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.

Mid-year update

The SIPP has undergone a fair bit of turmoil over the past few months. 

When my last blog was posted (25^th March 2015) the value of the SIPP was approx £89,170. At that time, my 10,000 shares in OPAY were worth over £32,000 and they are now worth £26,600.  Unfortunately, some of my other shareholdings have also taken a bit of a hit, and my overall SIPP value now stands at just over £81,100. This is disconcerting seeing as my target for 31^st December 2014 was £86,000 with my target for 31^st December 2015 set at £107,000.
That said, if things pan-out well with OPAY, the December '15 target could be achievable.

Back in March, my SIPP consisted of 17 shareholdings and to take advantage of the OPAY rights issue there had to be some reduction in the number of holdings.  The shareholdings sold were:-

Premier Foods (PFD): 5100 shares recouping £2,275.21

Lavendon Group (LVD): 1400 shares recouping £2,417.78

Telit Communications (TCM): 400 shares recouping £920.05

Selling Telit (TCM) wasn’t a good move as the shares increased in value significantly on good results and have traded at over 340 (equivalent to £1,360) since March.  Similarly, Lavendon Group (LVD) has also climbed above 200 from the sale price of 173, but has now retreated back to under 180; whereas selling Premier Foods (PFD) when I did was a good move.

In May, Meggitt (MGGT) was another disposal at 514 per share (recouping £2,302.63) and that company has slumped to 450 despite rumours of a merger in the news with Cobham (COB). Both of these companies are now looking like decent dividend/recovery plays, and require further investigation.

Looking back now, the disposals to finance the OPAY rights issue were good decisions on the whole. The gamble now is will OPAY perform this year? Personally, I think 320 is within reach very soon after the company enters the FTSE250, and we could see 400+ before the end of the year. If we do see 400 then the SIPP will be worth approx £95,000+.  This will be short of my target, but not far short.

A recent strategic decision regarding my SIPP (to ease the burden of management) is to dispose of shares in companies with a market value of under £1 billion and, instead, put up to 10% of the value of the SIPP into an Investment Trust that effectively specialises in companies of this size.  After some investigation of performance and make-up of suitable investment trusts, I selected BlackRock Smaller Companies Trust (BRSC).  Since 1^st March, the following purchases have been made in BRSC:-

24-March:  202 shares costing £1,645.46 (including commission & fees)

11-May:  199 shares costing £1,758.39

27-May:  175 shares costing £1,599.07

13-July:  178 shares costing £1,688.50

 Total shares purchased = 754 costing £6,691.42 or 888 per share (approx), with BRSC currently trading at 925-930.

These purchases were almost entirely financed by the sale of my shareholding in the JPMorgan Emerging Markets IT of 860 shares, recouping £5,174.02.

I have also consolidated my holdings in both Segro (SGR) and GVC Holdings (GVC).

On 2^nd-July, a further 400 shares in Segro (SGRO) was made at a cost of £1,649.70 (ave. 413) and this was a good move with the shares currently valued at 430+.

On the same day, a further 500 shares in GVC Holdings were purchased at a cost of £2,250.58 (ave. 450) as a potential successful bid for BWin was in the offing.  That hasn’t proven fruitful (yet) and the shares have slumped to 420; but there is renewed activity over the bid, and it could yet prove successful.

The shareholdings in International Personal Finance (IPF) and XChanging (XCR) have proved most disappointing. Due to changes in financial policy in Poland, where IPF obtain 60% of their profits, the share-price in IPF has dropped 25% to 380 (from approx 500).  As such, I’ve trimmed my shareholding by 360 to 1440 which are worth about £5,500. Xchanging is even worse.  There appears to be very little liquidity in XChanging, and this is something I didn’t take account of before making my purchase. I bought XChanging at an average price of 170, and they are now at 116, down over 30%. Why did I buy at 170?  Because I thought they had the capability to move above 200, but right now I’d just like to reduce my loss to something more bearable.

My latest purchase is 430 shares at 570 in the Intermediate Capital Group (ICP), and this financial company (which pays a healthy dividend) should benefit from increased confidence in Europe post the Greek economic settlement, and tick along quite nicely even if the European economy doesn't roar in 2016.

Target at 31^st December 2014 = £86,000

Actual Value on 28^th July 2015 = £75,780 (under by £10,220)

Current Value (29^th July 2015) = £81,100 (approx), including cash of £1,193

Target for 31^st December 2015 = £107,160

Value at commencement of blog (1^st August 2012) = £51,684.02

Monthly contributions since commencement of blog = 36mths @ £300 = £10,800

Capital Growth = £81,100 less (£51,684.02 + £10,800) = £18,616 or 36%

Update on OPAY - a happy dilemma

After taking some advice from a mate in the City, I'm re-jigging this posting and just confirming the numbers.
Now that the dust has settled, and OPAY has been resumed trading on the markets, the share price has settled down to approx 565 per share. That means my OPAY shares are worth £22,600.
My overall SIPP value stands at £89,170 including cash of £3,943.30

Where I go from here with OPAY, I'm not too sure.
To take up the rights issue - 5 new shares for each of my 3 existing shares - I will have to find another £11,332 plus dealing costs (if any). I'm entitled to 6,666 new shares at £1.67 each.
What I may do is sell off part of my options to the rights issue to finance exercising part of it.

Should I exercise the option, I'd have 10,666 shares worth approx (£22,600 plus £11,332) £33,932
This implies a share price on Day-1 (post rights issue) of £3.18 approx.
This takes no account of any "market approval" of the rights issue, but there may (or may not) be an uplift on Day-1.

If I do not exercise the option, but decide to sell it, then I should be able to sell the option to the rights issue at £1.51 per (new) share - this is £3.18 less the option price of £1.67.  That will give me approx, £10,000 in cash, and I will retain my 4000 shareholding which will be worth (at £3.18 a share) approx £12,720.  Note: £10,000 + £12,720 is approximately equal to the current value of the shares which is £22,600.

I have a couple of weeks to ponder this over, and decide whether to take:-
1) the £10,000 in cash (this seems to be the simplest option);
2) finance the rights-issue either in part;
3) finance the rights-issue in full;
4) Post rights-issue: whether to hold-on for a few weeks or sell-off a major portion and rebalance my portfolio.

OPAY seeking reverse takeover entry into FTSE250

Tremendous news this morning regarding the largest shareholding in the SIPP, as OPAY announce record annual figures for the year ending 31st December 2014, and the intention to purchase financial services company Skrill.
This is very exciting news as the combined company could have a share value of 660+ (close on Friday 20th March was 418) and cost savings plus the enhancement brought about by an entry into the FTSE250 for the enlarged group has seen forecasts this morning of a potential share value of 900+. Considering my initial purchase back in March 2012 was at 165, and I've been adding to that with my latest purchase at 307, my current holding of 4000 units is looking good.

Must admit, I thought the company was ripe for a takeover bid, but never thought the company would try and grow exponentially with a reverse takeover and move from AIM into the FTSE250.

Overall, my SIPP has been looking very positive since the turn of the year.
I've been reviewing it more recently, with some additions to the Investment Trusts.
Despite my success with some of my AIM purchases (see OPAY above), some of my stock-picking has been a bit haphazard, and so I've decided to gradually phase out those companies who have a market value of under £300 million from my SIPP. To replace them, I've decided to invest in an IT that specialises in companies of that value: namely BlackRock Smaller Companies Trust (BRSC). I've started off with a purchase equivalent to 2% of the SIPP value and acquired 202 shares, and intend to increase this shareholding by the equivalent of 1% of the SIPP value  per-month during the remainder of 2015, until it reaches an initial maximum of 10% of the SIPP value.

I recently decided to reverse my decision to invest in the smaller companies of the US and I've sold-off my entire holding of 500 shares in the Jupiter US Smaller Companies IT (JUS) and transfer that into my holding of Fidelity Asian Values (FAS), making the total holding 1,990 shares. I feel more positive about growth in the Asian markets than I do about the North American markets. And I also feel the same about Emerging Markets, and my holding in the JPMorgan Emerging Markets IT (JMG) has done well in recent months, so I've topped-up my holding there to 860 shares.

I've doubled my holding in GVC Holdings plc (GVC) to 500 shares as I think this company which operates in internet gambling, has potential to grow significantly. For the same reason, I have also more than doubled my shareholding in Hill & Smith Holdings (HILS) to 375 shares.

Lancashire Holdings (LRE) is a specialist insurance company, and is a tremendous cash generator. Although declared annual dividends are at about 1.80% pa, the company has a history of exceptional special dividends. As such, to take advantage of this I have increased my shareholding to 1000 shares (from 200). 

I have also recently doubled my holding in Premier Foods (PFD) on the premise that they could be due a significant re-rating as they traded at 80+ for much of 2013 (current share price is 44). The transition in supermarkets from large out-of-town shopping centres to smaller local units means that shops have to focus on a limited number of products (due to lack of shelf space and storage) and should (in theory) favour the larger brands, and that will be good for Premier Foods in the long-run. 

Finally, I have trimmed my holding in Telit Communications from 1250 shares to 400 shares as I felt this company was too specialist for my portfolio. I feel similarly about the shareholding in XChanging but, as I'm currently sitting on a large paper loss, I'm waiting for an upturn to sell into. 

Save more in your pension or face poverty

A stark headline on todays City AM (daily business free-sheet). A study by Policy Exchange - a government funded group gathering information for a better society - reckons that saving for a pension should be made compulsory. Today, average savers have just £36,800 in their own pension pot, well below the £240,000 target for the minimum required for a decent pension in retirement.

I fully support any move for enhancing pension pots for retirement but, rather than just pumping money into mis-managed funds or low-interest-rate bonds, my opinion is that more should be done to educate the population into managing their money throughout life.

This should start at school with lessons demonstrating principles such as compound interest, and pound-cost-averaging. The introduction of SIPP's was a significant step in removing the blinds from the "dark art" of pension funds. Now, the people of Britain need to be educated to know how to get the best from them.

I have set myself a Pension Fund target of £640,000 to be in my SIPP on my 65th birthday (8th November 2024). It may seem an impossible task from my current value of approximately £74,000 but you have to set yourself a goal.