UK Investment SIPP blog for the longer term

More losses. My SIPP is now around £29,500. I now realise how difficult it is to get 50% year on year. I’m still on track, but its certainly far tougher with the recent market. I have derisked my portfolio somewhat and now own around 10 stocks.

Just to keep you in the loop, here is a screenshot of what I own.

I took a bit of a hit with Polymer Logisitics when it announced worse than expected profits. Thankfully it was around 10% of my portfolio at the time.

Let me know how you gave faired recently by commenting below. I hope not too badly.

TOM is a purely speculative play and is a very small part of my portfolio – so do not invest in this one unless you like a very risky stock!

The value of my SIPP is now standing at £32,000. It’s a good return since I started on the 17th of July 2006, but down from the high of £39,000. Therefore, my first year return for 2006/2007 is 77%.

I am not fully invested at the moment and plan to update this blog with an audit of last years trades so I can go over my mistakes and hopefully adapt and learn for the future.

My investing has changed a lot over the year and I will analyse these changes so that I can determine if I am operating with a sustainable investment philosophy for the future.

On an individual stock basis, I think that RCG is looking cheap, but the issue of the lack of cash generation still irks me somewhat. The interims are due shortly and we will see cash flows then. If this company is burning cash then it may have difficulty asking the market for more in the present credit climate!

A stock that I love though is Apple as I think they have a huge competitive moat, especially with the music sales through iTunes. I can see these sales increasing for years to come. I will be doing a sales forecast on them next – just noticed they were down another 4%!

Suggestion! If theres a new born in the family, buy them some Apple shares. If Apple can survive 70 years then this pip could grow into an orchard. 

My pension pot is now circa £39,000. That’s £21,000 of profit in under a year. If I keep this up, I will be retiring a very wealthy man. In 10 years time, when I’m 47 years old, I would have £80 million if I maintain current growth rates. £20 trillion when I’m 65. I know 100% year on year is unrealistic, but I do want, and aim, to achieve 50% year on year.

Although, the SIPP investment gains I have had are spectacular, I havn’t suffered any market crashes during my SIPP’s investment period, and it will be telling how my SIPP pot will fare when one happens, and trust my words, numerous will in the next 30 years e.g. a US on IRAN missile strike seems increasingly likely.

However, some of my shares look to be over valued – eg Tanfield. Results are on Monday and my eye will be focussed on the profits generated by the Upright division. I have a good feeling about Tanfield’s future and intend to hold them for a long time.

Also, I might shave some profits from RCG and put them in Ten Alps, which, I feel, is undervalued and a good candidate for 50% share price increase this year.

Thanks to all of you who have signed up to my buy sell alert. I’m overwhelmed with your response and support so far. Be sure that I will update you all when my portfolio changes – be prepared for a long wait though as I am a buy and hold kind of guy. 

I sold out and bought TAL. I may regret this, but just couldn’t hold on. My reasons are,

1. Main Reason – Morrisons results didn’t give this SP a bump up (this worried me)
2. Couldn’t get out of my head the Warren Buffet saying, ‘If you don’t want to own a company for 10 years, then don’t own it for 10 mins.’. I have worries that alternative distribution channels will keep on eroding this business. When I now want to buy music, I generally look up the artist on iTunes and download the track, not a compilation album, which are never shown.
3. The price of TAL (Ten Alps) on my watch list came down to a good level and I am excited about their future. Didn’t want to sell any others of my holdings. So AMU got it. Realised, I don’t have the guts to do a pure value Benjamin Graham play.

I payed 110 and got out at 90p. Lost around £1200. First posted loss. I suppose it happens. My portfolio stands at roughly £26,700 so thats still around 42%, but still a long time left this year.

Sorry, I’ve not had time to update this blog recently, but I have some great news. I have nearly achieved the 50% increase in my portfolio and it’s only 5 months in
 - I started my SIPP on the 17 July 2006. My SIPP value is now £26,700 and I started with £18,850 – an increase of 42% – £7850. My main holdings at the moment are RCG, AMU and TAN.
I would like to add other stocks, but I find they are very hard to identify. AMU is a turnaround, currently valued at a forward PE of 5, RCG is a super growth story with undervalued characteristics
and TAN is a UK zero emmision electric vehicle company, with solid fundamentals and in a theme that should provide the next big investement bubble – environment. If you know of other solid environmental stocks please let me know.
If my investments keep rising like this, then watch out Warren Buffet, I’m on your tail.

Just bought £3000 worth of TAN – Tanfield group. Very good growth story in an expanding future market, zero emmision vehicles. The price may be bit high though. Time will tell. My portfolio is now standing at £22,100.

Santander has done well recently, the price seems to be catching up on it’s performance.

Portfolio now £21,900 (+16% in around 4 months). Cleverly (?) and sadly, I had to bite the bullet and de-risk my portfolio, so I sold £6000 of RCG and £10,000 is left. It’s not that I don’t like the company, but my profits had grown and coupled with the fact I’m short term trading on them too, the risk was too high. My pension is a long term thing, right? Events could shape the short term price too much and piss me off . Unrest in China, North Korean nukes, USA striking N Korea before Bush leaves office, a foreign object in Mao’s cornflakes, Hong Kong people working 20 hrs less per week by adopting European working hours etc etc. Also, Warren says stuff like, sure put all your eggs in one basket, but take very good care of that basket. Could I take total care of it? No. There’s no great margin of safety, but there is a good one, the price and the company’s prospects. One of Warrens biggest % holdings  was American Express where he bought 40% for his partnership, so he doesn’t mind big holdings, but perhaps not 70%.,
 
Stop press. RCG are at the Biometrics event in London, http://www.biometrics.elsevier.com/, and many investors are meeting with the Chairman Dr Chu. Wish I could be there, but I’m in Bonnie Scotland, so I’ll have to miss that. I really think I’m missing a beat here. Perhaps I will fly down to get more of a grasp of the competition in the industry and where RCG fits in. The conference is free after all.
 
Also, I’ve still not found another company to become an owner of. I looked again at Party Gaming, after their complete collapse of share price to 40p, but couldn’t deal with the stress of further countries banning and enforcing Internet Gambling prohibition. But more so, I think the churn factor of new players is big news (sorry couldn’t find an article to link to but see below) and their new sporting book isn’t really ‘internet’ changing, betting exchanges with better odds like bet fair will always have a competitive advantage.
 
My view on online poker churn:  New users come in and lose money to the experienced algoithmics spreadsheet players. When normal users realise the odds are always stacked against them, they won’t play and feed the big fish, then the big fish will leave. Sad and simple isn’t it!
 
Companies I’m looking at are TAN – Tanfield, Premier Foods and PZ Cussons. However, I don’t think Warren Buffet would buy into them  as they haven’t suffered a short term hit in price and their not that cheap. Tanfield may be a growth story though, and they are a leader in their field so the next financial model I will do is theirs. Also, I sadlly eliminated Tate and Lyle from my candidate list. Share price risen so much on Splenda sugar substitute. Could be a mistake, but certainly no big money to be made. Heck I want 50% per year. I can’t buy fairly priced companies. Mr Market has to be wrong when I buy.
 
This brings me back to Santander (sitting on £18,000 – £15,000 of this isn’t in my SIPP) – its no 50% growth story, but they impress me no end. Just bought Drive in the US for around 6.9 earnings as there’s fear of car financing slowdown in the US. Sounds like a Buffet buy to me. Buy when everyone is scared. Buffet might be pissed off he missed it. I wonder if Chairman Botin at Santander is near Buffet in his growth of Santander compared to Berkshire. Can’t be far off. He certainly buys low and sells high.
 
Till next time.