Saturday, 30 December 2017

2017 End of Year Results


2017! Where did that go? Time has really flown this year.

To recap: global indices have rallied hard, with the UK lagging somewhat. However I calculate the All Share Total Return to be +12.6% for the year, which isn't too shabby.

My own personal stock portfolio performance totals +15.8%, so a slight out-performance, which makes up a little for the -4% underperformance last year.

My rolling 5 year performance is 82.37%  VS  61.27% for the All Share TR. I'm sticking with the All Share TR as my yardstick, despite a gradual increase in exposure to the US.

The FTSE AIM index has been on fire, returning +33% for the year. Unfortunately I haven't had much exposure to this.

In recent years I have been put off by AIM, because the long term stats for the AIM index are terrible. An FT article written in 2015 around AIM's 20th birthday ( https://www.ft.com/content/ea2bd724-140c-11e5-abda-00144feabdc0 ) mentions that since inception, AIM has lost -1.6% per annum, and states that 72% of all the companies ever listed on AIM would have lost you money.

I have experienced such losses on AIM first hand, mostly via investments in oil/mining exploration companies that talked a good game, but never seemed to achieve what they anticipated.

Hence, due to statistics and experience, I've since tended to stay well away.

However, it strikes me that it is these oil/mining companies that are probably holding the AIM index back. If you stripped these out of the long term results, the returns probably look a lot better. I will endeavour to pay more heed to small/micro stocks in 2018!

Here is a list of my holdings as they currently stand:

  
Company %
Fidelity Special Situations China 8.79
AstraZeneca 7.26
Imperial Brands 6.77
British American Tobacco 6.58
Fundsmith Emerging Equities Trust 5.94
Berkshire Hathaway B Class 5.72
IG Group 5.50
Murray International Trust 5.38
Lloyds Banking Group 3.78
Diageo 3.01
Alphabet 2.86
Unilever 2.84
F&C Commercial Property 2.66
Legal & General 2.65
Domino's 2.62
GlaxoSmithKline 2.31
Pepsico 2.18
Disney 1.99
Intercontinental Hotel Group 1.86
Starbucks 1.81
International Greetings 1.78
PZ Cussons 1.78
Restaurant Group 1.77
Reckitt Benckiser 1.70
Apple 1.59
Sage 1.14
Berkeley Homes  1.01
Altria 0.98
Chipotle Mexican Grill 0.96
Card Factory 0.91
Philip Morris 0.90
International Business Machines 0.79
Marstons 0.65
P2P Global 0.58
Cash 0.48
Rightmove 0.46
 
Turnover since last year has been relatively low. My main activities have been to top up IG Group, Domino's & Restaurant Group. Domino's and IGG have rallied nicely since, Restaurant are still in the doldrums.

I've benefited from takeover bids for WS Atkins, which I subsequently sold, and Unilever which didn't go through, but helped buoy the share price.  

I sold some of my position in Glaxo earlier in the year, in hindsight I should have sold it all, as they have been very weak since.

My tobacco holdings, British American and Imperial, were both very weak over the year. I've used share price weakness to top up on Imperial Brands and also initiate new positions in Philip Morris and Altria, which are US based tobacco companies. Whilst morally debatable, tobacco has been the best performing sector over any medium to long time frame you could mention, and I'm hoping for some reversion to mean eventually.

I've also initiated some new small positions in Rightmove, Starbucks, Card Factory and IBM.

You may have noticed that I do gravitate towards the Mega Cap stock, partially because I find it immensely gratifying to see my holdings in action. I spend quite a bit of cash with many of these holdings on a regular basis, begrudgingly in some cases, which is usually a sign of a very well structured moat!

As a side note my other investment, a portfolio of managed OEIC's and Unit Trusts (circa 90% equities, 6% cash, 4% property), has matched virtually identically my DIY YTD efforts.

This year, through work I've had the pleasure of meeting a few great fund managers, including Keith Ashworth-Lord (Sanford DeLand), & Nigel Thomas (AXA Framlington). It's always good to hear from these veterans about how they go about stock selection. It seems the best fund managers are usually very humble, and always keen to share their experience and opinions.

Uncharacteristically I haven't read many investment related books in 2017. A couple of note of the few were Phil Oakley's 'How to Pick Quality Shares' and also Kerry Balenthiran's 'The 17.6 Year Stock Market Cycle', both of which I'd recommend!

A round-up of 2017 wouldn't be complete without some reference to Cryptocurrency and Bitcoin etc. For years I've been saying Bitcoin is a fad, and should not be seen as a viable investment. I likened it to Tulipmania back in 2013 ( http://www.mattjbird.com/2013/11/bitcoins-and-tulips.html .) Amazingly since then it has continued to confound me, with the price per coin continuing its parabolic ascent (currently circa $13,000.00 but has touched $20,000.00.)

I did not anticipate for a moment the amount of people who would get sucked into this, despite it not being a viable currency (too volatile) or a legitimate investment (i.e. it's non productive and has no intrinsic value).

My feelings about crypto haven't changed since 2013, and I still think it will end in tears for many people. I'm now starting to wonder whether it may be possible to profit from the eventual collapse?

Futures trading now allows you to bet against the currency which might be an option. But also I've been looking at potentially shorting businesses that are benefiting from the crypto-boom.

In particular Graphics Card producers such as NVIDIA (US) have had increased sales in recent years as people are buying their product specifically to 'mine' cryptocurrencies. The cards people are buying are very high end (expensive) and if/when this blows over there could be a large oversupply of said cards for some years. NVIDIA's share price has gone up 10 fold over the last couple of years, it might well fall back if sales decline.

I've made initial enquiries into Jan 2020 'out of the money' put options & this could be a viable way of betting against the collapse whilst capping the downside risk. NB I don't generally do this kind of thing and am a total novice, so please don't try this at home unless you know what you're doing!

That concludes my investment year. Many thanks to you all for reading, and in particular thanks to all the Twitterati PI's who continue to be a great source of information and knowledge. You know who you are!

If you have any questions please feel free to comment or alternatively contact me via Twitter

Have a great 2018!

Cheers,

Matt.
   

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