Report on Q2 2013

Report on Q2 2013

5 Jul 2013

The FTSE fell by 3% in the quarter meaning, obviously, that the easy wins of Q1 (+8.7%) were unavailable. My Q1 recommendations of Enterprise Inns and Go-Ahead trod water.

Home Retail Group fell after its last trading update, apparently on the basis that the rain kept people away from Homebase. Such absurdities provide buying opportunities for investors and would-be barbecue chefs. At 138p it has a historic FCF yield of 29% (admittedly 2012 was an exceptionally good year for its free cash flow.)

In May, I updated on ICAP which was still at 327p. The volatility of this share can be unnerving but right now it is 15% higher at 378p and it has maintained and paid its large dividend.

In May I wrote that I would not be buying FirstGroup at its ex-rights price of 111p. At today’s price of 97p I am still not buying but I’m still watching.

I also offered a list of twelve yield stocks. So far, so good. Ten are essentially unchanged or higher compared to a slight (0.8%) fall in the FTSE. Only UBM and Royal Dutch are down (I don’t know why).

For anyone fretting about my worst ever investment (in Taylor Wimpey), it just released a positive trading statement and is trading at just over 100p – and yes, I have sold some.

In April I wrote dismissing gold as an investment after it fell below $1400 an ounce. It is now $1242 and as unappealing as ever, in my opinion.

My view on QE, available here and there, is that it probably does nothing to stimulate economic growth but that it will continue to be favoured by the Treasury which influences the Bank of England decisively. Yesterday the MPC under its new Governor Carney stated that:

“..the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.”

In other words, the Bank Rate is going nowhere from its 0.5% base and QE is safe in their hands. The stock market duly rose 3% in response.

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