Share race: Expert leaves pupils in his wake
Five months into the race, the fund manager leads the pack, says James Daley
Saturday 28 June 2008
Almost five months into this year's Share Race, and it's the professional fund manager – Colin McLean of SVM Asset Management – who is out in front, leaving the students and the investment club fighting it out for second place, having already lost 13 and 15 per cent of their portfolios respectively.
McLean is now building up a commanding lead. While he too has made an overall loss, his portfolio was down just £75 (out of £5,000) – or 1.5 per cent this week. Since the competition started in February, however, the FTSE All-Share index is down more than 5.5 per cent.
The students, from Leicester's Moat Community College, and the investment club, from the UK's biggest lime producer Singleton Birch – have had a torrid couple of months since we last looked at their progress. But with seven months to go until the conclusion of the contest, neither team is yet out of contention.
Since we last looked at the teams' progress in April, McLean has had some mixed fortunes in his portfolio. Of the five holdings he had in the spring, there's only one left – BG Group – and this is showing a relatively healthy profit of 8 per cent. However, the rest of the portfolio has been turned over several times, as McLean has gone in search of defensive stocks that can deliver steady returns in the continued difficult conditions.
"I'd like the portfolio to be reasonably defensive, but at the moment, there's not much out there that is defensive," he says.
The portfolio's biggest winner has been Tullow Oil, which was added to his portfolio in the middle of April, since when it is up more than 40 per cent. "Tullow's been a big winner," he says. "It's had some drilling success in Uganda, and it's potentially got a very large field. So it should have encouraging news flow for the remainder of the year."
Although he admits the rising oil price has helped the share price along, he does not believe oil prices need to go any higher for Tullow to continue prospering.
Another new addition to the portfolio in April, British Energy is also showing a small profit, but the other two slots have proved harder to fill.
After two attempts to make money out of the tobacco industry, McLean has cut his losses and moved on. Investments in Imperial Tobacco and then British American Tobacco cost the portfolio more than £100. While he was attracted to these due to their potential growth in emerging markets, renewed fears about the global slowdown spreading through Latin America and Asia have taken their toll on the tobacco share prices. He also blames fear over the stability of emerging markets for the losses sustained on another new holding – the consumer group Unilever, which lost the portfolio more than £100 in just over three weeks earlier this month.
One of the portfolio's original holdings Randgold Resources was also sold at a hefty loss in May, making way for Pennon, the water company. Another new addition is the public transport company FirstGroup, which McLean believes will benefit from the rise in oil prices, as more people substitute buses and trains for their cars.
Back in April, the students at Moat Community College in Leicester were narrowly winning our contest. They'd made their money in oil and engineering stocks, and had shown a good selling discipline when companies in their portfolio had begun to perform badly. Alas, the last three months have proved much tougher, and while they're still beating the investment club, they're a long way behind the fund manager, Colin McLean.
After cashing in profits in the engineering group Costain – which helped build the St Pancras Eurostar terminal – and Aquarius Platinum in April, as well as crystallising a £50 loss in BAE Systems, they started moving into leisure stocks, with PartyGaming, the online poker site. Alas, a computer error showed them to have made an enormous profit on this investment, and teacher Claire Jackson admits her students had begun bragging about what they were going to spend their winnings on, now victory in the competition was all but certain. When the mistake was corrected, the team was devastated.
In the end, they made a small profit on Partygaming, but carried on with their leisure theme, recently investing in Cineworld, the cinema chain, and easyJet, the budget airline.
Shahid Sattar, one of the students, says many of his ideas have come from doing research on the BBC website. But he says the group's decision to go for a cinema stock was born out of slightly different reasoning. "We think during a recession, people will go to the cinema to cheer themselves up." He also believes people are more likely to go for the budget airlines when times are tough.
Unfortunately, easyJet's share price – like all airlines – has been hammered by the rising oil prices, and the group has made a loss of £250. But they're hanging on to it for now.
Dragon Oil and Costain – two early success stories – have both recently been re-recruited to the portfolio, but this time round have only added small losses to it.
While the students may be 14 percentage points behind the fund manager, they are not out of the race yet.
The investment club was trailing the students and fund manager by a long way in April, and has done little since to improve its position. Dismayed by its ailing fortunes during the first two months, the club split up into pairs, each of which would be responsible for managing the portfolio for a month.
In April, the pair in charge turned over the entire portfolio, selling out of Anglo American, Balfour Beatty, Rio Tinto, Hamworthy and Barclays at a small profit, and replacing them with Centrica, Tesco and Albidion. A quick profit of £141 was turned on Albidion, which was duly sold in May, when Alliance & Leicester and Xstrata were brought in.
Although Rentokil has proved a good buy, and Centrica has just about kept its head above water, Tesco's shares have slumped over fears of a consumer slowdown, and shares in Alliance & Leicester have fallen by more than 25 per cent.
Ellen Rainey, the investment club's treasurer, says she plans to make some changes this week. "Tesco definitely needs to go. And Alliance & Leicester, I don't think that's going to recover." She says she's been looking at water company Pennon as a potential replacement.
The club's got some work to do though. Having made up a large chunk of its losses, its investments in A&L and Tesco has put it back at the bottom of the pile.
The Share race is sponsored by Abbey
Diving in at the deep end is no excuse for shirking the style stakes
Where should I invest my savings?
'Scrap the trap': calls for change grow as banks are told to play fair with loyal savers
Bargain Hunter: Eurostar offers child fares for £1 each way to Paris, Brussels and Lille
Relaxed pensions rules: Guide to what they mean to you
Moment of truth for payday lenders: Watchdog plans to curb cost of short-term loans
- 2 Why I'm on the brink of burning my Israeli passport
- 4 War is war: Why I stand with Israel
- 5 Blackest is the new black: Scientists have developed a material so dark that you can't see it...
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
Emergency data law: David Cameron plots to bring back snoopers’ charter
NUT strike: David Cameron announces crackdown on strike action ahead of mass industrial action
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
Day In a Page
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square