Tuesday, 26 June 2012

Portfolio Update June 2012

Another update to talk my own book on my current personal positions and the why I hold them. I have dropped my shorts principally due to miserable ETF tracking errors and am now wholly long some select stocks.

SCOP: Finally Copper sold off somewhat to around $3.30 and given my dim view of the appalling tracking error on these ETFs I sold my positions around the $3.30-3.40 mark for a net of commissions return of 12%. Not a bad show but it should have been more like 20% if I could actually own the futures or even just short the long Copper ETF “COPA.” But alas. Interestingly being short a commodity can never be a long term position since unlike a bad or fraudulent stock the price is highly unlikely to ever reach remotely zero. So clearly I would have done myself favors selling this back in October during the initial selloff but at least I got out with a pleasant gain.

SAP3: I also closed this one up just 2% net of commissions again tracking error killed the trade as the raw position should have returned around 12% looking at the currency spot rates. Still a lesson learned there.

SBRY: I topped up some SBRY this month as the performance continues to be pretty weak and the dividend continues to look attractive. Sainsburys is way ahead of Tesco in terms of store quality and home delivery and I expect home delivery to be the future for the industry the key is making it profitable something that Ocado despite their great service and platform have failed to achieve.

Pandora A/S: I am still holding onto the remaining shares to see how the business pans out longer term. I think 10% dividend yield looks good although the stock has come off the boil since January and now trades around the 60Dkk mark.

RSA: I topped up some more RSA lately due to the healthy dividend and low exposure to European sovereign debt. This stock just looks cheap to me as it’s a good franchise, internationally diversified and it throws off cash. Risks for this are obvious; it is a european financial so could get blown around by further chatter regarding the glacial unfolding of the euro area collapse. It is also a global insurer so all kinds of catastrophes pose a risk to medium term underwriting results.

BBd/B: I purchased a position in Bombardier principally on valuation grounds; its cheap and its been underperfoming. 9x forward P/E seems cheap compared to GE and Siemens although the company has about half its earnings coming from Europe. Bombardier seems like a solid business operationally with a relatively low financial leverage. Clearly the European slowdown will effect sales for public transport but if they get a major airline order for the C series jets this could be a catalyst to unlock some value much as news of the Netjets order for smaller jets did over the past month. Some international diversification into CAD is also welcome.

Caveat: Clearly I have a financial interest in these investments and this post relates solely to my personal investment positions. It is in no way a solicitation to buy or sell these investments nor does it constitute advice to do so.

Tuesday, 12 June 2012

Gravy Train

So the games gravy train continues for our humble vested interests. Today its announced that drivers on the  Heathrow express will be receiving a £700 bonus for doing their jobs during the Olympics. This of course follows the tube driver deal and the national rail driver deals which have seen similar incentive payments for doing ones job.

In all this one feels a little sorry for the humble London bus driver  holding out for his £500 incentive to turn up for work payment . The Heathrow express is always empty. There is no additional workload all the driver does it go from Heathrow non-stop to Paddington. That’s it. So it’s just a bribe.

Bus drivers will instead by coping with millions of tube outcasts (ordinary Londoners trying to work for a living), numerous traffic restrictions (so the 4,000 olympic VIP BMWs can create their own congestion) and lots of complaining and violent passengers and nutters (every day on the bus).

Frankly I don’t see why anybody should get these payouts but it’s the nature of the beast when you bring a ridiculous circus to town whose entire raison d’etre is to create its own gravy train of corporate contracts  and advertising opportunities that the lower orders in vital services start trying to grab a piece of the action.

The current policy for the games in London seems to be one of hope. Hope that everyone who actually lives in London will somehow disappear leaving a lovely playground for the Olympic VIPs to play about in.

I reckon ordinary Londoners should go on strike from living until we get all get free travel cards and compensation for the month of disruption we will have to suffer this summer.

Hey we only want a fair deal which represents the vital contribution we make every day to London during these historic games...

Thursday, 7 June 2012

Pointless Studies

“Nothing is softer or more flexible than water, yet nothing can resist it.”

The special interests propaganda bureau is back today reporting a classic piece of pointless PR from none other than the Institution of Civil Engineers.

The civvies are expressing some useless news and views on the UK's 'water security' and the ongoing drought which thanks to the declaration of drought is soon to end in floods. We could export this countercyclical  climactic ability to ruin our summers to other rain starved regions by sending Michael Fish out on Somalian state TV forecasting prolonged drought. A few crafty contrarian Somalis might want to band their pirate skiffs together and build an ark.

Important factoids from the release include;

The Institution of Civil Engineers (ICE) said security of the UK's water supplies was at a "critical" point.”

Oh my golly gosh!

The ICE have lots of clever plans to help limit usage:

“Universal metering with higher tariffs for non-essential use such as cleaning cars and watering gardens should be introduced, the institution said.”

This sounds unbelievably unworkable to my mind. How could you possibly accomplish this? Separate water meters for your hosepipe tap? Surely this would be prohibitively expensive and impossible to enforce. But no, there is more;

“...the ICE was against the idea on costs grounds of a "national grid" for water in which resources could be pumped across the country to areas of greatest demand.”

Arguably this would be a cheaper idea! Something bored engineers with nothing better to do than write white papers could have a crack at.

Moving on;

“The ICE marked the UK's water security as four out of 10.”

This sounds like a terrible score. But what is the benchmark? I can mark the ICE a 4 out of 10 as an engineering organisation. Against what exactly?

What the article completely and utterly fails to address is that 20% of all water supplies are lost by the water companies in transit. Surely that is the remit of civil engineers not policing hose pipe bans and dreaming up surveys? Why don’t they dig up the bloody roads and replace some pipes and do other engineery things instead of wasting their breath on pathetic PR releases.

If you really want to curb 'non essential' usage of water all you have to do is....raise the price.