Forever Investor

It was all going nicely this year until those pesky Greeks came along with their anti-austerity ideas and their democratic rights etc… Just kidding, the markets were long overdue a correction and it seems that is what we have. Whether it develops into more than that is anybody’s guess.

In the meantime the broader market correction caused a 5.41% drop in the FI portfolio for June. Nevertheless, I am still in positive territory for the year with a total return of +1.76%. More importantly I am very comfortable with the businesses in there and the prices they are selling at. While some are definitely not buys at current prices, there is nothing that is going to keep me awake at night worrying about over-valuation and there are a few for which I can see plenty of upside ahead.

Uppers

Industrials did well over the quarter with Capita and the Royal Mail roller coaster performing strongly. (Rolls Royce’s nose dive came largely in July, thus escaping scrutiny.) Indivior, although just a fraction of percent of the portfolio, also brought home a small amount of bacon by appreciating 17% over the quarter and continuing its very strong run since its spin-off from RB. There is plenty of evidence pointing to spin-offs outperforming the market for their first few years as standalone companies and Indivior looks to be a case in point.

My various consumer staples also held steady over the quarter with Diageo particularly remaining anchored in the 1800s, despite a brief flurry of excitement inspired by takeover rumours (3G again). IBM seems also to have put down roots in the $160s, also a tempting buy-in price for me.

Downers

The on-going disappointment that is GlaxoSmithKline continued in the same vein with another flaccid performance (-15%) and AstraZeneca’s perky post-Pfizer bid price also continued to recede into memory as both pharma heavyweights struggled (Astra lost 13%).

Berkshire Hathaway is also having one of its dull periods but is consequently now looking tempting at a P/B of 1.3 (buy backs may well be back on the agenda at 1.2). If the Greek/China correction develops it will be interesting to see what Buffett pulls out of his box of tricks.

Amongst some of my airier holdings Reckitt Benckiser and Altria have begun returning to earth (no complaints here).

Top-Ups

Diageo, has probably been my main focus over the last year and I have added more to this position and will continue to do so the longer it remains rooted in current territory (or better still, lower).

Additionally, I have continued adding to IBM, PZ Cussons and JP Morgan. I also made what appears to have been a rather untimely addition to Rolls Royce, although with a proven operator now at the helm and the bulging pipeline I am comfortable that the long-term prospects for the main business remain strong.

Additions

In terms of additions, I have begun to build positions in the Hershey Company and BACIT and am proud to hold positions in each (in different ways!) Hershey always looks to me like the perfect company and BACIT is that rare beast for me – something for which fees will be paid, but at least the fees will go to a worthwhile purpose.

The Next Chapter

So what is on the agenda for Q3? At this moment in time Greece is still hogging the headlines with its interminable crisis, but China is coming up fast on the inside lane. The latest from there seems to be that the government is banning major shareholders from selling shares while the army of retail investors seems to be learning the meaning of margin calls.

Markets–like Hollywood–tend not to produce new plotlines, but just keep recycling the old ones.

Disclosure: All shares mentioned above.
Disclaimer: This post is not a recommendation to either buy or sell. Please consult your investment advisor.