I started this quarter with £2,687.30 in my ISA, of which £187.30 was profit over contributions totalling £2,500, and with about 25% of my funds still in cash. I put in £1,050 more, bringing my total contributions to £3,550, and ended the quarter with £3,705.42, a £155.42 profit from my investments (down £31.88 from the previous quarter).
Inputting all the above details into excel and using XIRR to determine my performance, with expenses and dividends included, gives me a quarterly rate of return of -1.09%. My first negative quarter, but certainly not the last.
At the beginning of the quarter I was still with Interactive Investor (II) but decided to move my ISA to AJ Bell due to the former’s high costs, as you can see in the table above on 10/01/2018 – a fixed quarterly payment of £22.50. I made a contribution of £50 on 12/01/2018 and received £14 in dividends from Dixons Carphone on 26/01/2018. Since I had already started the ISA transfer process and cancelled my direct debit with II, the following £50 contribution was not executed. And finally, on 15/02/2018, the transfer was finalized when II sent the cash outstanding to AJ Bell.
During the period in the above table, the only transaction I made was buying an additional 130 shares of Francesca’s Holdings. On 05/01/2018 Francesca published a trading update that was below market expectations, the share price dropped 20% from $7.50 the day before to under $6, and I decided to double down.
The second and last transaction I did in Q1 was buying another 100 shares of Provident Financial (PFG) on 26/02/2018, the day before their 2017 earnings release and rights issue announcement. The share price dropped 10% that day and was trading under 600p (I first bought 75 shares at 795.5p), so I decided to dip into my savings, contribute £500 more to my ISA and use that money to buy more shares at 588p per share (a drop of 26% from when I first invested). The next day the shares rose 70.41% because the news were much better than the market expected.
Following their Extraordinary General Meeting, the Rights Issue was approved and began trading on 22/03/2018, upon which the share price was automatically adjusted down to reflect the dilution in the number of shares. I decided to subscribe so I contributed an additional £500 into my ISA on 19/03/2018 for this (hence the difference between cash and available cash on the first image above – £387.45 are committed already). I was allocated 123 nil paid Rights allowing me to buy 123 shares at 315p. This process will be finalised on 10/04/2018 when the fully paid New Ordinary Shares will begin trading.
PFG is by far my best performer this quarter. Its Rights are trading at 371p, and I have a total profit of £434.58 (£149.95 + £284.63) on the shares and Rights combined, a 35.78% return over my total investment of £1,214.55 (£1,042.85 + £171.70).
Dixons Carphone‘s share price dropped 12.45% from 199p at the beginning of the quarter to 186.55p now, but this still gives a profit of £130.78 over my £615.42 cost basis, a 21.25% return. Including the £14 dividend I received in January brings my total return to 23.53% so far ((£130.78 + £14) / £615.42).
Francesca’s Holdings‘ share price continued to drop after I bought 130 more shares at $5.99 in January, and now trades at $4.80, a further 20% decline (and a 27.82% decline under my $6.65 average share price). This was worsened by the drop in the US dollar against the Pound Sterling during this period, and I now have a loss of £401.44 on my investment of £1,188.77, a -33.77% negative return, almost fully offsetting the profit that PFG provided.
I considered buying more Francesca when the price crossed below $5, but instead I decided to search for another company to invest in. Although I believe it’s worth much more than $5 per share, I was already thinking of subscribing PFG’s Rights Issue (I like this company much better than Francesca), and I would also like to decrease my portfolio’s volatility a bit. Because it’s highly concentrated, with only three investments, any movement in these will affect my portfolio’s value significantly. At one point during January I had a return of over 10%, but then in February I was also down a bit more than 20%, before Provident Financial recovered.
In this second quarter, I will be trying to find another great investment or two, and I will start by analysing the four companies I mentioned in this article.