http://michae1mouse.blogspot.co.uk/2011/08/very-little-research-but-are-these.html
In my update back in late September, the hopeless cases portfolio had just taken the lead despite one total write off. What's the current picture just 3 months later though?
Whilst the FTSE-250 has moved from a percentage gain of 48.9% to 59%, despite a total loss on Game Group and a 59% depreciation on Man. Group., the hopeless cases portfolio has increased it's lead. From a 51.6% gain in September it has now gained 73% in just under two and a half years. In other words, the hopeless cases portfolio leads by 14% points.
By far the best performers remain TCG and ITV up by 283% and 247% respectively. Following on behind is CWC with a current gain of 75%, Vodafone 46% and two purchases of Aviva (reasons explained in previous posts) with gains of 41% and 38% respectively.
I'm not sure what this proves, if anything, but I have found it interesting. Certainly it goes to show that out of favour or distressed stocks can eventually turn out to be the multi-baggers of the future (TCG and ITV), and even the biggest of companies that are watched by a multitude of financial experts can bring handsome rewards. Certainly if you can buy them when they appear to be unpopular e.g. Vodafone. Also bear in mind that VOD has paid excellent dividends over this period with a special dividend to come from it's sale of Verizon Wireless (I'm assuming it hasn't already been distributed?).
I probably won't pursue the comparison any further, but might instead choose a different 'hopeless cases portfolio' in the future to conduct a similar comparative study.
Incidentally, from April 2011:-
http://michae1mouse.blogspot.co.uk/2011/04/watch-out-for-competition.html
"This brings me on to Vodafone. Whilst I don’t invest in large cap. companies, I read in one of today’s newspapers that over the past 10 years Vodafone shares are down more than 17% whilst the FTSE 100 is up nearly 7%. This is quite an underperformance. Cursory research shows that Vodafone pay a near 5% dividend, it has a modest p/e ratio (from ADVFN data) and a Chief Executive who appears to have a sensible approach to creating shareholder value.
It will be interesting to see if Vodafone moves from being the under-performer to the out-performer over the next few years."
Very interesting. A 14% outperformance is good, although perhaps some would hope for better, especially given the high-risk nature of the portfolio. Having said that, it's a very good performance considering that you hadn't done any research on the companies; and brings into question as to how valuable research actually is.
ReplyDeleteWithout the benefit of hindsight I think it would have been difficult to predict the future performance of the shares. I mean, many people would have said not to buy Game because it was a basket-case. But one could have said the same thing about Thomas Cook, too, and missed a big winner.
None of your choices were "bad". For example, Man Group was undoubtedly a reasonable value pick for the time. It would have seemed feasible that it could have improved its operations, but alas, it was not to be.
My only criticism of the portfolio is that 3 out of the 8 shares were in telecomms, which is rather lopsided.
Still, it's very thought-provoking. Thanks for posting, and keep up the good work :-)
mcturra2000 - Thanks for taking the time to post a comment. It's always interesting to hear the views of others. I'm about to conduct another comparison with a group of companies that I haven't researched! I hope you'll find it interesting.
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