2018 Q3 Performance: -5.27%

total investments

I started this quarter with £4,512.28 in my ISA, of which £4,050 were contributions and £462.28 were profit. I put in £3,000 more, bringing my total contributions to £7,050, and ended the quarter with £7,232.96, a profit of £182.96 from my investments (down £279.32 since the previous quarter).

quarterly return

Inputting all the above details into excel and using XIRR to determine my performance, with expenses included, gives me a quarterly rate of return of -5.27%. If my investments performed like this every quarter, my yearly return would be -19.46%.

cash statement

Transactions

The only transactions I did in Q3 were buying 1,650 shares of Just Group PLC when its share price dropped to 90p on September 3, and buying 2,150 more shares when its price dropped to 70p on September 19, giving me an average price of about 79p (you can read all about JUST in my previous post). It ended Q3 at 88.4p, giving me a profit of £353.90, an 11.78% return in less than one month, and it was my best performer this quarter.

Besides trading commissions, the only expense I had was £2.71 for a Q2 shares custody charge on July 20.

portfolio

Dixons Carphone

I received a final dividend of £31 from Dixons Carphone on September 21. Together with the interim dividend of £14 that I received in January, this gives me a 2018 total dividend of £45, for a dividend yield of about 7.3% over my cost basis (£45/£615.42). Nice!

At least this offers some respite from DC’s share price fall during Q3 from £1.866 to £1.6965. Whereas I had a 21.28% return at the end of Q2, I now have a 10.27% profit (and was up 50% mid Q2).

Its latest trading update was published on September 6 and had no major surprises, with revenues staying flat for the quarter and the company reaffirming its £300m profit before tax guidance for 2018/2019, down from £380m in 2017/2018.

Francesca’s Holdings

From being my best performer in Q2, with a 57.3% rise to $7.55, FRAN reversed direction and became the worst performer, falling almost 51% to $3.71 at the end of Q3. Whereas I had a profit of £126.16 before, I now have a loss of £533.85 (44.91% loss on my investment!).

The biggest drop (32%) in its share price happened when the company released its latest quarterly report on September 11, reporting an earnings miss and lowering sales guidance for the second half of the year. For Q2 net sales decreased 6% and comparable sales decreased 13%. Net income was a $3.4m loss compared to $11.6m in profit over the same period last year, putting into question my idea that a turnaround in operating performance was near, or even possible.

I’m glad now that I decided to invest in PFG last quarter instead of buying more FRAN at $5. I’m going to see how the company performs next quarter, reanalyse and decide if I’ll remain invested or not. This company might be my first investing mistake.

Provident Financial

PFG remains practically unchanged, with its price rising from £5.998 at the end of Q2 to £6.04 at the end of Q3 (having traded near £7), which is surprising considering it reported a 24% drop in first-half adjusted pre-tax profit at the end of July, mainly due to lower collections at the home credit division. However, the recovery plan is expected to be substantially completed by the end of the year and the company intends to reinstate dividends with a nominal final dividend for 2018.

Its Q3 trading statement will be published on October 19 and I’m considering investing more if its share price falls below £5 between now and then.

Shire

Shire has been working out as anticipated, with its share price increasing the nearer we come to a final regulatory approval of its takeover by Takeda. I bought at £40 just after the Japanese company announced it would acquire Shire for about £49, and the company is now selling at £46.235 per share, giving me a 13.72% return in less than five months. Regulators in the USA, China and Brazil have already approved the acquisition. Crunch time is now November 6, when EU regulators will decide if they will allow it as well (which I believe is almost certain).

This last month was a wild ride! I was actually down about 16% when FRAN crashed, before JUST began to recover, so I can’t say that a negative 5.27% return for the quarter makes me feel really bad. Volatility is expected in a concentrated portfolio such as this and, to be a good value investor, resilience is key.

With this quarterly result, I’m basically flat year to date, so let’s see what Q4 will bring…

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