Half year portfolio report

It’s that time of year again, I review my portfolio performance every 6 months as a compromise between short term volatility and waiting too long between reviews. The first half of 2014 has been a bit of a roller coaster for my portfolio, driven mainly by swings in the price of my biggest holding Craven House Capital. The rest of the portfolio has been much smoother, seeing nice steady gains. My portfolio was strongest in the first couple of months of the year, in contrast to the general stock market which was negative until a couple of months ago but has since made some nice gains. Nevertheless I beat the trackers for the third half year in a row, making 7.6% versus 1.3% for the FTSE All share and 6.1% for the S&P 500 tracker. Note also that my portfolio is 70-80% weighted in UK shares, so the FTSE All share is the closest benchmark. My portfolio excluding my 30% position in Craven House returned 7.5%, so the holding didn’t really distort results for this half year. Here are the individual positions for the portfolio and the changes.

Positions closed in H1 2014

Positions held throughout H1 2014

Positions bought in H1 2014

The winners

There are a few highlights I want to make. Starting with the big winners, Kentz soared almost 65% during the first half, with most of the gains coming when a takeover was announced recently. I exited for slightly below the takeover price in order to free up cash for my portfolio. When I first looked at Kentz I thought it was a very strong company to hold for the long term, at the time it was trading at £3.90 and I thought it was worth £6.50 but would grow in value over time. I didn’t predict the takeover interest in it, it has had two offers and the latest was accepted at £9.35, almost 50% above my estimate of its fair value. I can’t be disappointed with a quick gain, but this didn’t turn out to be the long term holding I had envisaged.

The other big winner this half was Ridley Inc. I was less confident about the long term prospects of this company as I wasn’t as familiar with their agricultural business. So although it was high margin and is probably a good long term investment, I exited when it hit the top of my fair value range at $24.31. The shares did trade well above that initially but have since fallen back down. I made 75% on Ridley (lost some due to currency movements) in around 8 months.

The losers

I had more losers this half than last year and that is mainly due to my increased exposure to the more volatile London AIM shares. Clear Leisure plc is down 26% and shares are suspended pending publication of their Annual Report, which is late. I made a mistake on this investment but will see it through, I still think it’s worth what my revised estimate stated but will not add to the position though as my faith in management is dissipating.

Goldplat is my biggest loser at -37% but it is also the one I am most bullish about and I intend to increase my position. There is no real reason for the price fall, nothing fundamental in the business has changed since I invested, no news is out, and I stand by my original Goldplat analysis.

Argo Group is also down after it failed to pay its annual dividend this year. This is very disappointing from a company that is trading well below its net assets and can easily afford it if it simply liquidated some of its balance sheet (as an asset manager it doesn’t need its bloated balance sheet). The 10% dividend yield is what made it attractive to wait for management to finally return some capital to shareholders, now it is less so.

Other losers where Avangardco, which is down due to the instability in Ukraine and Russia, and Tesco, which has seen a continued deterioration in the main business. My position in Tesco is tiny so it has little effect on the portfolio and I wish I had sold my entire holding when I last sold a chunk (at a small profit!), rather than leave this little bit. The only reason I keep it is for sentimental reasons I suppose. I have a limit sell order at 300p.

The H2 2014 portfolio

Finally, here is my portfolio as it stands now. As usual, do your own research before investing your own money.

Investing Sidekick

Founder of Investing Sidekick. Works as a research analyst and is an avid value investor, always searching for undervalued shares.