Wednesday 19 March 2014

Portfolio Update March 2014

Since my end of year post on January the 3rd, the markets have been fairly stagnant. The FTSE All-Share (my new benchmark index), has fallen about 1.1%. My portfolio is only down about 0.4% but this includes a couple of dividends received so I am probably broadly in line with the benchmark.

Most of my larger holdings have been resilient. Astrazeneca, GlaxoSmithKline, Imperial Tobacco and British American Tobacco have risen nicely, and Berkshire Hathaway has had a recent spike upwards, Lloyds Banking Group is treading water.

However there have been a few disappointments. Cairn Energy has taken a big hit due to a bout of unsuccessful drilling projects, and also a tax investigation by the Indian Government. I will hold these shares for the time being as I think the bad news is fully priced in, but they are top of my hit list should any better ideas come along.

Polo Resources, another natural resource play, have also been suffering in light of weak commodity prices. They remain priced at a huge discount to net asset value, yet are still growing their asset base. Their latest investment is a purchase of 12.8% of the Tunisian phosphate miner Celamin. Polo only constitutes a very small portion of my portfolio, and I will continue to hold for the time being in the hope of a re-rating to reflect the value of the underlying assets.

My holding in JPMorgan Russian Securities has taken a hammering (-20%) due to the political unrest in Crimea. I think this fund represents fantastic value at these prices, so last week I bought a little more. There is obviously now a substantial amount of political risk in this investment, but hopefully in the long run the issues will be resolved and the fund will re-rate. In the meantime I'll benefit from a generous yield of 3.6%.  

I have also topped up on HSBC, who are also trading at a bargain basement price. Their forward PE is almost single digit and their forecast yield is 5.4%.

The decision to reduce my holdings in Tesco is looking like a good one. They have continued to struggle to hold their market share against discounters such as Lidl and Aldi, and are now in a nascent price war which will undoubtedly lower their net profit. That said, a lot of the bad news is priced in, and the shares are yielding almost 5% so I'll happily hold on to what I have remaining for the time being.

That's it for now. Happy investing all.


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