BHB Portfolio – Weekly Update – 22.05.20

  • Portfolio up +4.3% from previous week
  • Top of the Class: SWKS, DIS, NOK, MKS, AAL
  • Naughty Step: TSCO, MRW, HSBA, RCH
  • Purchases: AML*, MKS, SPCE, TSCO, SSE, BABA,
  • Sales: None
  • Dividends: None

Weekly Summary

A very nice week for the B-H-B portfolio up 4.3% from the previous week. Although the portfolio is still down 4.6% for the year, this is now a good recovery from the lows in March.

All sectors were up for the week with the exception of stocks in the Financial Services Sector – still this sector was only down -0.2%. The stocks in Communications Services, Tech and Basic Materials were all up more than 5%.

The only negative for the week was not getting further buying opportunities for stocks I was hoping would pull back. An example is Skyworks Solutions (SWKS) which was up 12.4% for the week – a great increase for the current portfolio but I was hoping for the opportunity to buy more before the next rally.

I did manage to add to some positions though and took a new speculative position in Aston Martin (AML).

Purchases

Tesco plc (TSCO) @ £2.24

I had Tesco on my watch list to buy more at under £2.24. I believe this is around 12% below fair value. It is also around 23% below the average analysts estimates so feels like a decent margin of safety.
At this price, Tesco is also paying around 4% dividend yield and is expected to keep paying through the current challenges.

SSE plc (SSE) @ £11.60

I already own a small position in SSE and have been hoping to add more for a while. The price jumped in December ’19 and took it way above the price I was willing to pay. The March sell off has brought it back down to a price I think is better value. I did have it as a buy at £11.40 or below from a valuation/fundamental point of view. However, I wasn’t confident that it would get that low looking at the technical charts. The price seemed to be finding some support at £12.00 but that did not give me the margin of safety that I felt comfortable with. Since the current dividend looks to be at over 7% and they haven’t cancelled it yet, I decided I would initiate a buy order for £11.60 in case it dipped below £12.00. The price did dip and the order filled.

Marks & Spencer Group plc (MKS) @ £0.85 & £0.84

I have been adding to the MKS position for a while now. It is on my watch list with a buy below £0.95. This stock has had a hard time recently dropping significantly. I think there are positives to come in the long term, especially with the Ocado partnership. At £0.85, I have this as being over 50% below fair value. The average analysts estimates are at £1.39. If the dividend payments come through as they were last year, that would be approximately a 13% dividend yield. Therefore, MKS can afford to reduce the dividend by 50% and still be a strong yield.

Virgin Galactic holdings inc. (SPCE) @ £12.26 / $15.00 & £12.09 / $14.80

Virgin Galactic is one of my selected speculative stocks. It is almost impossible to get a true value for a company like this so I have made to make assumptions. From the research I have done, I think anything under $17.00 is acceptable for the long term investment. However, I have my preferred target at $15.00 or below. My ideal range is around the $11.00 mark but I believe these will be rare opportunities now.
This week, the price dropped to $15.00 so I purchased another small lot. The following day, I bought more as the price dropped further. I will continue to build this position bit by bit when the price suits and there is cash available. It if does drop to around $11.00, I will be tempted to purchase a larger amount.

Alibaba Group Holdings Limited (BABA) @ £164.36 / $200

Alibaba is a stock I find frustrating however, I have been slowly adding small amounts over the last few months.
It’s on my watch list to top up if under $200 which I put at around 20% under fair value at the moment. Analysts are very favorable on this company too with the average analysts price being at $252 so $200 seems a reasonable price. The frustration comes with the volatility of the stock price as it gets pulled along with political fall outs.
The price did hit $200 this week so I have added to the position again but only a small amount.

Aston Martin Lagonda Global Holdings plc (AML) @ £0.37 & £0.35

This week, I opened a new position with Aston Martin (AML). I initially bought in at £0.37 and then when it dropped further later in the week to £0.35, I decided to purchase more.
This is a speculative investment as the company is not in a very good financial position at the moment. However, there is some potential for a come back. There has been investment from Billionaire Lawrence Stroll and then Toto Wolff (Mercedes Formula 1 boss) has also taken a stake in the company. There is also news of a new F1 team which has sparked my interest. The stock price has also taken a hammering and is down significantly.
Don’t get me wrong, the business fundamentals are not great and there is a lot of work to do in the company which is why this will only be a small speculative investment. I am an F1 fan so this is very much an investment made with the heart and not the head! This is not how you are supposed to invest. However, it is only a small position that I can afford to lose and sometime you have to have a little fun!

Thanks for reading, see you next week!

Good Luck and Happy Investing

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