Portfolio review

I'm getting to the point where I'm starting to run out of spare cash - and that's likely to remain the case for the next 6 months or so. So for the first time I might want to sell some shares in order to free up funds - with due caution about the costs of trading too often.

So, I think it's time for a portfolio review. For each of my shares I will do the exercise of working out the fair price, and comparing to the current price. Some shares I will want to invest more heavily in, and others I may wish to sell off.

RBS. Fair price (post-rights) 330p, representing a historical P/E ratio of 8 and a future P/E ratio of 10 on lower expected EPS of 33p per share (last year 41p). Anticipated dividend of 15p per share, representing a yield of 4.5%. Current price: 245p - a discount of 26%.

ZRX. Fair price 17.5p: a historical P/E ratio of 16, a future P/E ratio of 10 (based on anticipated EPS of 1.9p in 2009). Current price: 10.6p - a discount of 40%.

GNK. Fair price 800p: a P/E ratio of 11. Current price 533p a discount of 33%.

MXM. Fair price 230p: a historical P/E ratio of 12. Current price 135p for a discount of 42%.

TW. Fair price 215p: a future P/E ratio of 10 based on my expected earnings of £230m after the housing crash. Current price: 101p a discount of 53%.

QDG. Fair price 350p: a historical P/E ratio of 16 (on underlying earnings) and a future P/E ratio of 12. Current price 152p a discount of 57%.

EDD. Fair price 45p: a historical P/E ratio of 15 (assuming tax were paid at 30%), and a future P/E ratio of 11.5. Current price 42.5p a discount of 6%.

BDI. Fair price 170p: a historical P/E ratio of 12, and forward P/E ratio (in 2009) of 10. Current price: 138p - a discount of 19%.

High dividend trackers. Still reasonable dividend yield of 4-5%.
IAPD 1792p. IDVY 2395p.

Pure trackers: no idea of fair price.
IEER 2506p. LTAM 1582p. IFFF 2310p.

Summary
All of my shares remain undervalued. Prime candidate to be sold is EDD, but since it forms only a small part of my portfolio and the dealing charges are significant on such small transactions, I think I will continue to hold.

Prime candidates in which to invest further are Taylor Wimpey and Quadnetics. Taylor Wimpey will almost certainly win out since it can be held in an ISA.

The average discount across all my investments is just under 30%.

I hold a disproportionate amount of my funds in RBS, but at a discount of 26% I will continue to hold. I have RBS in two accounts: if it recovers to 297p (a discount of 10%) I will sell at least one of the lots if not both, assuming there are still bargains in the likes of QDG and TW.