SIF Portfolio: Sirius Real Estate Returns & 3 New Foreign Stocks

8th May '18 by Roland Head

7 comments 6006 reads

When following a rules-based investing strategy like the one I use for the SIF portfolio, the line between trading and investing can get blurred. In his recent interview with Ben Hobson (recommended reading), US trader Mark Minervini suggested that “an investor is someone who holds for long term capital gains; one year or more rather than weeks or months”.

By that definition, I guess the SIF portfolio’s minimum holding period of nine months means that it’s leaning towards being trading, rather than investment. Certainly this week’s choice of stock might suggest to many investors that I’m a trader!

Sirius is back!

Back in November, I sold the portfolio’s virtual holding in German commercial property firm Sirius Real Estate for a total return of 29%.

This company operates business parks in Germany, providing flexible workspace. It was a successful holding for the SIF portfolio. But forecasts for lower earnings in 2018 meant that it no longer satisfied my screening requirement for 1-year forecast earnings growth of at least 5%, so the shares were sold.

The passing of time means that 1-year forecast earnings are now weighted towards 2018/19, a year in which the company’s earnings are expected to rise by 25%, according to consensus forecasts:

A strong set of H1 2017/18 results means that this stock now passes all of my screening rules.

Indeed, Sirius Real Estate is currently the only stock in my screening results that I’m able to add to the portfolio, once existing holdings and sector duplicates are excluded.

Is it still worth buying?

Sirius still scores highly across the board, with a StockRank of 89 and Super Stock status.

You can read my original write-up of Sirius Real Estate from March 2017 here. I’m not going to recap all of this, as not much has changed. The only thing that is different is the maturity of the group’s portfolio.

Over the last year, the firm has sold some of its more mature assets and bought a number of new sites, often with low occupancy. Management expect to create value for shareholders by updating and remarketing these, as they have done successfully in the past.

This process is expected to have a short-term hit on earnings, but…

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oaktree

8th May '18

Hi

Have started buying the SIF portfolio and SIF international portfolio. But for the international will limit it to Asian and UK quoted as thats what I have paid screens on.

Looking forward to the next article.

PS trying to keep some cash as believe its been along time since a bear market which is only a matter of time away. Currently at 20%. Be good to have an article on just how much cash one should have. My feeling is the same analysis can go into that cash balance level as the SIF stock picks. So surely over time there is a cash % level thats right to have x years after a bear market has ended? I sleep well knowing I have both camps covered.

ddinksdadd

9th May '18

Hi Roland,

i would be interested to hear how you are getting on buying the stocks from the international screen, and how easy or hard is it for a UK based investor to participate practically?

Regards

Jim

Roland Head

Hi Jim,

The international version of the SIF portfolio is strictly a virtual portfolio, which I'm developing as an experiment. I don't own any of the stocks unless disclosed otherwise (at present only one or two of the UK stocks).

I don't have much experience of investing internationally. My impression is that for mid/large caps it's easy enough to invest in EU and US stocks. I know some brokers also cover the main Asian markets. The big spread betting firms also provide a good choice of markets - at least IG does.

Regards,

Roland

Hi Oaktree,

Thanks for your comment. I should emphasise that my articles represent my opinion only and are not advice to buy and sell stocks. Although I own most of the stocks in the UK SIF portfolio, the international version is a virtual portfolio only.

As for cash, I agree that it can be difficult to find a balance between decent opportunities today and the potential for better opportunities in the future. I don't think there's a single right answer. In my view, the correct amount of cash depends on an investors' personal strategy.

In my experience, some trial and error is required to find the right balance between cash and stocks.

Regards,

Roland

Hi oaktree,

One other thought on cash balances. In the case of the SIF portfolio, where stocks are bought/sold according to a fixed schedule and screening rules, there's no need to build up a cash balance. The aim is to stay invested without trying to time the market.

Although the portfolio does have some spare cash at the moment (https://www.stockopedia.com/fantasy-funds/stock-in-focus-portfolio-6449/), this is the result of capital gains over the last two years. I've actually increased the Fantasy Fund's allocation to each new stock from £50k to £55k this year, to try and reduce the cash balance.

Cheers,

Roland

Thanks Roland. I used to be of the mindset that one should be fully invested as over the long term thats the only way to make money ie the market over time goes up. But things are so volatile I do like a bit of cash especially now we are 9 years after a bear market. Jim Slater opened by eyes to this when he wrote about it in the Zulu principle.

Thanks for all your posts.

bobo

13th Aug '18

looks like you called the SRE sale perfectly as it drifts down to 55p now, well done.

SIF portfolio: Sirius Real Estate returns & 3 new foreign stocks

Sirius is back!

Is it still worth buying?

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Roland Head

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