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The Shareswatch Random Stocks Portfolio: May 2012

May 17th, 2012 · Greg Atkinson · 3 Comments

It’s now been a year since I last reviewed the Shareswatch Random Stocks Portfolio during which time the S&P/ASX 200 has slid  from around 4700 points to where it is today at around 4200 points.  Again it will be interesting to see how the portfolio has fared against the ASX 200 Index and if there are any surprises in terms of how the stocks have performed.

Firstly let’s have a look at what the S&P/ASX 200 has done over the last 12 months.

S&P/ASX 200 Index 1 year chart – 16th May 2012

asx200_index_1_year_chart_may_2012

As of today the ASX 200 Index is approximately 500 points lower than it was a year ago, so its likely that a number of the shares in the portfolio have also fallen back since the last review in May 2011.

One stock were profits have been locked-in is Riversdale Mining (RIV) which was taken over by RIO Tinto in June 2011.  Since the initial offer for each share was $16 I will use this as the sale price. The transaction details for this trade are:

Riversdale Mining ASX:RIV

Bought 2949 shares  on the 23rd October 2008 @ $3.39 = $9,997.

Sold 2949 shares on the 1st June 2011 @ $16.00 = $47,184.

Profit: $37,187 or a return of 372%.

That’s quite a deal, but sadly one I was not actually part of myself.

Now let’s have a look at the whole portfolio and how it stood as of market close 16th May 2012.

Shareswatch Random Portfolio May 2012

I have removed Riversdale Mining from the portfolio and added an entry for cash which equals the proceeds from the sale the holdings in this company. Of course tax will have to be paid on this sale so I will reduce this amount when I next update the portfolio as part of an end of financial year adjustment.

Overall the portfolio has increased in value by 44.63% since 2008 thanks largely to the sale of the RIV shares. If we strip this sale out then the unrealised gain is +8.27% which after more than three years is nothing to get excited about.

Back in May 2011 the unrealised gain was 53.2% so the portfolio has actually fallen in value over the last 12 months just as the ASX 200 has.

Some stocks have fallen much more sharply than others with Challenger Financial Services Group (CGF) slumping from $4.78 to $3.64,  Gunns Limited (GNS) continuing its bad run moving from $0.46 10 $0.16 a share and Onesteel (OST) slumping from $2.01 to $1.04 a share.

Woolworths (ASX:WOW) continues to display it’s defensive nature with it’s share price barely moving although it has managed to move against the market and inch up slightly.

Platinum Asset Management (PTM) is a stock which I thought would have been doing much better by now but it too has fallen back over the last year and is now only up around 5% since October 2008.

In summary I would say that a return of around 45% since October 2008 is quite good, however most of this is due to one stock so the portfolio has been a little lucky so far.

Please note that I consider the dividends from this portfolio are used to deal with tax and admin costs so I am not tracking these nor adding them to the cash in the portfolio.

Finally a question for readers: what should be done with the cash? My suggestion is to take it down to $40,o000 (assume the rest went in tax) and randomly pick four more shares – but I am open to suggestions.

Please note this Random Portfolio is NOT meant as an endorsement or recommendation of any of the stocks contained within it nor is anything in the above article intended to act as any form of financial advice.

The Shareswatch Random Portfolio is a random selection of stocks from the ASX 200 range of companies. For further details regarding how it was constructed please see: The Random Portfolio

The current stocks prices of the companies on the portfolio can be viewed here: Stock market quotes and stock prices

Greg Atkinson is the editor of Shareswatch Australia and the Managing Director of Ohori Capital. He is originally from Australia but currently resides in Japan. He can be followed on twitter via @GregAtkinson_jp


3 responses so far ↓

  • 1 Greg Atkinson // May 21, 2012 at 1:51 pm

    Okay the options for dealing with the cash in the portfolio are either invest $10k in four new randomly selected stocks or keep the cash. Possibly another option would be to spread the money and buy more stocks in all existing holdings.

    Any suggestions?

  • 2 Leigh // May 22, 2012 at 9:58 am

    Greg, To keep it random, select another random stock and put the lot in. You could randomly select four more but that would spoil the original experiment of a ten stock spread and it would be spreading the risk further than the original intention. To invest in the the remaining nine would be reasonable if you applied and equal amount to each, but I say go for it with a replacement stock you might get lucky.
    The one thing the experiment has shown is that we only seem to make a quid when there is a take over.

  • 3 Greg Atkinson // May 23, 2012 at 7:12 am

    Thanks for the suggestion Leigh. Perhaps $10k could be put into one stock to maintain 10 stocks in the portfolio and $30k left in cash just in case it is needed later?

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