SIPP Portfolio as at 30 September 2018

Current holdings in the SIPP

British Aerospace (BA.) holding now = 731 (n/c); Value = £4,605 (UP £177)

Blackrock Smaller Co IT (BRSC) holding now = 1200 (n/c); Value = £17,184 (down £516)

BP (BP.) Bought 1565 shares; holding now = 3065; Value = £18,084 (cost £17,366)

FDM Group (FDM) holding now = 855 (n/c); Value = £8,294 (UP £257) 

GB Group (GBG) Dividend 3 shares; holding now = 2558; Value = £14,836 (down £1,082) 

Genus (GNS) holding now = 160 (n/c); Value = £3,824 (down £739)

GVC Holdings (GVC) holding now = 1390 (n/c); Value = £12,732 (down £2,572)

HG Capital Trust IT (HGT) holding now = 840 (n/c); Value = £16,716 (UP £504)

Homeserve (HSV) holding now = 1526 (n/c); Value = £15,641 (down £229)

Keywords Studios (KWS) holding now = 779 (n/c); Value = £15,120 (down £460)

Legal & General (LGEN) holding now = 6500 (n/c); Value = £17,030 (UP £520)

Safecharge Group (SCH) holding now = 2464 (n/c); Value = £8,008 (UP £247)

Sage (SGE) holding now = nil : SOLD

Segro PLC (SGRO) holding now = 2600 (n/c); Value = £16,536 (down £634)

Cash: holding now = £2,637

Portfolio Value = £171,247 was £173,433  DOWN £2,186 or 1.26%

The loss in the month was worse that as reported as the current SIPP value includes a monthly contribution of £750, so the loss in the period is actually £2,936.

Major transactions include a sale of the complete holding in SAGE, as I cannot see a recovery in the SP in the next 6 months.  The business is undergoing major restructuring, which is something that I did not take into account.

The proceeds of the sale have been pumped into oil share BP: there's a few factors behind this a) the company has finally completed the payment of damages for the Texas oil spill; b) the company is now leaner and more efficient and has new income streams coming into play; c) the USA is about to launch trade sanctions on major oil producer Iran, and that could well push up the price of oil to US$90.  Since I've been a shareholder of BP, the share-price has improved and we should see it top 600 (my initial purchase was at 550).

I'm concerned that the actions of US President Trump have affected the SP of Genus (GNS) which is a company with large markets in China, and it seems unlikely that there will be a recovery soon.

I am also concerned about the drop in value of GVC from summer highs of over 1100 to under 930 today (2nd Oct 18).  Personally, given the strength in the management of the company, I see this as a buying opportunity and will be looking to increase my holding.

The same can be said for GB Group (GBG), this company should have a significant future and may well be in the FTSE100 within 5 years.

SIPP Portfolio as at 31st August 2018

During 2018, in managing the SIPP I have endeavoured to maintain a fair spread of holdings to alleviate risk and (hopefully) seek value, but sometimes this spread brings in holdings which although not losers, are not performing as well as expected. As such, they affect the overall performance of the portfolio and - if the portfolio is to hit the annual 15% growth target - then other holding have to do even better to compensate.

There are 2 holdings within the portfolio that I’ve held for some time that have underperformed in the past 12 months, and they are both Investment Trusts: 

JP Morgan Emerging Market IT (JMG) and 

Schroders Asia-Pacific IT (SDP).  

In the past year they have grown barely 5% and that has been a hindrance to the performance of the SIPP.  As such, I’ve decided to sell-off both of these holdings and have reinvested the proceeds in other companies held in the SIPP.  

As I wrote last month, I have also sold-off my entire holding Senior (SNR) as I thought this company had gone as far as it could in the short term.

Overall, the month of August has not been a great one for the SIPP, the value remains approximately unchanged at around £174,000 as while some holdings have done well – GBG has gone from 540 to 620+ and KWS has gone from 1818 to 2000 – some holdings have lost ground.

This month, I have increased holdings in 

GBG (bought an extra 1050 shares); 

HSV (bought an extra 476 shares); 

and KWS (bought an extra 324 shares). 

I also made an investment in oil company BP (bought 1500 shares).

I am conscious that I may have come in a little to late to the BP party as the SP in this company has improved considerably in the past 2 years. However, the rally looks like being sustained on the back of improved profits as oil prices continue to rise.  I am also hopeful that BP will make the move into more sustainable areas of energy generation.  

Sage (SGE) has been particularly disappointing as this time last month I thought we were on our way to 700+.  Little did I know that the CEO was about to be shown the door – apparently this was a friendly departure from the company, but he still leaves with immediate effect. If I had not already made my share purchases and emptied my “bank” in the process, then I would have topped-up my holding in SGE, but at this time I’m having to consider whether to sell other elements of the SIPP to provide funds or plough-in the balance of my small cash holding.

Current holdings in the SIPP

British Aerospace (BA.) holding now = 731 (n/c); Value = £4,428 (down £362)

Blackrock Smaller Co IT (BRSC) holding now = 1200 (n/c); Value = £17,700 (down £420)

BP (BP.) Bought 1500 shares; holding now = 1500; Value = £8,219

FDM Group (FDM) holding now = 855 (n/c); Value = £8,037 (down £85) 

GB Group (GBG)  Bought 1050 shares; holding now = 2555; Value = £15,918 

Genus (GNS) holding now = 160 (n/c); Value = £4,563

GVC Holdings (GVC) holding now = 1390 (n/c); Value = £15,304 (down £949)

HG Capital Trust IT (HGT) holding now = 840 (n/c); Value = £16,212 (UP £252)

Homeserve (HSV) Bought 476 shares; holding now = 1526; Value = £15,870

JPM Emerging Markets IT (JMG)  holding now = nil : SOLD

Keywords Studios (KWS) Bought 324 shares; holding now = 779; Value = £15,580

Legal & General (LGEN) holding now = 6500 (n/c); Value = £16,510 (down £578)

Safecharge Group (SCH) holding now = 2464 (n/c); Value = £7,761 (down £246)

Sage (SGE) holding now = 1532 (n/c); Value = £9,091 (down £419)

Schroders Asia/Pac (SDP)   holding now = nil : SOLD

Segro PLC (SGRO) holding now = 2600 (n/c); Value = £17,170 (down £114)

Senior PLC (SNR)   holding now = nil : SOLD

Cash: holding now = £1,069

Portfolio Value = £173,433 DOWN £770 or 0.44%

Some notes on my Brexit investment strategy

It always pays to have an in-depth look at individual holdings in your account to verify the reasons why you purchased in the first-placed, and whether there is still some purpose in maintaining the holding, or is it time to sell and move on - all the time trying to shape a "Brexit-Proof" portfolio.

As of this month, I've been holding Legal & General shares (LGEN) over 2 years with my initial stake being 1570 shares bought on 11th July 2016 at a price of 181.40p - with dealing costs the average cost per share was 183.07p per share. Back then, the SP was suffering from the post-Referendum reaction which saw some major movements in some share prices. I bought then as I thought the sell-off was overdone - and I was right. Since February 2017, the SP has been moving in a band between 250 - 270 and while I first thought it may strike-out and break the 300 level, it hasn't. Unfortunately, since February 2017, I've made a number of purchases in LGEN thinking I was doing the right thing but really I was just parking the money in the equivalent of a "high interest" account. The company goes "ex-div" on 17th August and that will probably lead to the SP dropping about 4p to under 260p.  As such, I'm looking to trim my holding in the company from 6500 shares to 3300 shares; which will be about 5% of the SIPP value.  The post-Referendum loss has been recovered and what I have to decide now is what action do I take regarding Brexit.  The reason for that drop was most commentators considered the future of LGEN outside the EU was not good. Personally I think the company has a very strong future on the domestic market and, while European growth may be a struggle, that domestic market should hold-up and maintain company profits. However, LGEN has only rarely seen it's SP top 275 and so I will be looking to sell should the SP top 270, which I am hoping will happen in the next 3 months.  

Monies released will be invested (in part) in increasing the holding in Homeserve (HSV). The company currently has a market value of £3.32bn and value needs to exceed £4.50bn to enter the FTSE100, but I can see that happening before the end of 2019, and it may well happen in the next 12 months. The stimulus for the SP increase will surely come from its US subsidiary's and this is a company that could well repeat the feat's of Ashtead Group in the USA and see a significant increase in turnover, profits and the SP.  Having a large foothold in the US, this company will be outside any Brexit influence. 

My current holding of 1532 shares in Sage was purchased at a cost of £10,625.36; an average of 693.56p per share. Unfortunately, since those purchases were made in Feb/March of this year. the SP has been trading at mainly under 640p.  What has been pushing the SP down are the domestic markets: sales in overseas markets has been growing significantly, and it is in this area that future growth will come.  If, post-Brexit, the £ drops in value to under US$1.20 per £1 those overseas markets will become even more important for the UK balance sheet and this could lead to a major re-value of the company and see it return to levels over 700p for the Share Price.  Even so, I shall be looking to reduce my holding by 25% when the SP climbs above 690p.

Currently, my largest invividual holding is in Blackrock Smaller Companies Trust (BRSC), and this investment trust has shown remarkable performance over the past couple of years.  My first purchase of BRSC was in October 2012 (nearly 6 years ago) and the SP then was 529p; but I sold off that initial investment the following June at 636p.  In March 2015 I returned to BRSC and started building-up my holding, acquiring  1391 shares at an average of £12,514.49 or 899.70p per share.  Rebalancing my SIPP in January 2017, I sold off 221 shared at an SP of 1000.80p and in hindsight that was a mistake - the SP is at 1555 and is over 10% of the value of my SIPP.   What to do with holdings like this before Brexit is a worry.

I've been a long-term holder of GVC buying 500 shares in January 2015 at an average of 446p. Today I hold 1390 shares purchased at an average of 577p and even with the SP at 1140p the growth does not seem to have ended yet.  The joint-venture with MGM International opens-up the US Sports Betting market to GVC and we could see the company enjoy a significant increase in revenue as a result, along with substantial profits.  Another company that should be able to ride the storm of Brexit.

I've been looking at the oil companies Shell and BP and they are looking healthier again, and there is a prospect of significant earnings growth.  Of the pair, I prefer BP mainly as I reckon the more time goes on from the Deepwater Horizon oil-spill in 2010, the more the memory fades and the prospect of earnings growing faster than Shell.  I'm looking for a buying opportunity, although possibly the best time to buy was in May/June 2016 with the SP around 360p. Today the SP is at 575-580 and I want to buy in as soon as I have funds available, as I can see the SP growing 15% in the next 12 months.

To finance the purchase of BP, I'm looking to sell off my entire holding in Senior (SNR).  I bought 1560 shares in SNR in March/april 2017 at an average SP of 207p and in the intervening period the company has managed to transform its share price hitting over 320 last month. that was a bit of a spike from the 295-305 range that the SP has been in recently, and I can't see that there is much juice left in this market.