01 January 2018
By Maynard Paton
Happy 2018! I trust you have enjoyed a successful year’s investing and that you continue to find my Blog useful.
I’m currently celebrating my third anniversary as a full-time investor — and I am reasonably satisfied with how things have turned out so far.
Indeed, with no income other than my capital gains and dividends, I am pleased my portfolio has recorded a positive performance during each of the last three years.
However, the three years have not been all plain sailing. In particular, I did wonder whether foregoing an annual salary was such a bright idea during the mid-2016 Brexit lows. Still, a recovery eventually emerged that has continued throughout 2017.
All that said, I’m disappointed to have under-performed the market for the second consecutive year. Unfortunately for me, a decent collection of 2017 portfolio winners was counterbalanced by one big loser.
Let me explain what happened.
How my portfolio changed during the year
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:
31 Dec 2016 (%)
31 Mar 2017 (%)
30 Jun 2017 (%)
30 Sep 2017 (%)
31 Dec 2017 (%)
|City of London Inv||6.5||6.7||7.1||7.0||7.0|
|Electronic Data Proc||2.8||-||-||-||-|
|S & U||-||4.3||4.1||3.9||4.4|
|World Careers Network||4.4||4.1||4.1||3.9||4.4|
I bought more Tasty and Getech
I made two top-ups during Q4.
I increased my Tasty holding by 9% at 32p including all costs. There has been no recent news from the hapless restaurant chain, but I thought the low-profile introduction of a new dining brand was quite promising.
I increased my Getech holding by 31% at 25p including all costs. The geoscience software business issued its annual results during October, and I liked what I heard at a company presentation.
As usual I have kept an eye on all of my existing holdings during the quarter — trying to spot buying opportunities just in case.
Here is a summary of the Q4 developments:
* Promising recovery developments at Getech;
* Nothing from Andrews Sykes, City of London Investment, M Winkworth, Mincon and Tasty.
I have written a full review of all the shares I held during 2017 — simply click here for the complete run-down.
That brings me on to my 2017 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 quoted bid prices;
* All dealing costs, withholding taxes, broker-management charges and paid dividends are included;
* My benchmark is the FTSE 100 Total Return Index (that is, the FTSE 100 index with dividends reinvested, as published by FTSE.com)
Here is a summary of my portfolio’s performance for 2012, 2013, 2014, 2015, 2016 and 2017:
|Year||My Portfolio||FTSE 100 TRI|
I have to say that I’m disappointed to have under-performed the market for the second consecutive year. As you will see in a minute, a decent collection of 2017 portfolio winners was counterbalanced by one big loser.
This table contains all the stats
Below is another table that lists every share I owned during 2017. Alongside each holding is my portfolio’s weighting at the start and end of 2017.
This table also shows the total return (that is, the capital gain/loss plus dividends received) each holding produced for me during the year. Each holding’s contribution towards my overall 10.5% gain is disclosed, too:
01 Jan 2017 (%)
31 Dec 2017 (%)
|City of London Inv||6.5||7.0||28.6||1.8|
|Electronic Data Proc||2.8||-||(0.9)||(0.0)|
|S & U||-||4.4||12.1||0.6|
|World Careers Network||4.4||4.4||16.3||0.7|
I hope the above table makes sense.
Just to confirm, during 2017:
* I bought one new holding (S & U at 2,070p);
* I sold one holding entirely (Electronic Data Processing at 67p);
* I trimmed one holding (Tristel at 289p);
* I topped up three holdings (Getech at 25p, M Winkworth at 104p and Tasty at 45p), and;
I left eleven holdings untouched (Andrews Sykes, Bioventix, Castings, City of London Investment, Daejan, Mincon, Mountview Estates, Record, System1, FW Thorpe and World Careers Network).
Here are a few thoughts on my 2017 stats:
* 13 of the 17 shares I held during the year recorded positive returns (at least for me).
* Of my 13 winners during 2017, 11 produced double-digit returns.
Sadly, only two shares gave me substantial (50%-plus) gains. I note my two single-digit winners — Daejan and Mountview Estates — operate in the property sector.
* My under-performance during 2017 can be blamed entirely on one investment — Tasty.
My fourth-largest position at the start of 2017, the shares of the restaurant chain lost more than 70% of their value during the year.
I bought more Tasty shares during 2017, which needless to say are currently showing losses. Without Tasty, my total portfolio return would have been 19%.
* My two biggest winners of 2017 — Bioventix and Tristel — were decent sized positions (5% and 8% respectively) at the start of the year.
Had the rest of my portfolio sat in cash throughout 2017, the combined performances of Bioventix and Tristel would have still given me a 10.4% portfolio return.
* The ups and downs of 2017 have not really altered the concentration of my portfolio.
My top five holdings currently represent 42% of my portfolio (2016: 41%) while my bottom five represent 17% (2016: 16%).
* 11 of my 17 holdings generated total portfolio returns of between zero and +2%.
Not exactly thrilling I know, but this army of smaller performances all added 10.8% to my overall portfolio return and counterbalanced the Tasty mauling.
Here are some other stats you may find interesting
* Portfolio turnover: I still can’t remember how to calculate this ratio properly. But for what it is worth, during 2017 I: i) sold shares equivalent to 6%, and; ii) bought shares equivalent to 14% of my portfolio’s year-start value.
* Dividends collected: Company payouts represented a useful 3.43% of my portfolio’s year-start value. That income included three special dividends (from Bioventix, Record and System1).
* Trading costs: Dealing commissions, stamp duty and account-management fees represented an aggregate 0.10% of my portfolio’s year-start value.
I am 94.3% invested in shares going into 2018
So here we go into 2018, with my current investments confirmed below:
31 Dec 2017 (%)
|City of London Inv||7.0|
|S & U||4.4|
|World Careers Network||4.4|
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 2017 at 7,688 and 6,520 respectively.
So… can I return to outperforming the market?
Certainly there seems to be more potential buying opportunities within my portfolio right now than there has been for some years.
In particular, I would like to think my main 2017 losers — Getech, System1 and Tasty — can recover some lost ground during the next twelve months. Daejan, Mountview Estates, S & U and M Winkworth offer attractions, too.
All in all, I will be content if once again the majority of my shares put in positive performances. I have my fingers crossed!
If you want to read more about my portfolio’s 2017 holdings, please click here.
Until next time, I wish you happy and profitable investing!
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Disclosure: Maynard owns shares in Andrews Sykes, Bioventix, Castings, City of London Investment, Daejan, Getech, Mincon, Mountview Estates, Record, Tasty, FW Thorpe, S&U, System1, Tristel, M Winkworth and World Careers Network.