2017 in Review

2017 In Review – Portfolio Performance

Another year, another all time high for UK markets.  Both the FTSE 100 and the FTSE All-Share ended at their highest point ever, with returns of 12% and 13% for the year, respectively.  Before looking at how the portfolio has performed alongside this, let’s get the numbers out of the way.

Year-to-date, my portfolio has returned 42.72%, dividends included.  Since I began it in August 2015, it has returned 65.28%.  I have said all along that so long as I am capable of beating the All-Share index (my benchmark) I will pick and choose my investments.  I’m delighted therefore to say that I have beaten this benchmark again in 2017.2017 in Review

Thank You

Before I talk about what’s happened in the portfolio, I wanted to say a massive thank you to everyone who has read my posts, commented, shared or otherwise engaged with me this year.  Your support has been invaluable in pushing me to keep the site running alongside an otherwise time-consuming full time job.  The engagement you have provided has made me a better investor, and I hope in some small measure that I have helped you too.

I am determined to up my game in 2018.  More analysis of companies, more reading of investment books, and more thoughts on markets & investment generally.  I read 17 books this year (see a brief synopsis of each here), some of which were investment related, whilst others bore no relation at all.  I already have plenty to sink my teeth into in 2018!

2017 in Review

I didn’t engage in all that much activity this year.  If you follow my writing at all you’re probably aware that I lean towards buying and holding, rather than trading in and out of positions.  So what did I buy and sell in 2017?

Buys

Somero (LSE: SOM) – March

Avon Rubber (LSE: AVON) – June

Taptica (LSE: TAP) – July

Sells

Gattaca (LSE: GATC) – April

Dunelm (LSE: DNLM) – July


I’m not kidding.  I don’t do much at all!  Alongside these transactions, I topped up on Somero, Next (LSE: NXT) and Creightons (LSE: CRL).  32Red was taken over in April, and my Emerging Market Europe ETF was shut down in November.  Happily, only three of my holdings had a negative return this year.  Howden Joinery (LSE: HWDN), Next and Dialog Semiconductor (FWB: DLG) (read about DLG here).

So, who’s blown the doors off, and who’s been a laggard?

The Good

Creightons PLC has caused me more stress than any other this year, I think.  I should say, it was one of my best performing shares last year, and still returned over 100% this year as well.  However, take a look at the share price movement in 2017:

2017 in Review

It has actually been significantly higher earlier in the year, before falling back a fair amount.  I was at one point onto a five-bagger.  Will it get back to this point?  I think so.  It’s a stellar company with fantastic management.

AB Dynamics moved into two-bagger territory towards the end of the year, with a remarkable run up since the start of November.  The company now sits on a P/E of 48, which surely isn’t sustainable.  Nevertheless, I will continue to hold, regardless of pull back.  If I start meddling and trying to time the market, I know I’ll fail.

Wizz Air likewise became a two-bagger in 2017.  When I weighed up this investment last year, I looked at it alongside Ryanair and Easyjet.  All told, I thought all three companies appeared attractively valued, however it seemed to me that Wizz Air was better positioned.  It sat on a more appealing valuation, it was growing market share and it had one of the youngest fleets in the business.  I’m heartened to see that on the final trading day of 2017 that they had finalised an order for new Airbus planes that will take them into the mid 2020’s.

The Bad

I have to start with Dialog Semiconductor.  They’ve been hit by a few warnings this year based on their relationship with Apple.  I wrote about this recently (Dialog Semiconductor: A Reminder to Pay Attention) but in summary, Apple account for around 70% of revenues for DLG, and unfortunately rumours abound that Apple will bring their semiconductor manufacturing in house.  Correspondingly, DLG’s share price has taken a few hits this year and currently has me at a loss.  I have decided to await further clarification in Q1 of 2018.

I sold Gattaca and Dunelm this year, finally losing patience (and money) with both.  In truth, had I formulated my current investing strategy before looking at these two, I wouldn’t have bought either.  I confess I held both of these too long, in some feint hope the shares would recover.  So lesson learnt.  If you’re not convinced by a company, don’t hold just because you want to make your money back.  Get out, put the money elsewhere.

Next continue to cause some concern.  A minor earnings upgrade caused me to top-up my holding, and I remain convinced of the quality of this business (just read an annual report to see what I mean), however the fact remains that they continue to struggle against faster growing, online competitors.  Will 2018 be the year they get their act together and start to catch up?

2018

What will the new year hold?  I’m not sure.  US equities are sitting on pretty lofty valuations, but worldwide equity returns have been very respectable.  In the UK, I think markets could at worst be considered ‘fairly valued’, and therefore remain happy to both hold my existing shares and make additional purchases wherever I find value.  With only around 8% of my portfolio in cash, I remain keen to build up my reserves in case of a correction as well.

Whilst I try to follow macro events, I don’t really allow them to affect my investment decisions.  That being said, it appears we may finally be seeing a program of interest rate rises globally.  This must surely put pressure on equities.

What am I looking at in 2018?  I’m keen to find a replacement to the emerging market Eastern European ETF I held until November.  If you follow my CAPE posts, you’ll see that Eastern Europe still presents real opportunity from a value perspective.

I’m also intrigued by the possibility of India.  I need to do far more research, but the attempts made to sort out their tax system last year should result in increased tax receipts to be spent on infrastructure developments.  If you had to bet on one country for the next 50 years, India must be a contender.  Perhaps a small-cap ETF is the way to go.  More research needed.

I’m also keen to continue diversifying away from the UK, for no other reason than diversification is rarely a bad idea.  I will be looking to screen for equities abroad, trying to find quality growth where I can.

And Finally…

I’m pretty happy with my investment methodology, as it stands.  It’s something that has been honed over a few years now.  That being said, I continue to develop and grow it based on new influences and education.  The nice thing is that I can be extremely discerning in what I add, and what I discard.  It seems to be working.

I was honoured to have been invited to contribute a Q&A interview to DIY Investor Magazine this year (you can read it here).  When I had the idea to start this site, I had no idea where it would go, or whether anyone would even read it.  It has been an education for me, and an inspiration to follow my interests and passions.  I am excited to see what 2018 has in store.

Our little Twitter UK investing community isn’t so little anymore!  It’s been fantastic to meet new contributors this year and I know they will make me a better investor in 2018.  If you’re not yet involved, join us!

I wish you all a happy and prosperous 2018.

Chriss

 

Leave a comment below, or find me on Twitter @BritishInvestor.

13 thoughts on “2017 In Review – Portfolio Performance”

    1. In most cases I believe smaller cap stocks outperform their larger peers. The downside is that they are also more volatile. But as a long term holding I’d be prepared to endure that.

  1. Very well done, with the performance all the more impressive with the lack of trading.

    A few more years like that and surely the full-time job can be ditched 🙂

    I would encourage you to keep the blog going. In particular, you will learn more about your investing by always writing about what you buy and sell. Also, I have also found you can receive all sorts of snippets of info from helpful lurkers.

    1. Thank you, Maynard. All the more so as yours was one of the first blogs I started reading, and proved an inspiration for me starting my own.

      I agree it is extremely beneficial as a tool for self-reflection, and certainly the responses I have received have proven invaluable.

  2. Hi Chriss Great article. I also share your enthusiam about india with a GDP growth rate of 7% a young population and now perhaps better governance , I follow this through India Capital Growth an IT (IGC) its been on a good growth trajectory and is actively managed , what’s not to like?

    1. Hi John

      Thanks for the comment, and the suggestion. Glad you share my view on India. I’ll take a look at IGC as well, sounds very interesting.

  3. Nice return for 2017. It would be interesting to see valuations on your current holdings, either individually or in aggregate, or both. Apologies if you already have that somewhere on the site…

    Best of luck for 2018

    John

  4. Hi Chriss,

    I also suggest IGC for India. I only bought in mid July and it is up 24% already. Other than Fidelity China Special Situations it is the only single country investment trust I own.

    I am not in Next principally for the bricks and mortar but it’s rapid rise in online which may reach 50% of group sales by Spring. It already has distribution hubs in Europe and the USA. It also benefits greatly from click and collect. The majority of it’s UK online returns, generally around 40% within the industry, are handed back in store. Whilst we watch the rapid rise in online the free cash flow from the stores funds the dividends/buybacks.

    Dave

    1. Hi Dave

      Thanks for the comment and IGC suggestion. A very healthy return so far for you.

      You make very salient points regarding Next. I hold for essentially the same reasons, and remain optimistic that they can continue growth in their online sales. We’ll see how their Christmas trading statement turns out tomorrow.

      Chriss

  5. Hi Chriss, what portfolio management software do you use? Are you happy with it? Any particular recommendations for DIY investors?

    Awesome performance.

    -Jeff

    1. Hi Jeff

      I have my portfolio in Google Finance and at Morningstar.co.uk. Neither of which are particularly powerful, but they are both free and do the job for me. I know Stockopedia comes highly regarded, if you wanted a more comprehensive portfolio management platform.

      Thanks a lot

      Chriss

  6. Hi Chriss,

    Agree Eastern Europe looks cheap and you might like to look at Blackrock Emerging Europe LSE:BEEP managed by Sam Vecht. It has around 50% exposure in Russia, and also invests in Turkey, Poland, Greece, Ukraine and Cyprus. So not specifically all E Europe the Russian holdings do look cheap at the moment.

    Impressive 2017 returns BTW and best of luck for similar (or better in 2018).

    David

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