhone 5 and iPad Mini but others as well.
Elsewhere rumours suggest that iPhone 5 will be announced on Sept 12 to hit the stores 9 days later.
Related article links:
- http://money.cnn.com: 7 best gadgets and gizmos coming this fall
Sunday, 2 September 2012
August 2012: Portfolio update.
Well its time to review things again which seems to have come around even quicker than usual due to the formatting/HTML issues which delayed my posting last month and which, thankfully Google (presumably), seem to have resolved.
My portfolio had a better time of things last month with a gain of 2.11% v. the FTSE100's 1.35%.
At one stage it even managed to hit an all time high with a mid month gain of around 4.9% but as with the FTSE it couldn't hold onto those speculation driven gains.
But following great expectation on my part (2012 Dividend bull period update to the update (to the update!) etc. etc.), the big one finally landed in the form of National Grid's 2012 Final dividend which contributed 0.65% towards last months gains.
Another big yield but with less of a weighting in my portfolio (unfortunately), came from Vodafone which also paid out on its 2012 Final dividend.
And finally, more like the novelty of a new toy than a reward at this stage, there was a first dividend from Apple which coincided with new all time highs for the stock (Apple valued at $623bn and returns to dividend payments.)
All told dividends contributed a satisfying 0.74% to this months gain (i.e. 0.74% in dividends and 1.37% in share price gains).
Completing the picture of transactions in August, I also made a further purchase and topped up my holding in IG Group on the basis of the strong financial base from which the company appears to be managed, its niche leadership, prospects for a recovery, and a 5% yield.
Looking across my portfolio, the months biggest share price gain came from a recently topped up holding in Aviva as speculation around the sale of its US operations continue which along with the fortunes of the EU look set to dictate the fortunes of this share for some time yet. Aviva shares rose 11.83% in August.
I have already mentioned Apple hitting all time highs. But, elsewhere the only other share price gains of note came from Centrica and a possibly bottomed out Tesco.
As things stand, Tesco remains the laggard of the portfolio, but at least there does look to be quietly building support in the shares although analysts are suggesting that the upcoming trading statement will likely still be weak.
Across the portfolio, the top-up/addition of IG and an update of consensus forecasts suggests a current view that my portfolio could yield 4.11% if held for the next 12 months.
The usual chart continues to show a pleasing long term divergence between the FTSE 100 and my own portfolio's performance (thankfully in my portfolio's favour), whilst also illustrating that the 2 indexes continue to follow a similar profile.
Looking ahead, the weather forecast remains the same with any sustained recovery remaining hugely dependent on a managed outcome of the EU/Euro fiasco. A further update is expected next week.
Having sought to slow down its economy, China is now looking to stimulate it again in the hope of insulating itself from the worst of European recession.
And, in the run to the year-end, the US could also shoulder its way into the mix with the country's own fiscal concerns and the upcoming Presidential election which looks likely to be waged on the economy.
We are also entering the last quarter of the year so might yet look forward to a year-end rally and with another month consigned to the history books must surely be moving towards an outcome and a post credit crunch future.
Looking at my little portfolio, 13.02% year to date is very satisfying and with a little cash left, I might yet add to my portfolio before the year-end.
Earlier posts:
- 2012 Dividend bull period update to the update (to the update!) etc. etc.
- Apple valued at $623bn and returns to dividend payments.
Links to Portfolio updates:
- July 2012: Portfolio update.
- June 2012: Portfolio Update.
- May 2012: Portfolio Update.
- April 2012: Portfolio Update.
- March 2012: Portfolio Update.
- February 2012: Portfolio Update.
- January 2012: Portfolio Update.
- December 2011: Portfolio Update.
My portfolio had a better time of things last month with a gain of 2.11% v. the FTSE100's 1.35%.
At one stage it even managed to hit an all time high with a mid month gain of around 4.9% but as with the FTSE it couldn't hold onto those speculation driven gains.
But following great expectation on my part (2012 Dividend bull period update to the update (to the update!) etc. etc.), the big one finally landed in the form of National Grid's 2012 Final dividend which contributed 0.65% towards last months gains.
Another big yield but with less of a weighting in my portfolio (unfortunately), came from Vodafone which also paid out on its 2012 Final dividend.
And finally, more like the novelty of a new toy than a reward at this stage, there was a first dividend from Apple which coincided with new all time highs for the stock (Apple valued at $623bn and returns to dividend payments.)
All told dividends contributed a satisfying 0.74% to this months gain (i.e. 0.74% in dividends and 1.37% in share price gains).
Completing the picture of transactions in August, I also made a further purchase and topped up my holding in IG Group on the basis of the strong financial base from which the company appears to be managed, its niche leadership, prospects for a recovery, and a 5% yield.
Looking across my portfolio, the months biggest share price gain came from a recently topped up holding in Aviva as speculation around the sale of its US operations continue which along with the fortunes of the EU look set to dictate the fortunes of this share for some time yet. Aviva shares rose 11.83% in August.
I have already mentioned Apple hitting all time highs. But, elsewhere the only other share price gains of note came from Centrica and a possibly bottomed out Tesco.
As things stand, Tesco remains the laggard of the portfolio, but at least there does look to be quietly building support in the shares although analysts are suggesting that the upcoming trading statement will likely still be weak.
Across the portfolio, the top-up/addition of IG and an update of consensus forecasts suggests a current view that my portfolio could yield 4.11% if held for the next 12 months.
| Merchant Adventurer's Portfolio | ||||||||
| Forecast | 1 month | YTD | 20 mth | |||||
| Price | % holding | Div. yield | % gain | % gain | % gain | |||
| R-R | 875.50p | 31.20% | 2.39% | -3.47% | 9.98% | 31.78% | ||
| National Grid | 683.50p | 17.29% | 5.98% | 3.17% | 9.36% | 23.60% | ||
| Aviva | 326.10p | 11.01% | 8.08% | 11.83% | 7.90% | -3.48% | ||
| Apple ** | $664.95 | 6.14% | 0.28% | 7.51% | 60.72% | 97.94% | ||
| BP | 441.35p | 5.54% | 4.63% | 3.83% | -2.86% | -3.58% | ||
| IG Group | 430.50p | 4.45% | 5.35% | -2.41% | -5.95% | -9.79% | ||
| William Hill | 300.30p | 3.22% | 3.64% | -4.36% | 48.08% | 75.92% | ||
| General Electric ** | $20.71 | 2.44% | 2.70% | -1.48% | 13.19% | 33.40% | ||
| Centrica | 326.70p | 2.36% | 5.02% | 6.04% | 12.93% | -1.48% | ||
| Microsoft ** | $30.81 | 2.30% | 2.33% | -0.37% | 16.18% | 8.43% | ||
| BG Group | 1288.00p | 2.16% | 1.27% | 3.77% | -6.43% | -0.62% | ||
| Vodafone | 181.50p | 2.02% | 7.17% | -0.60% | 1.45% | 12.64% | ||
| SSE | 1368.00p | 2.17% | 6.16% | 2.48% | 5.96% | 11.67% | ||
| Morrisons | 280.00p | 2.03% | 4.21% | 0.97% | -14.16% | 4.63% | ||
| BAE Systems | 318.50p | 1.83% | 6.14% | 3.11% | 11.72% | -3.48% | ||
| Tesco | 336.60p | 1.55% | 4.48% | 5.82% | -16.57% | -15.62% | ||
| Cash | 2.31% | 0.00% | ||||||
| 100.00% | 4.11% | |||||||
| 1 Month | YTD | 20 mth | ||||||
| Portfolio gain (incl. Dividends) | ||||||||
| - 1 month gain 1560.11 - | 1593.09 | 2.11% | ||||||
| - YTD gain 1409.55 - | 1593.09 | 13.02% | ||||||
| - 20 month gain 1264.20 - | 1593.09 | 26.02% | ||||||
| - 32 month gain 1000.00 - | 1593.09 | 59.31% | ||||||
| FTSE gain (excl. Dividends) | ||||||||
| - 1 month gain 5635.28 - | 5711.48 | 1.35% | ||||||
| - YTD gain 5572.28 - | 5711.48 | 2.50% | ||||||
| - 20 month gain 5971.01 - | 5711.48 | -4.35% | ||||||
| - 32 month gain 5412.88 - | 5711.48 | 5.52% | ||||||
| Transactions: | ||||||||
01/08/2012
|
Div
|
Vodafone @ 6.47p per share | ||||||
| 15/08/2012 |
Div
|
National Grid @ 23.47p per share | ||||||
| 21/08/2012 |
Div
|
Apple @ £1.4338 per share (est) | ||||||
| 28/08/2012 |
Buy
|
IG Group @ 425.45p | ||||||
| Notes: | ||||||||
| * US Dividends are adjusted for exchange rate and 15% withholding tax | ||||||||
| ** Sterling : Dollar exchange rate = £1: $1.587 as at 31/08/12 | ||||||||
The usual chart continues to show a pleasing long term divergence between the FTSE 100 and my own portfolio's performance (thankfully in my portfolio's favour), whilst also illustrating that the 2 indexes continue to follow a similar profile.
 |
| Click to enlarge, close to return. |
Looking ahead, the weather forecast remains the same with any sustained recovery remaining hugely dependent on a managed outcome of the EU/Euro fiasco. A further update is expected next week.
Having sought to slow down its economy, China is now looking to stimulate it again in the hope of insulating itself from the worst of European recession.
And, in the run to the year-end, the US could also shoulder its way into the mix with the country's own fiscal concerns and the upcoming Presidential election which looks likely to be waged on the economy.
We are also entering the last quarter of the year so might yet look forward to a year-end rally and with another month consigned to the history books must surely be moving towards an outcome and a post credit crunch future.
Looking at my little portfolio, 13.02% year to date is very satisfying and with a little cash left, I might yet add to my portfolio before the year-end.
Earlier posts:
- 2012 Dividend bull period update to the update (to the update!) etc. etc.
- Apple valued at $623bn and returns to dividend payments.
Links to Portfolio updates:
- July 2012: Portfolio update.
- June 2012: Portfolio Update.
- May 2012: Portfolio Update.
- April 2012: Portfolio Update.
- March 2012: Portfolio Update.
- February 2012: Portfolio Update.
- January 2012: Portfolio Update.
- December 2011: Portfolio Update.
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