Recent reporting and progress: Rolls-Royce; Lloyds, Aviva.

An interesting few weeks of reporting with Rolls-Royce, Lloyds and Aviva coming back to the markets to report on progress.

Rolls-Royce in particular shot up more than 10% after reporting profits and cash-flow figures ahead of consensus expectations, as well as progress on its XWB engine program..
A definite feather in the cap of CEO Warren East following the series of profit warnings, and SFO investigations, that came thick and fast in the early stages of his appointment, a legacy of the previous anonymous leadership of his predecessors. 
The hard truths that followed have seen a plan of action by East that might soon find the company establish a new baseline after a series of cost cutting measures that has/will trim the groups headcount as well as its markets as it tries to once again reconnect with its core business technology to ensure investment and strategy are focused.

Despite the results and guidance for the next two years, the current rating still feels a little frothy and ahead of progress. The business is very much a long term one though and the success of the corrective strategy and return to its ratings equilibrium perhaps needs to be looked at with a minimum 5 year view (if that 5 year commitment data was publicly available), otherwise a leap of faith is required.

Back in February, another recovering giant, Lloyds also reported. Whereas R-R beat expectations, Lloyds came in slightly behind expectations.
But, results were still well received given the 20% increase to the dividend and a share buyback program (a pet hate of mine), being announced. PPI compensation is still a restraining factor in the bank but should now be starting to be less of an inertia as time moves forward.
Similar to the R-R story, since joining Lloyds CEO António Horta Osório has quietly gone about the business of addressing the bank's core markets , simplification, and dealing with regulatory fall-out, and after re-instating the dividend in 2015, the bank appears to be coming out of the other side of that transformation.
The shares initially improved by 2% following results.

Aviva also reported this week, and as with the 2 previous companies, R-R and Lloyds, a strategy of reducing cost, simplification, and reviewing its focus and presence in markets has taken place under CEO Mark Wilson.
Profits were up and, perhaps more importantly, capital surplus was well ahead of the Solvency II ratio giving the company excess capital to deploy.
As with Lloyds, this has seen the company increase its dividend and announce a share buyback program.
Although still generally positive the news was less well received and the shares initially fell but went on to recover those falls and subsequently advance as more positive reviews appear.

You will no doubt be aware that Rolls-Royce was my biggest player, and but for a difficult period and bad timing for me to come back into the news-flow, would probably still be my biggest holding due to my belief in the long term profitability of the aero-engine business and the current duopoly in long range markets. 
I did actually hold both of those companies albeit with GE a much smaller weighting in my portfolio.
As things stand, decisions were made and Rolls-Royce is no longer a holding, and its position as the largest holding has been taken by Lloyds.
Aviva is also a long term presence in my portfolio and currently the second largest holding behind Lloyds.
Together, these 2 financial service providers form a large (risky?), 42% weighting in my portfolio.

Broker views today and my portfolio/watchlist.

A collection of broker views printed today with potential impact on my some of holdings and watchlists:

R-R @ 1006p, - 7p (-0.69%)Rolls-Royce to cut 600 jobs in marine division by the end of 2015, (www.sharecast.com: Rolls-Royce to cut 600 jobs in marine division by the end of 2015

BP @ 451.65p, -0.75p (-0.17%)
BP dividend at risk as oil prices weaken, Goldman downgrades to 'sell', (www.sharecast.com: BP dividend at risk as oil prices weaken, Goldman downgrades to 'sell')

Lloyds @ 87.94p, -1.06p (-1.19%)
Investec downgrades Lloyds to 'sell' after recent share-price surge, (www.sharecast.com: Investec downgrades Lloyds to 'sell' after recent share-price surge)

BHP Billiton @ 1470p, -63p (-4.11%)Broker tips: BP, Lloyds, BHP Billiton, Weir Group, Bwin.party, ( www.sharecast.com: Broker tips: BP, Lloyds, BHP Billiton, Weir Group, Bwin.party)

Very much a wait and see on all fronts, although I would probably have expected news of further cost cutting at R-R to have seen a neutral/more positive reaction.And BP, as a play on the oil price is very much dependent upon it, but its interest to see the view that having already divested assets and that previously being seen as an advantage as oil prices have fallen, should now be seen as a disadvantage?

When is a Rolls-Royce not a Rolls-Royce?

A little frustrating to see my information sources making the same basic error year on year.
In this case Digital Look, and its inability to filter out news stories and reporting between Rolls-Royce Holdings, the Aerospace, Defence and Energy company, and Rolls-Royce Motor Cars Ltd, a subsidiary owned of BMW.

The offending news story this time being a possible future Rolls-Royce SUV model but it appears under the Rolls-Royce Holdings section, the Aerospace, Defence and Energy company.

At a guess, as its an ongoing thing, and as with most things these days, I would assume it to be an error by computer given a restriction in its word search for news stories.

Its not a recent thing either, stretching back to the original sale of Rolls-Royce Motor Cars to Volkswagen in 1998, by its then owner Vickers.

Unfortunately for VW, this change of ownership triggered a reversion of the recognisable elements of Rolls-Royce cars to Rolls-Royce PLC, namely the Spirit of Ecstacy, the Radiator Grill, and the usage rights to the R-R brand logo.
Rolls-Royce PLC, already in a joint venture with BMW to produce small aero-engines proceeded to sell the rights to usage to its then partner, BMW.
Not necessarily part of the deal but the RR-BMW joint venture subsequently became a wholly owned subsidiary of R-R PLC.

The following year, 1999, actually saw the remaining elements of Vickers being bought by R-R PLC, so there was almost a return of the Motor Company to the Aerospace Company.

Anyway, 2003 saw the first Rolls-Royce cars, as we recognise them today, rolling off the purpose built BMW facility in Goodwood.
The original factory and workforce in Crewe (and to my mind the spiritual home), is still owned by VW, and producing cars under the other luxury and heritage brand, Bentley

Digital Look aren't on the their own though, and I have in the past written to such as Shares magazine highlighting the same confusing references in their reviews and recommendations.

So if you are interested in investing into the growing luxury car brand market and specifically Rolls-Royce Motors, its BMW AG you need to be looking at, not Rolls-Royce Holdings.

BMW AG is quoted in Euros on the DAX Index of the Frankfurt Stock Exchange.

January 2015: Portfolio Update.

Well, well, 2015 it is, and the first update of the year has heralded a new high for my portfolio after treading water for the whole of 2014.
A 3.89% gain in the month was enough to push past the previous high seen on the 31 December 2013, helped by the dividends from National Grid, Rolls-Royce, and a lesser one from GE.
Some satisfying capital gains came from Imperial Tobacco, Apple, Aviva, and BAT, which were offset by a -10.01 fall in Microsoft (following disappointing financials), and Banco Santander (following a hatchet job and about turn on its dividend policy).

3.89% bettered the FTSE100's 2.79%, and since inception the reinvestment of dividends has helped my portfolio advance almost 5 times as much as the FTSE100.

Merchant Adventurer's Index
			Forecast	1 month	YTD	49 mth
	Price	% holding	Div. yield	% gain	% gain	% gain
R-R	891.00p	22.95%	2.72%	2.41%	2.41%	35.72%
National Grid	936.00p	14.64%	4.65%	1.95%	1.95%	69.26%
Aviva	528.00p	13.60%	3.73%	8.98%	8.98%	45.94%
BP	424.00p	9.39%	6.08%	3.16%	3.16%	0.20%
Apple **	$117.16	8.64%	1.45%	9.82%	9.82%	113.63%
Vodafone	235.00p	2.29%	4.78%	5.55%	5.55%	-6.86%
Verizon **	3034.49p	1.41%	4.12%	1.10%	1.10%	9.34%
IG Group	726.00p	4.64%	3.99%	0.97%	0.97%	52.14%
William Hill	377.00p	3.05%	3.43%	4.00%	4.00%	104.70%
Imperial Tobacco	3124.00p	3.12%	4.51%	10.16%	10.16%	38.29%
BAT	3752.00p	2.53%	4.13%	7.20%	7.20%	11.86%
General Electric **	$23.89	1.83%	3.12%	-2.18%	-2.18%	62.15%
Microsoft **	$40.40	1.96%	2.52%	-10.01%	-10.01%	49.81%
BAE Systems	508.00p	1.80%	4.08%	7.63%	7.63%	53.94%
Centrica	294.00p	1.31%	4.81%	5.38%	5.38%	-11.34%
SSE	1609.00p	1.58%	5.54%	-0.80%	-0.80%	31.35%
BG Group	887.00p	0.92%	2.31%	2.54%	2.54%	-31.56%
Barrat Dev.	458.00p	1.45%	3.10%	-2.76%	-2.76%	28.12%
Banco Santander	450.00p	1.87%	3.09%	-17.36%	-17.36%	-17.54%
Cash		0.99%	0.00%
		100.00%	3.66%
				1 Month	YTD	49 mth
Virtual Portfolio gain (incl. Dividends)
- 1 month gain   2090.17-	2161.51			3.89%
- YTD gain         2090.17-	2161.51				3.89%
- 49 month gain 1264.20 -	2161.51					71.77%
- 61 month gain 1000.00 -	2161.51					117.15%
FTSE gain (excl. Dividends)
- 1 month gain   6566.09 -	6749.40			2.79%
- YTD gain        6566.09 -	6749.40				2.79%
- 49 month gain 5971.01 -	6749.40					13.04%
- 61 month gain 5412.88 -	6749.40					24.69%
Transactions:
06/01/2015	Div	Rolls-Royce @ 9p per share
09/01/2015	Div	National Grid @ 14.71p per share
29/01/2015	Div	GE @ 22c per share
Notes:
*     US Dividends are adjusted for exchange rate and 15% withholding tax
**   Sterling : Dollar exchange rate = £1: $1.50635 as at 31/01/15
***  Banco Dividends are adjusted for exchange rate and 21% withholding tax
**** Sterling : Euro exchange rate = £1: $1.33498 as at 31/01/15

Chartwise, I have again extended the scale to show the new high.

Click to enlarge, close to return.

The new high obviously gives me a little boost and encouragement after a disappointing 2014, and against a troubled global and political backdrop, is a nice way to start the year.
I think I do need to sit down and review the merits of each though.
A series of dividend cuts has been disappointing and, as with my exit from supermarkets last year, I still have a number of long term holdings that remain disappointing.
Strange that 2 of them, BG and Centrica, are both elements of the old British Gas, the last element being National Grid.
William Hill has also struggled to return to its ebullient highs, and then there is IG which I hope can maintain/consolidate its current highs.
Banco Santander is under review, after an about turn on its dividend policy, the very reason I had watched but eventually bought it for.
And finally, despite its contribution, I am still little uncomfortable holding tobacco stocks. 
My final reasoning being that successive Governments have little will to back up the health message, given the tax cash cow that tobacco revenue contributes to its coffers.
However, I am still not comfortable with it.

Those concerns aside, it has been an encouraging start to the year, but with UK elections in 2015, the road could be a winding one, with the added concern over Europe in addition to the political footballs of energy, tobacco, and austerity.

NB. 04 March 15. Amended by the addition of previously omitted dividends from R-R and National Grid which has improved overall gains and amended the individual holdings as a proportion of the overall portfolio.

Previous Posts:
- December 2014: Portfolio Update.

December 2014: Portfolio Update.

So that was 2015, now consigned to history and with it the disappointment of my first loss in the 5 years since I put a base on this portfolio and the discipline of measuring its performance against the FTSE100.

Strangely it has managed to just pip the FTSE100 at the last, and end the year -2.3%, as opposed to the FTSE100 finishing - 2.71% down.

So thats a full 12 months since my portfolio's high and a full 12 months put down to consolidation.

Although, there has been some changes notably, the all too late selling of Tesco and Morrisons; new additions in Barrat Developments and Banco Santander, and top ups to BP, Aviva, and R-R.

There was also the addition of Verizon as a result of Vodafone's dealmaking.

At 9 individual trades, thats slightly more than my typical 7/8 per annum, but includes an aborted attempt to put in place a regular purchase plan on Barrat, which ended up as 2 trades for what would have been 1 normal trading tranche.

So December proved to be a roller coaster with the early part of the month seeming to signal the start of an end of year rally, then with the bottom falling out of things, I think I was down more than 6% for the year before a late rally brought my portfolio back to finish the year year -2.3% (-0.66% in December).

The FTSE100 suffered a little worse to end the year -2.71%, after a -2.33% fall in December.

My portfolio benefitting from a few dividends from BAE, Microsoft, William Hill, and BP.

As briefly alluded to, I also added to my existing holdings in BP and Aviva which I hope will yield additional dividends and gains in the year ahead and beyond that.

I have to express my disappointment in the Supermarket sector's performance as my thoughts were that, as it provided one of our most basic staples, that my investments would actually be forever holdings but its seems that poor management and strategy can outweigh and undermine even those basic strengths.

Merchant Adventurer's Index
			Forecast	1 month	YTD	48 mth
	Price	% holding	Div. yield	% gain	% gain	% gain
R-R	870.00p	23.28%	2.78%	3.26%	-30.48%	32.53%
National Grid	918.10p	14.92%	4.74%	-1.28%	16.51%	66.02%
Aviva	484.50p	12.97%	4.06%	-4.63%	7.09%	33.92%
BP	411.00p	9.46%	6.27%	0.78%	-6.49%	-2.87%
Apple **	$110.38	8.18%	1.53%	-6.84%	45.88%	94.52%
Vodafone	222.65p	2.25%	5.05%	-4.83%	-11.75%	-11.75%
Verizon **	3001.41p	1.45%	4.02%	-7.18%	8.14%	8.14%
IG Group	719.00p	4.78%	4.03%	6.13%	16.72%	50.67%
William Hill	362.50p	3.05%	3.57%	8.21%	-9.80%	96.82%
Imperial Tobacco	2836.00p	2.94%	4.97%	-4.19%	21.30%	25.54%
BAT	3500.00p	2.45%	4.43%	-7.76%	8.09%	4.35%
General Electric **	$25.27	1.95%	2.95%	-4.24%	-4.49%	65.77%
Microsoft **	$46.45	2.26%	2.19%	-2.48%	31.47%	66.47%
BAE Systems	472.00p	1.74%	4.39%	-1.89%	8.51%	43.03%
Centrica	279.00p	1.29%	6.37%	-1.97%	-19.76%	-15.86%
SSE	1622.00p	1.65%	5.49%	-1.10%	18.39%	32.41%
BG Group	865.00p	0.93%	2.37%	-3.91%	-33.33%	-33.26%
Barrat Dev.	471.00p	1.55%	3.02%	2.32%	31.76%	31.76%
Banco Santander	544.50p	2.35%	6.46%	-5.71%	-0.22%	-0.22%
Cash		0.54%	0.00%
		100.00%	3.91%
				1 Month	YTD	48 mth
Virtual Portfolio gain (incl. Dividends)
- 1 month gain  2104.11 -	2090.17			-0.66%
- YTD gain        1644.62 -	2090.17				-2.30%
- 48 month gain 1264.20 -	2090.17					65.33%
- 60 month gain 1000.00 -	2090.17					109.02%
FTSE gain (excl. Dividends)
- 1 month gain   6722.62 -	6566.09			-2.33%
- YTD gain        5897.81 -	6566.09				-2.71%
- 48 month gain 5971.01 -	6566.09					9.97%
- 60 month gain 5412.88 -	6566.09					21.30%
Transactions:
01/12/2014	Div	BAE @ 8.2p per share
05/12/2014	Div	William Hill @ 4.89p per share
10/12/2014	Buy	BP @ 407.39p per share
15/12/2014	Div	Microsoft @ 16.50p per share
15/12/2014	Buy	BP @ 387.71p per share
16/12/2014	Buy	Aviva @ 464.00p per share
19/12/2014	Div	BP @ 5.8p per share
Notes:
*     US Dividends are adjusted for exchange rate and 15% withholding tax
**   Sterling : Dollar exchange rate = £1: $1.5586 as at 31/12/14
***  Banco Dividends are adjusted for exchange rate and 21% withholding tax
**** Sterling : Euro exchange rate = £1: $1.28769 as at 31/12/14

Click to enlarge, close to return.

The chart serves to illustrate the bobbing along pattern of consolidation, that follows the fact that my portfolio failed to break the all time high set at the end of December 2013, so lets hope that 2015 will bring better fortune.

And whilst, January is already bringing its ups and downs, I am comforted by the fact that my portfolio is still within touching distance of new highs.
Dividends from R-R and National Grid are due and will hopefully help to offset the financial machinations and change of strategy affecting Banco Santander.

So with that summarised it just leaves my wishing you all a happy and prosperous 2015!


Previous Posts:
- November 2014: Portfolio Update.
- October 2014: Portfolio Update.
- 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.

November 2014: Portfolio Update.

So heading into Christmas and the year end milestone, my portfolio finds itself still in negative territory for the year having hit its recorded all time high at the end of last year.

A difficult year or one of consolidation where it has, to date, ranged from -5.60% down to -0.34% down in the year.

The truth is probably somewhere between the two, and a mixture, as some sectors and company specifics have clearly under-performed with R-R the notable impact upon my portfolio. 

Pleasing then that despite a -32.68% performance in the year to date of R-R, my portfolio is just -1.64% down against its all time high, leaving it in with a chance of finishing in positive territory should there be a year-end rally in markets and sentiment.

It does feel like I have taken my eye of things a little this year, or at least stepped back from things, and coupled with my longer term strategy, I have to admit to being a little slow in topping up my portfolio with new or existing holdings which leaves me with around 7.5% cash. 

But, there has been one addition this month, that being Banco Santander. Its main attraction being its dividend (less 21% Spanish withholding tax), but also for a long running recovery in its national, european, and south american markets.
There has been quite a lot discussed around the dividend but it has been maintained through a difficult time, and has a little support through the option of a scrip in place of cash. Which, as long as the share price has support, helps reduce the liability of actually paying cash out of assets, albeit with a dilution of entitlement due to an increase in shares in issue.

Anyway back to the update and, as mentioned my portfolio is still down, by -1.64% in the year to date, despite a 2.22% increase in the month.
This is still down on the resurgent FTSE which recorded a 2.69% increase to finish -0.39% down

Dividends came in from Verizon, Aviva, Centrica, Apple, IG, and Barrat's, so it was a useful month for dividends with Aviva, and IG the notable contributors.
There were also some useful share price gains around the 10% mark from Apple, Vodafone, IG, Imperial Tobacco, and Banco.
Along with a disappointing drop in BG of -13%, as it took a one-two hit on pay for its new CEO, and a continuing fall in the oil price affecting the value of its assets.

Merchant Adventurer's Index
			Forecast	1 month	YTD	47 mth
	Price	% holding	Div. yield	% gain	% gain	% gain
R-R	842.50p	22.39%	3.02%	-0.06%	-32.68%	28.34%
National Grid	930.00p	15.02%	4.66%	0.43%	18.02%	68.17%
Aviva	508.00p	10.95%	3.78%	-2.50%	12.96%	50.35%
BP	420.20p	4.49%	5.93%	-6.41%	-13.90%	-7.24%
Apple **	$118.93	8.72%	1.40%	12.49%	56.59%	108.80%
Vodafone	233.95p	2.35%	4.86%	12.86%	-7.27%	-7.27%
Verizon **	3233.62p	1.55%	3.73%	2.84%	16.51%	16.51%
IG Group	677.50p	4.47%	4.22%	12.73%	9.98%	41.97%
William Hill	335.00p	2.80%	3.79%	-7.07%	-16.65%	81.89%
Imperial Tobacco	2960.00p	3.05%	4.74%	9.18%	26.60%	31.03%
BAT	3794.50p	2.64%	4.15%	6.98%	17.19%	13.13%
General Electric **	$26.49	2.02%	2.66%	4.84%	-0.26%	73.12%
Microsoft **	$47.81	2.31%	2.01%	4.02%	34.81%	70.70%
BAE Systems	481.10p	1.76%	4.34%	4.88%	10.60%	45.79%
Centrica	284.60p	1.31%	6.38%	-5.92%	-18.15%	-14.17%
SSE	1640.00p	1.66%	5.48%	2.56%	19.71%	33.88%
BG Group	900.20p	0.96%	2.27%	-13.44%	-30.62%	-30.54%
Barrat Dev.	460.30p	1.51%	3.09%	9.91%	28.77%	28.77%
Banco Santander	577.50p	2.47%	6.24%	8.76%	5.83%	5.83%
Cash		7.57%	0.00%
		100.00%	3.47%
				1 Month	YTD	47 mth
Virtual Portfolio gain (incl. Dividends)
- 1 m gain          2058.40 -	2104.11			2.22%
- YTD gain        1644.62 -	2104.11				-1.64%
- 47 m gain       1264.20 -	2104.11					66.44%
- 59 m gain       1000.00 -	2104.11					110.41%
FTSE gain (excl. Dividends)
- 1 m gain         6546.70 -	6722.62			2.69%
- YTD gain        5897.81 -	6722.62				-0.39%
- 47 m gain       5971.01 -	6722.62					12.59%
- 59 m gain       5412.88 -	6722.62					24.20%
Transactions:
03/11/2014	Buy	Banco Santander @ 545.71p per share
05/11/2014	Div	Verizon @ 29.12p per share
15/11/2014	Div	Centrica @ 5.10p per share
17/11/2014	Div	Aviva @ 5.85p per share
17/11/2014	Div	Apple @ £1.7586 per share (est)
18/11/2014	Div	IG Group @ 22.4p per share
20/11/2014	Div	Barrat Dev. @ 7.1p per share
Notes:
*     US Dividends are adjusted for exchange rate and 15% withholding tax
**   Sterling : Dollar exchange rate = £1: $1.5645 as at 28/11/14
***  Banco Dividends are adjusted for exchange rate and 21% withholding tax
**** Sterling : Euro exchange rate = £1: $1.25643 as at 28/11/14 Click to enlarge, close to return.

Chartwise is much the same as it has been albeit with a much stronger trend with both indices bouncing along in a channel just below the 2013 year-end position.

But also appearing to maintain some link to the longer term trend. 

I am not conversant with technical analysis but the trend and the channel would appear to be narrowing and forming some kind of pinch point which I'm sure the more proficient technical analysts would suggest could mark a break-out of the current channel but that could be one of of two ways, up or down.

Hopefully, if the long term trend is intact then this could be a break upwards but we shall have to wait and see.

Click to enlarge, close to return.

So December to come and the end of 2014. December has already seen a little movement up, which would be nice if it can continue and give me a positive year, but if it doesn't then I will hope for opportunities to reduce my cash holdings as we start to look towards 2015.

Previous Posts:
- October 2014: Portfolio Update.
- 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.