Newsletter March 2005
Rarely a dull moment for investments. Oil prices bubbling to
new highs, commodities remaining very strong, mining shares volatile to say the
least and rumours of inflation worries and interest rate hikes just around the
corner. Sterling looking stronger though and that may steady things for the UK.
Stock markets like the Dow seem very strong at the moment just days after Greenspan suggested the US budget deficit had to be tackled. In addition, Warren Buffet has pointedly raised the profile of the US deficit and remains short on the dollar. His company Berkshire Hathaway (sitting on $43bn cash) had a less successful year in 2004 than usual with net earnings down from $8.15bn to $7.31bn.-much of their assets are in Coca-Cola and other big names. Here, the FTSE has stepped back over the 5000 threshhold again. Will it stay that way, buoyed by ISA buying and an increase in confidence until May when the brokers go away?
Strong sectors this last week include Speciality and Other Finance, Life Assurance and Pharmaceuticals, each
of which has been subdued over the last 15 months. Due a comeback you might say.
Weak sectors have been, Beverages, Retailers and Leisure &
Hotels.
The Building and Construction sector is thought prone to consolidation.
Interest rate rises, although expected, are possibly steadying. In spite of
this, the sector was the fifth weakest on the week. Persimmon and others have had a good run previously and through the
reporting season have remained strong. Persimmon
itself should move up from the 250 Index to the 100 soon but would have to
be admitted if it made even a modest
acquisition. The move would surely contribute to a better rating and
higher price.
Our portfolio is looking fairly
good right now helped in no small part by upward moves from Hamworthy and
Airpartner. RTD has fallen back on
the week with a drop on results day but to me it signals a buy.
We have the option to make more purchases
since we still have uninvested cash so hopefully club members will come forward
with some compelling proposals. I have noticed that there are a lot of
companies, many in the small cap sector, which are showing exciting chart
profiles. If I read them correctly.
Hydro released results today (7th
). Although turnover was up, other figures were static. The dividend raise was
not enough to prop the price which thus came a cropper. Was it something the
chairman said?
My old favourite, Ashtead has strengthened considerably
recently. That in face of a weakening dollar must surely indicate a strong
positive cashflow from all departments including it’s UK operations and hints
of a glowing annual report in prospect. I cannot present a meaningful toolkit
with any confidence since their debt is still a hefty burden but I do believe
Mobius members should look at the chart and remember that Alpesh Patel gave it
his approval in November and it has continued to rise since then. The prospect
of it doubling again over the next 12 months should not be dismissed.
Since last newsletter, commodities
have hit new highs, gold is also up with the rest. It is pleasing to note that
the Mobius unit value is storming ahead. It gives me greater confidence for the
future and promises that we should, with luck and better judgement, be able to
beat our target for this year. We may even be able to beat last years target!!!
By the way. How many of you have
tried your hand at choosing ten winning shares in the Investaquest comp? Good
Luck.
ML March 7 2005