Bill1703
01 Jan 2018
Re: Top 10 Picks - New Top 10 for 2018 As foreshadowed on all relevant boards... 2018 trading from tomorrow, so time to repeat last year's "virtual portfolio" challenge. Same rules, as per the papers - equal weighted, valid for the whole year with no switching, full owning-up at year end! AACapitaConnect GroupGlaxoSmithKlineImperial BrandsITV Lloyds BankingMarks & SpencerStagecoachWPPI retain a bias toward UK exposure and 'Value' (the two closely related, obviously), with an expectation that the UK domestic outlook will clarify satisfactorily (if not wonderfully) this year. But it's no slam-dunk... and so hedged with a decent slug of overseas earnings and a general focus on "stock specific" stories - with LLOY the only real pure play on 'UK PLC' and associated sentiment. Ultimately, well aware that it's near-impossible to avoid losers as well as winners, I have asked the question - can I see 15% over 2018 (plus divis)? Without necessarily much help from the wider market. Four stocks stay in from 2017, with CPI, IMB, ITV and SGC still to justify their original inclusion and getting another chance (SGC was a close call). Bonmarche has done its job as "speculative" midcap retail play; VOD still looks fine to me but harder to see sufficient upside in either valuation or financial reporting; CARD and WTB were tougher choices, both still good for the long term IMHO but I see their respective attractions now more finely balanced against likely persisting near-term headwinds.I will doubtless be elaborating on the case for each of the "new" inclusions in the course of the year. FWIW stocks actively considered but failing to make the cut (as well as CARD and WTB): Braemar and SBRY (from my 2017 Top 10), then Aviva, BT, Debenhams, Gattaca, Merlin, Morrisons, Trinity Mirror.FYI I own 7 of the 10 stocks, with all of CPI (still!), WPP, GSK under active consideration (probably in that order). I'd be surprised if I didn't buy into at least one in the course of 2018.
Bill1703
29 Dec 2017
Top 10 Picks for 2017 - Q4 & FY update That's it for 2017, in market hours anyway, so it is time to tot up the final results for my previously published 2017 Top Ten... Q1 was not bad (in the end)... Q2 better, outperforming decently... Q3 not so much, a bit of a struggle throughout... and now a reasonable (if selective) Santa rally has delivered (belatedly) a decent enough Q4. It all means a positive absolute return for the year (+1.6%), albeit another good quarter for wider markets means I have underperformed the FTSE 100 by nearly 6% (and around 7% vs FTSE All-Share).But it's not the full story - I went heavy on income plays, with dividends (including a couple of "specials"
delivering a further 5.7%, around 50% more than the UK market yield. So I can point to a total portfolio return of 7.3% for the year - still below the 12% or so returned by the main UK indices, but somewhat nearer respectability - and preserving my status as (distinctly) average fund manager... making you some kind of return on your money, but not actually managing to beat, or even meet, an index.Star performer, after a pleasing (albeit slightly suspicious) late run, was one of my small-cap speculatives, Bonmarche - up 60% for 2017! Then, at the other end of the size scale, comes Vodafone, an 18% return reflecting a year of solid success... just ahead of Card Factory (up nearly 17% after a rollercoaster ride), although CARD just edges out VOD in total return terms (+26% vs +24%). After that, a good Q4 sees Whitbread end the year up 6%, after 'promising' something much worse for most of it. But that's it for gains, and 4 "winners" out of 10 doesn't really cut it, I concede. Both Sainsbury and Braemar ended near enough where they started (down just under 3%), but thereafter the disappointments pile up like roadkill... Imperial Brands falling 11%, ITV losing 20%, Stagecoach giving up 24% and Capita's year of woe and warnings means it brings up the rear, some 25% down - with some small solace that it's the only one I still don't own for real (but watch this space!) How to rationalise this performance picture? Well, looking back at my original post, it seems I predicted it up-front a year ago - I quote... "a vague attempt at balance and diversification across the list, though it's probably still a bit too exposed to the UK economy - and hence any further Brexit downturn. Probably inevitable, given my usual bias towards 'value' and aversion to buying into momentum."The hope was that the Brexit 'deal', and consequent UK economic outlook, would clarify - while there's finally some sign of that now, for most of the year it's remained mired in the mud of uncertainty and ungentlemanly exchange. There is the (related) theme of Value staying out of favour - albeit with 'green shoots' starting to appear just as the snow comes tumbling - and getting ever cheaper over the year as the market found reassurance in "reassuringly expensive" havens of Quality and Momentum. So what for 2018? "Double-down" on the combo of cheap UK and underappreciated Value, in the expectation (or 'hope'?) that "this time NEXT year, Rodney".... or capitulate and jump on the market bandwagon, trusting the wheels stay on for another 12 months? Anyone following my thoughts for any length of time will know the answer ... but either way, all will be formally revealed in due course with my Top Ten for 2018 - as I always promised, and likewise enourage others to participate.FWIW my 'real' portfolio fared better for 2017, up c.11.5% (total return c.15%). Nicely outperforming the FTSE 100 (+7.6%) and All-Share (+9.0%) in both price terms and their total returns of c.12-13%, though lagging the Global Market return of 20%. Given I've owned 9 of my "Top 10" stocks for most of 2017 and I didn't set out to pick bad stocks, you can deduce much of my performance came from unexpected quarters... a good advert for diversification - of one's own thought processes and investment instincts, not just of sectors and stocks
Johandesilva
19 Dec 2017
Added I did say if this becomes a 7% divi before I buy more. I am down on my average to about 450p. Latest broker target 420p.Like WPP its time to sit on my hands on this bet.
EssentialInvestor
15 Dec 2017
Serco v Capita ? Is Serco the better potential recovery play?.Just to say my own general take is very cautious on the sector.And we have the growing threat of Corbyn looming large - not a political point btw,just a medium term investment consideration.
Uncle Doug
15 Dec 2017
Re: Extremely bad day Time for a bit of bottom fishing anyone?
Doggedly persevering
14 Dec 2017
Re: Extremely bad day Political paralysis in the UK is the big problem surely. It is only going to get worse in 2018. It manifests itself in the rapidly deteriorating pipeline.And Capita has a history of optimistic forecasting that it doesn't deliver. I would bet that there is zero impact baked in for a potential Corbyn government as well.
contrarianstyle
14 Dec 2017
Re: Extremely bad day unfortunately any mention of bad news or weakness in the outlook and you just know this share will get destroyed 
Looks overdone to me but fears of dividend are a worry
Johandesilva
14 Dec 2017
FT Article [link] Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email [email protected] to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at [link] [link] Capita shares dropped on Thursday, extending their 2017 fall as investors eyed a decline in the contractor’s bidding pipeline as well as several one-off items that it disclosed in a trading update.The group’s shares were down 13.6 per cent in early trading in London, bringing the year-to-date decline to almost 25 per cent, according to Reuters data.Capita said in a pre-close trading update that it is still expecting a rise in underlying profits in the second half of this year. But analysts homed in on some signs of weakness next year.“…at first glance it looks as if there could be some pressures to [full year 2018] profitability,” said Caroline de La Soujeole, an analyst with Stifel Nicolaus.Ms de La Soujeole pointed out that Capita’s pipeline of bidding for future work had fallen to £2.5bn from £3.1bn reported in September. Further, “the company is warning of higher than anticipated contract and volume attrition in its private sector partnership division which could impact 2018,” she said.Ms de La Soujeole added:There is also a slew of exceptional costs (restructuring charges and impairments) to factor in. Leverage is expected to be slightly higher than previously flagged.
Johandesilva
14 Dec 2017
Extremely bad day Can believe the reaction to "Capita trading in-line with estimates " that was IMO expected.
Johandesilva
08 Dec 2017
Good day! +3% and hopefully Brexit on ice for a Santa Rally. Would love to sell around 600p so does anyone have access to Theresa May calendar? (This is a serious question).
Johandesilva
04 Dec 2017
Re: More bad news MACD, RSI, Moneyflow Index all show positive buying, as always CPI never plays ball. BritishBulls calls SHORT so CPI must be due a rise imminently Woodford is calling on all star performing funds of 2017 as being in a bubble and his stocks represent value.
shugg1e
24 Nov 2017
Re: More bad news I just bought a few thousand at 468p see what happens but its due a rally
Johandesilva
15 Nov 2017
Re: More bad news Thanks for the view Bill.I just bought 1 tranch of shares at 474p for the SIPP not really wanting to have to average down but mindful that Brexit blood is on the streets. IMO hard or soft outcome is irrelevant in the longer run as these companies always find a way to do business.Now holding some of the biggest value fallers in the FTSE apart from ITV that was tempting on P/E level but will continue to follow after this current bear period.I have also been wondering how City of London Investment Trust plc (LON:CTY) has managed to stay so steady during this week and not at all like my large-cap portfolio, and then I realised my stock performance mirror Woodford Patient Capital Trust PLC. If bullishness in commodities are done with (and Brexit fears factored in) I hope 2018 will be the year of value stocks.
Bill1703
14 Nov 2017
Re: More bad news "This is an odd stock.... I bought in on fundamentals re-affirmed by Bill at the time and sold for profit but if there are going to be more profit warnings I retain that I need a 7% dividend before I buy back in as dividend cover may have to be looked at again... the recent drop could just be market specific... hard brexit or whatever. "JDS - yes, still watching this one. I think we always said the period of uncertainty, and potential sustained recovery, would be protracted - and the negative newsflow has continued, as was always likely. But while a lot of this has been negative for the near-term earnings outlook, how much of it has materially changed the underlying cash flow profile? This remains key IMHO.Down here, the FCF yield (last FY actual) is up to near-15%! You don't see that very often, or indeed, for very long - something has to give, one way or another. I am sure FCF will be lower this year, and possibly for a while, but by how much? My guess is it will still look very enticing, however much actual reported earnings are crushed by accounting changes, etc...I actually think much of this renewed weakness is more market-driven, as you suggest... anything at all materially exposed to UK plc is being widely, indeed increasingly shunned, no matter how cheap it's getting (witness, for example, ITV)."At this price the yield is up to 6.3% based on this years earnings which i think is not too bad at all..."At 485p, the current dividend yields over 6.5%... as above, we will probably see dividend cover - on reported earnings - decimated this year, but on a FCF basis, cover was 2.2x last FY. FCF could fall 40% and cover would still be no worse than the UK market average....The new CEO could easily cut the dividend... because he can. But I maintain that, unless something more material has changed under the bonnet, there is little NEED to do so, given the cash generation profile and the stronger balance sheet post-disposals.Whether this is more market driven or still more about Capita under a cloud, I don't see this running back up - and staying back up - any time soon. But on a medium term view, definitely very interesting down here...
shugg1e
14 Nov 2017
Re: More bad news At this price the yield is up to 6.3% based on this years earnings which i think is not too bad at all.Like i said i think ill dip my toe back in tomorrow.Usual Santa rally looming in about 2-3 weeks
