The pointless panic over Brexit has subsided, so the house builders are finally starting to climb and my losses are narrowing. Best performer was TW.:Taylor Wimpey, climbing 11% and now only £2.55 down, although with the £7.08 dividend that arrived today you could say they were in profit.
Share of the Week is AMYT:Amryt Pharma, which after giving me a right scare has justified my confidence and leaped 14% this week. That's made up half the losses, so I'm still down £285, but every penny this goes up is worth £150 so I'm hoping it will get to break even soon.
Here's the story for the main portfolio
| Weekly Change | |||
| Portfolio cost | £36,979.15 | +£178.33 | |
| Portfolio value (share price) | £34,391.93 | (-6.5%) | +£137.51 |
| Portfolio sell value (bid price - commission) | £33,266.05 | (-10%) | +£92.57 |
| Potential profits | £1,186.88 | -£263.88 | |
| Dividends | £486.82 | +£13.08 | |
| Profit from sales | £3,381.80 | +£196.34 | |
| Average monthly cash profit | £403.69 | +£12.59 | |
| (Sold stocks profit + Dividends - Fees / Months) | |||
| Avg annual % of current portfolio cost | 13.1% |
The profit from sales increased by £196 thanks to selling a quarter of my GVC:GVC Holdings shares. The profit from this was higher, but the £40 loss I took disposing of MMX:Minds & Machines zapped a bit of it. Most of this was re-invested so the total cost of the portfolio went up by £178 as I topped up my holdings in AMYT:Amryt Pharma just in time, and CWR:Ceres Power.
The sales caused my potential profit to drop and I lost another £70 on top of that, mainly thanks to the drop in RCI:Rapidcloud.
Good news for dividends, with £7.08 from TW.:Taylor Wimpey and £6.00 from BDEV:Barratt Developments resulting in a £13.08 increase. Add that to the sales, and average monthly income tops £400 - yippee! With the sales projected to make a 13.1% return and the portfolio down by 10% I guess that means I'll be just about up overall if I keep the performance going for another 3 months.
The SIPP looks like this
| Weekly Change | |||
| Portfolio cost | £11,480.15 | +£3.02 | |
| Portfolio value (share price) | £12,927.90 | (+12.7%) | +£39.31 |
| Portfolio sell value (bid price - commission) | £12,661.85 | (+10.3%) | +£6.53 |
| Potential profits | £1,766.15 | +£31.18 | |
| Dividends | £48.82 | +£27.68 | |
| Profit from sales | £706.12 | +£6.23 | |
| Average monthly cash profit | £128.14 | +£0.78 | |
| (Sold stocks profit + Dividends - Fees / Months) | |||
| Avg annual % of current portfolio cost | 13.4% |
Fairly flat week, but nice to double my dividend income with £24.08 from LLOY:Lloyds and £3.60 from JLG:John Laing Group.
I sold my holding in SLI:Standard Life Property Investment this morning for a gigantic £6.23 (0.3%) profit. I'd bought it as a solid dividend yield of 5.6%, but I feel there's a risk property prices will start to drop soon, and I had a contrarian plan I was keen to execute so needed the capital.
I'd been thinking about those who short stock. Personally I think it's despicable and shouldn't be allowed, as it's basically gambling but the impact can be severe on real people, jobs and other shareholders. I had witnessed the effect of multiple shorts being stopped when GLEN:Glencore went ballistic just before I sold out. As stop loss after stop loss triggered, the price absolutely soared.
I then considered the mentality of shorters, and there does appear to be a herding instinct, with some shares targeted and relentless campaigns waged to keep shorting so much that the shorts themselves force down the price. However, if this is done to a sound company, at some point there will be a trigger that breaks the cycle and stop-losses fly into action.
I decided to look at the most shorted stocks, which are disclosed and available on the web, and see if there was one that had strong fundamentals. It had to be a stock I would buy anyway, so avoiding any that were clearly being shorted because they are duff or high risk. Imagine my surprise when I looked at the fundamentals of the most shorted stock and found them to be pretty sound. CLLN:Carillion has an amazing 19.71% of its stock out on loan as shorts. That's 84.8 million shares. Imagine if enough stop losses trigger to even close half of those - an instant need to buy 40 million shares. That could be carnage for those trying to close their positions as the price rockets.
On my analysis spreadsheet they fall down on a slightly low ROCE of 7% when I prefer 10%, and there's a big concern over debt, with £2.39 billion 15 times their profits when I normally aim for 3. However, I'm so fascinated with the potential for something interesting to happen that I'll overlook that.
Those are the negatives - but the positives are pretty impressive. 6.7% dividend yield and a P/E ratio of just 8.81 gives loads of room for share price growth, and with £41bn worth of potential pipeline orders, there's not much danger of a drastic drop in profits. Even if the shares drop a bit, I don't mind for my SIPP if I'm getting 6.7%. It's better than the 5.6% I would have got keeping SLI:Standard Life. The enterprise value alone is worth 421p a share and a P/E of 15 plus growth would get it up to 596p, over twice the current price.
So with that in mind I bought 371 shares at 273.54p and £5.07 stamp duty costing £1,028.85. Needless to say they dropped a few pence today so I'm losing £39, but I'm excited to see if this one becomes a roller coaster - and it will be one in the eye for the shorters if things go bonkers.
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