Friday, 1 May 2015

What does Insider Trading look like?



This is Creighton's share charge for the last few month's this year. You may remember I tipped them as my small cap guesstimate for this year in the year-end review post.  See them plodding along doing nothing until April 19th this year. Then a steady week of increasing share price. For no reason whatsoever. Until an RNS on the 30th April about them selling their Real Shaving business.

How is it possible for the world to know of these events before they are released to the share market?

Sunday, 4 January 2015

2014 Year End Review

“I don’t like piggy banks – I’m afraid of change!”

That time again to tie it all up and see if it was worth having my money in equities, rather than sticking it in the bank.

Here's what happened:

FTSE100 fell 2.7%
FTSE100 up 1.3% (total return, GBP)
FTSE-All World up 12.69% (total return, GBP)

Investimouse's fund which is a holding of investment trusts, tracker funds, bonds, fixed interest, and individual company shares is called The Team Dave Fund of Fun-ness. The individual company shares are generally high yielding quarterly paying shares (income is everything) but occasionally I do have a punt on something little. It is compared to the FTSE All-World each year rather than the UK only indices.

The Team Dave Fund of Fun-ness is up 14.76% this year (total return, GBP).

So slightly ahead of its comparative index. Still feel it needs more international exposure, but very pleased to do so well when everyone else is having a bad year.

Slightly annoyed last year about:

- Tesco - Clarke should probably be in prison, along with many of his cohorts.
- Bankers - I hate them all. Crowdfunding and individual finance can't come along soon enough and kill off their corrupt industry.
- The US justice system which continues to pick on BP despite their having made all of Florida an infinitely better place to live. Quite how BP are continually blamed for something American companies and employees caused is beyond me.
- Russia and Putin - madness
- Crawshaw - on the day I had researched it, Crawshaws price was 6p. At the last second I bought Tangent instead as my punt stuck for the year. Tangent earned me 25%, however Crawshaw would have ten-bagged my money. Sleepless nights.

Things I'm looking at this year:

- When exactly to go big on oil again. How long will Putin be happy with just fighting the Ukraine?More than likely his best option is to either rile the Iranians into attacking Israel (big risk) or start supporting ISIL and helping them create a larger conflict in the middle east, specifically by riling them up in Saudi Arabia. More unrest = higher oil price.
- Finger poised on the buy BHP button. Big divs, exposure to energy and all commodities.
- Creightons is my punt stock
- B&M European in retail looks good (I think...)
- Others which have me intrigued for 2015 are CityFibre, Telecity, Shell, Tungsten, Porta, Accumuli

Here's some share tips from round the media for 2014:

Daily Mail - This is Money tips
Stockopedia - Top Naps
Independent - Top Ten to Follow in 2015
Telegraph - Questor share tips for 2015 (plus here's last year's results)
iii - Aim share tips for 2015

Some of the other blogger 2014 'year in review' style posts:

DIY Investor
Retirement Investing Today
Investing Sidekick
DIY Income Investor
Adventures in Equities
UK Value Investor

Good luck for the coming year!

And to end a superb cartoon from XKCD:

Monday, 29 December 2014

Poor share performance this year? It's all about bad management

It's been a year to forget for many big FTSE companies (Tesco, BP, Morrisons, Co-op, Barclays, etc.) Diving share prices for previous darlings of the sharemarket have made everyone a bit twitchy. Most of it can be blamed on bad management. The bastion of journalism that is the Daily Mail (hahahahahaha, ROFL) has gathered together a list of the retards and scum that control some of the UK's biggest companies.

It's not good reading and the biggest reason why the UK continues to flounder along. Bad management is endemic in the country. I can only guess why complete scumbags end up at the top of public companies. Here's a few reasons though:

- Clearly, almost none of management have 'skin in the game', you know real money invested in their companies so they all operate with a short term, scam-as-much-in-bonuses-as-I-can attitude. Fred the Shred Goodwin was the ultimate example of this.
- The Old Boys Network, nepotism, cronyism, etc. You name it the old pat on the back, you scratch me, I'll scratch you approach is rife in the UK. There's no meritocracy here and so the people who are least suited to leading are rewarded for their guile, cunning and poor behaviour.
- Bribery and Corruption - even companies which should be miles removed from bribery are well involved in it (GSK). You'd think the health and wellbeing of people would make you think twice about bribing people to use your products. Oh no, you thought wrong.
- The Class System - it still exists. It results in in-bred, backward idiots leaping ahead of the pack and gaining senior management positions.
- An inability of middle management to tell CEOs and corrupt boards to change their ways. Not sure why this exists but things are invariably too late when a 'whistle-blower' tells all.

I haven't even touched on the King of All Management Bastards, Bob Diamond, head of Barclays Bank who once paid himself £63M a year, decided that banks didn't need to apologise for their poor behaviours, and his bank while he was in charge was accused of rate rigging, money laundering, and tax avoidance.

These aren't just a few bad apples. They're everywhere. These are just the famous ones the media can be bothered to have a pot shot at. Every day you can check investegate and see the RNS of the public companies in the UK. I can't be bothered calculating it, but you can guarantee that about 10% of them each day are management awarding themselves additional share options, warrants, bonuses and other schemes to feather their nests.

I'm not sure why the UK tolerates it all and why workers don't demand better leadership.

Instead of whistle-blowing, rioting on the streets or burning down their offices they appear to be giving up and starting new decent companies. It's heartening to hear someone who actually might be a decent leader commenting on the growth of new companies. (it's in the last couple of paragraphs).

He adds: 'Last year there was a record number of new companies created. This year that record will be beaten. A recent survey by a quite serious authority rated Britain fourth best country in the world to start a business.'
'We've created more jobs in the private sector in this country over the last four years than the whole of the rest of the EU put together, which is an utterly remarkable statistic. It just shows that having a flexible economy with a culture that embraces entrepreneurship is a good thing.'
When Branson called 2014, the year of the Entrepreneur back in Dec 2013, it appears he may have been right.

Maybe we're heading in the right direction and these last seven years have been about getting rid of the blight that has infected the UK.

In the US, one company (Abbott Laboratories) seems to have the right idea and is training management not just on the job but in simulations too. You have to applaud the balls to try new things in management, you never know you just might find someone good. Besides they can't be as bad as the current batch.

Thursday, 25 September 2014

A quick synopsis of stupid bloody Tesco

Unless your head has been buried in the sand (as mine was last week on a sunny island in the Ionian Sea) then you'll have noticed that Tesco has continued to add manure to the rather large fan it has constructed. The latest revelations? They can't add and just decided to guess how much money they had made in their latest interims.

While I'd like to think things can't get any worse, nothing at Tesco surprises me any more. They're the Barclays of retail now and consequently have the magnifying glass fully turned on them by the media and public. If something is afoot, it will definitely be found out, released and more damage will be done to their reputation, footfall, profits and share price.

I'd say it was time for drastic action. With a new CEO and CFO, take the time to clear the decks and release all the bad news as possible in one day. Sack the chairman who is clearly an idiot for allowing Clarke to eff everything up so badly.
The Previous Idiot
Take the hit, announce the new super plan (detailed below) the following week once everyone on the board of directors has announced they're buying £1m shares each themselves.

My SUPER PLAN of action would be this:

-Turn the Tesco mega boxes into Tesco property developments. Build houses around a typical small suburban shop area - have a Tesco Express, Tesco coffee shop, Tesco hairdresser and a couple of other shops. Make money by renting those and become Tesco Property. Easy.
-It's clear that the UK is now a mostly poor place to live in (outside London). Wages are low and being reduced on an inflation adjusted basis every few months. So it's time to compete with the cheaper end of the market (where Tesco began) and take on Aldi and Lidl, with a budget branded supermarket with limited range. Turn the stores that are in those areas and losing share into the cheaper brand. The rest of them can continue at the middle end in more affluent areas.
-Hire some people at the supermarket management level who actually care about them.
-Address customer service as quickly as possible.
-Tidy the stores up!!!!! Clean the aisles, stack at night, pick up the crap, put the rubbish away and not outside the door....

-Go back to being better than the rest as that's what made the difference to begin with. Competitive pricing, good stock levels, clean stores, helpful staff. This is so bleeding obvious.
-Are the little spinoffs of Tesco making money? ie. Blinkbox, Bank, Online, Delivery, etc.? If not, ditch them.
-Clean up the balance sheet. Start paying off some debt so you don't look like such a basket case.
-Is it possible to have some sort of employee ownership scheme like John Lewis - staff love working for them. Even just making a stand on short hours contracts - ditching them, getting the staff to love you, making yourself look good to the public again will help.

Morrisons and Co-op will eventually die. Sales and profits in the UK will pick up then with less competition. Globally Tesco should continue to do ok, so it's just a matter of time to see this out.

Will Tesco die like Woolworths? I don't think so, but it needs to kill off its weaker competitors as soon as possible.

I'm sorely tempted to buy more now...although to do so would be even more contrarian than buying Russia or investing in Syrian / Iraq housing.

Here's a roundup of everyone else's posts. They are all excellent pieces:

DIY Investor - Tesco Top Up Decision - he's all in again....
Under the Money Tree - Tesco Palaver - staying well clear for now...
Mark Carter - Tesco - keeps revising his valuation down (ahhh the benefit of hindsight)
Mark Ritson (marketing chap) - Tesco risks being famous for being broken - likens Tesco to Nokia, Blackberry, Woolworths and Northern Rock. Very pessimistic.
Expecting Value - Tesco, Yes Again - compares them to Man Utd's recent woes. Excellent.
Share Centre - Tesco's Comedy of Errors -  thinks Dave will need to be bold and do something creative. Big fans of creativity here at Investimouse.

Oh well, it's only one company and nothing's permanent in this world. We'll move on to the next big thing I'm sure...

Saturday, 6 September 2014

Portfolio - Half-Year Review 2014

Tiny bit late reviewing the portfolio as it's now September and not July 1st... oh well, that's the passive side of investing slowly winning over I guess.

Anyway, logged into i-Web this morning and ran a few reports to see what activity I'd made in the Team Dave Fund of Fun-ness portfolio in the first half of 2014.

So the fund is up 10.8% in the first half of the year. Which is good and pleasing but how did the overall world sharemarket do as our benchmark?

The ishares World Index ETF (the only world tracker I can find with reliable long term figures) has a performance of 5.16% for the first six months of the year.  So we're up on that. Positive stuff.

Here's the activity from the first six months:

Sold Monitise in Jan - it's going nowhere, keeps diluting shares, but a decent gain and profit from them. Since dropped back a lot.
Replaced with SPDR Emerging Markets ETF.
Finally sold RBS in Jan - after a decent rally up to 380 I thought it time to end the folly of it. Getting rid of it was like a huge weight coming off your shoulders. It's done nothing since, its 'profits' are 90% lies and I feel better for no longer supporting them.
Sold COMS in Feb - for an excellent doubling of money.
Put that COMS money into HSBC as it dipped under 600p - I like the quarterly dividends. Neil Woodford has since dumped his stake. Worrying.
Bought TESCO in Feb - mistake.
Bought Middlefield Canadian MCT in Mar - nice timing.
Sold Blackrock Emerging Markets Track which had been replaced by the SPDR one.
Bought Infinis Energy in March - poor timing. Since dropped 10%.
Sold L&G Technology Tracker - no idea why now. It made decent money though.

Far too much activity by the looks of things. However, what I've learned is that decent timing gets great results. The holdings in Monitise and Coms were superb earners. More money gained than years of passive investing. Buying on dips in massive companies has been semi-successful too with HSBC in particular being a decent effort on timing.

It seems the maxim of Mr Buffet is true - buy great companies at a fair price.

In all a good 6 months. Where's the next bit of out-performance going to come from though?

Sunday, 15 June 2014

The TSB IPO - Fancy buying a pukka bank?

The 17th June is the final day to decide whether or not you're participating in the TSB IPO. Once you've downloaded and spent the rest of the day reading the 300pg load of nonsense document you'll be none the wiser about what to do.

TSB is being sold off by Lloyds as punishment for being shafted by Brown and being forced to save HBOS during the Great Financial Crisis, they subsequently went broke and had to ask the state for survival funds. TSB was previously a mutual, then a bank and then succumbed to the excitement of the big bank mergers of the 80s-90s. What we are seeing now is a reversal of those big mergers and a general expansion of the number of banking entities as the new regulators attempt to encourage more competition and fewer companies that are too 'big to fail'.

So TSB - any good?

Here's the GOOD stuff about it:

- It's supposed to be a purely retail bank so no mucking about in the filth of investment banking. 
- It is supposedly being sold on the cheap, at least the PR tells us it is 'priced to go' at about .7-.9 of book value.
- It makes money - about £170M last year and on course for £200M this year.
- It won't be tainted with any mis-selling dramas from the last few years.
- Long term holders will get 1 share for every 20 held each year for the next three years. 

The BAD stuff:

- It revealed last week 45% of its mortgage loans are interest-only. This is INSANE. That's about 45% of its mortgage loans that it will never get its money back on.
- Competition is heating up. Tesco, M&S, Metro, etc. are all chasing new business too.
- Interest rates are on the move up. Mr Carney says so. Expect default rates on loans to rise as they do.
- There is some confusion as to how much they are paying for IT which is a huge cost for banks. Lloyds are currently subsidising / paying for it - when that arrangement ends, TSB will have to pay full whack.
- No dividends until a long time away - 2018.
- They tried to sell it a couple of years ago to Co-op for a boat load less. It wasn't worth £900M then, it's not worth more than that now.
- The market is fairly high at the moment. IPOs are dime a dozen as private equity groups look to cash in at the top of the cycle.
- Only 25% of the shares are being sold. Lloyds will retain the rest and look to sell them all over the next 12 months (I think that's the timeline, they have to sell soon I know). This enormous overhang of shares means there will almost certainly be a better time to buy (if you're keen).
- It's a bank. They can't be trusted. They're almost certainly lying about everything.

More stuff to read from others here:

Investimouse is staying out of this. There's almost never any way a private investor can make money out of IPOs unless the seller wants you to. Remember, it's a bank. They want your money and they don't care how they get it.

Thursday, 15 May 2014

Updates on the Team Dave Fund of Fun-ness Portfolio

With the FTSE ticking along well and no serious dramas kicking off in the world (except poor old Ukraine who everyone seems to have turned their back on) all seems quite serene in the portfolio.

Updates on some of the holdings:
- Took the opportunity to top up HSBC when it dipped under 600p last week. Seemed wrong not to.
- Infinis has dropped 20% since purchase. Most of me says sell, but the reasons for buying in the first place stay sound - growth, industry consolidation. There has been no news. I think people are just bored. It has guaranteed to pay out big dividends this year and next so no reason not to be in it. Hope I haven't missed something. Maybe debt is too high?
- Schroder Real Estate had a successful placing which I contributed to. With shares at 50.25p, it was an instant 2p gain which has since gone higher. They are continuing to turn around this company and I'm hopeful that the problems of the past are behind them.
- Middlefield Canadian Income was bought at 98p. Seemed a no-brainer with 1.25p every quarter in dividends. The board thought so too and bought 50,000 shares at the same price along with a director who bought 100,000 at 102. The price has now crept back up to NAV at 108p. Nice one.
- Emerging markets seem to be recovering slowly and as I have quite a bit in two holdings (an ETF and
- Man Group continues to be the dog in my holdings. Only keeping it for the dividends now which I hope will be massive this year. They announced a second quarter of net inflows to their funds which means things are on the improve but it still feels like a basket case. I'm not sure any financial institution is investable other than HSBC at the moment. Even with RBS announcing make-believe profits again, there isn't any way you should be putting your money in any of them at the moment. Barclays unbelievably did another placing recently, announced sackings of 15,000 bankers and simultaneously reduced in real terms their dividend. More evil than any corporation that has ever bestrode the planet.
- the Saga IPO is uninvestable too. Too much debt, of which they are only paying back a tiny bit. Plus it will almost certainly list at between 17-20x earnings with no growth in the last three years. Madness - you can put your money in Beazley (or any of the other growing insurance companies), pay between 9-10x earnings and get fantastic dividends too. The only people getting rich at Saga are the private equity companies and the directors. Save your money people.

There's been no sales of any holdings for a while.

Are we getting toppy? Certainly the pull-back in tech and bio stocks in the US is a warning to them. At the moment though with the FTSE on an average of 14.5x earnings and paying around 3.5% in divs, there is no point having your money anywhere else.

Plenty of great things on the blogs around the world at the moment. As ever, I am in awe of the writing on Monevator and hang on everything Paul Scott has to say in his daily roundup on Stockopedia.