However, even with a -12.55% fall in the month, from what had amounted to being around 25% of my portfolio, the overall fall in the month of -1.88% feels like an escape.
The wider picture tells me that Rolls-Royce has now lost -32.64% this year though and that is hugely disappointing and suggests that the current leadership are potentially not the right men at the top.
The change of Chairman, CEO, and CFO in recent years suggests a detachment from the successful strategy and financial discipline that has propelled the company to its current position.
The strong cashflow and available finances that have subsequently flowed have also masked what now looks like a deterioration in disciplines as new faces in controlling positions have not come up to speed fast enough, and this is now becoming visible.
So whilst the company continues to look strong with strong ongoing prospects, the decision making on protecting the balance sheet, and cash flow seems to have gone a little awry of late in a company that has historically maintained a clear focus on its future strategic goals and the best route to move towards them.
In short the available riches of recent years appears to have resulted in apathy and deal making.
Elsewhere, dividends were slim this month with just one coming in from GE.
But, Apple has surged 9.04% in the month following a good set of iPhone 6 figures.
BG Group also fell by -8.94% and whilst my hand hovers over the sell button, a new, highly regarded CEO, Helge Lund (credited with transforming the Norwegian state owned Statoil), has come in, so there may yet be light at the end of the tunnel for those with patience.
My more recent addition of Barratt Developments also performed well with a 5.76% gain in the month.
In summary then, my portfolio is down -1.88% in the month, and 3.78% year to date, and continues to lag the FTSE 100's performance of -1.15% in the month and -3% year to date.
But, putting that in context and in a more positive light, -3.78% year to date is also just -3.78% down from my portfolio's all time closing high achieved on the 31 December 2013.
| Merchant Adventurer's Index | ||||||||
| Forecast | 1 month | YTD | 46 mth | |||||
| Price | % holding | Div. yield | % gain | % gain | % gain | |||
| R-R | 843.00p | 22.91% | 3.02% | -12.55% | -32.64% | 28.41% | ||
| National Grid | 926.00p | 15.28% | 4.68% | 4.28% | 17.51% | 67.45% | ||
| Aviva | 521.00p | 11.48% | 3.68% | -0.57% | 15.86% | 54.20% | ||
| BP | 449.00p | 4.90% | 5.55% | -0.88% | -8.00% | -0.88% | ||
| Apple ** | $108.00 | 7.92% | 1.54% | 9.04% | 39.21% | 85.62% | ||
| Vodafone | 207.30p | 2.13% | 5.48% | 1.62% | -17.84% | -17.84% | ||
| Verizon ** | 3144.26p | 1.54% | 3.76% | 2.25% | 13.29% | 13.29% | ||
| IG Group | 601.00p | 4.06% | 4.76% | 1.01% | -2.44% | 25.94% | ||
| William Hill | 360.50p | 3.08% | 3.52% | -2.57% | -10.30% | 95.74% | ||
| Imperial Tobacco | 2711.00p | 2.85% | 5.17% | 1.76% | 15.95% | 20.01% | ||
| BAT | 3547.00p | 2.53% | 4.43% | 1.87% | 9.54% | 5.75% | ||
| General Electric ** | $25.81 | 1.97% | 2.73% | 2.48% | -4.86% | 65.12% | ||
| Microsoft ** | $46.95 | 2.27% | 2.05% | 3.02% | 29.60% | 64.10% | ||
| BAE Systems | 458.70p | 1.72% | 4.55% | -2.61% | 5.45% | 39.00% | ||
| Centrica | 302.50p | 1.42% | 6.00% | -1.79% | -13.00% | -8.78% | ||
| SSE | 1599.00p | 1.65% | 5.62% | 3.36% | 16.72% | 30.53% | ||
| BG Group | 1040.00p | 1.14% | 1.97% | -8.93% | -19.85% | -19.75% | ||
| Barrat Dev. | 418.80p | 1.40% | 3.39% | 5.76% | 17.16% | 17.16% | ||
| Cash | 9.75% | 0.00% | ||||||
| 100.00% | 3.39% | |||||||
| 1 Month | YTD | 45 mth | ||||||
| Virtual Portfolio gain (incl. Dividends) | ||||||||
| - 1 month gain 2097.83 - | 2058.4 | -1.88% | ||||||
| - YTD gain 1644.62 - | 2058.4 | -3.78% | ||||||
| - 46 month gain1264.20 - | 2058.4 | 62.82% | ||||||
| - 58 month gain1000.00 - | 2058.4 | 105.84% | ||||||
| FTSE gain (excl. Dividends) | ||||||||
| - 1 month gain 6622.72 - | 6546.7 | -1.15% | ||||||
| - YTD gain 5897.81 - | 6546.7 | -3.00% | ||||||
| - 46 month gain5971.01 - | 6546.7 | 9.64% | ||||||
| - 58 month gain5412.88 - | 6546.7 | 20.95% | ||||||
| Transactions: | ||||||||
| 29/10/2014 | Div | Gen. Electric @ 11.43p per share | ||||||
| Notes: | ||||||||
| * US Dividends are adjusted for exchange rate and 15% withholding tax | ||||||||
| ** Sterling : Dollar exchange rate = £1: $1.59815 as at 31/10/14 | ||||||||
And the chart illustration of performance over the last 46 months.
 |
| Click to enlarge, close to return. |
So, it continues to be a tough year for my portfolio, but having trimmed Tesco, and Morrisons (and clearing some of my negativity), and adding new funds to the incoming dividends, I am now looking to add those funds back into the market which might yet see a year end rally.
And, whilst this year now looks to be one of, at best, consolidation, I am already looking beyond 2014 to next year.
To that effect I made my first re-investment yesterday adding Banco Santander to the fold, and this will show in November's Update.
Until next month...
Previous Posts:
- September 2014: Portfolio Update
- August 2014: Portfolio Update
- July 2014: Portfolio Update.
- June 2014: Portfolio Update.
- May 2014: Portfolio Update.
- April 2014: Portfolio Update.
- March 2014: Portfolio Update.
- 2013 Dividends profiled.
- February 2014: Portfolio Update
- January 2014: Portfolio Update
- December 2013: Portfolio Update.
Over 20% in one company is too much, I think. Even National Grid is a bit high. Obviously both Rolls Royce and National Grid have worked their way up to those percentages partly because they've both seen strong growth in recent years. But the chart of your fund's performance vs the FTSE 100 over recent years just looks mostly like a chart of Rolls Royce vs the FTSE 100 over the same time period.
ReplyDeleteObviously some people prefer concentration over diversification. But I think you have to really know a market, a sector, a company and its competitors to be able to realistically justify it being a large percentage of your holdings. People like Buffett, etc are a different class of investor with access to and understanding of far more information than mere mortals, and the time and drive to process it.
Concentration of portfolio feels great when the company is rising, but that horrible feeling when it's falling can be dangerous. Your experience with Morrisons and Tesco shows this as well. You've managed to buy high and sell low. I hold both of them and bought them at far more than their current value. Time will tell whether my decision to hold or your decision to sell was correct.
My attitude is that buying at the wrong time doesn't mean you should sell at the wrong time as well. And the fact they're not too large a stake in my portfolio means that while it stings, I don't have the urge to rip them out of the portfolio just so I don't have to deal with seeing the big red numbers on the screen.
Hi anon,
ReplyDeleteagreed,
There are historic reasons for my holding in R-R though which have taken me time to adjust to.
R-R did start here with a higher weighting, around 33%, and was even 50% before I started the chart, much of those proceeds actually being diversified into NG etc.
But what if I only had 4/5 holdings? What if Aviva had doubled, or Apple was $1000?
The wider problem is finding enough options to diversify at similar levels with reasons that I am happy to hold (you might see I deal around 7 times a year), and it takes time for some of these to perform and achieve reasonable weighting, like NG has (although I think it now overbought).
My challenge is to reduce the high points of the weighting, but my focus is on bringing others in which itself is affected by average purchase size.
I would suggest every portfolio has this tail v. performance problem, but I am loathe to start with a blank page just to even things up for a short time.
My strategy is based on a long term hold horizon beyond the markets recommendations which does largely detach me from that urge to sell but I think that should include portfolio weightings too and avoiding diversification just for the sake of it particularly if that concentration has outperformed, after all, 77% of my portfolio isn’t R-R.