A return of 2.31% for the portfolio in April makes for a second consecutive positive month since beginning the blog but, sure enough, now that we are into May that desperate old “Sell in May and go away” saw is being trotted out by all the usual suspects. I think that trying to predict the movement of the market is a complete waste of time and I will do nothing other than watch this from the sidelines while continuing to try to find a decent home for whatever I can afford to add to my ISA at the end of every month.
AstraZeneca was undoubtedly the star performer over April, rising strongly on the back of Pfizer lumbering into view with its takeover cannon fully loaded. There is a lot of talk of tax inversion and synergies and it does look as if the primary motivation for this deal is more financial engineering than science, but whether the rationale is good or otherwise it is my role to look at the potential selling price and decide whether I want to stick around for the endgame or not. £50+ increasingly looks on the agenda and, if Pfizer do offer that, I wouldn’t be unhappy if Astra sell up. That said, I’m not going to be disappointed if they reject it and carry on with their turnaround at their own pace either. Soriot seems to have done a great job so far and, from what I can tell, seems firmly focused on the long-term, which is exactly what you want. Of course the price would tumble back down if they do reject Pfizer, but jam tomorrow is still jam and Astra’s pipeline looks a lot healthier than it did before he got to work.
In terms of activity during the month, I again added to both IBM and Diageo. IBM reminds me of AZN four or five years ago–it pops up as good value whenever you look at those metrics and also seems a grand old company that has lost its way a bit. In truth, I think IBM is repositioning, something which, for a company of that size, is a far from straight forward manoeuvre. Nevertheless, while it continues to look good value I will continue to buy more and hope that the management eventually gets it right. Diageo is far from cheap, but is quality merchandise–a genuine hold forever company.
Now it is time to sit back and watch to see if the prophets of seasonal doom are (as so often) proved right.
Disclosure: Long IBM, DGE, AZN
Disclaimer: This post is not a recommendation to either buy or sell. Please consult your investment advisor.