This article is the latest in a series that aims to help novice investors with the stock market. To enjoy past articles in the series, please visit our full archive.
The Beginners’ Portfolio is a virtual portfolio, with all costs, spreads and dividends accounted for. Transactions are for educational purposes only and do not constitute advice to buy or sell.
It’s nearly two months since our end-of-2012 valuation update, so how is the Beginners’ Portfolio doing?
In short, it’s up 22.6% since we made our first purchase, of Vodafone Group (LSE: VOD) (NASDAQ: VOD.US), on 18 May last year. Since then, Vodafone has been on a bit of a roller-coaster ride and by August was nicely up, but the tail end of the year saw a slump as low as 154p — partly based on tough conditions in Europe leading to falling service revenues. But data revenues are up, and Vodafone’s global reach helped it gain a new contract with German giant ThyssenKrupp last week. Ace UK investor Neil Woodford famously sold Vodafone this month, but I’m happy to go against the guru, and I still think Vodafone is a ‘buy’.
| Company | Shares | Buy price | Total cost | Bid Price * | Proceeds | Gain/loss | % change |
|---|---|---|---|---|---|---|---|
| Vodafone | 289 | 168.5p | £499.51 | 163.5p | £462.52 | -£37.00 | -7.4% |
| Tesco | 159 | 305.5p | £498.23 | 373.6p | £584.02 | £85.79 | 17.2% |
| GlaxoSmithKline | 34 | 1,440.5p | £502.22 | 1,474.0p | £491.16 | -£11.06 | -2.2% |
| Persimmon | 79 | 617.9p | £500.55 | 898.0p | £699.42 | £198.87 | 39.7% |
| Blinkx |
1,319 | 36.9p | £499.68 | 93.0p | £1,216.67 | £716.99 | 143.5% |
| BP |
112 | 434.5p | £499.01 | 452.9p | £497.25 | -£1.76 | -0.4% |
| Rio Tinto | 16 | 3,048.4p | £500.18 | 3,519.5p | £553.12 | £52.94 | 10.6% |
| BAE Systems | 146 | 332.3p | £497.59 | 350.0p | £501.00 | £3.41 | 0.7% |
| Apple | 2 | $458.40 | £605.98 | $452.60 | £548.25 | -£57.73 | -9.5% |
| Dividends | £91.62 | £91.62 | |||||
| Total | £4,602.95 | £5,645.02 | £1,038.58 | 22.6% |
(* Bid prices are from mid-afternoon Monday while markets were open, so I could get accurate spreads)
The winners
In Tesco (LSE: TSCO), I sided with that other guru, Warren Buffett, who dipped in for a large helping when the price slumped last January in response to a poor Christmas period. Subsequent updates from the UK’s biggest supermarket have shown that the company’s turnaround plans are bearing fruit, and the share price has regained a good deal of its loss. We’re up 17% on Tesco since our purchase on 23 May, and it is definitely still a ‘buy’ for me.
Our biggest winner so far is clearly Blinkx (LSE: BLNX), the video technology developer, whose shares surged more than 20% earlier this month when the company told us that full-year sales could be ahead of target. I have been pleasantly surprised by the rapid rise we’ve seen from Blinkx, as I was expecting growth the be a bit slower. But these things can happen with high-tech growth shares, and we should just smile and be grateful when they do.
Persimmon (LSE: PSN) has done well for us too, as the housebuilding sector has recovered strongly over the past six months. The share price did dip a bit on Monday to 898p despite full-year results showing a 52% rise in underlying pre-tax profit, with a 6% rise in completions and a 6% rise in average selling price. Persimmon is due to pay a 75p-per-share dividend on 30 June, but that will be it until a planned 95p payout two years later.
Valuation
Since the last update, we’ve had a final dividend from BP to add £10.08 to the pot, a final dividend from GlaxoSmithKline of £7.48, and approximately £3.50 as a quarterly dividend from Apple. The extra cash all helps take us to that 22.6% rise — and that’s offer-to-bid, with all charges accounted for, and represents what such a portfolio would actually raise should it all be sold.
It’s still early days and we’re in this for the long run, so valuations are not that important now — but it is nice to see things going well!