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, run as if based on real money with all costs, spreads and dividends accounted for. Transactions made for the portfolio are for educational purposes only and do not constitute advice to buy or sell.
I haven’t looked at the overall valuation of the Beginners’ Portfolio since I dumped Tesco and Blinkx and added ARM Holdings and Sirius Minerals (LSE: SXX), so here’s what it looked like around mid-morning on 22 May:
| Initial investment | £5,073.66 |
|---|
| Company | Shares | Buy | Cost | Bid | Value | Change | % |
|---|---|---|---|---|---|---|---|
| Glaxo | 34 | 1,440.5p | £502.22 | 1,467p | £488.78 | -£13.44 | -2.7% |
| Persimmon | 49 | 617.9p | £352.21 | 1,921p | £931.29 | £606.08 | +186% |
| BP | 112 | 434.5p | £499.01 | 459.0p | £504.08 | +£5.07 | +1.0% |
| Rio Tinto | 31 | 3,132.9p | £996.05 | 2,901p | £889.31 | -£106.74 | -10.7% |
| BAE | 146 | 332.3p | £497.59 | 514.0p | £740.44 | £242.85 | +48.8% |
| Apple | 14 | $65.50 | £605.98 | $131.50 | £1,177.95 | £571.97 | +94.4% |
| Aviva | 146 | 321.4p | £470.71 | 541.5p | £780.59 | £309.88 | +65.8% |
| Barclays | 210 | 254.2p | £546.56 | 271.7p | £560.47 | £13.91 | +2.5% |
| ARM | 80 | 913.5p | £744.46 | 1,112p | £879.60 | £135.14 | +18.2% |
| Sirius | 3,440 | 13.75p | £485.33 | 18.75p | £635.00 | £149.57 | +30.8% |
| Cash | £7.66 | ||||||
| Current value | £7,595.17 | £2,521,51 | +49.7% |
The obviously pleasing news is that we’re in profit to the tune of 30.8% on Sirius Minerals since buying on 12 May, allowing for all costs and spreads. Obviously that’s pretty meaningless right now, because the Sirius investment is almost sure to have a binary result — either the company will be successful in its bid to develop its York Potash project and the price will soar, or it won’t and the price will collapse.
Multi-bagger?
As it stands, Sirius is valued at a market cap of almost £420m, but that could be dwarfed by its eventual value should its plans come to fruition. The firm is sitting on an extremely high grade deposit of polyhalite potash, which is in great demand as a crop fertiliser — and the Chinese are already lining up to buy it. Sirius reckons it should be able to shift about 13 million tonnes a year, creating around 2,000 jobs in the process.
At the moment there are no fundamental ratios, simply because Sirius is still in the net investment phase and recorded a £10m pre-tax loss in 2014, and nobody is able to forecast anything until we get more planning permission news — but of three brokers offering recommendations, all have Sirius down as a Strong Buy.
The crunch day will be 30 June when we should have a Yes/No answer. I’m hoping my next update will show a lot more than that 30% gain.
Apple up
Our one non-UK stock, Apple (NASDAQ: AAPL.US), has continued its climb, with the shares up to $131.50 apiece for a 94.4% profit so far — and including dividends, we’re over 100%. Apple’s share buyback has helped, but billionaire fund manager Carl Icahn thinks it needs to be ramped up and reckons Apple’s shares should be changing hands at $240 per share.
Based on an estimate of $12 EPS and a P/E of 18, that actually doesn’t sound too unreasonable to me — dare we hope for the 3.5-bagger that it would imply?
50% up
Overall the Beginners’ Portfolio has passed the third anniversary of its first purchase with a gain of just a fraction under 50%, with a bit of help from a 186% gain from Persimmon, 49% from BAE Systems and a 66% profit at Aviva.