Q4 2015: 1 New Buy And Up 18% For The Year

01 January 2016
By Maynard Paton

Happy 2016! I trust you have enjoyed a successful year’s investing and that you continue to find my Blog useful.

I’m currently celebrating my first anniversary as a full-time investor — and I must admit I am quite pleased (and relieved!) how things have turned out so far.

True, 2015 has seen some market ups and downs. I have to confess, August and September were not easy months for me. I watched my portfolio shrink as shares in general fell heavily… and I suddenly discovered what it was like not to have a regular salary to average down! I guess that was an experience I will just have to get used to.

Anyway, I’m thankful the final three months of the year saw my shares mostly recover. So finding paid employment is still not on the cards just yet :-)

This is how my portfolio has changed since the start of the year

You may already know from my previous updates (Q1, Q2 and Q3) that I publish a portfolio review after every quarter. So here is the recap of my October/November /December activity.

The table below shows how my portfolio stood at the start of the year, as well as at the end of March, June, September and December:

Holding	Weighting 01 Jan 2015 (%)	Weighting 31 Mar 2015 (%)	Weighting 30 Jun 2015 (%)	Weighting 30 Sep 2015 (%)	Weighting 31 Dec 2015 (%)
Andrews Sykes	3.0	3.0	3.1	2.9	2.6
Burford Capital	4.5	-	-	-	-
Castings	-	-	-	7.9	7.9
City of London Inv	13.4	13.3	12.4	7.6	6.6
Electronic Data Proc	3.3	3.3	3.0	2.9	2.7
French Connection	9.4	8.0	6.5	3.2	4.8
Getech	5.3	6.4	6.7	5.6	3.2
Mincon	-	3.1	2.7	2.9	2.7
Mountview Estates	10.6	10.1	10.9	10.5	10.1
Pennant Int	5.1	-	-	-	-
Record	4.7	8.3	9.7	8.5	4.3
SeaEnergy	7.4	-	-	-	-
Tasty	8.8	10.5	9.4	10.9	12.7
FW Thorpe	6.2	6.7	7.4	9.5	9.6
Tristel	13.1	11.2	14.8	13.7	18.2
M Winkworth	0.8	0.8	1.0	0.8	0.7
World Careers Network	-	4.7	3.2	3.2	1.9
TBA	-	-	-	-	1.7
Cash	4.4	10.6	9.2	9.9	10.3
TOTAL	100.0	100.0	100.0	100.0	100.0

Another confidential buy… for now

Look through the table above, and you will see TBA — To Be Announced.

Yes, I have acquired yet another new company for my portfolio. However, I am not going to disclose its identity just yet as I may wish to buy more of the shares. Sorry about that.

When I’ve bought enough — or the price has risen firmly into ‘fair value’ — I’ll publish a write-up explaining why I invested. Until then, I shall leave you in the dark.

In terms of portfolio activity during Q4, that small investment in this brand-new holding was the only bit of action.

Company updates from the last three months

As usual I have kept tabs on all of my existing holdings during the quarter — trying to seek out bargain buys just in case.

Here is a summary of Q4 developments:

* Satisfactory progress reported at Tristel, Mountview Estates, Castings and Mincon;

* Mixed news from Electronic Data Processing and Record; 

* Disappointing issues emerging at Getech and World Careers Network;

* Surprisingly positive news issued by French Connection, and;

* Nothing from Andrews Sykes, City of London Investment, FW Thorpe, Tasty and M Winkworth.

I’ve written a full review of all my shares in 2015 — simply click here for the complete run-down.

So that brings me on to my 2015 performance!

I always like to study my portfolio’s performance at the start of every year.

It’s just that I’m keen to discover where all my gains (and losses!) occurred during the previous twelve months, and to see whether my portfolio decisions were consistently good, bad or indifferent!

Here are my performance ground-rules:

* My year-end portfolio weightings and returns are calculated using bid prices;

* All dealing costs, withholding taxes, broker-management charges and paid dividends are included;

* Cash injected into the portfolio during the year is deemed to have a 1 January start date for performance calculations;

* My benchmark is the FTSE 100 Total Return Index (that is, the FTSE 100 index with dividends reinvested, as published by the Financial Times).

Now here’s a summary of my portfolio’s performance for 2012, 2013, 2014 and 2015:

Year	My Portfolio	FTSE 100 TRI
2012	46.1%	10.0%
2013	29.2%	18.7%
2014	16.0%	0.7%
2015	18.0%	(1.3%)
Compound return	158.6%	29.7%

I have to say that I was pleased when I worked out my performance for 2015. Trust me, a fair bit of luck has been involved and, once again, I do not predict that level of performance to continue indefinitely!

(And as I have mentioned before, I have measured my results between 2012 and 2015 because for some years before my portfolio was almost all in cash to fund a house purchase.)

Here’s the usual long table containing all the stats

Below is a long table listing every share I owned during 2015. Alongside each holding is my portfolio’s weighting at the end of 2014 and at the end of 2015.

I’ve also shown the total return (that is, the capital gain/loss plus dividends received) each holding produced for me during the year, as well as the holding’s contribution towards my overall 18% gain.

Holding	Weighting 31 Dec 2014 (%)	Weighting 31 Dec 2015 (%)	Holding Return (%)	Portfolio Return (%)
Andrews Sykes	3.0	2.6	9.6	0.3
Burford Capital	4.5	-	14.3	0.6
Castings	-	7.9	9.2	0.8
City of London Inv	13.4	6.6	6.7	0.9
Electronic Data Proc	3.3	2.7	3.1	0.1
French Connection	9.4	4.8	(39.1)	(3.7)
Getech	5.3	3.2	(27.0)	(1.4)
Mincon	-	2.7	10.1	0.3
Mountview Estates	10.6	10.1	15.1	1.6
Pennant International	5.1	-	(3.7)	(0.2)
Record	4.7	4.3	(8.3)	(1.0)
SeaEnergy	7.4	-	14.1	1.1
Tasty	8.8	12.7	70.5	6.2
FW Thorpe	6.2	9.6	85.1	5.3
Tristel	13.1	18.2	77.9	10.2
M Winkworth	0.8	0.7	11.0	0.1
World Careers Network	-	1.9	(58.2)	(3.3)
TBA	-	1.7	5.6	0.1
Cash	4.4	10.3	-	-
TOTAL	100.0	100.0		18.0

I hope the above table makes sense.

Just to remind you, during 2015:

* I bought four new holdings (Castings, Mincon, World Careers Network and another TBA);

* I sold three holdings entirely (Burford Capital, Pennant International and SeaEnergy);

* I trimmed three holdings (City of London Investment, Record and Tristel);

* I topped up one holding (Record), and;

* I left eight holdings untouched (Andrews Sykes, Electronic Data Processing, French Connection, Getech, Mountview Estates, Tasty, FW Thorpe and M Winkworth).

Here are a few thoughts after compiling that long table

* 13 of the 18 shares I held during the year recorded positive returns (at least for me). Eight produced double-digit returns, of which three gave me substantial (70%-plus) gains. I am satisfied with that overall consistency given the wider market’s stagnant performance.

* Some of my larger holdings at the start of 2015 were among my best performers. Of particular note are winners Tristel and FW Thorpe — my second- and fifth-largest positions twelve months ago.

* My larger holdings doing well means I am currently running a more concentrated portfolio. During 2015, the proportion invested in my top five holdings increased from 55% to 59%.

* Three shares fell heavily — French Connection, Getech and World Careers Network. Avoiding just this trio of losers would have increased my portfolio’s return from 18% to 26%.

* 12 holdings generated total portfolio returns within 2% either way of zero. Not exactly thrilling I know, but this dozen of smaller positions/winners all added up to give a near-5% portfolio return.

Here are some other stats you may find interesting

* Portfolio turnover: I can never remember how to calculate this ratio properly. But for what it is worth, during 2015 I i) sold shares equivalent to 30% and; ii) bought shares equivalent to 26% of my portfolio’s year-start value.

* Dividends collected: Company payouts represented a useful 3.19% of my portfolio’s year-start value.

* Trading costs: Dealing commissions, stamp duty and account-management fees represented an aggregate 0.23% of my portfolio’s year-start value. 

I am 90% invested in shares going into 2016

So here we go into 2016, with my current investments confirmed below:

Holding	Weighting 01 Jan 2016 (%)
Andrews Sykes	2.6
Castings	7.9
City of London Inv	6.6
Electronic Data Proc	2.7
French Connection	4.8
Getech	3.2
Mincon	2.7
Mountview Estates	10.1
Record	4.3
Tasty	12.7
FW Thorpe	9.6
Tristel	18.2
M Winkworth	0.7
World Careers Network	1.9
TBA	1.7
Cash	10.3
TOTAL	100.0

As usual, I have no idea what the market will do in the next twelve months. All I can say is that the FTSE 100 index and FTSE 100 Total Return index start 2016 at 6,242 and 4,891 respectively.

However, something I have realised from writing this post is to consider re-balancing my portfolio. It is very top-heavy in certain shares that did well during 2015, and I am not so sure they will all do as well during 2016.

So… a fifth straight year of beating the market? Wish me luck!

Until next time, I wish you happy and profitable investing!

Maynard Paton

Disclosure: Maynard owns shares in Andrews Sykes, Castings, City of London Investment, Electronic Data Processing, French Connection, Getech, Mincon, Mountview Estates, Record, Tasty, FW Thorpe, Tristel, M Winkworth and World Careers Network.