Diary of a Private Investor

Q2 Rebalancing Update

In my last article I highlighted some rebalancing I had planned for my portfolio, including dividend reinvestment. This brief article provides an update on those changes along with commentary:

Bioventix (BVXP) – top sliced. This remains my largest holding but I felt it prudent to top slice in order to lock in some of the gains, add liquidity to the portfolio and manage risk. I was pleasantly surprised to be able to do this immediately after ex-div day and the first day of the tax year without taking a significant hit on the price.

System1 (SYS1) – top sliced. Again, this remains a core holding of mine and the top slicing was to lock in some gains, add liquidity and manage risk.

Tristel (TSTL) – sold out. I wasn’t convinced that the large director sales were solely to supply institutional demand and followed the motto “if in doubt, sell out!”. With hindsight this might have been the wrong decision as the share price has recovered, the new institutions don’t appear to have sold out and I still think the company has a great business opportunity. So, this company is now back on my watchlist and I will look for a suitable re-entry opportunity but I will not be in a hurry to do so. It might end up going down as one that got away but rather that than be booking losses.

Blackrock World Mining (BRWM) – sold out. This was a small holding and I either needed to add to that holding or sell out (based on my own decision making rules). I have sold out for now but still regard BRWM as a decent income holding, so I might revisit when I am building up this segment of the portfolio in future.

Air Partner (AIR) – sold out. Again, when results were published yesterday I decided that I either needed to add to my relatively small position or sell out completely. As the yield had fallen below 5% and given the cyclical nature of the business, I decided to exit.

Hurricane Energy (HUR) – new buy. Lordy help me but I have taken a fairly large stake in this O&G company. This is no explo minnow and their PR suggests that there could be over a billion barrels of recoverable oil at their Lancaster and Halifax sites in the North Sea West of Shetland – it even made the mainstream news! O&G is not my area of expertise but from the background reading I have done, the HUR assets appear to be strategic and a farm-in with an oil major such as BP seems likely (along with possible debt and equity fund raising). Overall, I believe that HUR has the potential for significantly further upside, albeit with the possibility of some future dilution.

 IG Group (IGG) – top up. The fall in share price here still seems overdone (although it has been rising over the past couple of weeks) based on fears that new regulations might restrict their business. The company themselves argue that these regulations could benefit their business as they acquire market share from lower quality competitors. This said, my main reason for topping up here is the dividend and that looks safe, sustainable and likely to grow.

Stadium Group (SDM) – new buy. An interesting growth/recovery play that is worthy of more coverage than I have time or space for in this article.

Watkins Jones (WJG) – top up. They haven’t put a foot wrong since last year’s IPO and I only wish I had been bolder when I first spotted the opportunity.

Liontrust Asset Management (LIO) – top up. A solid growth and dividend play that continues to perform well and therefore, worthy of a higher weighting in the portfolio.

Ideagen (IDEA) – top up. This share is expensive but nowhere near as expensive as some of the stock screeners are showing. It’s debatable if I should have waited for a dip before topping up but I believe this is an impressive company in an exciting space (data governance).

IQE (IQE) – top up. These shares have already had a stellar rise over the past year but that might pale into insignificance if it transpires IQE’s VCSEL technology is being used in the next generation of smartphones being launched this year. That’s not the only reason for investing IQE, they are showing signs of potentially spectacular growth in several of their markets. After all, 2016 saw a material investment in increasing production capacity – one has to ask, why would they make that investment if significant growth were not likely to happen in 2017? I’ve taken a relatively large position in IQE and for sure, there is risk but equally, it has multibag potential, so let’s see how it pans out.

Lloyds Bank (LLOY) – new buy. With a 6% dividend, the government about to sell down its remaining stake (it is now below 1%) and a reshaped, lower risk banking operation, LLOY could be a 10 year plus hold. It’s only an entry level holding for now but I will be looking to increase the weighting here when funds become available.

Since the start of the new tax year I was also able to reinvest a couple of large dividend payments from Bioventix (BVXP) and Somero (SOM) plus a tax relief payment for transferring some of my holdings into my SIPP. We are now one third of the way through the calendar year and my portfolio is showing a year-to-date gain of 21.05%. At the start of the year I made a comment, somewhat tongue in cheek, that if I could deliver a 60% gain this year, I would be able to retire and run my portfolio and this blog full-time. It seems that I am currently on track for that outcome but it is too early to be in self-congratulatory mode. We are in a bull market and that’s great – make hay while the sun shines as the saying goes – but market sentiment can shift on a sixpence and who knows when that might happen?

My current holdings and weightings have now been updated to reflect the changes covered in this article.

Happy investing folks!
Simon

 

Disclosure – At the time of writing, I hold long positions in BVXP, SYS1, SOM, HUR, IGG, SDM, WJG, LIO, IDEA, IQE and LLOY

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