Confidence shaken, not stirred in Nifty Thrifty Portfolio
2nd December 2014 16:04
by Richard Beddard from interactive investor
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The Nifty Thrifty's descent from what was only recently a comfortable margin over the stock market average continues. In this, the 18th quarterly update since inception in June 2010, the portfolio is up 47%.
Last September it was up 54%. In June it was up 57%. The benchmark investment in an index-tracking fund has all but closed the performance gap. It's up 44% over the same period.
Today, £30,000 invested in the Nifty Thrifty portfolio four years and six months ago, would be worth £44,196 with dividends reinvested. £30,000 invested an index-tracking fund on the same basis would be worth £43,598.
To view the Nifty Thrifty's holdings and trading chronology, click here.
Stars trump stinkers
This quarter, seven shares were due for ejection. Three, , and remain because they are sufficiently highly ranked to be selected again. An eighth share, Kentz, was taken over by SNC-Lavalin. The cash was credited to the portfolio, to be reinvested.
Fortunately, SNC-Lavalin paid a significant premium to the price Kentz traded at when the Nifty Thrifty selected it and the portfolio made a 139% profit in the two years it was a holding.
A slightly slower burning but nevertheless highly profitable trade marked the end of the Nifty Thrifty's four-year interest in , the retailer. It returned a profit of 179% on top of the portfolio's initial investment.
By contrast, two of the four scheduled ejections were absolute disasters.
Lower oil prices would have put pressure on the price of shares in oil and gas exploration and production company anyway, but events at its oilfields and in the boardroom have compounded its difficulties.
In October, Afren sacked its chief executive and chief operating officer for gross misconduct and suspended other directors after it discovered illegal payments apparently siphoned through a partner company to the accused. Shortly afterwards it reported a 35% drop in production.
Those shareholders that didn't sell in November when the company's share price almost halved endured another bout of panic, as doubts about the stricken service company's viability intensified.
The only certainty is profits keep falling after alleged frauds were revealed in government contracts last year. If the company doesn't raise more money soon, through a second rights issue and disposals, it may breach the terms of its loans.
Dap squib was the fifth share to leave the portfolio.
Full up on oil
The highest-ranking company to join the portfolio is another African oil explorer, . Unlike Afren, it's not embroiled in scandal, but like many rivals, Ophir's fortunes are tied to oil prices, which may or may not show signs of recovery before Ophir is scheduled for possible ejection in December 2015.
It joins SOCO International, and another new addition, Nostrum Oil and Gas in a full quota of oil and gas companies.
would not have been eligible for the Nifty Thrifty portfolio a year ago. To qualify, shares must be fully listed on the London Stock Exchange.
Although Nostrum's Global Depository Receipts have been traded for years in London, these are instruments that allow shares listed on foreign exchanges to be traded here. It was only in 2014 that Nostrum listed its shares in London and entered the FTSE 350. The company's operations are based in Kazakhstan.
The other three newcomers are miner , engineer , and retailer . Halfords has only been out of the portfolio for three months, after a four-year stint that rivalled WH Smith's in duration, but not in profitability.
The next portfolio reshuffle is in March, when eight companies are scheduled for replacement.
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