Anyone who picked up any accountancy training in the course of their working life may have come across the idea of ‘overtrading’. It is explained something like this:
Education
Watching Brief – December 2021
Pottering About
I often cross check what I have written in the past about economics and markets, partly to see how my looking into the future has inevitably been exposed as frequently ‘off beam’ (this tends to keep my current writing away from the wildest of speculations!) but more to assess what surprises or new trends have emerged and the more common reality: over many periods how little changes in 12 months.
Midweek Musings – quickies
After a longer technical post last week, this week I am going to confine myself to cherry picking a few news items that are relevant for investors who are considering portfolio asset mix balance and possible transactions, like profit taking.
Markets certainly seem edgy at the moment and the odds of a Santa Rally are receding. I suspect that institutional traders are looking to book some gains after a good year, perhaps nervous about the worsening Covid situation in much of Europe.
Midweek musings – what about ETFs?
When you need focus – should it be an ETF?
When undertaking some research into Agritech investing a few weeks back, I concluded that for the moment the only way a retail investor could make a highly focused investment in that theme was by purchasing an ETF (Exchange Traded Fund).
Midweek musings – Rock flattens Hut
One of the reasons I don’t own shares directly (other then for exceptional reasons) is that most of the available shares in any given company are owned by gigantic institutions and if they decide to sell large blocks, the market will usually get wind of that and the share price will plummet. The more concentrated the ownership of shares in a business, the greater that risk becomes.
Yesterday there was a perfect example of that risk turning into reality. A business which has a chequered history is called THG or the Hut group. Its shares were quoted at around 800 pence at the start of the year after floating as a new listing at 500 pence. That was a classic case in itself – the market rating a retailer with not much special going for it as it it was a technology business. It has happened before (ASOS, in its early days).
The mega investor BlackRock built up a 10% holding in the company or 124 million shares (data anyone could check out using stock market ownership notices). They have now decided they don’t want to keep all those shares and are selling half of them. To shift that many shares in one go is not easy, even for BlackRock, so they have offered them at a discount to a price that has alraedy plummeted – in fact at 195 pence.
So if you bought the shares at 800 pence on the basis of a Sunday paper tip written by some lazy pundit (people do that), you would be 75% down by now!
If you owned these shares in a fund, the most you could possibly own (and your fund manager would be due to be sacked if you did) would be 10% of the fund. so your maximum loss would be 7.5%.
In summary, if you want to speculate in shares, remember that you might well be a sprat swimming in the whales’ feeding grounds.
Midweek Musings – manager style research concluded
In my October Watching Brief post I introduced a Digging Deeper topic initiated by readers who wanted some pointers on identifying manager style.
You may find it useful to read the introductory comments when I suggested starting with the house style. In the example I chose, which was a real request to me for comment on a fund, I have been looking at the Baillie Gifford Income Growth fund.
The managers in person – getting to know them
I think all readers will know that you can find out who in person manages a fund using resources like Trustnet and Morningstar and most of the time you will easily find a short biography, supplied by the employer and consistent in all research sources. This bio may be expanded on the fund provider’s own web site but that is in my experience unusual.
Base facts that I usually pay attention to are: