Archive
More magic shares, booming farms, BP dividends and directors deals
Among many other things, we try to help investors pick the right shares. So it might seem a bit odd for us to be fans of quantitative strategies, where you just crunch the numbers and buy whatever the results tell you. But if such strategies work more often than not, who are we to argue? That's why we regularly run things like dog share and momentum portfolios - and why we're re-running a 'magic number' stock screen. This is inspired by a Joel Greenblatt book and uses two simple metrics to produce a 30-stock hitlist. Last year's selection easily beat the market; here's another set for 2012. Elsewhere, the FTSE100 might be within touching distance of 6,000, but over the past week, UK company directors have offloaded 拢12m of shares. Do they know something we don't? Our writing team looks at some of the key disposals, including a notable one at retailer WHSmith. It's not just ordinary shares that are rising strongly. There's been a big rally in subordinated bank shares - Pibs and the like. We look at one issue from a big mutual. A couple of oily updates: BP, whose shares we advised buying a few months ago, still faces years of legal wrangling in the US, but its dividends are rising again and so is the cashflow that funds them. At the other end of the size spectrum, Xcite Energy, a North Sea operator, could be reinvigorated by some positive newsflow - and its shares are up almost 60 per cent on our tip price. Finally, Mark Twain once advised investors to "buy land, they don't make it any more." Nowhere is that more true than in farmland, where prices have boomed over the past few years. Stephen Wilmot looks at whether it actually makes a good investment.
Investment trust portfolio, buy-to-let booms, Xstrata deal - plus Dickens
Earlier today I was at the launch of the Credit Suisse Global Returns yearbook for 2012. This publication traces the history of returns for various asset classes in various countries back to 1900 and is one of three publications I make a point of obtaining each year (the other two are the annual Barclays Equity-Gilt study and Warren Buffett's letter to Berkshire Hathaway shareholders). One of the key themes of this year's tome was that international equity investing does reduce volatility - even allowing for the impact of currency movements on returns. That will be welcome news to John Baron, whose investment-trust portfolios are overweight in emerging markets, particular Asia. He's just added a fourth out-of-favour sector: commercial property. He explains why. Talking of property, the buy-to-let market has been enjoying a renaissance, and Stephen Wilmot explains the new maths of being a landlord. On the companies front, Xstrata and Glencore have announced their merger today. Xstrata shareholders get an 8 per cent premium and 45 per cent of the combined company, but shares in both companies drop; blame possible regulatory hurdles and doubts over the super-egos at the top, and see our Chronic Investor blog later today for more. Staying with shares, another nugget from the CS yearbook was the staggering long-term record of momentum investing, something that's very close to Chris Dillow's heart. But as he explains, momentum isn't just confined to shares - its effects are present in bonds and currencies too. Finally, on the 200th anniversary of Charles Dickens' birth, Moira O'Neill recasts the fund provider in the role of the "horny-skinned, two-legged, money-getting species of spider" of Bleak House! Well, sort of鈥�
Reasons to be cheerful, Simon Thompson value share, new tips section, weekend press tips
I saw a tweet from the FT's Brussels bureau chief last week, reminding everyone that for all the euphoria over Friday's better-than-expected US jobs data and upbeat purchasing manager surveys, "Greece still has 1,104 hours to find 鈧�14.5bn it doesn't have". Sure enough, Greece's funding problems are back centre-stage today (around 1050 hours left on the clock...) with the latest austerity package failing to get through parliament, and markets have gone into risk-averse mode. But don't get too despondent, says fund manager Nick Train. He points out that we investors buy companies, not countries, and that many people are still hugely under-estimating the emerging market opportunity. He names his favourite shares and opines that the most significant event of 2011 had nothing to do with the euro. It pays to listen to Mr Train - his Finsbury Growth and Income investment trust has soundly beaten the FTSE for over ten years. Another individual with a solid track record of beating the market is our own Simon Thompson, and this week he returns to a share he first recommended about nine months ago. Recent developments mean it is more undervalued now than it was then. We've got our usual round-up of newspaper headlines and weekend press tips, and, talking of tips, we've rejigged our own share tips section to make it easier to use. Check out our guide to the new features.
German profit machines, a better way to invest in emerging markets, mining shocks and core ETFs
While Greece sinks into the mire, and quite a few other European member states find themselves ankle deep in quicksand, Germany goes from strength to strength. Last year the country's economy grew by an impressive 3 per cent. It boasts a jobless rate of 6.6 per cent - contrast that with Spain's rate of 22 per cent - its public finances are in great shape, German companies are booming and its exports are soaring. The appeal of Europe as an investment theme may have lost its lustre but the same can't be said of the economic powerhouse at its core. Julian Hofmann examines the best ways to access the German stock market and the shares to focus on. And if a better way of buying into Europe is to buy German, there may be a better way of buying into the emerging markets story than simply chasing developing nations' "biggest and best". They may be great companies but do they offer exposure to the real growth potential in the developing world? Our columnist Bearbull thinks not and he's dumping a fund packed full of global giants, quasi utilities and national champions and replacing it with one that links his portfolio with the dynamic side of developing economies and their consumers. Meanwhile Martin Li explains how increasing structural challenges facing miners are likely to underpin long-term commodity prices and, as the new tax year draws nearer, Leonora Walters argues the case for putting a low cost ETF into your Isa and identifies suitable core holdings. Finally, we are looking to recruit people to join a research panel with a view to improving the 果冻传媒. If you are interested or would like to find out more, please complete the short questionnaire below.
Xstrata & Glencore, Facebook's IPO, top quality international companies, and The Trader
The market's worst kept secret is out - Glencore is in talks with Xstrata about a merger of equals to create an $80bn (拢51bn) resource company. Details are still thin - the statement was forced out because of a leak - but the outcome looks rather disappointing for Xstrata shareholders. Xstrata needs to offer its shareholders a much better deal than that. Xstrata and Glencore aren't the only global giants to hit the headlines today. Facebook too had an announcement to make: it's filed papers for an initial $5bn listing in the US, making it the world's biggest technology IPO yet. If you're not one of Facebook's 800 million users and have no idea how social media companies should be valued, Malar Velaigam casts her eye over the sector and advises on the best way to assess this new breed of company. Facebook's debut on the market has been carefully planned and it comes market-ready with a worldwide "customer" base and a profit in 2011 of $1bn from $3.7bn of largely ad revenue. That healthy profit margin already places it in stark contrast to the flop that Ocado's debut and subsequent story's been, and underlines the attractions generally of global giants. Their fortunes aren't tied to a single economy, at risk of spluttering along in first gear. According to the Institute for Fiscal Studies the UK is heading straight into a technical recession and growth going forward will be even slower than forecast. And although the Institute argues that the chancellor is taking the right steps to tackle the deficit (if he had followed Labour's plans, the think tank says, the deficit in a few years would be around 拢76bn rather than the 拢24bn now expected), it warns that, should the eurozone break up, UK public finances would take another big hit. Against that sort of backdrop, the allure of big international companies can only grow. For peace of mind and the potential for strong returns, it makes sense to tuck at least a few of these chaps into your portfolio. Algy Hall's done the research and come up with a list of global elite recommendations. Meanwhile the Trader explains why even though the current stock market is about as appealing as a grotty late-night takeout, he's still tucking in. Finally, the stripping of former RBS chief Fred Goodwin of his knighthood has split opinion up and down the country - and at the 果冻传媒. John Hughman and Alistair Blair hold firmly opposing views. Worried chief executives and directors might like to note that Mark Zuckerberg's bonus in the first half of 2011 was a mere $220,500.
A solid global fixed income fund, RBS bonds and oil prices
Ever since the idea of an EU financial transactions tax was mooted, Britain has been trying to push the door to such a tax shut. France meanwhile has been wedging its foot in the door to keep it open. The UK view is that it would be madness for Europe to adopt the tax on its own. But as French president Nicolas Sarkozy campaigns for re-election in April, he has promised to introduce the tax in France prompting London's mayor Boris Johnson to invite French banks to think about relocating to London. If France goes ahead with the tax, it could indeed be London's gain. But another effect would be to increase pressure on the EU to introduce the tax Europe wide, and hence widen the gulf further between Britain and the other member states who continue to bind themselves ever tighter together. The whole episode serves to remind us how important it is to aim for diversity in our investments so that we don't end up heavily exposed to trouble spots. Our fund tip this week offers some instant diversification: it's a global best ideas fund, with low volatility and experienced managers. Meanwhile, as former RBS boss Fred Goodwin is stripped of his knighthood, we assess the bank's bonds 鈥� should you boot them out or hold on? In the retailing sector, Dixons has lost the man who was meant to save it. John Hughman reports on the impact on the company. Finally, Mark Robinson reports on why oil prices might surge.