BHB Investment Portfolio Update – SEPT 2020

October 3, 2020 0 By bullheadedbear
Bull Headed Bear Logo

MONTHLY PERFORMANCE:
-0.8%

2020 PERFORMANCE:
+5.9%

  • PURCHASES: #APF, #LLOY, #INTC, #GFIN
  • SALES: #RR., #BT, #SMDS, #IBST, #ABF
  • DIVIDENDS: #SWKS, #MSFT, #WBA, #RIO, #ULVR, #SSE, #RDSB, #AV, #BP, #DGOC, #AAL

BEST PERFORMERS (+5%)

Mirriad Advertising Plc (#MIRI): +79.2%
Reach Plc (#RCH): +46.6%
Greatland Gold Plc (#GGP): +35.8%
GVC Holdings Plc (#GVC): +21.1%
Anglo Pacific Group Plc (#APF): +19.6%
Unilever Plc (#ULVR): +7.1%
Virgin Galactic Holdings Inc (#SPCE): +6.6%
Diagio Plc (#DGE): +5.6%

WORST PERFORMERS (-5%)

Gfinity Plc (#GFIN): -27.3%
Banco Santander SA (#BNC): -21%
Nokia Corp (#NOK): -20.5%
BP Plc (#BP): -14.8%
Barclays Plc (#BARC): -12.8%
Royal Dutch Shell Plc (#RDSB): -11.6%
Morrisons Supermarkets Plc (#MRW): -11.5%
iShares Physical Silver (#SSLN): -11%
Apple inc (#AAPL): -10.3%
Aston Martin Lagonda Global Holdings (#AML): -9.6%
Pan African Resources Plc (#PAF): -8.6%
Vodafone Group Plc (#VOD): -7.9%
Trans-Siberian Gold Plc (#TSG): -7.4%
Lloyds Banking Group Plc (#LLOY): -7%
Microsoft Corp (#MSFT): -6.7%
Cisco Systems Inc (#CSCO): -6.7%
LM Ericsson (#ERIC): -6.52%
Walt Disney Co (#DIS): -5.8%
Walgreen Boots Alliance Inc. (#WBA): -5.5%

SUMMARY:

September proved to be a month of realisation as nearly all markets were on the decline along with some of the major commodities. Coronavirus cases are on the increase in most parts of the world and fear of lock downs are building again. The presidential battle is also heating up with the first presidential debate now taken place and Brexit talks are back in the headlines.

The BHB Investment Portfolio has actually held up fairly well considering. -0.8% is not bad at all when I look at the long list of stocks -5% or more for the month. It was actually the higher risk speculative stocks that outperformed this month and limited the damage from the larger lower risk stocks.

I managed to take advantage of the drop and topped up on a few stocks, but just small amounts. I was especially pleased to be able to add more Intel Corp (#INTC) and Gfinity Plc (#GFIN). Intel was up for the month but still undervalued in my eyes, and I managed to get Gfinity for less than £0.03 even if it took more than one attempt due to my first order filling at £0.031.

With the markets now respecting the risk again I decided it was time do some de-risking myself. I have tried not to panic sell through this year and so far have been pleased with my trades. However there were some stocks that I had lost confidence in and thought the capital was better deployed elsewhere.

September turned out to be another great month for Dividends with 11 stocks paying out. This again continues my run of increasing monthly dividend income vs previous year. September provide to be the biggest increase yet with an increase of 87% vs September 2019. I don’t have any dividends automatically reinvesting but all dividend income stays within the portfolio for me to allocate to new purchases as and when the time is right.

PURCHASES:

Anglo Pacific Group Plc (#APF)

Anglo Pacific Group Plc Logo

Buy Price: £0.995
Fair Value Calculation: £1.27 (reduced since July)
Analysts Estimates: £1.87
Dividend Yield: 9.2%

I have been building this position throughout the year but did start to hold back after the recent earnings showed reduced guidance due to commodity prices and coronavirus impacts. The company has the potential to bounce back and continue the growth but does have some head winds to deal with. However, when the price dropped to £1 that encouraged me to purchase a few more and cost average down. That should be it for now though until the next earnings where I can see how they are progressing and dealing with their current issues. The current price delivers a 9.3% yield and my current price average delivers a 7.7% yield so we will have to see if this continues as it is high.

Lloyds Banking Group Plc (#LLOY)

Lloyds Banking Group Plc Logo

Buy Price: £0.245
Fair Value Calculation: £0.36 (Short Term)
Analysts Estimates: £0.37
Dividend Yield: 0% (5yr Avg = 4.4%)

Lloyds along with the whole UK banking sector have taken a beating this year. The holdings in the portfolio are already significantly down at around -43% but decided to keep holding. After reviewing the fundamentals and playing with some projections, even with a few poor years and then a steady pick up the ROI over a 10 year period is actually really good. In the long term the current price could be very undervalued so I decided to buy a bit more.

Once banks are allowed to pay dividends again the price should jump a bit, then at some point in the future interest rates are going to have to rise to help pay back all the debt so banks will start to earn money again. I could have this wrong due to the amount of factors in play, but feel comfortable that this is a good long term hold.

Intel Corp (#INTC)

Intel Corp Logo

Buy Price: £39.01 / $49.75
Fair Value Calculation: £51.27
Analysts Estimates: £44.73 / $57.87
Dividend Yield: 2.4%

Following on from my comments in the BHB Investment Portfolio Update – September, Intel Corp (#INTC) at these values is a bargain. I think there must be some agreement with me in the markets as the majority of the tech stocks dropped in September, but Intel was up. I have no issues with this stock developing into one of the portfolios biggest holdings if the price continues to stay within this price range.

Gfinity Plc (#GFIN)

Gfinity Plc Logo

Buy Price: £39.01 / $49.75
Fair Value Calculation: £51.27
Analysts Estimates: £44.73 / $57.87
Dividend Yield: 2.4%

Following on from the purchases last month I have continued to buy more Gfinity Plc (#GFIN) shares. I stated in the update last month that I was hoping to be able to buy more shares in this price range but was really hoping to get in below £0.03. This stock is fairly volotile and with it being such low value it can bounced +/- 10% within a few minutes. The stock dropped below £0.03 and I got the alert, placed the order but by the time it executed it had gone back up so I bought at £0.0315. The stock was bouncing above and below £0.03 for a few days and I eventually got my order filled at £0.029. It might not sound like much but it can make a big difference in the long run.

SALES:

Rolls Royce Group Plc Logo

Rolls-Royce Group Plc (#RR.)

Sale Price: £1.81
Profit/Loss: -28%

I only opened a position in Rolls-Royce Group Plc (#RR.) a few months ago and you will see from the post in July that I was planning on holding this for the long term. I called out that I was expecting a bounce due to the scale of the sell off and could sell early and take profits.

However I did believe it had reach a resistance level but as the price was in free fall and the market was taking a turn for the worst I decided to just cut my loses now and remove this risk altogether. I still believe there is a turn around story here in the long term, however I really don’t need that risk right now. Luckily it was only a small position so the impact was not that big.

BT Group Plc Logo

BT Group Plc (#BT.A)

Sale Price: £1.11
Profit/Loss: -35%

BT Group Plc (#BT.A) is a stock I have owned for a while and started it’s big decline at the back end of last year. When the market sell off happened it was already at a 9 year low but unlike most other stocks it never regained any of it’s losses and continued to hit a 10 year low. I reviewed the fundamentals and the business has been very static for a long time and has been increasing it’s debt levels for the last 4 years. I originally thought 5G might give it the boost it needed, however it looks like the expense of getting this implemented mean debt is likely to keep increasing, especially now they can not use Huawei technology and have to use more expensive solutions.

So after taking a step back and reviewing the facts I decided to cut my losses and get out completely. I can now hopefully put this capital towards something that will provide higher returns and recoup the losses.

DS Smith Plc Logo

DS Smith Plc (#SMDS)

Sale Price: £2.72
Profit/Loss: -1%

I need to hold my hand up and admit that I probably didn’t need to sell this one.

There is a lot about the business that I liked but I was concerned with their debt levels. I got in originally at a decent price so felt the value was there even though the debt was borderline. When they announced they were putting the dividend on hold for the year I was a little disappointed. The dividend was one of the reasons for investing in DS Smith. It was especially disappointing when they were not forecasting a reduction in revenue, and should have been benefiting from the Covid-19 environment. The recent earning figures showed performance was OK but they were still not paying a dividend until next year. They also didn’t pay down as much debt as I would have thought.

I think I have allowed emotions to get involved in this sale which is annoying. Now I have had more time to reflect on this, I should have kept the holding. However, there are always lessons to learn and mistakes will be made. This one hasn’t cost me and I can resolve it by getting back in if I really want to.

Associated British Foods Plc Logo

Associated British Foods Plc (#ABF)

Sale Price: £18.40
Profit/Loss: 5.6%

I bought Associated British Food Plc (#ABF) just as lock down was easing off with the intention of a short term trade. Primemark had obviously been shut for a period of time and the stock price had tanked. Other areas of the business were not as impacted so the company was going to be fine. There were a lot of people that were itching to go shopping at Primemark when it reopened so I saw the trade potential as lock down lifts. I could have sold earlier with a 20% gain but Covid cases started rises and the price started dropping. In the end I cashed out with 5.6% profit which is not life changing but better than a kick in the teeth.

BHB PORTFOLIO RADAR & WISHLIST

GROW HOLDINGS: Gfinity Plc. (#GFIN):
Hope to continue buying at around the £0.03 mark but preferably below.

GROW HOLDINGS: Microsoft Corp. (#MSFT):
I would like to add to the current position but ideally at around $180, so I need a significant drop.

GROW HOLDINGS: Intel Corp. (#INTC):
As mentioned already, I like the size and scale of Intel Corp. (#INTC) and believe it’s fundamentals to be good. While it is hovering around the $50 mark I will keep buying and building this position for the long term.

NEW INTEREST: Boohoo Group Plc. (#BOO):
I mentioned in last months update that I was interested to learn more about Boohoo. I have started the research but need to do a bit more before make any decisions.

NEW INTERESTS: Activision Blizzard Inc. (#ATVI) & Electronic Arts Inc. (#EA):
I am very bullish on the gaming industry and two stocks I like are Activision Blizzard inc. (#ATVI) and Electronic Arts Inc. (#EA). I need to do more analysis to understand the value feel I will need them to pull back considerably.

NEW INTERESTS: Amazon.com Inc. (#AMZN):
Amazon services are regularly used by me and my family and I really like the business. Another stock I need that I need to review in more details to understand value.

NEW INTEREST: Alphabet Inc. (#GOOG) & Facebook Inc. (#FB):
Alphabet Inc. (#GOOG) and Facebook Inc. (#FB) are two tech company’s I don’t own and would like to. I am really impressed with their financials and growth but need the prices to come down more. For a decent margin of safety I’m looking in the region of – #GOOG @ $1400 and FB @ $230.

POTENTIAL SALES: 
The stocks that are on my potential sale list at the moment are Banco Santander SA (#BNC), Hon Hai Precision Industry Co Ltd (#HHPD) and Trans-Siberian Gold Plc (#TSG). There are different reasons I’m thinking of selling but need to work a few more things out before deciding. I’ll share details on any sales in next months update.

Thanks for reading, see you next month!

Good Luck and Happy Investing

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