December 2017 – Trades, Tips and Funds

December 2017

Today’s post is another in the series of monthly roundups of the interesting investing tips I’ve come across, plus a summary of any trades that I make. Welcome to December 2017.

Trades

My focus remains on tidying up the existing portfolios in anticipation of a new strategy for 2018:

  1. Exploring various strategies for protecting my portfolio.
    • Both against a possible market crash in 2018 or 2019
    • And also against Brexit and a likely Corbyn government in the UK
  2. Preparing for a possible blow-off in the stock market before the crash.
    • I want to exploit any euphoria in the last months of a bull market.
    • I will trade this aggressively vis spread bets, so I need cash to beef up my account.
  3. I also want to take advantage of a time in the market cycle when I am happy to carry more cash.
    • This allows me to liquidate holdings in legacy accounts so that I can consolidate and reduce the number of SIPPs and ISAs I and my partner hold.

I have also freed up cash in my SIPP for my annual UFPLS withdrawal, which is in progress.

  • Most of this cash was generated by selling legacy funds (OEICs).

Here’s the same strategy presented by portfolio / account:

  1. SmallCap AIM Growth Portfolio (SGAP)
    • Reduce the number of stocks from 30 to 20, bringing the average holding to £4.6K
  2. PiggyBack (Main Market) Portfolio
    • Reduce the number of stocks from 25 to 20, again with an average holding of £4.6K.
  3. Bonkers (Momentum) Portfolio
    • Move this over entirely to the spread-bet account.
  4. Legacy Portfolio
    • Gradually sell this set of stocks into cash.
    • This portfolio will then be replaced by a Defensive portfolio as part of my protection strategy.

On to the trades themselves:

  • SmallCap AIM Growth sales:
    1. Cenkos Securities plc (CNKS)
    2. United Carpets Group plc (UCG)
    3. IP Group (IPO)
    4. Dotdigital Group plc (DOTD)
    5. Tristel Plc (TSTL)
    6. IQE plc (IQE)
    7. Anpario PLC (ANP)
  • SGAP buys:
    1. Christie (CTG)
    2. Gama Aviation (GMAA)
  • Piggyback sales:
    1. Dignity (DTY)
    2. Quarto (QRT)
    3. Drax (DRX)
    4. Telecom Plus (TEP)
  • Piggyback buys:
    1. ScS (SCS)
    2. Bloomsbury Publishing (BMY)
    3. Avon Rubber (AVON)
  • Legacy Sales:
    1. AstroZeneca (AZN)
    2. National Grid (NG)
    3. United Utilities (UU)
    4. Southern Electric (SSE)
    5. Shell (RDSB)
    6. Centrica (CNA)
    7. Aviva (AV)
    8. Vodaphone (VOD)
    9. Shire (SHP)
    10. Imperial Brands (IMB)
    11. Banco Santander (BNC)
    12. Sky (SKY)
    13. Tesco (TSCO)
    14. Royal Mail (RMG)
  • The Legacy portfolio has now been completely sold off.
    • I plan to use the proceeds in 2018 to build a Defensive portfolio, and to invest in the annual Stockopedia NAPS.
    • I invested in the NAPS for the first time in 2017, and they worked out well for me.
  • Bonkers sales:
    • Bonkers “sales” are spread bets closed automatically through trailing stops.
    • I don’t record these separately and need to investigate the IG analytical tools in time for the next Bonkers update.
    • The only two that I can remember are Bitcoin and Ethereum.
  • Bonkers buys:
    1. Facebook
    2. Microsoft
    3. Apple
    4. Intuitive Surgical
    5. Communisis
    6. Hunstworth
    7. Zotefoams
    8. Gooch & Housego
    9. BooHoo
    10. Tristel
    11. IQE
    12. Dot Digital

That’s 44 trades this month.

Tips

Richard Power

In MoneyWeek, Richard Power – who runs the Octopus UK Micro Growth fund – looked at “three top micro-cap stocks”:

  1. First Derivatives (FDP)
    • This is a momentum stock that I have on my spread bets watchlist.
  2. Gear4Music (G4M)
    • This was already on my AIM watchlist, but has lost its way recently.
  3. Everyman Media (EMAN)
    • I’m new to this stock (though I have been to the cinemas it operates).
    • I’ve added it to the AIM watchlist but it’s on a high PE, so I’ll probably access it via a spread bet with a guaranteed or trailing stop.
See also:  August 2018 – Trades Tips and Funds

Mike Tubbs

Mike Tubbs looked at how to invest in the next big medical breakthrough.

  • Unfortunately, most of the stocks he mentioned were on Nasdaq.
  • That’s not a problem in itself (many of the big tech stocks are listed there), but the stocks he chose were small, “one-shot” biotech firms.

He also recommended Roche on the Zurich Exchange.

Matthew Partridge

In a move that might be seen as acceptance of defeat, Matthew Partridge wrote in the normally value-seeking MoneyWeek about where to find the hottest growth stocks.

  • The past decade has been good for growth investors.
  • S&P 500 growth stocks have returned 8% pa, compared to 6% pa for the index as a whole, and only 3.5% pa for value stocks.

He offers a few factors to look for:

  1. growth in earnings and sales
  2. return on equity greater than the cost of capital
  3. earnings quality (consistency of past earnings and visibility of future ones)
  4. intellectual property or brands to support long-term growth

But he didn’t mention too many UK stocks specifically.

Matthew’s second article was on how to profit from “the beautiful game” – football for any readers who aren’t fans.

  • Celtic (CCP) were the only UK-listed club that he mentioned, and there’s been a big recent jump in the share price.

Alternatives to direct investment included:

  • Paddy Power Betfair (PPB), and
  • Goals Soccer Centres (GOAL)

Neither look particularly exciting to me.

Funds

Merryn Somerset Webb

Also in MoneyWeek, Merryn carried out her semi-regular review of their IT portfolio, which only has six funds:

  1. Caledonia (CLDN)
  2. Personal Assets (PNL)
  3. Scottish Mortgage (SMT)
  4. RIT Capital (RCP)
  5. Law Debenture (LWDB)
  6. Temple Bar (TMP)

You could do a lot worse than those.

MoneyWeek IT portfolio

The portfolio is up 110% since 2012 on a total return basis, or around 20% pa.

  • The yield is low, under 2%.

The FTSE All Share has a total return of 70% over the same period, and the two rival world indices are up 90% and 120%.

The MoneyWeek panel considered replacing SMT, which invests in tech and has done really well recently.

  • Monks (MNKS) was the potential replacement.

Another swap that was considered was replacing LWDB with Pantheon International (PIN).

  • But in the end Merryn decided to make no changes.
  • The next review is in six months’ time.

All of the trusts discussed feature on our Master List of ITs.

David Stevenson

As part of his aim of building an alternative income portfolio, David Stevenson reported on a new clean energy fund from Gravis, who run the GCP stable of investment trusts:

  • GCP Infra
  • GCP Student
  • GCP Asset Backed

Unfortunately, the new fund is an OEIC, so I won’t be adding it to the list of Exposure Stocks.

  • The fund will invest in existing UK investment trusts, plus US-based “yieldcos” (listed special-purpose vehicles containing renewable assets).

David’s second article was about emerging europe.

He recommended two trusts:

  1. Baring Emerging Europe (BEE), and
  2. BlackRock Emerging Europe (BEEP).

I’ve had mixed results with this sector in the past, but I’ve added the trusts to the Exposure Stocks list.

Until next time.

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December 2017 – Trades, Tips and Funds

by Mike Rawson time to read: 4 min