Wednesday, June 25, 2008


Aviva - owner of Norwich Union, is an financial services company with operations in Europe, Asia and America.

The market cap. is about £14 Billion, the PE is about 11 and the dividend yield is about 6%.

Aviva is an insurance company. And that is the problem. Insurance companies are very hard to value as their accounting is more complicated than most other types of companies. Also, as an insurance company you are selling a commodity - most consumers will take the cheapest quote they can get regardless of the brand. This makes it almost impossible to build some sort of competitive moat.

If I want to invest in an insurance company I will probably choose Berkshire Hathaway.

Having said that, Aviva is cheap, the brokers love it and the yield is generous.

One to keep at the back of my mind I think.

Monday, June 23, 2008


Here is another quick look at a FTSE 100 company.

Antofagasta (ANTO) is a Chilean based copper miner. It also has operations in Bolivia and Peru and also mines Molybdenum. ANTO also has railway and water distribution operations.

The market cap. is about £6.5 Billion, the PE is about 10 and the dividend yield is about 4%.

So is ANTO worth a second look? Probably, although other more diversified miners like BHP Billiton are available at a similar PE. Unless you have a specific reason to be bullish about copper prices BLT would be the safer option. ANTO obviously has greater political risk as it operates purely in South America. The chance of a serious political crisis is low but increased taxation on miners is always possible.

Another point to note is the volatility of the ANTO share price - in the last 6 month is has moved between 600p and 800p twice. The could present trading opportunities but could also be a bit disconcerting when it is plunging.

A final positive point - the 4% yield is generous for a miner.

One to keep an eye on I feel.

Thursday, June 12, 2008

UK banks buy tip

I hope you all acted on my buy tip for UK banks last summer. As you can see from the chart above when I said buy I actually meant sell!

Joking aside, the fear in the market when it comes to banking stocks is palpable. HBOS and RBS have both recently released updates stating that trading is inline with earlier guidance but the market has just ignored that reassurance and kept on selling.

The problem is simply that no one wants to buy banking shares at the moment. No one knows when the stream of bad news for banks will end and as a result the shares have been heavily discounted.

Is the sell off overdone? Probably, but then I have been saying that for a long time.

Incredibly HBOS has lost 75% of its value since its peak just over a year ago. I would have thought that discounts all the current bad news and lots more to come, including a UK recession.

It looks like UK banks are going to ruin my 2008 performance as well 2007's. I am still clinging on to my HBOS, LLoyds TSB, RBS and Barclays shares for the moment. They have to stop falling at some point... don't they?

Saturday, June 07, 2008


At my current rate of progress through the FTSE100 I may just finish by the end of 2009! And by then the constituents would have changed considerably. So maybe I am permanently stuck in a trawl through forgettable FTSE100 companies! Aarrgh!

Anyway, AMEC is a consultancy supplying to the energy industry. So as you would imagine with any company involved in the energy industry it has done rather well in the last couple of years with the share price more than doubling.

The basics: Market cap. of almost £3 billion, the 2008 PE ratio is about 20 and the dividend yield is almost 2%.

AMEC is growing. Brokers forecast EPS growth of 35% in 2008 and 20% in 2009.

The growth rate is impressive but I am not a big fan of consultancies. That is because they are totally subject to the whims of their customers and the movements of their industry. Their differentiator is the quantity and experience of their consultants but human resources are rather dynamic by nature. Therefore this is not the enduring competitive moat that Warren Buffet so prizes.

I feel more inclined to yawn than invest.

Next please.

Tuesday, June 03, 2008

Alliance Trust PLC

Not much time this morning but let me see if I can knock another FTSE100 constituent off.

Alliance Trust (ATST) is an investment trust. The market cap. is £2.3 billion, the dividend yield is about 2.5% and the PE ratio is about 40.

By selecting shares I am effectively forming my own investment fund so I won't be letting ATST make mistakes for me. If I wanted to stop selecting shares I would invest in a tracker fund or possible a number of ETFs.

Although ATST has a low expense ratio of 0.5% that is still 0.5% off all gains (or added to losses.)

Not for me,