Investing mid-long term Journal!

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Old Aug 11, 2012, 7:00pm   #1
 
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Investing mid-long term Journal!

So I just started my business a few months ago and I've been running ok, after a first few hectic months where a lot more control was needed and where trading was tottaly forgotten.

After reading some books again on the topic and going through a lot o magazines on anything from FHM to Shares Magazine (34 flights in the last month is a lot of time on airports and plains), I decided to grab 100,000 GBP and put them on an account, for some mid-long term investment, being the target a 20% annual profit.

I put some rules into this and this has nothing to do with spreadbetting. I am going to have no more than 5-6% of my account in one share and before I commit myself into something, I will have to write here why and how!
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Old Aug 12, 2012, 2:27pm   #2
 
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Re: Investing mid-long term Journal!

Burkina2008 started this thread 11 August 2012

Just filled the saturday with loads of boring things...woken up way past 12 and still with a headache from friday's long night around figures.

Two key points on the day:

1 Sporting B-team began its campaign this year and with a lost against more stuctured Oliveirense...boring game, 1-0 result, spent more time doing other things than actually concentrating on the tv...

2 My girlfriend had to help a friend getting some extra books on a Bimby machine order, so we had to have a demonstration of the machine here at home. I just sat back on my office room and listen to the two hours instructions and cheap marketing technics...extraordinarily enough at the price of +900 euros, it still quite popular in Portugal.


So the two companies I was looking at investing this past week was alchohol beverage giants Diageo and small identity solutions company BG

From Diageo this were my notes:

- Premium drink business, brands like Johnie Walker, J&B, Bushmills, Smirnoff, Bailey's, Captain Morgan, Guiness
- Owns 34% of Möet Hennessy, with brand Möet & Chandon among others...


- Market cap 42,9 Bn
- PE high at 22,467
- Revenue 13,3 Bn
- Dividend last year 40,40p
- Profit 1,9 Bn
- Yeald last year 3,25%
- Next dividend ?
- Ex-dividend date 5 Sept to be paid in 22 Oct
- Debt 8,3Bn a bit to high at 4,5x profit


- Strategy: Expanding to emerging markets and innovative premium drinks


Click the image to open in full size.
Click the image to open in full size.
- Steady climbing since Mar 2009, valuation of 120%
- Looking to buy along the 1700 mark and before the end of next week to catch the ex-dividend slope, with the objective of reching 2100-2200 on a 6m to 1y date.
- Stop-loss if lower tha 1550

My personal comments:
- In depression times more liquid is sold and in growing regions Diageo already has a foot
- Strategy based on premium drinks may contradict the first comment
- Crysis in emerging markets is a definite threat
- Hope they try to expand more into Asia and not in the wine and beer business where they would find hard to get a share of a market with too many players...



Any comments from you would be ver helpful!
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Old Aug 13, 2012, 4:01pm   #3
 
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Re: Investing mid-long term Journal!

Burkina2008 started this thread 13 August 2012

I just bought 3 shares of Diageo at 1693,50, tryng to get at a cheap price when they began to rebound....

So resume is after stamp tax and commissions:

Portfolio
- Diageo 3 shares - 5080,50p (5,08%)
- Cash 94881,60p (94,92%)

Yesterday just had a sick day, completly exhausted, so just watched some movies and read some internet nonsense...only time to get out of the house was after dinner with a stroll down the avenue...
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Old Aug 14, 2012, 11:00am   #4
 
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Re: Investing mid-long term Journal!

Burkina2008 started this thread 14 August 2012

So, tomorrow flying agains, this time to München and Amsterdam, actually I will take the opportunity to spend the weekend in Holland...cant just be work, can it?

I have loads of documentation on BG and hope to decide on weather this would be a good investment or not. Anyway I would be glad to find someone that has any info on the company to exchange some views!

Anyway, there is a recent portuguese start-up that managed to be exchanged in NYSE Alternext, providing some very nice solution and expanding to middle-east and central Asia...I will be looking at this ISA - Intelligent Sensing Anywhere, (NYSE Alternext: ALISA)

How can France still finance itself on a zero rate is a mystery to me
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Old Aug 20, 2012, 2:11pm   #5
 
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Burkina2008 started this thread 20 August 2012

Back from München-Amsterdam trip and a few considerations after having seen some very interesting trends in both contries:

- Germany shows a bit more spending on "new things", at least in comparison to what I saw 15 years ago. I visit Germany at least once every 3 months and I've noticed a lot of acceptance from the new youth that hasnt felt the war necessity of older generation. Another noticable thing is that construction is high, mainly on highways been renovated, a sector to look into for sure.

- Holland a vast fast food market showed to me a healthy food company existing only in Holland and Belgium as a very interesting and accepted concept, La Place (further investigation needed)

- Both countries along with an FT article on 15th see a trend on cheap supermakets, mainly Lidl and Aldi (both unfortunatly not AG)



Interesting readings along the trip:

- A publication on Shares magazine says that 3 factors are still proof that economy is a long way from recovery: dow jones transport is not doing better that the whole index, coper is down and Korea index is not recovering...obvious reasons behind this semi-flawed article if anyone wants to discuss it

- Mining companies are not my cup of tea - their shares move correlated to comodity prices and desviations are caused by new discoveries or failures...

A nice strategy:
- Contaning loses is 90% of any good strategy;
- Buy if »MA;
- Dont take tips, do research yourself
- Poker is a good practice
- Always have a plan
- It doesnt matter if you have more than 50% correct buys/sells, what matters is than the winning trades make more than you lose on the bad ones


Companies to look into next weeks:
- Telit Communications (TCM: AIM)
- Micro Focus (MCRO)
- Tribal (TRB) - maybe too big of a spread....
- Driver's (DRV:AIM)
- Tracsis (TRCS) - just follow
- Iomart (IOM:AIM)
- Tavan Tolgoi
- Mongolia index companies
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Old Aug 20, 2012, 3:07pm   #6
 
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Re: Investing mid-long term Journal!

Quote:
Originally Posted by Burkina2008 View Post
13 August 2012

I just bought 3 shares of Diageo at 1693,50, tryng to get at a cheap price when they began to rebound....

So resume is after stamp tax and commissions:

Portfolio
- Diageo 3 shares - 5080,50p (5,08%)
- Cash 94881,60p (94,92%)

Yesterday just had a sick day, completly exhausted, so just watched some movies and read some internet nonsense...only time to get out of the house was after dinner with a stroll down the avenue...
er, 3 shares - they are only £16:97 atm
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Old Aug 20, 2012, 3:15pm   #7
 
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Re: Investing mid-long term Journal!

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er, 3 shares - they are only £16:97 atm
sorry didnt understand what you mean with that comment...can you rephrase please?
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Old Aug 20, 2012, 4:00pm   #8
 
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Originally Posted by Burkina2008 View Post
sorry didnt understand what you mean with that comment...can you rephrase please?
Well, you say you bought 3 shares in Diageo @ 1693:50 cost £5080:50 leaving you with £94,881:60 left from your £100,000 starting pot.

All fine except that Diageo shares were priced at £16:935 and 3 shares would have cost £50 odd, not £5080.

You seem to have mistaken the quoted price as £ rather than pence, so you will either get a bit of a shock when your contract note arrives, or you are just working a pretend portfolio.
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Old Aug 20, 2012, 4:05pm   #9
 
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Re: Investing mid-long term Journal!

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er, 3 shares - they are only £16:97 atm
Quote:
Originally Posted by barjon View Post
Well, you say you bought 3 shares in Diageo @ 1693:50 cost £5080:50 leaving you with £94,881:60 left from your £100,000 starting pot.

All fine except that Diageo shares were priced at £16:935 and 3 shares would have cost £50 odd, not £5080.

You seem to have mistaken the quoted price as £ rather than pence, so you will either get a bit of a shock when your contract note arrives, or you are just working a pretend portfolio.
ah sorry I meant 300 shares...dunno why I wrote only 3...my bad!

No is not a pretend portfolio

Anyway thanks for the correction and can you give me any other input on what i just wrote?

cheers
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Old Aug 20, 2012, 4:41pm   #10
 
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ah sorry I meant 300 shares...dunno why I wrote only 3...my bad!

No is not a pretend portfolio

Anyway thanks for the correction and can you give me any other input on what i just wrote?

cheers
well your analysis seems ok, but remember that there are many very highly paid people analysing them all with much more knowledge about them than we have and they are all ready anticipating good growth to judge from the price.

On a general point, you have talked about your target growth but you haven't talked about what you are going to do if the price falls. What's your strategy here?
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Old Aug 20, 2012, 4:52pm   #11
 
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Re: Investing mid-long term Journal!

Good thread... subscribed - will be interested to see how you do...
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Old Aug 20, 2012, 9:48pm   #12
 
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Re: Investing mid-long term Journal!

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Originally Posted by Burkina2008 View Post
can you give me any other input on what i just wrote?

cheers
Nice to see an intelligent new thread on T2W, particularly one more aimed at investing than day-trading. I'll cut to the chase though. I don't think you'll make your targeted 20%. In fact I'd be impressed if you consistently annualised single digit returns. Out of interest, where did your 20% come from? Two reasons why not. First any long-only portfolio is heavily geared to beta. Your returns will derive more from where the markets go than the individual stock choices you make. Yes, you can 'outperform' the market by 20%, but you won't make 20% in absolute terms in a year when the market tanks. Second is Barjon's point. A stock discounts the market's expectations of the present value of its future cash flows. To generate stock alpha you need to be right where the market is wrong. Given that the weight of money in the market is driven by professionals who spend all their time looking at this stuff, you need to be pretty confident that you know better. Why do you think that the market is unaware of the positives you list for Diageo and therefore that it is incorrectly discounting its future growth? I'd guess pretty much every institutional shareholder in Diageo owns it for the reasons you give. You may have more luck with small-caps which are under analysed, but in AIM stocks you get into a whole set of unpredictable corporate governance issues. The sweet spot (at least in UK investing) is probably in the FTSE250 names where the professionals are less focussed but corporate governance is at least of a reasonable standard so the Chairman or CEO is less likely to consider shareholders funds as his own slush money. Just a couple of thoughts, but seriously good luck and keep going with the thread.
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Old Aug 21, 2012, 2:38pm   #13
 
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Re: Investing mid-long term Journal!

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well your analysis seems ok, but remember that there are many very highly paid people analysing them all with much more knowledge about them than we have and they are all ready anticipating good growth to judge from the price.

On a general point, you have talked about your target growth but you haven't talked about what you are going to do if the price falls. What's your strategy here?

Yes, i gather that, but I also have a lot of free time on my hands now and my background will help me analyze it "my way" (which doesnt mean the correct way until proven right!). Anyway Diageo is a FTSE100, but I will look forward into "lower" levels where a lot of research hasnt been done.

On the other side I try to look into the companies in a consumer opinion way, which might be an advantage or not.

Well I have a stop-loss at close below 1550, but I may re-enter if I find conditions appropriate.
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Old Aug 21, 2012, 2:38pm   #14
 
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Good thread... subscribed - will be interested to see how you do...
thanks, your comments will be very helpful to help me achieve my results
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Old Aug 21, 2012, 2:56pm   #15
 
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Re: Investing mid-long term Journal!

Burkina2008 started this thread
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Originally Posted by Jack o'Clubs View Post
Nice to see an intelligent new thread on T2W, particularly one more aimed at investing than day-trading. I'll cut to the chase though. I don't think you'll make your targeted 20%. In fact I'd be impressed if you consistently annualised single digit returns. Out of interest, where did your 20% come from? Two reasons why not. First any long-only portfolio is heavily geared to beta. Your returns will derive more from where the markets go than the individual stock choices you make. Yes, you can 'outperform' the market by 20%, but you won't make 20% in absolute terms in a year when the market tanks. Second is Barjon's point. A stock discounts the market's expectations of the present value of its future cash flows. To generate stock alpha you need to be right where the market is wrong. Given that the weight of money in the market is driven by professionals who spend all their time looking at this stuff, you need to be pretty confident that you know better. Why do you think that the market is unaware of the positives you list for Diageo and therefore that it is incorrectly discounting its future growth? I'd guess pretty much every institutional shareholder in Diageo owns it for the reasons you give. You may have more luck with small-caps which are under analysed, but in AIM stocks you get into a whole set of unpredictable corporate governance issues. The sweet spot (at least in UK investing) is probably in the FTSE250 names where the professionals are less focussed but corporate governance is at least of a reasonable standard so the Chairman or CEO is less likely to consider shareholders funds as his own slush money. Just a couple of thoughts, but seriously good luck and keep going with the thread.
First of all thank you for your comments and remarks, they are highly useful and I am happy that someone is also interested in the topic.

The 20% is just a figure that makes for the 20,000 GBP I want to make a year on this venture, so not really a scientific or highly calculated number

I am not only going long, I am looking to short some companies in the future on my spreadbet account, although I would have to say that on downturns I would be keeping cash and shorting just a small amount. I still will have to learn how to balance it.

On Diageo I agree with all of what you said, but the company is climbing since 2009 and I see much more domination of them on a sector that begins now to become a oligopoly. The asian market is still very unexplored and from many reports I have read (and recommendatios of brokers and all are wrong many times) some see more climbing for the stock and no surprise if they reach the 2200 soon...

On Future investments I will also look into FTS250 as well as smaller stocks. I am also not only looking into UK but also where there are opportunities, at the moment Mongolia looks nice...
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