Gostevie's Blog
My postings on things investment-related - and perhaps more.
Having only recently started this blog, and with it now being over three weeks since my previous post, I thought it was time to get the ball rolling again. It has been an interesting time for me as I am leaving my current salaried job next week and I have taken the decision not to look for another one for a while but to take a break from the treadmill while I decide what I want to do next. This of course will give me more time to concentrate more on my investing, which is something I have been wanting to do for some time. Many readers of this blog will be aware that I have also had the honour of being interviewed by Peter Higgins of Share Talk as part of his Conkers’ Corner series. At first I felt a bit embarrassed to be doing it as I am nowhere near in the same league as many of Peter’s previous interviewees but he was great at putting me at ease and once I got started I enjoyed it a lot – to the extent that I rambled on a bit at times! Anyway, here is a link to the Conker’s Corner website – I am #46: http://www.share-talk.com/investing.php Anyway, the title of this post refers to today being my 54th birthday. I’m not a great one for celebrating birthdays but it does mean that it is just a year until I can consider taking the 25% tax-free lump sum from my SIPP so this seems like a reasonable time to have a look at what it currently contains. Here is a summary: So my biggest ‘holding’ at the moment is cash at just over a fifth of the total, which is a higher proportion than I normally hold in my SIPP. This is partly due to a general feeling that some things on my watch list look pretty fully valued at the moment and I am happy to wait for any dips before buying (watch as that ship sails off without me, folks!) and partly because I have recently sold a couple of things – Debenhams and IG Group – and haven’t yet reinvested the proceeds. All of my shareholdings pay at least a reasonable yield and most of them will need no introduction, but here is a brief rationale behind why I hold them: Centaur Media is a small company that I have held in one form or another since May 2013 (and I mention briefly in the above podcast). It has been a bit up and down at times but has paid a good dividend throughout and overall I am comfortably up. Hansteen Holdings is a bit of a ‘special situation’ REIT that I purchased in March when it announced that it was selling off its German and Dutch portfolio for €1.28bn, which appeared to be roughly the entire market capitalisation of the company at the time, and would likely be making a cash return to investors whilst keeping its UK portfolio. The share price has hardly moved since then but things should be resolved in the next month or so, so I am happy to hold and see what happens. Marston’s – I first bought these in February and the share price is currently roughly where it was back then. Has been steadily increasing its dividend for years. Royal Dutch Shell – A staple of any High Yield Portfolio. Dividends are declared in dollars but paid in sterling so the recent weakness of the pound has helped in that respect. Revolution Bars Group was an attempt to ‘catch a falling knife’ when a share price fall following a mild profit warning seemed to me to be overdone. I bought at around 132p and, naturally, the price continued to tank to around the 110p mark. However, it has perked up a bit of late and is now around 126p. This morning they announced that the Interim Finance Director has been appointed Chief Financial Officer so hopefully he can sort out the issue of increased costs which was the main cause of the warning. Carillion seems to divide opinion on the bulletin boards. It is apparently the most shorted stock in the FTSE 350 and some view the 8.8% yield as a sure sign of a value trap, but it has increased the dividend every year since 2009 and I don’t see any sign that they are about to change that. Some disagree, so who knows? Galliford Try – Another one whose dividend has been increasing annually for a good few years (since 2010). Lloyds Banking Group seems to me to be the best of the banks (from an investing point of view) at the moment. Now freed from any part-ownership by the government after it sold its final stake last month. So that’s how it stands now. Looking ahead, I am not adding any new money into the pot but will seek to add another two holdings with the 21% cash element later in the year. I apologise for the slightly rushed nature of this post but I wanted to get it published today. Thanks as always for reading it! Gostevie
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The title of this post refers not to this jaunty little number by ol’ rubber lips (Sorry, Sir Michael Philip Jagger) and his band… https://www.youtube.com/watch?v=gedzgZqNdxE …but to the sorry tale of an ill-advised and ill-executed foray that I made into and out of a company called Tungsten Corporation back in 2015. Although it wasn’t my biggest loss in percentage terms it was by far my biggest loss in actual cash terms. I am not going to put a figure on it here but it was the equivalent to several months’ take home pay at the time. Looking back at this one embarrasses me even now – everything that a mug investor could possibly do wrong I seemed to do with Tungsten. Here are the gory details: Tungsten Corporation (TUNG) Bought and Sold: See table below (all prices inclusive of costs) Percentage Loss: -42.8% In early 2015 Tungsten, led by the charismatic ‘rainmaker’ Edi Truell, became the latest ‘blue sky’ stock to get the bulletin boards buzzing. It described itself as “a leading provider of automated invoice processing, supply chain finance and spend analysis” and although it was nowhere near breakeven and burning cash like it was going out of fashion, Mr Truell somehow persuaded a lot of very sensible people that the potential was there to turn it into a multi-billion pound company, such was the untapped market for its services. It most certainly wasn’t my normal sort of investment but enough experienced and successful investors whose views I respect seemed to believe the hype that I very foolishly became sucked/suckered into joining in and bought my first tranche on the 21st April at just over 175p, convinced that I would make a quick killing as the share price spiked and then move on. But of course the share didn’t spike at all, and over the next few weeks just drifted lower. I should have realised that I had made the wrong call and sold out at a small loss but instead I made the classic novice mistake of being convinced I was right and began averaging down throughout May at prices between 158p and 111p as it went lower and lower. By the end of that month I was thoroughly disillusioned with Tungsten and annoyed with myself for being such a mug but still couldn’t bring myself to sell and move on. Instead, for the first half of June I watched the spiral downwards continue. But surely it couldn’t keep going down, could it? So on June 19th I made two more purchases at just over 60p – my biggest two single purchases in Tungsten – even selling shares in much better companies to fund it. (One of those companies was Tristel [TSTL] which I sold for 78p. The current bid price is around 201p.) Tungsten now accounted for over half of my CREST portfolio and I was spending far too much time thinking and worrying about it, so three market days later when the share price had actually moved up a bit I finally sold half for just north of 63p. I finally decided to bail out completely just over a week later for slightly under 65p and I remember that the sense of relief that I was finally rid of Tungsten was palpable. I was actually almost pleasantly surprised when I worked out that my overall loss was less than 50%. This chart shows what the TUNG share price did during my period of holding: Anyway, as an old teacher used to tell me, the most important thing about mistakes is to learn from them, so what lessons did I learn from this debacle? Lessons Learnt:
Have I ever broken any of those rules post-Tungsten? To quote Captain Corcoran: “Never… Hardly ever!” Purely out of curiosity I couldn’t resist having a quick peek at how Tungsten shares are doing now, a couple of years later, and they are currently trading at around 66p. I’m sorry that only my second post to this blog is on such a negative subject but I wanted to get this one out in the open. The next one will be more positive – honest! Gostevie Welcome to my first blog post! Older readers may recognise that the title refers to the catchphrase of CJ, Reggie's boss in the classic 70s sitcom The Fall and Rise of Reginald Perrin. Not that I am anything like CJ (at least I hope not!) but the purpose of this post is to give a bit of background into how I got into investing. I can't say that as a child growing up in the 1970s or even as a young man I showed any interest in business or investment. No stories of selling things to my schoolmates at a profit - a couple of my classmates did that - or starting a business from a phone box from me. I was vaguely aware of the stock market through the financial pages of the Evening News (my Dad always thought the sports pages in there were better than the Evening Standard) but that was about it. In the late 80s/early 90s I worked at a place where a few of my colleagues invested in shares but in those pre-internet days it was a world away from the way most of us do it today and still of no interest to me. If anything I mildly disapproved as I was a bit of a leftie back then! On the contrary, by the early 2000s, I found myself in quite a bit of consumer debt with loans and credit cards. Hey, it was the thing to do in those days, I mean what could possibly go wrong? It was through seeking inspiration as to how to get out of that debt that I came across The Motley Fool UK website and its now defunct bulletin boards; and indeed boards with titles like 'Dealing with Debt' and 'Living Below Your Means' did indeed inspire me to get myself debt-free. But through that site's 'Best of' board, which would feature a sort of hit-parade of the most recommended - or 'recced' - posts of the past 24 hours, I also discovered all these other boards with unusual names like 'Paulypilot's Pub' and 'High Yield Portfolio', which were all about investing - and in particular investing in individual companies listed on the stock market. For some reason - perhaps in part due to the brilliance of some of the regulars who posted there - I became fascinated by this whole new world and the chat about P/E Ratios, RNSs and 'multibaggers'. The attraction of being an investor rather than a debtor was perhaps my biggest inspiration of all when it came to paying off those credit cards and loans. My first ever purchase on the stock market was made in April 2005 - long before I got out of debt actually, which is not something I'd recommend to anybody also trying to clear debts, but I was keen to get started. That purchase - made using Hargreaves Lansdown's telephone broking service - was 326 shares in what was then called Lloyds TSB (LLOY), at a price of 458.59p, chosen because it was a 'safe' cash-generative dividend-paying FTSE 100 blue chip that wasn't likely to get into financial difficulty anytime soon! Fortunately for me, I sold out in December 2005 at a price of 471.32p (also having collected a couple of dividends along the way), a couple of years before the financial crisis of 2007/8. Not, I hasten to add because of any great foresight on my part. More, I think, because it meant I could use the proceeds to pay off another one of my credit cards. Over the next seven years or so I continued to make small investments on an ad hoc basis. Some were successes, such as a sort of ambulance chasing compensation seeker called Accident Insurance (ACE) which by pure fluke I timed just right, and some were failures, such as that pioneer of flat-surface loudspeakers (which they never could make sound any less tinny than a transistor radio playing in next door's bathroom!) called NXT (NTX). All of this was very valuable learning, but it was still all just dabbling until I finally became debt-free in March 2012 and set about getting enough capital saved that I could do it more seriously, which took about a year. Coincidentally, it was during this same period of time that a change in the rules regarding the transfer of Guaranteed Minimum Pensions (GMPs) meant that I could move a very old occupational pension, which until then I was stuck with, into a SIPP in January 2013. Then, in March of the same year, I opened my first online broker account - a Sponsored CREST Account with Stocktrade. So in the space of a few months I had not one but two small portfolios to look after! I felt I was up-and-running as a 'proper investor' at last... And that seems like a good point at which to bring this first post on this blog to an end. Apologies for the somewhat self-indulgent nature of it but I did want to set the scene. Hopefully future posts will be a bit more useful. At this point though, I'd like to acknowledge publicly that my main inspiration for starting this blog has been the example of my good friend WheelieDealer who has been doing his own one for a few years now and whose skill and expertise - both in picking stocks and in writing about his rationale for doing so - is something I can only aspire to. His website can be found here: wheeliedealer.weebly.com/. Do have a look - especially at his extensive blog archive: wheeliedealer.weebly.com/blog. There is some wonderfully educational stuff in there. Many thanks for reading this. If you have any comments or suggestions do please leave them below. All the best, Gostevie |
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