Investing mid-long term Journal!

[Burkina2008]

So I just started my business a few months ago and I've been running ok, after a first few hectic months where a lot more control was needed and where trading was tottaly forgotten.

After reading some books again on the topic and going through a lot o magazines on anything from FHM to Shares Magazine (34 flights in the last month is a lot of time on airports and plains), I decided to grab 100,000 GBP and put them on an account, for some mid-long term investment, being the target a 20% annual profit.

I put some rules into this and this has nothing to do with spreadbetting. I am going to have no more than 5-6% of my account in one share and before I commit myself into something, I will have to write here why and how!

 

[Burkina2008]

11 August 2012

Just filled the saturday with loads of boring things...woken up way past 12 and still with a headache from friday's long night around figures.

Two key points on the day:

1 Sporting B-team began its campaign this year and with a lost against more stuctured Oliveirense...boring game, 1-0 result, spent more time doing other things than actually concentrating on the tv...

2 My girlfriend had to help a friend getting some extra books on a Bimby machine order, so we had to have a demonstration of the machine here at home. I just sat back on my office room and listen to the two hours instructions and cheap marketing technics...extraordinarily enough at the price of +900 euros, it still quite popular in Portugal.


So the two companies I was looking at investing this past week was alchohol beverage giants Diageo and small identity solutions company BG

From Diageo this were my notes:

- Premium drink business, brands like Johnie Walker, J&B, Bushmills, Smirnoff, Bailey's, Captain Morgan, Guiness
- Owns 34% of Möet Hennessy, with brand Möet & Chandon among others...


- Market cap 42,9 Bn
- PE high at 22,467
- Revenue 13,3 Bn
- Dividend last year 40,40p
- Profit 1,9 Bn
- Yeald last year 3,25%
- Next dividend ?
- Ex-dividend date 5 Sept to be paid in 22 Oct
- Debt 8,3Bn a bit to high at 4,5x profit


- Strategy: Expanding to emerging markets and innovative premium drinks

- Steady climbing since Mar 2009, valuation of 120%
- Looking to buy along the 1700 mark and before the end of next week to catch the ex-dividend slope, with the objective of reching 2100-2200 on a 6m to 1y date.
- Stop-loss if lower tha 1550

My personal comments:
- In depression times more liquid is sold and in growing regions Diageo already has a foot
- Strategy based on premium drinks may contradict the first comment
- Crysis in emerging markets is a definite threat
- Hope they try to expand more into Asia and not in the wine and beer business where they would find hard to get a share of a market with too many players...



Any comments from you would be ver helpful!

 

[Burkina2008]

13 August 2012

I just bought 3 shares of Diageo at 1693,50, tryng to get at a cheap price when they began to rebound....

So resume is after stamp tax and commissions:

Portfolio
- Diageo 3 shares - 5080,50p (5,08%)
- Cash 94881,60p (94,92%)

Yesterday just had a sick day, completly exhausted, so just watched some movies and read some internet nonsense...only time to get out of the house was after dinner with a stroll down the avenue...

 

[Burkina2008]

14 August 2012

So, tomorrow flying agains, this time to München and Amsterdam, actually I will take the opportunity to spend the weekend in Holland...cant just be work, can it?

I have loads of documentation on BG and hope to decide on weather this would be a good investment or not. Anyway I would be glad to find someone that has any info on the company to exchange some views!

Anyway, there is a recent portuguese start-up that managed to be exchanged in NYSE Alternext, providing some very nice solution and expanding to middle-east and central Asia...I will be looking at this ISA - Intelligent Sensing Anywhere, (NYSE Alternext: ALISA)

How can France still finance itself on a zero rate is a mystery to me

 

[Burkina2008]

20 August 2012

Back from München-Amsterdam trip and a few considerations after having seen some very interesting trends in both contries:

- Germany shows a bit more spending on "new things", at least in comparison to what I saw 15 years ago. I visit Germany at least once every 3 months and I've noticed a lot of acceptance from the new youth that hasnt felt the war necessity of older generation. Another noticable thing is that construction is high, mainly on highways been renovated, a sector to look into for sure.

- Holland a vast fast food market showed to me a healthy food company existing only in Holland and Belgium as a very interesting and accepted concept, La Place (further investigation needed)

- Both countries along with an FT article on 15th see a trend on cheap supermakets, mainly Lidl and Aldi (both unfortunatly not AG)



Interesting readings along the trip:

- A publication on Shares magazine says that 3 factors are still proof that economy is a long way from recovery: dow jones transport is not doing better that the whole index, coper is down and Korea index is not recovering...obvious reasons behind this semi-flawed article if anyone wants to discuss it

- Mining companies are not my cup of tea - their shares move correlated to comodity prices and desviations are caused by new discoveries or failures...

A nice strategy:
- Contaning loses is 90% of any good strategy;
- Buy if »MA;
- Dont take tips, do research yourself
- Poker is a good practice
- Always have a plan
- It doesnt matter if you have more than 50% correct buys/sells, what matters is than the winning trades make more than you lose on the bad ones


Companies to look into next weeks:
- Telit Communications (TCM: AIM)
- Micro Focus (MCRO)
- Tribal (TRB) - maybe too big of a spread....
- Driver's (DRV:AIM)
- Tracsis (TRCS) - just follow
- Iomart (IOM:AIM)
- Tavan Tolgoi
- Mongolia index companies

 

[barjon]

13 August 2012

I just bought 3 shares of Diageo at 1693,50, tryng to get at a cheap price when they began to rebound....

So resume is after stamp tax and commissions:

Portfolio
- Diageo 3 shares - 5080,50p (5,08%)
- Cash 94881,60p (94,92%)

Yesterday just had a sick day, completly exhausted, so just watched some movies and read some internet nonsense...only time to get out of the house was after dinner with a stroll down the avenue...

er, 3 shares - they are only £16:97 atm

 

[Burkina2008]

er, 3 shares - they are only £16:97 atm

sorry didnt understand what you mean with that comment...can you rephrase please?

 

[barjon]

sorry didnt understand what you mean with that comment...can you rephrase please?

Well, you say you bought 3 shares in Diageo @ 1693:50 cost £5080:50 leaving you with £94,881:60 left from your £100,000 starting pot.

All fine except that Diageo shares were priced at £16:935 and 3 shares would have cost £50 odd, not £5080.

You seem to have mistaken the quoted price as £ rather than pence, so you will either get a bit of a shock when your contract note arrives, or you are just working a pretend portfolio.

 

[Burkina2008]

er, 3 shares - they are only £16:97 atm

Well, you say you bought 3 shares in Diageo @ 1693:50 cost £5080:50 leaving you with £94,881:60 left from your £100,000 starting pot.

All fine except that Diageo shares were priced at £16:935 and 3 shares would have cost £50 odd, not £5080.

You seem to have mistaken the quoted price as £ rather than pence, so you will either get a bit of a shock when your contract note arrives, or you are just working a pretend portfolio.

ah sorry I meant 300 shares...dunno why I wrote only 3...my bad!

No is not a pretend portfolio

Anyway thanks for the correction and can you give me any other input on what i just wrote?

cheers

 

[barjon]

ah sorry I meant 300 shares...dunno why I wrote only 3...my bad!

No is not a pretend portfolio

Anyway thanks for the correction and can you give me any other input on what i just wrote?

cheers

well your analysis seems ok, but remember that there are many very highly paid people analysing them all with much more knowledge about them than we have and they are all ready anticipating good growth to judge from the price.

On a general point, you have talked about your target growth but you haven't talked about what you are going to do if the price falls. What's your strategy here?

 

[DionysusToast]

Good thread... subscribed - will be interested to see how you do...

 

[Jack o'Clubs]

can you give me any other input on what i just wrote?

cheers

Nice to see an intelligent new thread on T2W, particularly one more aimed at investing than day-trading. I'll cut to the chase though. I don't think you'll make your targeted 20%. In fact I'd be impressed if you consistently annualised single digit returns. Out of interest, where did your 20% come from? Two reasons why not. First any long-only portfolio is heavily geared to beta. Your returns will derive more from where the markets go than the individual stock choices you make. Yes, you can 'outperform' the market by 20%, but you won't make 20% in absolute terms in a year when the market tanks. Second is Barjon's point. A stock discounts the market's expectations of the present value of its future cash flows. To generate stock alpha you need to be right where the market is wrong. Given that the weight of money in the market is driven by professionals who spend all their time looking at this stuff, you need to be pretty confident that you know better. Why do you think that the market is unaware of the positives you list for Diageo and therefore that it is incorrectly discounting its future growth? I'd guess pretty much every institutional shareholder in Diageo owns it for the reasons you give. You may have more luck with small-caps which are under analysed, but in AIM stocks you get into a whole set of unpredictable corporate governance issues. The sweet spot (at least in UK investing) is probably in the FTSE250 names where the professionals are less focussed but corporate governance is at least of a reasonable standard so the Chairman or CEO is less likely to consider shareholders funds as his own slush money. Just a couple of thoughts, but seriously good luck and keep going with the thread.

 

[Burkina2008]

well your analysis seems ok, but remember that there are many very highly paid people analysing them all with much more knowledge about them than we have and they are all ready anticipating good growth to judge from the price.

On a general point, you have talked about your target growth but you haven't talked about what you are going to do if the price falls. What's your strategy here?

Yes, i gather that, but I also have a lot of free time on my hands now and my background will help me analyze it "my way" (which doesnt mean the correct way until proven right!). Anyway Diageo is a FTSE100, but I will look forward into "lower" levels where a lot of research hasnt been done.

On the other side I try to look into the companies in a consumer opinion way, which might be an advantage or not.

Well I have a stop-loss at close below 1550, but I may re-enter if I find conditions appropriate.

 

[Burkina2008]

Good thread... subscribed - will be interested to see how you do...

thanks, your comments will be very helpful to help me achieve my results

 

[Burkina2008]

Nice to see an intelligent new thread on T2W, particularly one more aimed at investing than day-trading. I'll cut to the chase though. I don't think you'll make your targeted 20%. In fact I'd be impressed if you consistently annualised single digit returns. Out of interest, where did your 20% come from? Two reasons why not. First any long-only portfolio is heavily geared to beta. Your returns will derive more from where the markets go than the individual stock choices you make. Yes, you can 'outperform' the market by 20%, but you won't make 20% in absolute terms in a year when the market tanks. Second is Barjon's point. A stock discounts the market's expectations of the present value of its future cash flows. To generate stock alpha you need to be right where the market is wrong. Given that the weight of money in the market is driven by professionals who spend all their time looking at this stuff, you need to be pretty confident that you know better. Why do you think that the market is unaware of the positives you list for Diageo and therefore that it is incorrectly discounting its future growth? I'd guess pretty much every institutional shareholder in Diageo owns it for the reasons you give. You may have more luck with small-caps which are under analysed, but in AIM stocks you get into a whole set of unpredictable corporate governance issues. The sweet spot (at least in UK investing) is probably in the FTSE250 names where the professionals are less focussed but corporate governance is at least of a reasonable standard so the Chairman or CEO is less likely to consider shareholders funds as his own slush money. Just a couple of thoughts, but seriously good luck and keep going with the thread.

First of all thank you for your comments and remarks, they are highly useful and I am happy that someone is also interested in the topic.

The 20% is just a figure that makes for the 20,000 GBP I want to make a year on this venture, so not really a scientific or highly calculated number

I am not only going long, I am looking to short some companies in the future on my spreadbet account, although I would have to say that on downturns I would be keeping cash and shorting just a small amount. I still will have to learn how to balance it.

On Diageo I agree with all of what you said, but the company is climbing since 2009 and I see much more domination of them on a sector that begins now to become a oligopoly. The asian market is still very unexplored and from many reports I have read (and recommendatios of brokers and all are wrong many times) some see more climbing for the stock and no surprise if they reach the 2200 soon...

On Future investments I will also look into FTS250 as well as smaller stocks. I am also not only looking into UK but also where there are opportunities, at the moment Mongolia looks nice...

 

[Burkina2008]

22 August 2012

I am sometimes quite astonished by the market readings from some brokers, that comment on mining companies stocks going up as signal that investors have more appetite for risk. If I make a clear picture in my mind I can see that both can be correlated, but I can also make a picture showing exaclty the opposite.

Last days I've been having some Acid Reflux which means eating only stuff that looks way too healthy...this started after last weeks trip which made me have a good breakfast at the hotel at 8,00 and then not eating sometimes till 23,30. Next time I have to go easy on the meeting scheduling and maybe make some luch-meeting

So here the report on the other company I looked at and bought:

GB Group (GBG.L)

- Provides identity management solucions, such as: identity verification, capture and maintenance, as well as identity analysis for corporate clients in the UK
- Leading identity management systems in the UK
- Expanding to Germany, Austria, Switzerland and the Netherlands


- Market cap 92,17 M
- PE 13,10
- Revenue 31,8 M
- Dividend last year 1,375p
- Profit 3,6 M
- Yeald last year 3,60%
- Next dividend ? but up 8-10% expected
- Ex-dividend date 13 Dec ? to be paid in 10 Jan ?
- Debt 12,74 M at 3,5x profit


- Strategy: Buying New companies to expand the services offered and expansion in central northern Europe.

- After hitting 175p they fell to 10p in 2002 on the explosion of the high tech bouble
- They keep on the 35-50 till 2010, but in two years rose more than 100%
- Stop-loss if lower than 75p and buying to target the 120p

My personal comments:
- Still a lot of space to innovate and create new opportunities in this market
- An industry that will be very very needed in the close future
- Stock will go up with any new contract won.


Portfolio from today:

GB Group bought at 92,2p


- Diageo 300 shares - 5041,50p (5,05%)
- GB Group 5500 shares - 5071,00p (5,07%)
- Cash 89811,74p (89,88%)

Commissions and stamp tax: 75,76p

 

[Burkina2008]

26 August 2012

Making the beach vacations I was urging for quite long, I took my parents beach house till the 4. of September. But this does not mean that I am going to forget about stocks and al that, time at the beach is time to read not just have fun...

I will be in NY on the 30.November till the 9.of December and my grandma that is almost 90 years old, already warned me that the shootings at the Empire State Building are "happening often and often! Back then there were no shootings like today, these young people..."

Got a bit upset that Sporting couldnt win the game on Uefa Cup against poor poor Horsens (sorry danish people, although i lived and studied in Kobenhavn for 2 years, your football sucks...plain and simple). If they cant even win against these guys, what hope is there...

Just did some research on the last couple of days and decided to add this company to my monitor list, but I will not buy in the next months for sure!

Telit Communication (TCM.L)

- Global provider of wireless machine-2-machine technology
- 3rd largest competitor in a 14B$ Market, with revenue climbing since 2005
- Italy-based, but present worldwide
- Since January 12 also in the GPS market, after buying Navman


- Market cap 56,72 M
- PE 54,31
- Revenue 177,4 M
- Dividend last year 0
- Profit 2,2 M
- Yeald last year 1,84%
- Next dividend ? 0 expected
- Ex-dividend date na
- Debt 44,44 M at 22x profit way too much


- Strategy: Represented in most countries it takes the job worldwide; tries to provide not only M2M network but also services in the area; continues to invest a lot in R&D and in new markets

- Company had its ups and down, with its 5 year high in April 11 (105p), after that the stock went down again and stabilized on the 50-60p band

My personal comments:
- Market is supposed to triple in size by 2016
- Very big spread: at the moment 53-57
- Present worldwide

Final Note: Not buying at least for now, due to high dependence on credit lines and market growth, a huge amount of debt and very big spreads...also pays no dividends

 

[Jack o'Clubs]

You might want to check your market data as its showing last year's yield at 1.84%, but no dividend last year. Also you could add interest cover and/or net debt to EBITDA to your balance sheet metrics, the latter is useful as debt covenants are often linked it and anything over 3x generally needs explaining.

 

[Burkina2008]

You might want to check your market data as its showing last year's yield at 1.84%, but no dividend last year. Also you could add interest cover and/or net debt to EBITDA to your balance sheet metrics, the latter is useful as debt covenants are often linked it and anything over 3x generally needs explaining.

Jack the "tools" I use are advfn and yahoo.finance...there are still some concepts that I find some difficulty, can you explain me what is the difference between net dbt to EBITDA and debt to profit ratio?
And why the 3x? Any article you might have on the subject?

 

[Burkina2008]

28 August 2012

Just spending a lot of time on the beach, mostly reading as the atlantic coast where I am at is very cold and the micro climate from the region makes it even worse, but most of all walking and semi-running with my girlfriend who is ultra-fit, as I gain too many kilos after stopping with the sports 3 years ago...I used to be 67-68 Kg, now I am 75-76Kg, so I am trying hard to eat healthy and too walk at least two hours on the beach everyday.

My company has its issues, but nothing upsets me mor than seeing my dear Sporting, losing over and over again, last night, 0-1 against poor Rio Ave, I almost smashed the tv...with those wages...

Markets have been nice for my two stock, they are gainig well even against the market and I am looking into IMIC right now...also like to see the euro recovering something...not that is good for the economy in Portugal but still 1,21 is a bit too low, or maybe I am just beeing a bit stupid in the way I am thinking?