End December update

As outlined in previous posts the season for taking tax losses ends on 31st December in the United States. The S&P 500 Index was up 28.9% in 2019, so it does not come as a surprise to find weakness in tech stocks that are well down from recent highs, and strength in similar stocks that are up near their highs.

The “weak” stocks were ROKU 133.90, MDB 131.61, WDAY 164.45, ZM 68.04, PINS 18.64, and WIFI 10.95.

The “strong” stocks were BABA 212.10 and MSFT 157.70. There was also a gain on SNAP 16.33. Funds also gained with IJR 83.85, SHCD 57.92, VIG 124.66, and Findlay Park 137.16.

Funds in the UK and Europe were generally a bit stronger and the Buffetology fund was up from 343 to 351.

The adjusted total returns for the year on the portfolios will not match the S&P as cash buffers are in place. The actual numbers need to be worked out on a mainframe, so will wait and see.

Sale of BAT and purchase of Boingo

During the second half of December the remaining holding in BAT was sold at 3179p. Standing a bit higher today, but overall strategy is to exit tobacco shares and not get involved in fossil fuels – although BP or Royal Dutch might be considered from time to time.

I previously noted that I would not be buying US small caps and bought an ETF instead. However this ETF could not get approval for my ISA account, so was left with a smaller overall holding than planned.

Today I bought a smallish holding in Boingo @ $10.84. This company provides WiFi services – notably in airports – that are a lot quicker than free services. The interesting development is the company’s expertise in capturing WiFi signals, bearing in mind that 5G signal capture is a whole new ballgame. As the shares were double the current level earlier in 2019, and the tax loss sale season is coming to a close, I thought a purchase before the year was a good idea. Boingo is a small cap with a chart going back to 2011 , so not a unicorn.

Profits taken on Superdry and Nvidia

Superdry published results a few days ago. The item that stood out was that the turnaround/reorganisation will take about two years. Also noticed a few unfavourable comments about the former CEO (now taking the job at Saga) relating to his management style. The shares popped up on the Election result so took profits @ 510p. The cost back in May was 452.76p.

Nvidia has recently made intra day lows of >200 in late November and again in early December. Clearly the shorts have not got it right yet apart from a few potential scalping trades. As I am uncertain about the future trajectory – 225 seems like resistance – and I would prefer to be holding more cash right now, I decided to sell my entire position and received 223.33. The cost of 80% of the combined holding was 166.49 from November 2018, and the remaining 20% was added at 141.19 end May 2019. Not at all bad for my first chipmaker investment, but may have a few losses to cover if markets peak soon then weaken on something unexpected.

Bought a US Small Cap ETF

Both Barron’s and Knox Ridley have been writing about US Small Caps during the past week. As Findlay Park started as a US Small Cap fund before changing to an unconstrained portfolio I thought that this would be a good area to consider at the present time. I do not like the idea of buying a few small cap stocks as the risk is very high, so I looked at the funds mentioned in Barron’s.

I prefer ETFs over managed funds for additional investment in the U.S. , mainly because mutual funds pay local taxes and spin off tax credits to holders. I am investing tax free funds, so the tax credits have no value.

The ETF which I decided to buy is iShares Core S&P Smaller Companies and 320 of these went into my pension fund yesterday @ 82.50. I will also add another 180 to my ISA account whenever fund is approved by my ISA managers – as long as the price is close to 82.50.

Sale of Slack, purchase of more Zoom

Prior to quarterly results I made a decision to sell Slack (WORK) as the stock had been underperforming and there might be better opportunities to reacquire when valuation looks more reasonable in relation to growth. The sale went through at 22.09 giving a loss on all accounts except the ISA.

Also noticed that Knox Ridley intended to add to Zoom (ZM) following a price drop after their quarterly results, so increased my holding – buying 200 for my ISA @ 63.38

The point has been made that both companies face competition from big tech, notably Microsoft. My feeling is that Zoom could be the better opportunity of the two because it has more of a global reach. Big tech will also be constrained from seeking monopolies by politics – it’s better to have at least one competitor at present to avoid anti trust actions, and try to increase the size of the overall market.

End November update

As things turned out November was a surprisingly good month for most of the technology stocks in the portfolios. The three with negligible changes were WORK 22.82, SNAP 15.25, and PINS 19.48.

BABA finally went ahead with their HongKong listing and the ADR price improved from 176.67 to 200 even. My best guess is that Beijing decided that a mega listing would help restore confidence in HK as a financial centre despite the protests and riots. Notable gains were also made by NVDA 216.74, MSFT 151.38, ROKU 160.37, MDB 148.70, WDAY 179.12, and ZM 74.50.

In the real world the general strength in US equities was reflected in Findlay Park American – up from 129.81 to 134.60, SCHD up from 55.52 to 57.09, and VIG up from 119.61 to 122.54.

U.K. funds and investment trusts were generally a bit firmer. However SSON up from 1202 to 1302, and the Buffettology fund up from 322 to 343 stood out as gainers while FEET lost a bit from 1177 to 1138. There is a U.K. General Election on 12th December and Sterling has remained reasonably strong. Once again the result is unpredictable despite opinion polls showing this and that. Theresa May experienced this last year.
People in general are sick and tired of the whole political class.

Started a holding in Pinterest

The two main disrupters of e-commerce dominated by Amazon and E-Bay at the present time are Pinterest and Shopify. On October 31st after hours Pinterest posted quarterly figures which disappointed many analysts, although still showing reasonable growth.

I wrote that the price looked more like 20 than 25 yesterday, before Wall Street opened. In the event the stock started trading either side of 19 and a best order secured a small position @ 19.13. The stock closed at 20.86 but it is very difficult to predict which way the wind will be blowing next week.

From a technical perspective there remains a big gap to fill, but this is going to take time. For the moment I will look to either trade this small position or build on further weakness.

End October prices

It is useful for me to have a timeline on month end prices that I can look at just like that.So the list starts with US tech, then funds, then U.K. investment trusts and funds.

BABA 176.67, NVDA 201.02, MSFT 143.37, ROKU 147.20, WORK 22.00, SNAP 15.06, MDB 127.77, WDAY 162.16, ZM 69.89

Findlay Park 129.81, SCHD 55.52, VIG 119.61

SSON 1202, FEET 1177, Ab Euro Inc 94, Johcm inc 188, Laz Globalinc 107, Trojan X inc 105, Thread U.K. inc 144,( Buffettology 322p on 1/11)

There is not much on my watchlist. Pinterest just had a disappointing quarter so chances are the price will be more like 20 than 25 with many people stopped out.

Some older small holdings are gradually being disposed of to generate cash.

More October trades – Nokia disappoints big time

Zoom continued down to its next support level so I bought another 150 in the real world at 63.90. Mentioned to an ex client with landed estates – he already uses Zoom to videoconference what is happening on his farms and woodlands, while his day job might see him in London, New York, or any other major centre for the arts.

As for Nokia, a huge disappointment as earlier guidance withdrawn, dividend suspended – that’s a 100% cut while new guidance for 2020 looks like 40% down. That sounds like the ADR is headed for USD3 or thereabouts – Travis on Stock Gumshoe sold his at 3.90 and I followed him the next day at 3.79. To me the whole spectacle of a telecoms equipment company losing its way reminds me of GEC in the U.K., a company built over many years by Lord Weinstock only to be trashed by new management during the internet boom around 1999/2000.

Good news that Microsoft has been awarded the Pentagon contract. $10 billion over 10 years will not make a huge amount of difference to earnings, but is a great advertisement for their cloud business, second only to Amazon at the present time. And if we are worried about Green New Deal then Microsoft sits well given Bill Gates’ philanthropic interests.

Another Roku trade

The target for my recent addition to Roku was the 115 to 120 range. So when the stock price jumped into this range at the close 9th October a sale was imminent . The following opening took the price just North of 120 so I took my profit at 120.56.

This gave me the opportunity to sell in the real world subject to capital gains tax – the purchases of the two lots of 50 shares were in the tax free world of ISA and SIPP.
My rationale was that sooner or later the stock price may be much higher, and I do not wish to have my profits diminished by tax. As things stand this is not the case, as I have a few losses that I can take to bring gains inside the annual tax free allowance in the UK where the tax year ends 5th April.

Thanks for this trade must go to Knox Ridley, a very smart chartist who predicted the rally.