August was a strong month for the portfolio with a total return of over 4%.
I don’t need to look to hard to find the main drivers of this, with Berkshire advancing by about 11% (in sterling terms) over the period. Furthermore, the gain was based on fundamentals, with Berkshire announcing early in the month that its operating profits had risen by 10.5% over the same period a year earlier. Total book value had risen 5.6%, by the end of July. As an amusing footnote, August also saw the class A shares rise to over $200,000 for the first time, eight years after they topped $100,000. Will they ever get to $400,000? Sadly my portfolio does not contain any of the legendary A shares!
It was also a decent month for AstraZeneca with a rise of over 5%; this is a share that over the last six months has gone from dull as ditch water to a running soap opera. I can barely keep up with events, such is the drama. The latest rise is, apparently, due to speculation that the praying mantis, a.k.a. Pfizer, is still stalking its quarry. Will it return to deliver a knock-out blow (or whatever method mantises usually use to dispatch their victims)?
If I don’t acquire Pfizer via AstraZeneca, perhaps I should just look at purchasing it anyway. It is a company that seems to be turning itself around quite nicely and, having recently split its operations into three, is beginning to revitalise its own pipeline with a vaccine for Meningitis B currently awaiting approval in the US. The large cash pile and 3.4% dividend also add to its appeal. Having just been through a decade of no share price progress, perhaps Pfizer is limbering up for a better run of results in the future. This might well be after a break-up, something that often seems to benefit investors as the smaller and nimble entities that result tend to be priced more efficiently by the market.
One marginal faller over the month was Rolls Royce, a quality company with strong growth prospects whose price has gone nowhere in the best part of two years. Its recent results included a drop in first half revenue, as with many of its peers largely due to forex issues. However, Rolls also reiterated guidance for a strong improvement in the second half, bumped its (admittedly fairly stingy) dividend up by 5%, and plans to continue with its buyback. I suspect that Rolls would prove a decent investment at these prices, but my attentions are currently elsewhere and I will be looking to keep adding as much as possible to Diageo, JP Morgan, and IBM in the months ahead.
Cheaper prices all round would be useful and, if the increasingly hysterical tone of market commentary is anything to go by, we must surely get them sooner or later. But, in the meantime, that wall of worry is still being scaled by this gnarled old bull.