Portfolio Update – 2017 Mid-Year

I have been considering quarterly updates, but given the lack of activity in my portfolio over the last six months (and a lack of time on my part), I have decided to provide a bi-yearly update instead.

2017 mid-end performance: 4.7%

With regard to activity over the past 6 months, I sold nothing, but did use some new money to initiate three new positions. Two of those positions I discussed on the blog (Admiral Group and M Winkworth), and the other was an exercise in bottom-fishing that I haven’t had the time to write up yet (Tasty Plc).

  • Barclays, my largest position, delivered results for 2016 end-year as I would have hoped for, maybe even exceeding my expectations slightly. However, given the rapid turnaround that has taken place, I was still a little disappointed in other respects. In particular, the surprise “exceptional” write-down of the Barclays Africa operation indicated business as usual for bank that has had a string of these “exceptional” write-down’s for the best part of a decade. I still think that Barclays own a collection of high quality businesses, but with most of the restructuring now complete, there should be no excuses in 2017 to not see vastly better results.
  • Admiral Group is a position I initiated at the start of the year and knowing my luck, the share price tumbled a few weeks after I bought it when the government announced measures that would require the company to increase the cost of claims paid out. Thanks to excellent year-end results (notwithstanding government measures) and dividends paid out, my position on this is already in the black. I feel comfortable with my position in this company.
  • M Winkworth is a new position I opened up over the past 6 months. I have to say, this is a company that has given me some concern, despite it generating a 15% return on my cost basis. Up and coming competitors in the estate agent business have been taking significant market share from established bricks and mortar operations like M Winkworth. I do not know how houses will be bought and sold in the future, but if results here continue to slide, then I am minded to just cut this position entirely.
  • Vienna Insurance Group has just been a pleasure to own. I bought this at significantly below tangible book value when it reported problems (critically, not with underwriting). While low interest rates have impaired returns on their investment portfolio, underwriting has remained strong with the business continuing to report a combined ratio well under 100%. This business still has exposure to Eastern European markets which I am wary of, but overall my expectations have been exceeded and the company has given guidance of superior profits to come in 2017.
  • Wells Fargo was a share I was lucky enough to buy at close to a multi-year low after the fallout of the “fake accounts” crisis that it was dealing with at the time. 2016 year-end results were a little weaker than I hoped for, also a gradual decline in ROE and rising costs have given me minor cause for concern. This is a company I will be keeping an eye on in case it displays any further weakness.
  • Tasty is still a very new share in the portfolio, hopefully I will get time to write it up in further detail.

Up to date information on my portfolio can be found here.

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