More Tesco

I bought some more Tesco shares today at 321p.  They're on a P/E ratio of less than 9 and a yield of 4.6%, despite:

• Having a dominant position in the UK market.  Economies of scale give them an advantage over their competitors and make it hard for them to assault Tesco's position.
• Having a trusted brand which they can leverage in banking, insurance, etc...
• Being in a cautious economic environment which means their non-food profits are currently depressed.
• Having a very high-growth international business with excellent potential.
• Being in a non-risky business that requires little in the way of capital investment, R&D, etc..
• Being in a business that is largely inflation-proof (with the exception of banking).

When the factors are all this favourable, and given the absence of other obvious investment candidates, I'm happy having a large proportion of my portfolio in Tesco shares.  They are now 26% of my portfolio (up from 17%).

I still have cash available, but I have no immediate plans to invest it.  I want to make sure I have some available in the event of an even better opportunity arising.

Giving up on Game

Game Group are struggling to pay their rent, and their suppliers are starting to pull the plug.  The news is looking rather bleak.  So I've given up on them and sold my shares at 3.368p. 

The only ray of sunshine seems to be this:
http://www.investegate.co.uk/Article.aspx?id=201203141734253773Z

"The Board of GAME confirm that a third party has shown interest in providing additional funding for the company"

This does not sound like good news to me.  This sounds like someone wants to be first in line once Game go into administration, by buying their debt from the banks.  So I'm not interested in hanging on for the ride.  I run the risk that they'll stage a storming recovery and I'll miss out on a multi-bagger, but I'm OK with that.

Portfolio tweaking & 4-year performance review

Tweaks
I've done some fiddling around the edges of my portfolio.  Nothing major, just tidying stuff up.

In summary:

• Sold my paltry holding of Game Group shares (on which I had an ENORMOUS capital loss).
• Bought it again immediately in a different account (in fact, about 3 times as many shares - still a paltry holding though!).
• Sold Bond International Software, crystallising another capital loss.
• Sold Maxima, for another capital loss.

The latest snapshot of my portfolio is here:

http://www.danieltebbutt.com/portfolio.html

I've now rated Rok shares as zero and put them in the "sold" category.  I'm not entirely sure if they're officially worthless yet, but my sharedealing account no longer shows them as a holidng, so...

Now everything is much tidier: only 6 shares in my portfolio: Berkshire, Tesco, NWBD, IS15, BP, GMG.  And only one real tiddler: GMG.

Review

While I'm here I may as well post some performance figures for my portfolio in 2011.  Bit misleading since my trading was almost entirely driven by external factors rather than trying to beat the market, but anyway...  lets compare with previous years.  I can't remember how I've worked this out before, but attempting a new and fairly simple method I get:

2008:   Down 53%

2009:   Up 42%

2010:   Up 19%

2011:   Down 3%

i.e. if I'd been a fully-invested closed investment trust then £100 at the start of 2008 would now be worth £77.  Boo.  Luckily my funds under management were very approximately:

2008: X

2009: 2X

2010: 4X

2011: X

Meaning I have an overall profit of 60%, or an annual return of 12%.  Hurrah!

I don't have data to compare with the FTSE, but staring at a graph and making up some dividend yields I come up with:

2008: Me -53%.  FTSE all-share -30%

2009: Me +42%.  FTSE +28%.

2010: Me +19%.  FTSE +14%

2011: Me -3%.  FTSE -4%.

So if I'd invested exclusively in a tracker then I would have made 39% overall, or about 8.5% per year.  

Fully invested in a tracker throughout the period I would have been down 2%.

And finally just for fun: so far in 2012 I'm down 2.6% while the wider market is up 3.3%.  Ouch - a 6% disparity already, and it's not even February...