Shaking up the Portfolio and learning to count.

Following on from the “When to sell a stock” post, funnily enough, I have been on a mad selling spree in my actively managed portfolio!

This all started after I was playing around and working out the CAGR for a number of my stocks, when I realised something didn’t feel quite right with the overall picture of my portfolio. I redid the numbers and realised that when I had originally setup my annual tracker, I must either have been VERY tired, or rather very tipsy.

Being an idiot.

My calculations for my percentage returns actually divided my increase in value by my final ending figure, rather than the initial figure plus contributions! Whilst it is annoying that I made such a basic mathematical error, the plus side is that I made the error in my favour – I under reported. I have gone back and corrected last years figures – the tracking of the FTSE etc. was all calculated correctly (which is why no-one shouted I guess!) so only a couple of minor errors on the actual portfolios where I had copied and pasted the errors where I had added sheets. A valuable lesson learnt. To save you from the hassle of scrolling through however, the bottom line was that my actively managed performance was not the reported 30.9% as I claimed, but was in fact a staggering 44.7%.

Yup – taking my starting value and contributions, my returns added a further 44.7% to my portfolio. This was partly what made me sell off some of my shares to drive my balance back towards more into trackers – there are some huge shifts in values in there which could easily go wrong again (just look at AZN today – that hurt!).

I plan to use all the funds that I have raised from the sales, the dividends I have received since my last investment and put that all into a single tracker to help slowly rebalance my portfolio. The sooner I can rebalance, the sooner I can start buying individual shares again within my tolerances 🙂

Number Crunching

So, what has been sold, and what were the returns? Please note that the returns include the cost of fees (so book cost includes all transactional fees (dividend reinvestment, dealing charges, stamp duty etc.), and the end value was calculated on what I got credited to my account after the sale (i.e. after paying dealing charges).

Dividends reinvested in the same security were not added to the total value, but dividends not reinvested (i.e. cash thrown off that I spent on something else, was). I also calculated the return for the FTSE-100 over that period (although excluding dividends, so we will have to assume approximately 3%) to provide a comparison. It’s been pretty steady over the years, and for the last 3 years the FTSE-100 over that period was 4.6% (or 7.6% if you add dividends).

Sale Item #1

First to bite the bullet – HSBC. I’ve held the shares for 3 years now since I first bought them, and they have been a good steady performer. I will miss the quarterly dividends which have been steadily ticking up over the years. I sold out at just over £7.50 per share, which over the 3 years gave a CAGR of 24.2%. Not at all bad – I will chalk that as a win!

Sale Item #2

Next to go was MIDD. I was going to use this as my tracker of choice for mid-caps, but when Monevator recently posted on the charges, I realised I was paying 0.4% but could pick a Vanguard fund for 0.1% – I decided to switch, no two ways about it! I originally purchased the morning the Brexit result came through when there was panic on the streets. I sold out at just £19 per share, giving me a CAGR of 23.1% over the year. I can live with that!

Sale Item #3

Next up was MRW. This was purchased about 3 years ago as I looked at the underlying business and the usual arguments on the ownership of their stores etc. but with the ongoing grocery wars, Amazon entering the fray I have decided not to wait for my number to come up, but cash in while I am ahead. I sold out at just over £2.40 giving me a CAGR of 14.5%. Not anything great there but still not too bad – certainly beats a savings account!

Sale Item #4

Lastly, I sold in my BLT that I purchased a couple of years ago. I cashed out at just over £13.60 per share. I’ve been contemplating cashing in as the price does fluctuate a lot, but thought why the heck not. A total CAGR of 25.9% over 2 years so not really too shabby.

Now what?

The outcome of all of this is that I now have a fairly large chunk of cash to deploy into the market. As I am planning on buying trackers, and I shouldn’t be trying to time the market, I know I now need to purchase my required trackers within the next couple of weeks, so watch this space!