National Grid's jump start to 2013.

 National Grid @ 766p, +15p (+2%)

After the disappointment of Aviva cutting its dividend in a kitchen sink move by the incoming CEO, its nice to receive a little good news for the income element of my portfolio with the announcement from National Grid today ( http://www.sharecast.com: National Grid earnings ahead of forecasts as new divi policy is revealed), that their dividend policy will continue to be progressive with an aim to grow at least in line with the Retail Price Index (RPI).

This new aim is due to apply from the 1st April 2013 for the foreseeable, but will not affect the payment of the current year's final dividend which the company expects will reflect the previous policy of 4% per annum.

The company also announced that they now expect current year earnings to finish "modestly" ahead of the company's previous expectations.

This follows the recent announcement by National Grid confirming the company's agreement with the regulator regarding pricing controls and capital investment plans.

Together, the new dividend policy and the agreement with Ofgem has removed quite a bit of uncertainty from   this most utilitarian of shares and the share price has started to motor as a result.

National Grid is my portfolio's second largest holding (February 2013: Portfolio update.), and its largest dividend contributor so this has been welcome news.

But it is also fair to suggest that, despite its attractions as a utility, and the little less uncertainty that these announcements have provided, the company is starting to look a little full in its valuation so I hope it can continue to deliver against current expectations.

Related posts and article links:

- http://www.sharecast.com: National Grid earnings ahead of forecasts as new divi policy is revealed

- February 2013: Portfolio update.

February 2013: "following Woodford" update.

Well the Invesco Perpetual High Income Fund has continued to move forward strongly and leads the way in this virtual experiment with a gain of 11.91% since inception.

The similarly run Edinburgh Investment Trust, which is also managed by Neil Woodford, trails despite a strong 8.74% showing.

Alas, the experiment of 3 picks continues to lag albeit with a positive 3.58% gain. 

Bizarre that the 3 picks has been negatively affected by Woodford's decision to exit Vodafone completely, his second such exit of  a FTSE 100 holding in the space of 14 months (Tesco being the last). 

Both decisions still seem strange to me given the long term value that I thought Woodford sought despite short term concerns. Similarly negative cashflow aspects continue to affect his largest holding, Astrazeneca, and the more recently topical holding in BAE.

The fact that Tesco is now closing in on its pre profit warning trading range and Vodafone has bounced since his exit with renewed prospects of some form of deal on its Verizon Wireless assets makes the decision to offload even more difficult to understand. After all it has been speculated this year.

You would think that with the funds size and shareholding influence and access to management that the prospects of a Verizon deal would have been discussed as a potential game changer.

Mystifying though and for me personally having to switch from Vodafone to BT makes the 3 picks much less attractive. 

But as debated last month (January 2013: "following Woodford" update.), I have kept faith to the experiments criteria and followed suit The main priority being a easy maintenance portfolio with not too much to think about other than to keep tabs on the High Income Funds top 10.

But where is the High Income Fund's outperformance, well there lies a tail.

I did also mention last month that if I was to widen my criteria to sector weightings in the whole portfolio I would have picked up industrials and ended up with BAE rather than BT and it is another industrial holding that has made the tops 10 this month and now sits at no 10 just behind BAE, and what is that holding?

Well at 3.74% that holding is now Rolls-Royce which is currently the largest holding in my personal portfolio.

Slightly galling to think that if I had delayed the decision to trade (which would have meant taking a tangent from the High Income Fund's top 10), then this month would have confirmed Industrials as the 3rd largest sector in the Top 10 and I would have had my pick of Rolls-Royce or BAE, both of which sit in my personal portfolio.

So Woodford's High Income Fund is wining this experiment with one of my own shares. I would suggest that it is a conspiracy on his behalf but that would be paranoid, or would it!

				Shares	Price	£Value	%Gain
	Inv. Perp. High Income			1110.14	6.05	6714.71	11.91%
		Residue				0.00
		Dividends
		Total		6000		6714.71	11.91%
	Edinburgh Investment Trust			1182.00	5.52	6524.64	8.74%
		Residue				0.43
		Dividends				260.04
		Total		6000		6785.11	13.09%
	3 Picks
	BAT			61.00	34.35	2095.05	4.75%
	Glaxo			138.00	14.56	2009.28	0.46%
	Vodafone			1191.00		0.00
	BT			788.00	2.68	2109.48	-3.80%
		Residue				0.00
		Dividends				1.05
		Total		6000		6214.86	3.58%
Transactions in the month:
	Invesco Perp. High Income			N/A
	Edinburgh Inv. Trust
				22/02/2013	Div	59.1
	3 Picks
		Vodafone		06/02/2013	Div	38.95
				15/02/2013	Sell	1976.56
		BT		15/02/2013	Buy	-2192.7
					Res	3.68

So chartwise a flat performance from the 3 picks and more dealing charges than foreseen when considering Neil Woodfords fund as a benchmark.

Click to enlarge, close to return.

Related post links:
- January 2013: "following Woodford" update.
- February 2013: Portfolio update.
- http://www.invescoperpetual.co.uk: Invesco Perpetual High Income Fund

Aviva Chief shows faith??

Aviva @ 315.78p, -7.41p (-2.29%)

Have to laugh at this type of thing (or cry), because its a hilarious byline (or not!), when you think about it.

Right, so given the Chairman and "interim" executive's attempts to maintain the dividend (for "long" suffering shareholders, I might add), there was an increasing risk that any newly appointed Chief Executive would take an axe to the dividend.

I still think such as Barclays took advantage of this fear and hyped it with suggestions of 15% or more as a cut, and like any experienced manager of a business knows once information and figures are out there (be it leaked rumour or fact), affected people are already getting their heads around the probability of that risk being enacted. 
Which has given Aviva's new CEO the red carpeted opportunity to take advantage of that.

And despite a significant improvement to the company capital consumed position (thanks to the Chairman), the new CEO has taken his first big decision to cut the dividend.

So soon into a new appointment I would have done the same but unfortunately the personal motivation to clear out the deadwood and give me a greater chance of personal success would form the basis for that.

So I have to chuckle even more when the new CEO has now forked out to buy shares that have taken a beating following a pre-meditated decision of his.
It used to be a flaw in old stock market based computer games, dump shares to drive the price down then buy them back at the bottom.

There was never a chance of him buying before that decision was there? That would have been with the benefit of pre-knowledge (and he would have lost money!), but what are the ethics of subsequently benefitting from that decision as existing shareholders suffer.

I have also written many times that when reading information from any source you also have to question what they have to gain from it.
I wish I could move share prices with a couple of sentences. 

So have Barclays and Mark Wilson created a short term buying opportunity?

Having to laugh even more when its ex dividend today so he's going to get 9p per share dividend as well.

Not a great start to his tenure, and a lot of living up to reputations to do now, so here's hoping he can do something special to correct this faux pas!

Related article links:
- http://www.independent.co.uk: Aviva chief shows faith with £480,000 share purchase
- http://www.telegraph.co.uk: Aviva investors await dividend news amid fear of cuts

February 2013: Portfolio update.

Well as mentioned earlier I have been away in South Africa for a couple of weeks and purposely detaching myself from the constant daily barrage of information.
But in the meantime my portfolio has managed to look out for itself and advanced 4.70% in the month and managing to overturn January's under-performance relative to the FTSE100.

Year to date then the portfolio is currently up 8.5% v. the FTSE100's 7.72%.

Some big gains all round in Feb but by virtue of its 34.87% weighting Rolls-Royce's 8.67% gain has contributed the most following record results. 
Additional bounces from IG Group, General Electric, BG Group, Microsoft, National Grid, William Hill, and BAE have also contributed nicely along with dividends received from GE, Vodafone, IG, and Apple.

Rolls-Royce's record results have continued to push the company higher and the price now seems to include a small premium but it has traded higher (relatively), and I continue to be believe in the long term nature of Aerospace although there is still some uncertainty specific to R-R following recent revelations of agent fees etc.
William Hill also continues to stride forward with a recently announced move to exercise its option to buy out  the outstanding stake in its online venture. I've read somewhere that this will be partially funded by a rights issue which I will have to judge once details are announced. 
I've previously mentioned concerns about the recent increase in acquisitions and the effect that this might have on the balance sheet but, while it will alleviate some of the burden I would have preferred the company to manage its ambitions within the manageable constraints of its own balance sheet and cashflow.
Its also pleasing to see Tesco's share price start to show some life again after a year in the doldrums.
BP's legal problems following the Gulf of Mexico disaster continue to move ever closer to a conclusion with court cases about to start.
National Grid has bounced on news that it has agreed conditions with the regulator which should take away some uncertainty over its cashflow.

Apple continues to lurch downwards though with little real justification (at these levels), other than pure weight of influence and negative sentiment towards the company, but can anyone safely assume that Apple will not continue to grow sales, which seems to be the primary concern, and maintain a market leading profit margin which seems to be the secondary concern. 
The company's only real competitor at this point, Samsung, is growing smartphone sales and profits but these must be heavily diluted given its dominant position in the traditionally low margin TV market and other consumer electronics.
And, despite the continued development of the Android operating system, it still seems to be a disparate market with neither the software developer or the hardware manufacturers having total control over the appearance and usability of Android.
The patchy performance of individual manufacturers such as HTC, and Sony, only adds further to the disparate sum of parts.
Along with Samsung's success with the Galaxy, the Google branded tablet from ASUS, the Nexus, is also gaining some popularity due to its keen pricing and performance.
But, these matched battles aside, it still doesn't seem like an Android v IOS battle out there, more an Apple v Samsung, or Nexus v. iPad.

Back to the portfolio then and I am much happier about February's performance, and the year to date position, than I was in January.
8.5% in 12 months would be pleasing in itself, and whilst there is a long way to go in 2013, and beyond, 8.5% in 2 months is hugely satisfying.

11% from this point (say by the end of this year), will see my portfolio achieve a 100% gain in 4 years, woo hoo!
But a lot can and will happen between now and then.

Merchant Adventurer's Index
			Forecast	1 month	YTD	26 mth
	Price	% holding	Div. yield	% gain	% gain	% gain
R-R	1028.00p	34.87%	1.92%	8.67%	17.69%	65.01%
National Grid	729.50p	16.47%	5.61%	5.50%	3.77%	31.92%
Aviva	356.80p	10.75%	7.24%	-2.70%	-4.34%	5.60%
BP	445.70p	5.00%	5.09%	-4.51%	4.92%	-2.62%
Apple **	$441.40	5.24%	1.76%	1.17%	-11.68%	19.51%
IG Group	493.20p	4.55%	4.45%	10.58%	9.60%	3.35%
William Hill	404.70p	3.87%	2.81%	5.36%	16.26%	137.08%
General Electric **	$23.22	2.56%	2.54%	8.93%	17.98%	56.57%
Centrica	352.11p	2.27%	4.65%	0.55%	5.55%	6.19%
SSE	1446.00p	2.05%	5.83%	1.90%	1.97%	18.04%
Microsoft **	$27.80	1.94%	2.76%	5.82%	10.92%	2.41%
BAE Systems	355.10p	1.82%	5.52%	4.56%	5.40%	7.61%
Vodafone	165.55p	1.65%	6.26%	-3.81%	7.19%	2.74%
BG Group	1165.50p	1.75%	1.51%	4.06%	15.11%	-10.07%
Morrisons	259.60p	1.68%	4.52%	3.43%	-1.29%	-2.99%
Tesco	369.60p	1.52%	4.02%	3.73%	10.00%	-7.35%
Cash		2.02%	0.00%
		100.00%	3.74%
				1 Month	YTD	26 mth
Virtual Portfolio gain (incl. Divs)
- 1 month gain   1704.36 -	1784.42			4.70%
- YTD gain         1644.62 -	1784.42				8.50%
- 26 month gain 1264.20 -	1784.42					41.15%
- 38 month gain 1000.00 -	1784.42					78.44%
FTSE gain (excl. Dividends)
- 1 month gain   6276.88 -	6352.95			1.21%
- YTD gain         5897.81 -	6352.95				7.72%
- 26 month gain 5971.01 -	6352.95					6.40%
- 38 month gain 5412.88 -	6352.95					17.37%
Transactions:
04/02/2013	Div	GE @ 14.41c per share
06/02/2013	Div	Vodaphone @ 3.27p per share
20/02/2013	Div	Apple @ 145.32p per share
26/02/2013	Div	IG Group @ 5.75p per share
Notes:
*     US Dividends are adjusted for exchange rate and 15% withholding tax
**   Sterling : Dollar exchange rate = £1: $1.5163 as at 28/02/13

Chartwise I have once again had to add a further 10% bar to the scale, and may yet rebase the chart (for a second time), to the 31 Dec 2011 from the current 31 Dec 2010 (and previous 31 Dec 2009).
Visually the 2 points continue to move further apart (through individual performances and dividend reinvestment), despite sharing a similarly contoured profile (in line with macroeconomic events).

Click to enlarge, close to return.

Officially I now feel part of the barnstorming start to 2013 but cannot help taking an opposing sentiment, as fundamental performance and political actions need to catch up with stock markets.

There are also a few portfolio speed bumps ahead as well, with speculation over Aviva's dividend (update tomorrow), the advancing legal proceedings against BP, Morrison's flat performance, and Apple's lack of friends being the most obvious.
I'll also need to take a view on any William Hill rights issue, although it should be easily taken up if the current trajectory of the share price is any indication of demand for the shares.

Inevitably attention will turn back to: the US's management of debt and postponed budget cuts; Chinese growth v. inflation; the future of the EU; and many more.
But if there wasn't these concerns there would be others, there always are. 
It is just the painful memory of the credit crunch and the long drawn out recovery with no end in sight which makes these concerns seem "taller in real life!"

But I continue to pursue an investment horizon beyond these concerns that I hope will absorb them. After all the longer the horizon the smaller these historical seismic events seem to have been when we look back on them.

Onwards and upwards then!

Previous posts:
- January 2013: Portfolio Update.
- December 2012: Portfolio Update (2012 Year-end).

Back from my trip!

Well I have to apologise for the scarcity of posting in February with just the 2 portfolio updates being published. 
I've actually been away for most of February and purposely didn't take a Laptop so as to maintain some distance and recharge my batteries post christmas.

Fortunately it looks like my portfolio has managed itself and probably recovered the temporary outperformance that the FTSE managed over it in January.

It looks like Rolls-Royce, National Grid and William Hill have been the drivers for this outperformance.

Anyway, I'm back now having had a bit of Winter sun and a great time in South Africa!
And, am once again looking at the monthly portfolio updates that should confirm a good start to the year, and long may it continue!