Tuesday 27 November 2012

Is it time to bet on IG Group shares?

IG Group @ 414.10p, -3.60p (-0.86%)

Struggling to understand the anchor ploughing going on with IG Group ahead of its 11 December half yearly update.
It seems to be heading South despite markets tentatively resuming a Northerly direction.

The company has already reported on the first quarter and cited the comparison with August 2011 as a particular exception given the record numbers recorded in that month. 
It also stated that:

"The first quarter of any financial year is normally the lowest revenue quarter for IG, with the prior year an unusual exception to this. The group continues to face tough comparatives at the start of the second quarter, with September 2011 the second highest revenue month in the history of the company. The group anticipates that revenue this year will, as in most years, be weighted towards the second half." (http://www.iggroup.com: IG GROUP HOLDINGS PLC Interim Management Statement).

So we can't anticipate any improvement until we move into 2013.
The July and September sells by the Chairman, Jonathan Davie, and Chief Operating Officer, Peter Hetherington probably haven't helped sentiment either.

The threats seem to be coming from economic pressure on European revenues given the ongoing weakness in this area, and the potential threat of a tax being imposed upon all financial transactions which could affect IG's business:

"The European Union financial transaction tax (EU FTT) is a proposal made by the European Commission to introduce a financial transaction tax (FTT) within the 27 member states of the European Union by 2014. The tax would impact financial transactions betweenfinancial institutions charging 0.1% against the exchange of shares and bonds and 0.01% across derivative contracts." (http://en.wikipedia.org: European Union financial transaction tax).

But, assuming that IG transactions fall under the derivative side and the 10 supporting countries (the UK isn't one of them), are all within IG's business doesn't 0.01% seem small enough to be accommodated between IG and its clients given that rivals would also be affected.
To which, I have to say, possibly naively that I am not overly concerned about given the company's shrewd, and prudent financial management, and balance sheet strength. Particularly with cash balances jumping to £285m as at the July full year update (IG Group beats forecasts. What storm clouds?).

If it wasn't for that being left in the dark feeling I am really tempted to top up my portfolio with more IG given its forecast pe ratio of 11.12 times and forecast dividend yield of 5.5%. Underlying this is the company's market leading position (http://www.prnewswire.com: IG Extends its Lead as the UK's No.1 Spread Betting and CFD Provider), and a healthy balance sheet.

My sensible head says to wait until the 11 December update, expect it to disappoint and then top up ahead of a possibly better second half.

On the other hand it could be oversold now?

But then again, at 157.32p, there is also Vodafone to consider.

Related Article links:

Related Post links:

Monday 26 November 2012

FTSE 100 ex. dividends and National Grid highs.

National Grid @ 716.32, +5.32 (+0.007%).

I noticed that National Grid notched up a new 52 week intra-day high this morning ahead of the shares trading ex. the 14.49p dividend on Wednesday.

Interesting to see as well that the FTSE100 could lose 2.49 points on Wednesday as National Grid (2.08), Amec (0.14), Johnson Mathey (0.13), and Tate & Lyle (0.14), all trade without their respective dividend entitlements.
But, as you can see, the biggest contributor to the 2.49 is National Grid due to the size of the company (by capitalisation), its divided yield, and its relative weighting in the FTSE100.

I find it useful to note the impact of dividends (a return of capital), on an index constructed on the relative capitalisations of 100 (or so) companies.
I say that because when listening to negative comments around the FTSE100, inevitably the comment comes up about the FTSE trading sideways for a period. For example, the FTSE100 today is around 5789 as I look at it.
If I was to look back at the 28 November last year it stood at 5552.29. 
So with the index now standing at 5789 (5552.29), we can see that it has moved ahead by 4.26% over 12 months.

Casting the net for information a little further I see that the iShares (nothing to do with Cupertino in this case), FTSE100 Exchange Traded Fund trades at around 578p (http://uk.ishares.com: iShares FTSE 100 (ISF).). 
578p v 5789 (actual FTSE) is close enough in numeric similarity (give or take a decimal place), and you should also be able to see from the chart below (that compares the movement of the ETF with the actual FTSE100 index over 1 year), that the ETF does an extremely good job of achieving its objective of mirroring the FTSE 100.


Chart courtesy of Digitallook.
Click to enlarge, close to return.
The discrepancies come from things like transaction charges, management charges, and timing, or inertia (the fact that the fund can only respond after an event depending upon its declared policy). 
For example as the FTSE declares changes to the line up of the index then the fund will respond accordingly but the exact timing, entry, and exit prices of individual share may differ from the datum prices used by the FTSE.

So recognising that the ETF is a fairly accurate mirror of the FTSE100 it must also do one more thing and that is..... issue dividends.
It is after all holding the same 100 companies, some of which yield dividends
And over the last 12 months the ETF has issued quarterly dividends as follows: 2.66p; 7.44p; 4.56p; and 5.61p. 
20.27p in total.

20.27p divided by the current 578p = 3.51% which is amazingly close to the 3.51% distribution yield published on the information page for this ETF (http://uk.ishares.com: iShares FTSE 100 (ISF).).

So taking this mirrored yield and applying it back to the FTSE then at 5789 (approx.), we can assume that the FTSE has also yielded 3.51% over the last 12 months. As mentioned, they both hold the same 100 companies after all.
3.51% of 5789 is 203.19 points which means that if these dividends hadn't been distributed then the FTSE 100 would actually be at 5992.19!

Going back to the 12 month performance of 5992.19 / 5552.29, then the FTSE 100 would actually be (or is actually!), showing an increase of 7.92% which is just about the oft quoted historical average.

Putting the FTSE100's actual gain to one side, 203.19 points is a sizeable gain in itself and when distributed tax free to basic rate taxpayers stands comparison with anything coming out of our so called savings institutions today.
But despite this income and the opportunity for capital gain, the hurdle for any would be investor remains the risk to capital. This is where realism, acceptance, understanding, and diversification come in to ensure that a suitable level of risk management is in place.

There are also other facets to consider in any comparison, like inflation, and I would still suggest that, where possible, companies balance pricing models in line with inflation whereas very few savings accounts seem to match/better inflation. Real inflation anyway, not the knocked up CPI that the last lot came up with.
And, that being the case then company profits (and shares), stand a better chance of protecting capital against inflation, than savings accounts will on their own.

But savings accounts do have their place in any, and all investment strategies as they also provide a form of diversification as well as easy access to day to day and rainy day funds.

But I'm digressing on my digressing. I started out looking at National Grid and anticipating its ex. dividend status on Wednesday before running off on a tangent of how ex.dividends on Wednesday could affect the FTSE and then how the FTSE100's performance over a period is also affected by dividends.
What I will say is that a significant piece of my current thinking and strategy is how best to make use of these dividends, specifically re-investing them (if you don't need the income of course). 

And, as it is for the FTSE100 on Wednesday, so it is with my portfolio that National Grid is the biggest contributor to my cause with the dividend alone contributing around 1% to my portfolio each year regardless of the FTSE's volatility (October 2012: Portfolio Update (The Long Haul).)

National Grid dividend @ 14.49p per share
28 Nov. ex.dividend 
- 16 Jan. payment date

Related links:
- Chart courtesy of Digitallook
http://uk.ishares.com: iShares FTSE 100 (ISF)

Related posts:
October 2012: Portfolio Update (The Long Haul)

Sunday 25 November 2012

FTSE100 @ 5819.44, +213.85 (+3.81%): That was the week that was

FTSE100 @ 5819.44, +213.85 (+3.81% on the week).

Another week and another EU summit ends without agreement. This time on the touchy subject of EU budgets and contributions for the next seven years.

Thankfully the week started out on the front foot with a little optimism from across the pond, that the US political machine might yet find a compromise over its impending fiscal cliff. 
What followed was a sprinkle of recognition that employment data and US housing data were actually better than one might have imagined given talk of double dips etc.
The baton was then handed back to Europe as the US celebrated thanksgiving which, thankfully wasn't dropped ahead of the huge retail optimism ahead of America's Black Friday sales which, unofficially at least, seems to signal the run-up to Christmas for America's retail giants.

All told the FTSE 100 managed a 213 point/3.81% rise in the week with over half of that coming during Monday's 132 point rise which started a 5 day sequence of higher closes that was almost enough to drag it back to the 5884.9 at which the FTSE100 closed on the 5 November.

A more confident week then which has also done its best to confound and outfox me when I fully expected to be dipping into the market only to watch BP slipping out of my grasp as I looked to bottom fish the market on some of my holdings.
But I am still left with IG, Vodafone, Tesco, Apple and BAE currently floundering. 
You will no doubt notice that four (five including BP), are dividend biased choices, and one, Apple which has a capital gain objective given its recent fall from $700, new product launches, and Christmas within sight. Christmas is likely to yield another record quarter for Apple, although it remains to be seen what level of record quarter will be enough to satisfy analysts.

But given a slightly less murky understanding of its path to recovery, BP would have been my first choice though as, despite there still being a legal case to answer for, the company looks more than capable of capital recovery and dividend growth as the liabilities against its cashflow diminish.

I expect that as details of the EU summit continue to emerge, and be speculated upon, that markets will struggle to maintain last weeks surprising exuberance though.

Flip a coin, heads the FTSE goes up, tails it goes down!

Tuesday 20 November 2012

What to do with a problem like Microsoft?

Microsoft @ $26.73, +$0.21 (0.78%).

OK, so having just gone through the painful process of selecting a new Laptop (the only work related solution for me), I have had to go through the rather painful journey of comparison between Windows 7 and Windows 8 to the point where I have then had a race against time to snap up a "chosen" Windows 7 based Laptop before they are all "upgraded" (or so they say), to Windows 8.

And having fitfully navigated through this vacuum of compatibility information, it raises a significant concern to me as to the fate of my share holding in Microsoft, which has recently tumbled 20% following the departure of Steven Sinofsky, the assumed heir apparent to CEO Steve Ballmer, and executive in charge of developing Windows 8 to its current launch status.

Having seemingly rescued the Windows evolution from the depths of Vista with a successful Windows 7, Sinofsky's latest challenge was to meaningfully re-invent Windows 8 for the multi-platform mobile revolution. 
But whilst the Metro interface seems to work prettily, with an obvious appeal and familiarity to Windows Phone users, and therefore suggest Windows as an option in the Tablet sector, the new OS seems to be struggling for meaningful compatibility with its current raison d'etre in its traditional commercial markets.
Either that or it is being marketed very badly?

It also still feels like tablets are media devices rather than the portable work stations that many of us need.
It might therefore be a race against time to ensure commercial software development is sufficiently tight to the new OS.
Of course it will also still cause resentment in many users, particularly so in the smaller business sectors where software upgrade after software upgrade and ongoing compatibility with purchased services cause a strain on cashflow, communication and relationships, capability, suitability, and backwards compatibility (of records and back-ups), etc, etc.

I saw the launch of Windows 8 as a positive second coming for Microsoft which would further entrench its position with Windows and Office as the mainstay of many a business.
I'm concerned now that the well might have been poisoned for a time.

Am I being over dramatic though? And is it just the same cyclical issue that arises from each new launch. 
Survival of the fittest (with sufficient access to finance), then?

At least writing it down like this I can see that it must have happened with each new incarnation.
But, is this time different (as the saying goes), and will it speed up a migration to other establishing OS's, and therefore make inroads into Microsoft's encumbent position.

It might be that the company points to a huge uptake on the cheap upgrade front but I'll also need to keep an eye on PC manufacturer sales.
Its discomfiting but, given that personal experience is a form of market research, I am seriously considering selling my portfolio's holding in Microsoft on the back of it. 

Related Posts:
October 2012: Portfolio Update (The Long Haul).
How is my Globally Diversified Technology, Growth and Hedge portfolio getting on?

Monday 19 November 2012

Musings: FTSE rise, recent falls and fiscal cliffs.

FTSE100 @ 5662.25, +56.66 (1.07%)

Not sure what to make of this morning's bounce on the FTSE other than to say it throws another spanner at my efforts to add to my portfolio by making a seemingly cheap price "slightly" less cheap. This will have very little bearing on the long term but: cake, having, and eating comes to mind! 
Although, to be fair selecting is also turning into a chore as more and more candidates drop into an attractive price range albeit with their own dark webs of future forecasts being spun by analysts.
Is there no end to the economic gloom!

But at least it looks like their might be some logic to the recent sell-off in the US (which doesn't suggest others should lamely follow though), and that is the stock market related implications stemming from the unwinding of the Bush era tax cuts in yet another legacy of self interest which has long since been capitalised on. 
The most interesting ones (or not as the case may be), being an increase to Capital Gains Tax and Dividend Tax (or withholding tax in my portfolio's case).

With the uncertainty over Capital Gains Tax rates, market reporters seem to be hinting tentatively that a proportion of the recent sell-off might actually be a case of locking in profits ahead of any as yet unconfirmed increases to the rate of CGT.
Actually seems logical.

This thinking also seems to have been applied to Apple, given its meteoric rise, as a partial explanation for some of the continued recent falls ie. locking in profits.

Is now the right time to buy, who knows. No one I know anyway.
But at least you would be buying in the knowledge that most stocks are cheaper than they have been in the last few months, some comfortably so.
So on that basis I still think it very likely that I will make an addition or top up to my portfolio soon. 
My biggest problems will be indecision and not having enough funds to buy everything I want to.

As things stand currently, November is looking like being a very disappointing month for my portfolio with current falls in excess of 2% from October's close.
But at least the dividends are continuing to roll in with GE (finally), Morrison's, Centrica, and Aviva having coughed up so far this month, and Apple and BAe still to come.
In addition, Apple, BP, Microsoft, National Grid, and Vodafone, have gone, or are due to trade ex-dividend this month. 
Which basically means that I now have visibility of my next invest-able size tranche of funds.


Ex Div. Company and payoutDue date
19-SepAviva @ 10p per share16-Nov
19-SepIG Group @ 16.75p per share23-Oct
20-SepGE @ 17c per share25-Oct 
26-SepMorrison @ 3.49p per share05-Nov
26-SepCentrica @ 4.62p per share14-Nov
10-OctTesco @ 4.63p per share21-Dec.
17-OctBAE @ 7.8p per share30-Nov
24-OctR-R @ 7.6p per share04-Jan.
24-Oct
07-Nov
07-Nov
William Hill @ 3.4p per share
Apple @ $2.65 per share
BP @ 9c per share
07-Dec.
15-Nov
21-Dec
13-Nov
21 Nov
Microsoft 23c per share
Vodafone @ 3.27p per share
13-Dec
06 Feb
28 NovNat. Grid @ 14.49p per share16 Jan




Roll up, roll up for the Magical Dividend Tour!

Related post links:
October 2012: Portfolio Update (The Long Haul).

Monday 12 November 2012

Markets move up! Markets move down?

Markets (and myself), took a bit of a proverbial, and psychological, towelling last week, amidst concerns about lemmings and fiscal cliffs, trojan horses, and alphabet soup (EU GDP).

And whilst these are genuine concerns, from which you can suggest that they are rightly being accounted for, none of them are new, and questions the sense of logic that prompted markets to rise in the first place before coming back down, and then some. 
Strangely, markets started to move ahead as the uncertainty surrounding the next President of the United States of America, appeared to lessen as polls pointed towards the incumbent Barack Obama. 

As recently as election day itself the DJIA was moving up with such as United Technologies driving them (U.S. Stocks Stage Election Day Rally; DJIA Notches Triple-Digit Gain!).
And I've purposely picked United Technologies, which rose 2.7% on election day, because as a large US employer, and a conglomerate who's interests include defence, it surely wouldn't be affected by tax rises and cuts in "defence" spending would it?

Forearmed with this knowledge, and putting European woes aside for a minute, why then did markets drop dramatically once the uncertainty became a certainty as President Barack Obama made his victory tweet and returned to the Whitehouse.
Almost upon the last letter of his historic tweet (1 million retweets), US index futures were indicating the probability of a 100 point fall in the DJIA as speculator attention moved once again to the impending fiscal cliff of tax rises and spending cuts in January.

100 points up, and a 100 points down.

None of this is breaking news though. 
But if markets hadn't moved up then it would not have seemed such a dramatic fall which once again raises the question of short term market moves and who benefits.
For a small private investor such as myself it can drive you mad and is probably the biggest barrier to anyone thinking of investing in shares as it creates such a dramatic image of risk.

As to European GDP figures, shhh, its a secret but did you know there has been a recession and rising unemployment in Europe which might lead to lower output!
Ah, so you did know, I bet you didn't know that Greece has problems though and, despite agreeing to tax rises and budget cuts, can't seem to implement them all.

There does not seem to be the will in Greek leadership to turn the country around whilst it is being spoon-fed and trained by the EU.
Greece really needs to be left alone to fix itself as that is the only way by which they will accept the unpalatable decisions and support them.
I wonder when the case will be heard in the European Court of Human Rights that Greece is being put upon by its northern neighbours?

My Portfolio seems to be full of potential bad news at the moment as well, with Apple dropping amidst speculated supply chain constraints (its struggling to meet pent up demand!!!), and future dividend concerns across National Grid, Vodafone, and Aviva. 
The latter, which I was concerned to read about in the Telegraph's Questor column (Sunday share tips: Aviva, Staffline, G4S), where the columnist reports that analysts expect a cut next year. Funny that this has not filtered through into consensus forecasts yet? 
Some analysts do then and some don't, hence the consensus, or average.
But, worryingly there is a change of language here, despite the Chairman seeming to understand its importance to shareholders and suggesting it would be a last resort if the steps identified to shore up the company's capital position don't come to fruition.
I wonder how much is speculated and how much is leaked to give shareholders time to acclimatize themselves to expecting a cut?
More uncertainty then.

And, apparently we are no longer shopping at Morrison and Tesco's either, and BG Group can't get at its gas yet. 
On BG Group, it is annoying that, according to internet sources, on the 7th September, the COO Martin Houston apparently sold 56,034 shares at 1269.07p, raising £711,111.25 ahead of the hastily brought forward Halloween statement that prompted a 20% fall in the share price.
Of course, as the Chief Operating Officer and an Executive Director, he would not have any foreknowledge of business performance or production delays, would he? 
I'd like to think it's just a co-incidence.

On the subject of supermarkets though, why don't they stop giving us piles of paper to carry around and just cut the prices in store? 
Morrison's also need to stop trying to catch the ship, its sailed. 
The niche for Morrison's label clothing must be small. The stores aren't large enough so it must surely cost more to set-up and market than it will realise anytime soon.
Its a worry when new management teams come in and want to make a mark by spending the family silver.
Find me a supermarket whose mission statement is "to sell good quality groceries at the right price in an attractive environment (with car parking spaces large enough that my car doors won't keep getting bashed)".
The last bit is me being grumpy but is still a factor in where I choose to shop.

But Morrison's have finally taken the one step forward, to keep pace with rivals, that they should have taken years ago though, and thats to extend their opening hours.

Anyway, I've caught a cold in more ways than one so you might be able to tell that I am feeling a bit grumpier than usual.
And that being the case I will sign off now.


Related article links:
http://online.wsj.com: U.S. Stocks Stage Election Day Rally; DJIA Notches Triple-Digit Gain
http://www.sharecast.com: Sunday share tips: Aviva, Staffline, G4S

Thursday 8 November 2012

October 2012: "following Woodford" update.

Wow, the last couple of months have proven a torrid for this trial strategy as the market casts doubts over the growth prospects of "defensive's".
This has seen the constituents of the 3 picks pull back from year highs causing the mini portfolio to slump against its 2 alternatives.

Not altogether surprising given that the 3 picks was given the biggest handicap to begin with, these being:
- the greatest costs to set up with, from both dealing and stamp duty (New Trial Investment Strategy: 3 ways to follow Neil Woodford!). In contrast the HIF had zero set up costs as could be the case from a fund supermarket.
- 2 of the 3 picks were trading ex.dividend at inception. In contrast due to lead time between ex dividend and payment these 2 dividends would subsequently benefit the other 2 options.
- more concentrated/low diversification with just 3 picks from 3 sectors.
- as well as the dealing charges, the 3 picks also started life with the highest amount of uninvested "residue" funds, £3.68 (£2000 tranches and you can only buy whole shares), which also means it started life with the lowest actual investment amount.
- lastly, the 3 picks are also building up an uninvested amount of cash from dividends whereas this is more immediately re-invested into the HIF and its accumulation units.

Despite these handicaps the 3 picks did rise to the top of the pile during August and September before falling foul of recent volatility which possibly highlights the risk of low diversification.

But the fact is that the table has been turned on its head with the Invesco Perpetual High Income Fund seeming to defy gravity at present despite including large weightings in the 3 picks (their selection being derived from the fund's top 10 holdings at the time New proposed investment strategy based upon Neil Woodford's top 10.).

As feared last month though, Vodafone's slump has seen it fall outside of the HIF's top 10 but I think that I will retain it for the 12 months though (effectively setting a guideline for holding against short term volatility). 
The alternative being to trade it for BT as my original premise was to pick one from each of the 3 most represented sectors in the HIF's top 10, and Telecom's continue to be 1 of the 3.

So 2 of the 3 ways remain in positive territory (and both managed by Neil Woodford).
Which just leaves the 3 picks as the only one in negative territory then, by £64.93, or 1.08%, which is also roughly equal to the estimated £67.15 that was used to cover the set-up cost of the portfolio. 
So really it is still up on its -1.2% starting point! (New Trial Investment Strategy: 3 ways to follow Neil Woodford!).

Qty £price£value %gain 
Inv. Perp. High Income 1110.14 5.53 6143.87 2.40%
Residue 0.00
Dividends
Total 6000 6143.87 2.40%

Edinburgh Investment Trust

1182.00

4.99

5898.18

-1.70%
Residue 0.43
Dividends 167.58
Total 6000 6066.19 1.10%
3 Picks
BAT 61.00 30.70 1872.70 -6.37%
Glaxo 138.00 13.87 1914.06 -4.30%
Vodafone 1191.00 1.70 2020.65 1.03%
Residue 3.68
Dividends 123.98
Total 6000 5935.07 -1.08%
Transactions in the month:
Invesco Perp. High Income N/A
Edinburgh Inv. Trust N/A
3 Picks
Glaxo 04/10/2012 Div 23.46



The only transaction in the month was a £23.46 dividend received by the 3 picks from Glaxo.
And the chart, which is starting to look like a roller coaster (a loop the loop would be interesting!), is as follows:

Click to enlarge, close to return.


Looking at the chart, it is Interesting to see that the performance of each of the 3 options was very closely aligned for the first 2 months before embarking on more volatile journeys.
Will they come back together again or continue to swing wildly around each other, only time will tell.

But it has been an interesting first 7 months for the "3 ways" to follow Woodford trial and a new guideline is in place ie. to hold a share for the 12 months despite it dropping out of the HIF's top 10. 
This is still a developing trial though, which includes the guidelines. And, at this stage, 2 further complications to the new guideline haven't been crossed yet, which are:
- slipping out the top 10 results in the selected industry sector no longer being one of the top 3 weightings in the to 10.
- the share being sold by out of the HIF which might seem an extreme scenario but one that Neil Woodford appears to have enacted on a number of occasions exiting banks, BP, regulated utilities, and most recently, Tesco.

What I do also need to give some thought to though, is the question of timing and dividend re-investment, which could affect both the Edinburgh Investment Trust, and the 3 picks options. The 3rd option, HIF accumulation units automatically re-invest dividends.
My thoughts were to allow them to build up before re-investment but what is a suitable level and, in the case of the 3 picks (I need a better title!), what to re-invest back into, the options being,
- equally into the 3 companies,
- split in the same way as the dividends were issued, ie back into the issuing share
- into just one of the shares, worst/middle/best performing
or if allowed to build up sufficiently (that could take 5/6 years), add a 4th holding at £2000.

If left to drag on without a plan, this might give a further advantage to the HIF option which will always be fully invested.
A bit of thought required then.

Related article links:

Earlier related posts:


Note: Unlike my Portfolio updates (Portfolio Updates.) which reflects an actual investment portfolio, following Woodford is an experimental strategy and a virtual portfolio.
However, I do hold an investment in Vodafone.

Friday 2 November 2012

October 2012: Portfolio Update (The Long Haul).

Well that's October drawn to a close after an eventful All Hallows Eve. Can't say that I would have chosen October 31st to surprise the market with a disappointing and apparently confusing update as the board of BG chose to.
Despite their protestations that some of the bad news had already been communicated they ultimately must still take responsibility to manage shareholder expectations.
It is a bit of a boring litany from me these days but Directors are ultimately stewards of a company on behalf of shareholders'.

But that disappointment aside I have to confess that my head is still not completely back in the game after returning from a tour of Florida's Gulf Coast beaches.
Coming back to shorter, colder, and wetter days tends to dampen one's enthusiasm.

But the sun is shining today and an erratic disappointing October is now history, as are the expectation missing updates in what has seemed to me a drawn out 3rd quarter reporting season in the US overlapping the UK. 
Thats not to say that there won't be more disappointments coming in the next few days/weeks with more UK updates to come, but I can hope that reactions might be a little more tempered and muted following the recalibration of expectations from Apple, Microsoft, Google, GE, Tesco, BG et al.

Portfolio wise things have been just as erratic particularly as Apple, Microsoft, GE, Tesco, and BG have all disappointed to varying degrees.
The 2 reporting bright sparks in the month came from BP, and William Hill.
The former seeming to take a number of stumbling steps towards rehabilitation with its Rosneft deal, then managing to surprise the market with better than expected profits and an increase to its quarterly dividend. 
And William Hill continues to extend its day in the sun with potential takeovers in the making and a satisfactory update.
Both added to the portfolio's performance this month with gains of 1.56% for BP, and a table topping 6.69% for William Hill (despite also trading ex. dividend).
3 further holdings: Tesco; BAE; and R-R, also turned ex. dividend, but SSE, R-R, National Grid, and Aviva showed share price gains in the month which, alongside a healthy dividend payment from IG, contributed to the portfolio gaining a minor 0.49% in the month.

Still odd seeing Apple down -10% in a month though.


Merchant Adventurer's Index
Forecast 1 month YTD 22 mth
Price % holding Div. yield % gain % gain % gain
R-R 875.50p 32.00% 2.30% 1.36% 14.47% 37.16%
National Grid 706.50p 17.61% 5.78% 3.44% 13.04% 27.76%
Aviva 331.40p 11.02% 7.88% 3.98% 9.65% -1.91%
Apple ** $595.32 5.33% 0.32% -10.64% 41.55% 74.33%
BP 443.30p 5.49% 4.53% 1.56% -2.43% -3.15%
IG Group 435.50p 4.44% 5.25% -2.35% -4.85% -8.74%
William Hill 338.00p 3.57% 3.27% 6.69% 66.67% 98.01%
General Electric ** $21.12 2.41% 2.74% -6.85% 13.56% 33.84%
Centrica 324.10p 2.30% 5.05% -1.13% 12.03% -2.26%
SSE 1448.00p 2.26% 5.82% 4.02% 12.16% 18.20%
Microsoft ** $28.58 2.06% 2.64% -3.88% 6.02% -1.05%
BG Group 1147.50p 1.90% 1.41% -8.20% -16.64% -11.46%
Morrisons 267.90p 1.91% 4.41% -6.07% -17.87% 0.11%
Vodafone 168.25p 1.85% 7.40% -4.27% -5.95% 4.42%
BAE Systems 312.20p 1.77% 6.25% -3.97% 9.51% -5.39%
Tesco 319.85p 1.45% 4.65% -3.66% -20.72% -19.82%
Cash 2.63% 0.00%
100.00% 4.03%
1 Month YTD 22 mth
Virtual Portfolio gain (incl. Divs)
- 1 month gain   1608.75 -  1616.66 0.49%
- YTD gain         1409.55 - 1616.66 14.69%
- 22 month gain 1264.20 - 1616.66 27.88%
- 34 month gain 1000.00 - 1616.66 61.67%
FTSE gain (excl. Dividends)
- 1 month gain   5742.07 - 5782.7 0.71%
- YTD gain         5572.28 - 5782.7 3.78%
- 22 month gain 5971.01 - 5782.7 -3.15%
- 34 month gain 5412.88 - 5782.7 6.83%
Transactions:
11/10/2012 Div IG Group @ 14.75p per share
Notes: 
*     US Dividends are adjusted for exchange rate and 15% withholding tax
**   Sterling : Dollar exchange rate = £1: $1.61603 as at 31/10/12


In contrast, the FTSE100 did better still with a gain of 0.71% but remains behind on a year to date basis with a gain of just 3.78%  (excl. dividends), as opposed to my portfolio's gain of 14.69% (with dividends re-invested). 
On a 22 month basis the outperformance is even more pronounced with the FTSE100 still -3.15% down on the 5971.01 it stood at on the 31 December 2010 whereas my portfolio is up some 27.88%.
A performance which continues to underline the benefits of re-investing dividends.


Click to enlarge, close to return


So despite October proving to be a recalibration of expectations, I am still taking a number of positives from it principally:
- new product launches from Apple which at least takes uncertainty out of the way allowing consumers to choose;
- Tesco's update showed some small improvement in performance which might at least put a floor under its UK market share and its share price.
- BP replacing the infighting uncertainty of TNK-BP with the unknown quantity that is state controlled Rosneft. And increasing the dividend.

The rolling bandwagon of ex. dividends and dividend payouts will also continue in November with 2 more holdings due to trade ex.dividend and 5 payments due including GE's which doesn't appear to have cleared customs yet as it hasn't landed in my account.


Ex Div. Company and payoutDue date
19-SepAviva @ 10p per share16-Nov
19-SepIG Group @ 16.75p per share23-Oct
20-SepGE @ 17c per share25-Oct 
26-SepMorrison @ 3.49p per share05-Nov
26-SepCentrica @ 4.62p per share14-Nov
10-OctTesco @ 4.63p per share21-Dec.
17-OctBAE @ 7.8p per share30-Nov
24-OctR-R @ 7.6p per share04-Jan.
24-Oct
07-Nov
07-Nov
William Hill @ 3.4p per share
Apple @ $2.65 per share
BP @ 9c per share
07-Dec.
15-Nov
21-Dec
13-Nov
21 Nov
Microsoft 23c per share
Vodafone @ 3.27p per share
13-Dec
06 Feb
28 NovNat. Grid @ 14.49p per share16 Jan




If nothing else October's disappointment has also started to make a few shares look interesting again which might yet tempt me to make another purchase before the year-end.

I also think it definitely worth noting that October/November has seemed to be such a significant period of quarterly updates which, in future, might add some weight to any trading indecision around this time of year. 
And, it being the last quarter before christmas in a still difficult, and uncertain, political and  economic environment, perhaps disappointment shouldn't have been such a surprise and investors expectations needed re-calibrating in the short term.

But, one quarter is one quarter and doesn't represent a longer term, or the long haul!


Links to Portfolio updates:
September 2012: Portfolio Update.
August 2012: Portfolio update.
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.