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This portfolio ticked up this month, advancing from a cumulative loss of 18 per cent to a still mediocre loss of 14 per cent. The seven open positions registered an 8 per cent increase in valuations compared to a 5.4 per cent increase in the benchmark FTSE 100 index.
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So, all in all, a credible performance, although I'm still nursing an overall loss. The best share yet again was emerging markets IT specialist Dimension Data, which has moved ahead 24 per cent in the last four weeks. This month, I've found two new candidates – both very active in the construction/building services, outsourcing and PFI space.
• Buy Carillion . Business is booming at this construction services and PFI specialist. A half yearly trading update from the summer underlined the West Midlands based firm's great counter-cyclical strengths – the company said it has continued to perform strongly in the first half of 2008, with overall trading in line with its expectations and expects to achieve strong double-digit growth in underlying earnings per share against the comparable period in 2007. It noted that its order book at the half year to be worth about £20bn against £15.8bn at the same time last year with a pipeline of probable new orders worth approximately £3.5bn. Integration of the recently acquired Alfred McAlpine business also looks to be progressing – Carillion said it had firmly identified integration cost savings that will reach a run rate of £40m a year by the end of 2009, much more than expected. At 11 times earnings and on a dividend yield of 3.52% I think Carillion is a great defensive buy at 312p
• Buy MITIE . Business is also booming at out-sourcing specialist Mitie. While sales growth from local government customers look like it might be slowing down , most analysts reckon that the group should see more growth from the private sector as more businesses seek to outsource as the economy tightens. We really like the low cyclicality of the business and the low balance sheet risk - most analysts reckon that only around 11-13 percent of revenues are cyclically exposed and its low gearing allows it to opportunistically pick up debt laden rivals on the cheap . Buy at 216p.
The Portfolio
| Name | EPIC | Close | Return % | Price % 1 month ago |
|---|---|---|---|---|
| Balfour Beatty PLC | BBY | 4.185 | -10.4 | 9.48 |
| Dimension Data Holdings PLC | DDT | 0.52 | 10.1 | 23.81 |
| First Choice Holidays PLC | FCD | 2.9575 | 0.3 | |
| United Drug PLC | UDG | 3.0475 | 3.9 | 9.82 |
| Hunting PLC | HTG | 8.47 | 21.8 | 4.76 |
| Interserve PLC | IRV | 4.1475 | -0.9 | 2.16 |
| Johnson Matthey PLC | JMAT | 15.76 | -2.5 | -1.13 |
| SOLD POSITIONS | Average | 8.15 | ||
| Galliford Try PLC | GFRD | 0.59 | -55 | 43.9 |
| Kier Group PLC | KIE | 10.89 | -42 | 33.37 |
| Morgan Sindall PLC | MGNS | 5.85 | -30.6 | 32.35 |
| Smith (DS) PLC | SMDS | 1.2125 | -27 | 18.87 |
| William Hill PLC | WMH | 2.985 | -37 | 15.25 |
| Average | -14.11 | |||
| FTSE 100 | UKX | 5454.8 | 5.47 | |
Note: • Kier, Morgan Sindall, Galliford Try and William Hill all hit stop loss and were sold 18th February 2008. • Smith (DS) was sold 17th March 2008 • Johnson Matthey bought 14th July at 1617p |
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Key metrics
| Name | Capital (£m) | Close | Broker consensus | 1 year ago | Current | Forecast | Price % 1 year ago |
|---|---|---|---|---|---|---|---|
| NEW STOCKS | EPS Growth % | EPS Growth % | EPS Growth % | ||||
| Carillion PLC | 1235.8 | 3.125 | Weak buy | -8.1 | 19.9 | 53.21 | -18.51 |
| MITIE Group PLC | 685.6 | 2.1625 | Buy | 11.1 | 18.5 | 21.3 | -12.89 |
| EXISTING STOCKS | |||||||
| Interserve PLC | 518.4 | 4.1475 | Buy | 86 | 6.3 | 44.43 | -8.85 |
| Dimension Data Holdings PLC | 881 | 0.52 | Weak hold | 189.3 | 37 | 40.99 | -9.17 |
| United Drug PLC | 705.9 | 3.0475 | Buy | 9.3 | 7.6 | 24.2 | 27.64 |
| Johnson Matthey PLC | 3477.8 | 15.76 | Buy | 9.8 | 15.4 | 18.3 | -1.56 |
| Balfour Beatty PLC | 1998.9 | 4.185 | Buy | -0.4 | 89 | -12.36 | -2.67 |
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
