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, which is run as if based on real money with all costs, spreads and dividends accounted for.
Smaller-cap growth shares, who’d have ’em?
Well, I reckon the odd one or two in a portfolio from time to time can be a good idea, but you do need your portfolio diversified in order to counter any shocks. And shocks we have had from Blinkx (LSE: BLNX).
Profit warning
The latest was a 32p (48%) crash in the share price to 34p, based on a profit warning released 2 June. The company told us that “Trading for the period has been below management expectations“, with sales coming in lower than expected. It seems the blog written by Harvard associate professor Ben Edelman, in which he alleged underhand tactics in getting advertising onto people’s computers, is still having a negative effect.
The company told us “We attribute this performance to industry-wide issues of efficiency and effectiveness, which, in our case was compounded by the lingering effects of the disparaging blog about the Company. This resulted in a slower than expected return of demand, despite earlier signs of normalization“.
Revenue is still up 5% year-on-year, but EBITDA should now come in around $5m less than previously expected.
We’ll need to see how earnings go over the next couple of quarters. But for now, we’re actually sitting on a loss on Blinkx — a far cry from the massive gain we were enjoying back when the shares were over £2.
The Quindell purchase
We’re in the unusual position of having two growth candidates in the portfolio at the moment, with Quindell joining only last week. After selling some Persimmon shares to fund the Quindell purchase, here’s how the portfolio looks now:
| Company | Shares | Buy | Cost | Bid | Value | Change | % |
|---|---|---|---|---|---|---|---|
| Tesco | 159 | 305.5p | £498.23 | 284.0p | £441.56 | -£56.67 | -11.4% |
| Glaxo | 34 | 1,440.5p | £502.22 | 1,571.0p | £524.14 | £21.92 | +4.4% |
| Persimmon | 49 | 617.9p | £352.21 | 1,299.0p | £626.51 | £301.30 | +92.6% |
| Blinkx | 1,319 | 36.9p | £499.68 | 34.0p | £438.46 | -£61.22 | -12.3% |
| BP | 112 | 434.5p | £499.01 | 519.0p | £571.28 | £72.27 | +14.5% |
| Rio Tinto | 31 | 3,132.9p | £996.05 | 3,209.0p | £984.79 | -£11.26 | -1.1% |
| BAE | 146 | 332.3p | £497.59 | 428.0p | £614.88 | £117.29 | +23.6% |
| Apple | 2 | $65.50 | £605.98 | $93.60 | £748.82 | £142.84 | +23.6% |
| Aviva | 146 | 321.4p | £470.71 | 518.0p | £746.28 | £275.57 | +58.5% |
| Barclays | 210 | 254.2p | £546.56 | 216.5p | £444.65 | -£101.91 | -18.6% |
| Quindell | 249 | 196.5p | £501.73 | 223.0p | £545.27 | £43.54 | +8.7% |
| Cash | £1.19 | ||||||
| Initial total | £5,073.66 | ||||||
| Current total | £6,700.68 | £1,627.02 | 32.1% |
So, we’re now up only 32.1% since inception, after accounting for all costs — and that’s a bit disappointing at this stage.