JIC: August 2014 Portfolio Review; a better month!

Sunday, Feb 03 2013 by
6
JIC August 2014 Portfolio Review a better month

This is the review for January 2013. Subsequent months appear under "comments" below;

A great start to the year from equity markets all around the world. The JIC portfolio rose by 4.7% to £191,715 compared to a 6.4% rise for the FTSE All Share Index including dividends. So mixed emotions; whilst a return of 4.7% will keep the wolves from the door I am a little disappointed not to have done better.

Most of the damage was done by Quindell, which on account of its >200% rise since purchase was the largest holding in the portfolio going into 2013. It fell 22% during January as some holders, including me, banked some profits. There is some scepticism about its prospects mainly centred around its ability to generate sufficient cash and to bed down all the acquisitions it has made during the last year. An Investors Chronicle article in the 25th January edition summed up all these concerns succinctly and caused some damage to the share price. Should the Company prove the doubters wrong there is scope for considerable upside given the low valuation of 5.5x 2013 consensus earnings forecasts. Findel (LON:FDL). also performed poorly following its trading statement and like Quindell, if it can prove its doubters wrong the shares should bounce back strongly.

The best performers over the month were Globo (LON:GBO) 58%, easyJet 22%, Jupiter Fund Management 17%, Gulf Keystone 16% and Intermediate Capital 12%. I have commented on the first three of these during the month, following trading statements and in Globo's case, a meeting with the management.

As for the market outlook, many commentators are saying the markets have risen too far, too fast and will fall back. I don't remember many of them screaming at us to buy stocks when the market was on its downers last May! Best to ignore all the noise and focus on picking stocks.

I have introduced a number of new holdings since the start of the year; St.Ives, Dolphin Capital, Regenersis and Synectics which hopefully will add some value to the portfolio in the coming months.

www.JohnsInvestmentChronicle.com


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I run a subscription website  www.JohnsInvestmentChroncile.com in which I show my JIC Portfolio and all transactions. I blog within an hour of trading, with an explanation, and send an alert email to all may subscribers. I do not pretend to have all the answers but I hope my Portfolio, and… ...read more or visit website »


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"The investments and any other products mentioned in the johnsinvestmentchronicle website should not in any way be considered advice to buy or sell anything. Any information on the website is given in general terms and does not constitute personal advice to any individual. Readers are responsible for developing and applying their own strategies based on their personal circumstances and furthermore readers should obtain independent financial advice from an FSA regulated intermediary before investing money. Information or views in older blogs may become outdated and should not be relied upon unless confirmed by recent comment." "johnsinvestmentchronicle takes every care to ensure that the factual information on its website is accurate but cannot guarantee this."


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Polar Capital Holdings plc and its subsidiaries are engaged in providing research driven specialist investment management and offer a family of long-only, long-bias, equity long/ short and other fundamentally driven hedge fund strategies under the Polar Capital brand. The Company provides a centralized sales, operational and regulatory platform to support its fund management activities. The Company is a specialist investment management company, offering professional and institutional investors a range of geographical and sector investment opportunities. The Company is engaged in the provision of investment management and advisory services. The Company’s assets under management are separated into products and services. The Company is a parent Company of Polar Capital Partners Limited. more »

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Coms plc is a provider of cloud based telephony services over the Internet and mobile devices to customers. The Company’s principal activity is the development and commercialization of Internet telephony services and sale of associated equipment. It operates in three segments: provision of telephony services; supply and distribution of telephony equipment and related services, and provision of management services for the Group. It has two product offerings: Hosted Internet Telephony, and Internet Telephony and Unified Communications Solutions. In November 2013, the Company announced the acquisition of Redstone Converged Solutions Ltd. In December 2013, Coms Plc formed a new subsidiary, Coms Media Ltd, following the acquisition of the Clicks Media Studios Ltd and Darkside Animations Ltd. Effective March 13, 2014, Coms PLC acquired Smarter Mobile UK Ltd. In August 2014, Coms Plc announces launch of new Group subsidiary, Coms Carrier Services Ltd (Coms Carrier Services). more »

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Fox Marble Holdings PLC is a natural stone extraction company operating in Kosovo and the Balkans region. The Company has access to over 300 million cubic meters of marble including white breccia and honey yellow onyx. The quarry at Banjat e Pejes consists 172 hectares, holding 42.1 million cubic meters indicated reserves and a further 101.2 million cubic meters inferred reserves of honey yellow onyx marble. The Rahovec area contains three seperate quarries: Varrezat, Cervenilla and Antenna, together cover 256 hectares. Its Suhogerll quarry contains emperador and breccia marble, which consists of 54 hectares with inferred resources of 37 million cubic meters. Verrezat contains 16.8 million cubic meters of indicated reserves of primarily grey dolomite. Cervenilla contains 32.5 million cubic meters of indicated resources of primarily red and grey limestone. Antena contains 97.2 million cubic meters of inferred resources, with black basalt and grey granite. more »

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22 Comments on this Article show/hide all

johnrosier 1st May '13 3 of 22
2

April 2013

Markets continue to climb the "wall of fear" with the FTSE All Share (Total Return) Index recording, just, its eleventh monthly rise in a row; it rose 0.6% during April and is now up 11.0% since January 1st, (see top chart below). The notable event during the month was the collapse in the gold price from around $1600 an oz to $1320 before rallying to $1475 as of last night. JIC does not hold gold and although there are arguments for some exposure as insurance against rampant inflation I feel that the chart,(see bottom chart below) is not compelling and that if I was a betting man I would expect further weakness.


During April the JIC portfolio returned 0.5% and is now up 14.1% since 1st January and 38.3% since inception in January 2012. The main movers during the month were; Polo Resources -24.3%, Agriterra -13.6% and Dolphin Capital Investors -12.3% on the negative side and Quindell Portfolio +33.3%, Synectics +13.5% and Baillie Gifford Shin Nippon + 10.3% on the positive. I have blogged about both Agriterra and Polo during the month setting out why I am hanging on to them.


The other move of interest is the continued strength of the healthcare/biotech theme with Biotech Growth Trust up 6.4% during April and 52.5% since purchase and on the same basis, Worldwide Healthcare Trust up 4.0% and 31.1%


Should we ignore the old adage, "sell in May and go away" and will we see a twelfth up month in a row? I am of the more optimistic disposition and given the continued monetary easing we are seeing around the world I suspect we can. Conscious however, of the good gains made since last May I will endeavour to be more disciplined with my stop losses and if that means cash levels rising again, so be it.

Website: JohnsInvestmentChronicle
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johnrosier 2nd Jun '13 4 of 22
1

MAY 2013

The FTSE All Share Total Return Index was up 2.9% during May, the twelfth month in a row of positive returns. The Index has risen by 14.2% since the start of the year and by 30.1% since 31st May last year. Towards the end of the month markets became a little nervous, sparked by a near 8% sell off in the Japanese market, apparently on fears that Chinese growth was slowing down and / or the US would rein in the pace of monetary stimulus in response to a run of strong economic indicators. Whatever the reason, Japan had by far been the best performing major equity market during 2013 and was probably due a bit of profit taking.

The JIC portfolio had a good month, returning +5.5%, making +20.4% since the start of the year and 48.3% since 31st May last year. During the month the top contributors were Gable Holdings +42%, Dolphin Capital +20%, Dixons +18%, St.Ives +15%, Polo Resources +15%, easyJet +13%, Globo +13% and Intermediate Capital +11%. Baillie Gifford Shin Nippon -18%, was the only holding to fall by more than 10%. As mentioned in Friday's posting I intend to stick with it as I think that the pull back in Japan will prove to be a healthy correction rather than anything more sinister.

Given the strong run in markets it would be foolish not to expect some sort of pull back /consolidation in the short term but in the medium term I am more sanguine. I can't see monetary easing around the world coming to an abrupt halt; it may be "tapered" in the US, but it has only just got going in Japan and in Europe it hasn't really started yet.

In my April review I said "Conscious however, of the good gains made since last May I will endeavour to be more disciplined with my stop losses and if that means cash levels rising again, so be it." During May I was not troubled by my holdings hitting "stop losses" but I suspect June may be a different story given the recent increase in volatility and expect that in a month's time I will have raised some cash.

Website: JohnsInvestmentChronicle
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johnrosier 1st Jul '13 5 of 22
3

It had to come to an end sometime! After twelve positive months in a row the FTSE All Share Total Return Index gave up ground during June, falling 5.0% leaving it up by 8.5% for the first half of 2013. Market volatility, sparked by Ben Bernanke's comments in late May, that the monthly purchases of bonds, (quantitative easing) would be tapered in the face of an improving US economy, continued into June. Emerging markets, which were seen to have benefited the most from "easy money" were the worst affected, followed by European markets. The US was relatively unscathed in comparison, with the pull back looking no worse than last October/November and thus far, the upward trend seems to be intact. The other notable, and not unconnected events were the rise in US treasury bond yields and the collapse in the gold price which is now down 35% since its peak in August 2011.

The JIC portfolio had its first down month for over a year falling by 3.3%. The portfolio was up 16.4% in the first half of 2013 and 41.2% since January last year. The top contributors were Baillie Gifford Shin Nippon, which recovered well to record a rise of 16%, Vislink +8%, Anite +6%, easyJet +2% , Filtronic +1% and Berkeley Group +1%. The laggards were Agriterra -26% (luckily it is one of the smaller holdings in the portfolio), Globo -20%, Laird -16%, Fenner -11% and Laura Ashley -10%. Of these fallers, I made small additions to the Laura Ashey, Fenner and Laird.

In my last monthly I said "given the strong run in markets it would be foolish not to expect some sort of pull back /consolidation in the short term but in the medium term I am more sanguine". The question is whether the pull back we saw in June was the extent of it or whether there is more weakness to come? It's a difficult one; on balance, whilst I expect markets to be higher at the end of the year, I have to acknowledge that the summer months could prove volatile. I will be treating this as an opportunity to find attractive investment opportunities as well as enjoying the sun!

See Full portfolio at www.JohnsInvestmentChronicle.com

Website: JohnsInvestmentChronicle
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johnrosier 2nd Aug '13 6 of 22
1

July 2013


Normal service is resumed! After giving up ground during June equity markets resumed their upward progress during July, with the FTSE All Share (total return) Index rising by 6.8% and is now up 15.9% since 1st January.


The JIC portfolio lagged the All Share for much of the month but had a good late spurt to sneak ahead and return +7.2% and 24.8% year-to-date. The winners were; Vislink +24.3%, Gable Holdings +18.1%, Melrose +13.1% , Fenner +12.5%, Intermediate Capital +11.8%, St.Ives +10.6%, Dixons +10.6% and Agriterra +10.6%. There were only two holdings that fell by more than 5%; Polo Resources -7.9% and Anite -5.6%.


In my last monthly report I said “The US was relatively unscathed in comparison (to other world equity markets), with the pull-back looking no worse than last October/November and thus far, the upward trend seems to be intact”. As I write, the US market has just closed at an all-time high, helped I think by steadily improving economic indicators. In the UK the economy is clearly gathering pace and indeed in Europe there have been some encouraging signals.

I am currently 100% invested but confess to being a little nervous given the strong run during July. There has been little evidence of the usual summer volatility thus far but we are only just entering the peak summer holiday period!

Website: JohnsInvestmentChronicle
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johnrosier 1st Sep '13 7 of 22
1

August 2013


An uneasy month for markets with the FTSE All Share (TR) index falling -2.2%, recording its only second down month in the last 15. The All Share Index is now up +13.3% year-to-date.


The JIC portfolio had a good month both relatively and in absolute terms recording a rise of +1.8% so that it is now up +27.1% year-to-date. Globo (LON:GBO) +40%, Vislink (LON:VLK) +16%, Synectics (LON:SNX) +15%, Polo Resources (LON:POL) +13%, Amino Technologies (LON:AMO) +12% , Laird (LON:LRD) +12% and Agriterra (LON:AGTA) +10% put in strong performances. The only holding to fall more than 10% was easyJet (LON:EZJ) -13%, which gave up ground after such a meteoric rise over the previous 18 months. I halved my holding during the month but will be looking for a suitable opportunity to increase it again. It was good to see two of my worst performing holdings, Agriterra (LON:AGTA) and Polo Resources (LON:POL), have a strong month. Both stocks are mentioned in this week's Investors Chronicle with the first being described as "criminally cheap" and the second "obviously undervalued"! I agree and intend to stick with both of them and hope the worst is behind them.


In my July report I said "I am currently 100% invested but confess to being a little nervous given the strong run during July. There has been little evidence of the usual summer volatility thus far but we are only just entering the peak summer holiday period!" During August I increased the cash level in the portfolio to 10%. Although in the medium term I am pretty sanguine about the outlook I may increase cash levels a little further in the weeks ahead to give me some fire power should markets give up more ground during September/October.

Full portfolio as at Friday's close at www.JohnsInvestmentChronicle.com

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johnrosier 1st Oct '13 8 of 22
2

September 2013


The FTSE All Share (TR) Index managed, just, to record a positive month, up 1.1% so that it is now up 14.6% since the start of the year.


The JIC Portfolio had a strong month returning +4.6%, so that it is now up 32.9% so far this year and +61.1% since inception in January last year.


The main contributors to the strong showing by the portfolio were Globo (LON:GBO), +32.6%, Regenersis (LON:RGS), +27.2%, Fenner (LON:FENR) +16.2%, Dixons Retail (LON:DXNS) +13.2% and Baillie Gifford Shin Nippon Closed Fund (LON:BGS) + 12.1%. No stock fell by more than 10%; in fact the worst performing stock was IGas Energy (LON:IGAS) which was down -8.9%. Globo (LON:GBO) and Regenersis (LON:RGS) responded to good results and optimistic outlook statements. Dixons Retail (LON:DXNS) also benefited from good results but was also helped by news that it had disposed of its long standing, loss making subsidiary, Pixmania. I have reduced the number of holdings in the portfolio slightly to 26 following the sales of Laura Ashley Holdings (LON:ALY),Gable Holdings Inc (LON:GAH) and Filtronic (LON:FTC). New holdings during the month were Thorntons (LON:THT), Gable Holdings Inc (LON:GAH) and Adept Telecom (LON:ADT).


It feels like October could be a slightly more volatile month with agreement on increasing the US debt ceiling needed by the middle of the month. This is likely to go down to the wire again and given the impasse over the budget, which has led to a partial US Government shut down today, I guess the markets may fear the worst. I may add a little to the 5.7% cash currently held in the portfolio to give me fire power on any market set back.

Website: JohnsInvestmentChronicle
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johnrosier 3rd Nov '13 9 of 22
2

October Review

 

 

A strong month for markets on the back of the US government shutdown and debt ceiling being resolved, albeit temporarily. Markets were also helped by the realisation that “tapering” of the monthly $85bn Federal Reserve purchases of debt had been pushed out, most probably into 2014. The FTSE All Share (TR) Index rose 4.3% on the month and is up 19.5% so far this year.

The JIC portfolio lagged the Index very slightly with a return of 4.1% so that it is now up 38.4% in 2013 and 67.7% since inception in January last year.

The leader board was made up of French Connection (LON:FCCN), +25.4%, Thorntons (LON:THT), + 18.0%, Laird (LON:LRD), +13.4% and Berkeley (LON:BKG), +12.9%. Two stocks which I added to the portfolio during the month, Lamprell (LON:LAM) and Anglo Pacific (LON:APF), also performed well, rising 17.6% and 12.4% respectively. No stock fell by more than 10% with the worst performing stock being Agriterra (LON:AGTA) which declined by just 3.1%. French Connection benefited from rumours of a takeover approach, Laird from encouraging Q3 trading and Thorntons from a Q1 trading statement which showed continued recovery. New holdings during the month, apart from the aforementioned Lamprell and Anglo Pacific, were Templeton Emerging Markets It Closed Fund (LON:TEM) and Fusionex International (LON:FXI). Fenner (LON:FENR) and Globo (LON:GBO) were sold.

With various US indices hitting all-time highs during October there has been a chorus of commentators calling for a correction. Whilst, when you look at the chart above, I would not be surprised if there was a pull back to somewhere in the 1650-1700 region, I am not willing to call the end of the bull market yet. When there is as much liquidity being pumped into markets as there currently is, valuations can be stretched a lot further. Time to be strict on stop losses and not be afraid if the cash level rises a little, I think.

 

Website: JohnsInvestmentChronicle
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johnrosier 2nd Dec '13 10 of 22
1

November 2013


The UK market struggled to make progress during November with the FTSE All Share (Total Return) Index falling by 0.7% so that year to date it is up 18.6%. It was a satisfying month for the JIC portfolio which recorded a positive return of +2.0% and is now up 41.2% since 1st January and 71.1% since inception in January last year.

Performance was driven by Regenersis which rose 40.3% following a visit to its Glenrothes facility and some bullish comment by its broker. It is now the second largest holding in the portfolio at 6.5%. I met the management on Friday; more or on that later. Synectics, +19.5% and Thorntons, +17.0% were also strong, in the latter’s case on enthusiasm ahead of, hoped for, bumper Christmas sales!

The only holding to fall more than 10% was the FTSE 100 Put warrant that I bought to provide some insurance against a correction in the market. It has fallen by 21.3% since I acquired it, so costing about 0.4% off my performance. I will actively monitor the position and should the market push on upwards during December may well add to it.
A few new holdings during the month: Crawshaw Group, Plastics Capital and Baillie Gifford Japan Trust. WH Smith and Templeton Emerging Markets Investment Trust were sold.

The UK market has lagged behind the US, Japan and Germany which have been pushing on to new highs in recent weeks. Many commentators are calling for a correction, especially in the US where valuations have risen but, whilst quantitative easing continues unabated, pinpointing the timing of any pullback will be difficult. It would be surprising if the UK did not play a bit of catch up during December, so at the moment I am still happy to be fully invested, albeit with my small exposure to some FTSE 100 put warrants to give me some protection. On further market strength I may buy a little more insurance!


Website: JohnsInvestmentChronicle
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alterego 2nd Dec '13 11 of 22

John, interesting to hear you use put warrants to "insure" your portfolio. Can you elaborate for someone who is less clued up but has a similar need - also up 40% this year? Thanks.

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johnrosier 3rd Dec '13 12 of 22
1

This is what I wrote on my blog on 5th November when I bought the holding;

I have bought a "put covered warrant" on the FTSE 100 with a 21st March expiry date and a strike price of 6500. I have invested 1% of the portfolio value. Should the market push on upwards from here the worst case is that, if I let the warrants expire worthless, I will have lost all my investment in the warrant. However, should the market have a correction in the next few weeks the warrant should increase in value affording me a small amount of protection on the overall portfolio.

I have made good money this year and am happy risking 1% of the value of the potfolio to give me some downside protection.(see transactions)

And this is what I wrote on the 8th November when I doubled up to 2% of the portfolio;

I have added to the holding in the "put covered warrant" on the FTSE 100 with a 21st March expiry date and a strike price of 6500 which I invested 1% of the portfolio value two days ago. I now have a 2% holding.

To repeat;

Should the market push on upwards from here the worst case is that, if I let the warrants expire worthless, I will lose all my investment in the warrant. However, should the market have a correction in the next few weeks the warrant should increase in value affording me some protection on the overall portfolio. (see transactions)

This is risky as I could lose all my investment in this warrant if the market tracks sideways or moves up or I get my timing wrong. If the market moves up at least I will be compensated somewhat by the 95% of the portfolio that remains invested.

 

When I bought the gearing of the warrants was around 13x, so for a 5% fall in the market I would have expected the put warrants to move up 65%. So, all things being equal, if my portfolio moved in line with the market I would have expected the 97% invested in shares to fall to 92.15 (97x0.95), the 1% cash to stay at 1 and the 2% in the put warrant to rise to 3.3 (2.0x1.65) = total of 96.45. So instead of the portfolio falling to 95 it has fallen to 96.45!  Of course all things are not equal and hopefully the portfolio would perform better than the broader market. 

You will see 2% does not buy you a lot of protection and you have to be prepared to lose all your money should a) the market move up or b) it just move sideways up until expiry.

(Yesterday for example the warrants rose 16.8% which added about 0.3% to the portfolio on a day the FTSE All Share fell 0.82%)

But be warned, They are dangerous things because you can lose all your money invested in them and you need to understand all the mechanics of how they work!

 

 

Website: JohnsInvestmentChronicle
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alterego 3rd Dec '13 13 of 22

In reply to johnrosier, post #12

thanks John.

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johnrosier 2nd Jan 14 of 22
2

December 2013


Markets had a poor start to the month, reflecting nervousness ahead of the Federal Reserve meeting on December 18th, at which it announced a start to the “tapering” of its quantitative easing program. Markets greeted the announcement with seasonal joy and with the uncertainty out of the way the “Santa” rally got underway with the S&P 500 Index closing 2013 at a new all-time high. The FTSE All Share Total Return (including dividends) Index was up 1.8% in December and +20.8% for the year as a whole. The JIC Portfolio lagged the Index in December, rising 0.3% but was up 41.5% over the year.


The best performers during the month were Fusionex International (LON:FXI) +23.0%, Crawshaw (LON:CRAW) +21%, Berkeley Group (LON:BKG) +12.8% and Plastics Capital (LON:PLA) + 11.0%. Unfortunately these were all quite small holdings in the portfolio and although no holdings were down more than 10%, a number of the larger holdings in the portfolio did not participate in the rally; Regenersis (LON:RGS) fell 8.2%, Dixons Retail (LON:DXNS) -5.6% and ST Ives (LON:SIV) -2.5%.


I belatedly sold three poor performers, booking losses; Anglo Pacific (LON:APF), Polo Resources (LON:POL) and Agriterra (LON:AGTA). I reduced the holding in French Connection (LON:FCCN) to 2% and Amino Technologies (LON:AMO) was sold completely. New holdings were acquired in J Sainsbury (LON:SBRY), Intermediate Capital (LON:ICP), Fox Marble Holdings (LON:FOX) and Kromek (LON:KMK) and the holdings in easyJet (LON:EZJ), Crawshaw (LON:CRAW) and Melrose Industries (LON:MRO) were increased.


Many commentators are calling for a correction in the market but as always timing such an event is difficult. Clearly equity markets have had a good run but the UK, at least, does not look overly expensive in absolute terms and apart from a tactical holding in cash there do not, in my view, seem to be many sensible alternatives; Gilts have ridden a 20 year bull market on the back of falling interest rates and with the UK economy staging a reasonable recovery, do not seem an obvious place to make money. I am happy entering the New Year with the JIC Portfolio fully invested.

Website: JohnsInvestmentChronicle
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johnrosier 4th Mar 15 of 22

Equity markets regained their poise in February with the S&P 500 closing the month at a new all-time high. In the UK the FTSE All Share Index was up 5.2%, more than regaining January’s fall, so that it is now up 2.0% since 1st January. The JIC portfolio returned +3.8% in February and is now up 7.3% since the start of the year and 84.1% since inception just over two years ago.

The stand out performer was French Connection, which reacted favourably to its year-end trading statement which showed a return to profitability in its second half; the shares were up 46.6% in February. If the success of its autumn/winter range under its new design team proves more than a flash in the pan then the recovery in the business and the share price could have some way to run; for now I am a happy holder. Dixons was up 17.8% boosted somewhat by the announcement that it is in merger talks with Carphone Warehouse. Given the similar market valuations of the two companies it is likely to be a merger of equals and could lead to considerable synergistic benefits; it will also give Dixons a strong position in the mobile smartphone market where it is currently pretty weak. Jupiter Fund Management was up 16.9%, helped by an enthusiastic reaction to its 2013 results which include a 43% increase in the dividend. Regenersis was up 11.2%. The disappointing holdings in the portfolio were Synectics which warned of a pause in growth in 2014 which did not go down well with the shares down 23.3% in February. It seems that it had been too optimistic about the timing of new contract wins. Adept Telecom fell 10.0% and is now sitting right on the 200 day moving average which hopefully will act as support. I have a meeting with the management in nine days’ time.

During the month I bought a new holding in Jupiter Fund Management, which I further increased following its results. I also bought a new holding in Polar Capital Management; I suspect that it will follow the example of Jupiter and increase the dividend by a meaningful amount. It has many of the characteristics of Jupiter; it is well managed with good control of costs, the management hold significant stakes in the business and thus their interests are aligned with outside shareholders.

In the biotech/healthcare theme which has been strong this year, (Since 1st January; Biotech Growth Trust +17.7%, Worldwide Healthcare Trust +12.6% and International Biotechnology Trust +10.6%),  I reduced the holding in Biotech Growth Trust to 3.0% and used the proceeds to increase the International Biotechnology Trust to 5.0%. Given that the share price was on an 18% discount to net asset value I reckoned there was a chance of out-performance as the discount narrowed. The jury is still out on the success of that switch! Melrose Industries returned capital to shareholders accompanied by a share consolidation. I used the proceeds of the return to increase my holding in Melrose back up to 4.0% of the portfolio.

March should be a busy month with around ten of the JIC Portfolio holdings due to announce results, starting with interim results from Thorntons tomorrow. Thus far markets have ignored the events unfolding Ukraine; it will be interesting to see how things unfold and whether they develop into something that does undermine market confidence. In the meantime I will continue to focus on the individual holdings with the portfolio, try to avoid further profit warnings, run my winners and cut my losers!  

The chart below is of The Dow Jones Global Index; it is a broad yet investable measure of the global stock market. It targets 95% coverage of markets open to foreign investment. The index currently tracks 47 countries, including 26 developed markets and 21 emerging markets. It is less than 2% off its October 2007 highs! Was it all a bad dream?

Website: JohnsInvestmentChronicle
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johnrosier 2nd Apr 16 of 22
2

March 2014


March saw a recovery of sorts in emerging markets and the “more risky” European markets; Brazil +7.0%, Italy +6.1% (the best performing market year-to-date, up 14.4%), India +6.0%, China +3.0% and Spain +2.2%. Japan, the US and the main continental European markets were flattish. The FTSE All Share (Total Return) Index lagged other markets, falling 2.6% so that it is now down 0.6% year to date. The JIC Portfolio returned -0.6% in March but is up 6.6% so far this year and +83.0% since inception in January 2012.


French Connection was the leader of the pack for the second month running, up 30.8% in March and 95.8% year-to-date on the back of a recovery in the business which I am hoping will be sustained. Crawshaw got the silver medal, up 21.6% in March and 72.2% year-to-date, following a strong trading update, and the bronze went to Regenersis, +20.8%, helped by an acquisition on the last day of the month which was well received by the market. Vislink was up 12.2% and Adept Telecom up 11.2%. Kromek was disappointing, falling more than 30% on its profit warning last Friday; it was the smallest holding at only 1% of the JIC Portfolio so was not as damaging as it could have been! During March greater damage was inflicted by the 15.2% fall in both the Biotech Growth Trust and the International Biotechnology Trust. Given the combined weighting in the JIC Portfolio of 8.0% before the fall, it hit my overall performance by about 1.2%. Since the start of the year, however, Biotech Growth is flat and International Biotechnology is down 6.2%. In my opinion the fall has been overdone and last week I added to Biotech Growth Trust.


During March no new holdings were introduced to the JIC Portfolio but I did add to a number of existing positions.


March was a pretty busy month form a reporting point of view and April, with Easter, should be quieter. At this stage I am expecting updates Polar Capital Holdings, final results from Crawshaw and trading statements from Plastics Capital, St.Ives, Jupiter Fund Management and Thorntons.
It has been pretty tough going so far this year, a bit like trudging through treacle. Markets have generally been directionless, trading in a fairly narrow channel as it digests the Ukrainian/Crimean situation and worries about the likely pace of tapering of quantitative easing in the US, under new Fed chairman, Janet Yellen. For now I am reasonably comfortable being fully invested as I still believe that central banks are unlikely to take any risks with recovery, especially whilst inflation is causing little concern.

Website: JohnsInvestmentChronicle
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jjis 2nd Apr 17 of 22

In reply to johnrosier, post #16

Well played on Regeneris John and guess you are enjoying the bull market in Crawshaw, boom boom.

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pooledaniel 2nd Apr 18 of 22

Fox Marble on the up for the past few days also, looking a bit more positive.

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johnrosier 2nd Apr 19 of 22

In reply to pooledaniel, post #18

Mew highs always good news! easyJet and Third Point Offshore closed at new highs yesterday as well.

Website: JohnsInvestmentChronicle
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johnrosier 3rd Jul 20 of 22
2

June 2014

Background:

In general, a good month for equity markets with the US pushing on to new highs with small cap recovering and leading the way; the S&P 500 returned 1.9% but the smaller cap indices, the Russell 2000 and S&P 600 were up 5.3% and 4.6% respectively. The BRIC countries of Brazil +3.8%, Russia +5.4%, India +3.6% and China +0.3% were all strong. The Japanese Nikkei was up 3.6%. Against this background the UK was rather disappointing with the FTSE All Share (TR) Index down 1.3%, the FTSE 250 down 1.6% and the FTSE AIM 100 down 6.4%. Concerns over likely early interest rate hikes and the strength of sterling may have been responsible for the UK’s lacklustre performance. 

JIC Performance:

The JIC Portfolio performed well rising by 2.1%. The standout performer was Crawshaw Group, up 72.6%, helped by strong current trading and the announcement of plans to accelerate the opening of new stores on a nationwide basis. It was also good to see Baillie Gifford Shin Nippon +9.7%, respond to strength in the Japanese market. COMS was the real disaster, down 29% after the Company had to re-issue its full year results. The damage was limited by the holding being one of the smallest in the Portfolio at 2.4%. French Connection gave up 15.5% on no news and easyJet 10.8%. 

Activity:

An active month for the Portfolio; new holdings were introduced in Ted Baker and The European Asset Trust. Ted Baker had drifted back to a more attractive valuation given its growth prospects, which should be increasingly driven by international expansion. The European Asset Trust is my chosen vehicle for gaining exposure to Continental European markets which look cheap relative to other world markets and are likely to benefit from continued loose monetary policies, as the ECB attempts to encourage growth and stave off deflation. I added to the holding in Intermediate Capital, attracted by the 5.5% prospective yield. I reduced Crawshaw a few times on its incredible strength; I love the story but I think a 4% holding is sufficient given it is no longer as cheap as it was and is still only a £36m company. I also reduced the holdings in St.Ives, Melrose Industries and Dixons Retail. 

First Half:

The first six months of 2014 have been a lot more difficult than the preceding 18! The FTSE All Share (TR) Index is up only 1.6% and the FTSE 250 (TR) Index just 0.6%. AIM market investors have had a particularly tough time with the AIM All Share down 7.5% and the AIM 100 down 12.2%. Against that background, whilst not wanting to appear complacent, I am reasonably happy with the +6.9% return of the JIC Portfolio.

Poor performers!

The main disappointments, which I am still grappling with to some extent, were easyJet, Thorntons and Coms. Easyjet fell 12% during the first half but 26% from its peak in early April. The latest damage was done on Monday by a note from Merrill Lynch, which to me, looked rather tabloid in nature; “22% downside, lazy consensus heads blindly into an EPS cliff!” was the headline. The analyst’s main beef was that an increase in European airline capacity would lead to reduced yields and therefore downgrades. He may well be correct but I thought the note rather “lazy” in that it did not back up these claims with any data on capacity increases. With hindsight the valuation may have got a little stretched and I may have become too emotionally involved; I should have at the very least reduced when the share price momentum had clearly changed direction. Discipline! However, we are where we are and I am going to hang on for the time being; recent traffic stats have been strong with June’s due on Friday, the shares look oversold and the valuation looks to me attractive. There are no signs of downgrades to forecasts yet but it is something to keep an eye on. If I had reduced earlier at higher levels I would now be buying back but I feel a 4% holding is about right. It is encouraging to see a sensible institution like Capital Group has used recent weakness to add and this morning announced it had gone through 5%. Thorntons warned on sales but reassured on profits for the full year ending 30th June. It was pleasing to see that the 4th quarter did see a return to growth in this morning’s trading statement. I have added. Lastly, COMS I think was bad luck. I could not have seen that coming. I am hanging on as I think it looks good value and to sell now would risk throwing the baby out with the bath water. It is valued at 16.4x February 2015 earnings for 55% growth and 7.8x February 2016 for 100% earnings growth. It does have to rebuild confidence and so for now I am not adding but sticking with the 1.8% holding.

The future:

Who knows what the second half will have in store. Many are pointing to the low level of the VIX “fear index” suggesting a correction is on the way, but they are only looking at a short period of history; there have in the past, been long periods of low volatility. In Europe, monetary conditions will continue to be loose and in many parts of the world there is evidence of improving economic growth. In the UK I think the consensus is moving towards an interest rate rise before the end of the year. To be honest, it would probably be a good thing to get the first rise since July 2007 out of the way but given the strength of sterling, with its downward pressure on inflation together with the slowdown in mortgage approvals, the consensus, as so often, may be proved wrong. 


I shall strive to find some good new investments and be more disciplined about reducing exposure to stocks that have clearly “rolled over” or where valuations have become overly stretched.

Website: JohnsInvestmentChronicle
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johnrosier 4th Aug 21 of 22
3

July 2014

Poor European economic news, tension over Ukraine and talks of interest rate rises in UK and US all conspired to make it a poor month for Western equity markets; German DAX fell 4.3%, the French CAC 4.0%, the US S&P 500 1.5% and the FTSE All Share 0.3%. Far Eastern and emerging markets fared far better with China up 8.9%, the Hang Seng (Hong Kong) 6.8%, Japan 3.0%, Brazil 5.0% and India 3.9%. Russia, not surprisingly, was the worst market down 10.7%. The JIC Portfolio had a poor month falling 3.6%, its second worst since inception in January 2012 and surpassed only by May 2012 when it gave up 8.3%.

JIC monthly performance since inception:

monthlyret

The Portfolio is skewed very much towards FTSE 250 and small cap stocks which lagged the FTSE 100. The FTSE 250 Index fell 1.5%, the FTSE Small Cap -0.7% and the AIM All Share -2.2%. The best performing stock during July was Dixons Retail, up a measly 3.8%! Much of the damage was done by Crawshaw, which gave up 25.4% after announcing the placing of shares with new institutional investors at 42p, a significant discount to the prevailing price, to raise £8m to fund expansion plans. The fall should be seen in context of the 73% rise in June and 180% since the start of the year. Regular readers will know I am still very keen on this stock. Fox Marble retreated 16.6%. Polar Capital fell 13.7% after going ex-dividend and now stands on a prospective dividend yield of 7.3% according to consensus forecasts. Finally COMS gave up a further 10.9%.

I bought a number of new holdings for the JIC Portfolio during the month and am now up against my upper limit of 30 holdings. I bought Plus500, Micro Focus International, BlackRock World Mining Trust and Interserve. To make way I sold completely out of Igas Energy, Lamprell and Third point Offshore. I added to existing holdings in Crawshaw, Thorntons and Sinclair IS Pharma. The reasoning behind all my trades can be seen in the company blogs history.

The last week of the month saw a pick-up in volatility as is nicely captured by this chart of the VIX Index. I suppose a move up to 20ish in the near term would not be a huge surprise.

vix

Given we are into the dog days of summer when markets often move on little news or volume, we could well see the S&P 500 fall back to the 200 day moving average, some 3.5% lower.

sandp

I will endeavour to take advantage of any further short term market weakness; back in February/March I was struggling to find new ideas but the shake out, especially in mid cap and small cap stocks has, I think, thrown up a fair number of opportunities at attractive valuations.

Three stocks have performed poorly since acquisition. The first COMS is down 41% and has cost the portfolio nearly 1.0% of performance. I have decided not to cut and run and thus far have resisted the temptation to add. My resolve however is weakening as it now stands on a PE of 13.3x January 2105 forecasts falling to only 6.4x next year ending January 2016. Turnover is likely to be running at an annualised rate of c.£100m as we move into 2016 compared to a current enterprise value of £36m. It recently appointed an experienced chairman, Frank Beechinor who is also Chairman of successful DotDigital. After the debacle with the 2013 accounts the FD stepped down and I look forward to the announcement of her replacement. So, in conclusion the shares were justifiably hit after the accounts debacle but in response the Company has taken the right steps and I think offer great value. Very Happy Holder at these levels!

coms

Fox Marble is down 22% since acquisition. The Company is doing everything to plan; production is underway and a new processing plant is nearly completed. The final piece is ramping up sales which is obviously crucial to the long term success of the business. It has made some progress on this front but until there is further evidence of success I will sit on my hands. Last month it placed shares with new institutional investors at 18p, encouragingly in line with the prevailing market price, to fund the acquisition of two new quarries.  Massive rewards if they get it right! Holder!

fox

Finally, Polar Capital is down 9.1% since acquisition. It is a high Beta stock so will not have liked the market conditions of the last few weeks and has been weak since going ex-dividend in early July. I remain a fan of the Company and am especially attracted to the prospective yield of 7.2% for the year ending March 2015. If we have entered a protracted “bear” market then this is probably not the stock to own but as I do not think we have. I am a Happy Holder!

polr

Website: JohnsInvestmentChronicle
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johnrosier 2nd Sep 22 of 22
1

August 2014

After a poor July a better month for both equity markets in general and the JIC Portfolio. The US lead the way, helped I think, by encouraging economic data, with the S&P 500 rising 3.8% to finish the month at an all-time high. In Europe the French CAC was up 3.2%, the German Dax +0.7% and the Spanish IBEX +0.2%. The Japanese Nikkei failed to join the party falling 1.3% and the Russian market, -2.4%, struggled for obvious reasons. The FTSE All Share (TR) Index was up 2.2%. It was good to see mid and small cap companies recover their poise somewhat; the FTSE 250 Index was up 2.8% and in the US the Russell 2000 gained 4.4%.

The JIC Portfolio had a good month rising 4.3% so that year to date it is up 7.5% against 3.5% for the All Share and since inception in January 2012 has gained 84.4% against 40.4% for the Index.

Monthly returns for JIC Portfolio and FTSE All Share (TR) Index

5405c8c4715bacomp2.png

The winners were Renew, +22.4% which broke out of a fairly narrow trading channel, Crawshaw,+17.8% on enthusiasm for the prospects of its national rollout, Fox Marble, +16.9% bouncing from subdued levels, Biotech Growth Trust, +15.8% buoyed by corporate activity in the sector, and Vislink, +14.4% (sold this morning). Plastics Capital gave up 11.6%; it looks like one of its very large shareholders is reducing its holding and Sinclair Pharma fell 6.6% falling to the bottom of a fairly defined trading range.

During the month I introduced two new holdings; Interserve which looked just too cheap to me and Gem Diamonds which appears to be in a sweet spot of rising diamond prices and the end of its substantial capital expenditure on Letseng, its Lesotho mine and its new mine, Ghaghoo in Botswana. I funded these sales by selling Third Point Offshore for a nice profit and Melrose Industries where I was concerned that further progress in the share price would be difficult given its valuation, sterling strength and subdued end markets. I added to existing holdings in Coms which in my opinion looked super value after the share price more than halved since March, AMEC after its half year results on expectation that the second half would benefit from the completion of the Foster Wheeler acquisition, and European Assets Trust, in expectation that the ECB will take more drastic action to attempt to halt deflation taking hold in Continental Europe.

In my July monthly I reported on three “dogs” in the JIC Portfolio; Coms, Fox Marble and Polar Capital. It was pleasing to see that Coms recovered 13% during the month but is still down 26% since purchase, so some way to go. Fox Marble recovered 16.9% but is still down 11.1% and the 7% recovery in Polar Capital left it down just 1.8% on my book price.

So, we continue to climb the proverbial wall of worry. It is very easy to be nervous at the moment with Putin seemingly intractable over Eastern Ukraine, ISIL in Syria/Iraq, sluggish economic growth and the spectre of deflation in Europe and lastly, equity and bond valuations, particularly in the US. Against this we have very accommodative monetary conditions which are likely to get even easier in Continental Europe and in the UK and US robust economic growth. So I won’t attempt to predict where markets go from here, (my last attempt in my July review where I suggested the S&P 500 would drift back to the 200 day moving average shows what a mugs game predicting markets is) and focus on the individual holdings in the JIC Portfolio where most of the stocks are on low teens PE ratios, PEG ratios (PE to growth ratios) of under 1.0 and have decent yields.

Good luck and Happy Investing!

5405c9065e256sandp.png

Website: JohnsInvestmentChronicle
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About johnrosier

Johnrosier

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I manage my subscription website  www.JohnsInvestmentChronicle.com in which I show my portfolio and all transactions. I blog within an hour of trading, with an explanation, and send an alert email to all may subscribers. I do not pretend to have all the answers but I hope my portfolio, and the trades, provides food for thought as well as helping those who are new to managing their own portfolios.I think what I do is unique. There are plenty of tipsters out there who will remind you of the good ones and quietly forget the duffers; I do not have that luxury as the portfolio is there for all to see. I have to confront my mistakes and deal with them. A tipster also does not show how a tip fits into the context of an overall portfolio. My portfolio of up to 30 holdings has different holding sizes based on my conviction behind the stock and its risk. I set up www.JohnsInvestmentChronicle.com in January 2012. Prior to that :In September 1984, I left university with a degree in Zoology and started work in the City of London. Over the next twenty five years most of my time was spent managing UK equity portfolios with Fleming Investment Management and Henderson Global Investors, for company and local authority pension schemes as well as the reserve fund for a well known charity. During 2009 I left full time employment and decided to take time out to consider the next stage of my career. In the meantime I have been putting my years of experience to good use investing the family savings. I have thoroughly enjoyed the freedom of investing from home and despite some tricky periods during 2011 it has been a rewarding experience.  more »



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