Doubling up

There seems to be a theme developing to my recent trading: doubling up.

Royal Bank of Scotland has been one of my favourite holdings for a while and as a result of their bid for ABN Amro their share price has dropped to ridiculous levels. Analysts estimate that RBS will earn 70 pence per share in 2007 giving it a 2007 PE of 9. This for a company growing at a rate of at least 10% and yielding over 4%!

The market hates uncertainty so while the battle for ABN rumbles on the share price will be depressed. With or without ABN I think RBS is a great company so I will be increasing my holding.

To that end I sold my last position in Vodafone on Tuesday. The market loved the yearly earnings report sending the shares up to almost 160p. However VOD is having a terrible time in Europe at the moment with profits falling in its biggest markets. To counter this VOD is buying into developing countries such as India where mobile penetration is low. However revenue from non-Western European countries is still a small fraction (maybe 20% from the top of my head) of total revenue. The best thing about VOD is their enormous Verizon Wireless investment but after years of agony caused by the VOD share price I am happy to get out at a decent level and put it on my wishlist.

So I now have overweight positions in Google, Genzyme and RBS. I hope I know what I am doing!