Meeting:

Monthly Meeting - February 2007

 

Held at:

The Brocklebank, Crewe

Date:

15th February 2007

 

 

Time:

17:50 – 19:10

Prepared by

Dave G

 

Chairperson:

Dave G

 

Present:

Chris B

Dave G

Kit P

Richard W

 

 

 

 

 

Apologies:

Adrian T,  Simon B

 

 

Chairman’s Acceptance of Minutes

 


_____________________________________________


____ / _____ / ____

Signature

Date

 

 

 

1           NEXT MEETING

Thursday 15th March at 17:00 in the Brocklebank.

2           Minutes of previous meeting

Accepted.

3           ACTIONS FROM PREVIOUS MEETING

3.1          Actions Closed Since Last Meeting

Ref.

Description & Progress

Status

DG/0523/01

 

 

(Action changed from ALL to RW/0523/01 at Sep 06 Meeting. Changed to DG0523/01 at Dec 06 meeting)

Revise the Strategy to clarify that a company in takeover position will still be considered held if it is still shown as a holding in the Treasurer’s Report / Valuation.

0621: Was sent out as version 7b (draft).   Awaiting confirmation of approval before it can become the authorised version

0726: Still needs all to review it to confirm it as authorised

0831: Richard to provide suggested rewording so that Dave can incorporate into the version to be approved

0920: No progress

1018: No progress

1113: No progress

1213: Changes made and approved by meeting. DG to issue document as final.

0116: Not yet issued

COMPLETE

RW/0920/03

Revise the rules of the lucky llama to cover the necessity for at least one stock to be from the Banking sector (and possible also consider some form of penalty)

1018: No progress

1113: No progress

1213: Changes made and approved by meeting. RW to issue as final.

0116: Not yet issued

COMPLETE

CB/0116/01

Consider possibilities for using covered warrants or listed CfDs as a hedge against falls in some of our holdings

0215: Chris had produced an analysis of the use of a FTSE100 CfD.  It was agreed that whilst these would provide insurance against a fall in the FTSE, the cost in terms of their impact on our performance if there was NOT a large fall was considered too much.

COMPLETE

CB/0116/02

Update the Monthly Management Checks part of the Treasurer’s report to show uninvested cash as OK (rather than Too Low) if there is mechanical cash available too.

COMPLETE

RW/0116/03

Sell First Choice Holidays and buy appropriate amount of Oxford Instruments

COMPLETE

RW/0116/04

Consider how best to record which mechanical holdings have been selected via the hybrid method – so that we can do good portfolio analysis in the future

COMPLETE

CB/0116/05

Incorporate a check of the discount to NAV of the investment trusts into the monthly valuation report

COMPLETE

DG/0116/06

Incorporate a table into section 5.6 showing the discount to NAV of the investment trusts as Exit conditions

COMPLETE

3.2          Actions Carried forward to Next Meeting                         

See end of these minutes.

4           Treasurer’s Report

4.1          Monthly Report Summary

See separate report for detail. 

Highlights/Lowlights:  Yet another excellent month with profits of £3.3k on the month, a rise of 5.6% against a rise in the FTSE of 2.3%.  Further new records for asset value (£70.4k) and profit (£36k) and ROI has now gone above 100% for the first time since December 2000. 

Unit value up from 805.257 to 846.810 

We have £3.9k available as non-mechanical cash with an additional £9.5k in cash alternative investment trusts. 

Overall club assets stand at £70,421 with profits of £36,001.  Overall return on investment is 104.59% and the annualised rate of return since the club started in May 1998 is 28.02% (compared with an annualised rise in the FTSE of 8.96% over the same period).   In the 93 rolling 12-month periods since comparisons could begin, the Club has outperformed the FTSE in 77 of these which is 82.7%.

4.2          Matters Arising From Report

BSS now appears to have been de-listed as no price information is available though there does not appear to have been an official announcement to confirm the de-listing.  Richard to investigate to confirm.

5           PORTFOlio Management

5.1          Monthly Money Management Checks

As usual, the Fundamental portfolio is still showing as “too low” with 12.2% held in this portfolio against strategic minimum of 25%.

The Fundamental portfolio is also too concentrated with still only 3 holdings in it, the issue being that two of these three exceed the strategic maximum weighting of 30% in any one stock within this portfolio.

More fundamental buy proposals are encouraged.

5.2          Mechanical Portfolio

Once again an excellent month’s performance, up 8.0% compared to the market’s 2.5%. The main movers were Laura Ashley (+25%), John David (+18%), Character Group (+15%), Cable & Wireless (+10%) and Metnor (+7%).

Not surprisingly, all of the above set new highs but there was also a new highs for Interior Services, Jacques Vert and Lookers. McAlpine and Metnor remain above their stop loss levels (currently 534.3p and 383.53p respectively) and will only be sold if they fall below them.

We are due to sell Interior Services Group this month. Following the sale we will have two vacancies in the Value side of the portfolio.  The action to agree a new relaxed set of filters has been completed and, using these, results in Royal Dutch Shell and ScS Upholstery being selected this month.

 The table below now reflects the sell situation for each mechanical holding.  The appropriate sell condition (i.e. “Anniversary” or “Sell If Below”) is shown in bold.

Company

Annivers-ary date

Purchase Price

Target Price

Trailing Stop Loss

High

Target Met?

Sell If Below

McAlpine (Alfred)

Oct-06

347.97

521.96

52.20

586.50

Yes

534.30

Metnor Group

Nov-06

219.83

329.75

32.97

416.50

Yes

383.53

Interior Services Group

Feb-07

259.70

389.55

38.96

307.00

No

389.55

BETonSPORTS

Mar-07

159.44

239.16

23.92

171.00

No

239.16

Character Group

May-07

59.50

89.25

8.93

141.00

Yes

132.08

Ashley (Laura)

May-07

22.50

33.75

3.38

29.00

No

33.75

Cable & Wireless

Jun-07

110.39

165.59

16.56

179.50

Yes

162.94

John David Group

Jun-07

254.49

381.74

38.17

389.50

Yes

351.33

Jacques Vert

Aug-07

18.00

27.00

2.70

23.75

No

27.00

Lookers

Nov-07

167.72

251.58

25.16

180.00

No

251.58

Oxford Instruments

Jan-08

273.73

410.60

41.06

285.50

No

410.60

 

It was agreed that we should treat BetOnSports as no longer being part of the Mechanical Portfolio and that we should buy a replacement immediately.  The replacement is Renold.

Until we have confirmation that it has zero value, it was agreed that we should move BetOnSports into the Speculative Portfolio.  Chris to reflect this re-allocation in the Treasurer’s report.

Richard to make the necessary transactions.

Dave to update the strategy with the new relaxed filters and the caveat that any selection made with these new filters can only be purchased if it still appears in the top 50 unfiltered list (i.e. same caveat as with the other filters).

5.3          Monthly Reports For Each Company in Fundamental Portfolio

Coda

HOLD – Not yet met sell criteria (see table in 5.6 below).

SciSys

HOLD – Not yet met sell criteria (see table in 5.6 below).

Raymarine

HOLD – Not yet met sell criteria (see table in 5.6 below).

Qinetiq

HOLD - Not yet met sell criteria (see table in 5.6 below)

 

5.4          Speculative Portfolio

Nothing to report.

5.5          Other Investments

Nothing to report.

5.6          Stop Loss / Sell Criteria (as of date of treasurer’s report)

The following is the summary of sell criteria for each stock held within the Speculative or Fundamental portfolios The stop loss is invoked against the “end of day” price, but the sell decision may wait for the opening price to avoid rogue trades at the end of day.

Stock EPIC

Stock Name

Reportee

“High” Price

Stop Loss

Exit Criteria

CODA

Coda

Richard

210

157.5

25% trailing stop loss.

SSY

SciSys

Richard

103.5

77.625

25% trailing stop loss.

RAY

Raymarine

Simon

458

366.4

20% trailing stop loss.

QQ

Qinetiq

Simon

208

156

25% trailing stop loss

IFFF

Ishares FarEast ex-Japan

N/A

1924

N/A

Review 3-monthly (next is Mar 2007)

CWR

Ceres Power

N/A

310

N/A

-          if value doubles (474p) trailing stop-loss of 15% to apply

-          sell if value halves (118.5p)

-          review after 12 months (29June2007)

-          review following any signficant announcement affecting company prospects including, but not limited to, breakdown of contract with British Gas, escalation of development cost/timescale arising from technical/safe/regulatory/other concerns

 

ASP

Ascribe

N/A

47

N/A

sell at 15p or impose a trailing 5p stop at 50p whichever comes first.

STAR

Star Energy

N/A

275

137.5

50% stop loss but review in April 2007

Cash Alternative Investments

EPIC

Name

Price

Disc.

Exit Criteria

ATST

Alliance Trust

376

-11.8

Sell when discount narrows to <5%

WTAN

Witan Investment Trust

468

-10.5

Sell when discount narrows to <5%

 

5.7          New Buy Proposals

Chris submitted a proposal for Wipro which is quoted on the NYSE.

The meeting agreed to buy Wipro but recognised that we would first need to open an account that allowed overseas purchases.  An inspection of charges, etc. had identified SelfTrade as being the most appropriate broker to use.  As it may take a while to create the account, it was agreed that we should revisit the Wipro proposal once the account was open just to check that it had not taken a negative turn but, in principle, the purchase was agreed.

Chris to open an account with SelfTrade.

All to vote on whether we should progress the Wipro purchase once the SelfTrade account is set up.

6           Lucky Llama competition

From Richard’s report:-

“After winning the previous two months, Dave slipped to a small loss this time, down 0.6% mostly due to SportingBet. Peter Hambro did well for Simon but Ascribe did badly and the net result was just a 0.4% rise.

Chris fared a little better with new picks Plus Markets and Savills both doing well but Star Energy dropping. Overall up 0.6%.

 

This month's winner and by a huge margin is Richard with a 5.8% rise. SciSys

was the only big gainer but his other 4 holdings all rose as well.

 

In the overall stakes, Richard has leapfrogged into the lead and with just one month left has a lead of nearly £5k over Dave.

 

Richard  £112,089.09

Dave     £107,318.17

Simon    £105,980.09

Chris    £104,498.09

Adrian   £100,000.00

Kit      £100,000.00”

7           Competitions

Dave to make sure we submit our entry for the Proshare Awards.

8           Spending on “Fun” and “Learning”

A brief discussion took place on whether we should buy any tickets for the Awards night.  Logistically it is difficult with the last train to Stafford, Crewe or York being 22:30 (other than the all night stoppers) so it was decided not to attend this time.

9           AOB

Nothing to discuss

Actions carried forward to next meeting

Ref.

Description & Progress

Target Date

DG/0620/04

(Reassigned from ALL)

Consider writing an article for a paper or magazine or a more in depth one for the financial press

0718: No progress.  All to consider possible ideas, possibly centred on our mechanical portfolio

0810: No progress

0921: No progress

1017: No progress

1128: DG to create a “straw man” on the Mechanical portfolio

1219: No progress

0117: Terry Bond’s article in January’s Bloomberg Money indicates that he will look into our mechanical strategy and ‘report back next month’.  Wait to see whether anything appears in the Feb issue.

0215: Bought Bloomberg Money Feb edition and it had no mention of us so looks like we need to write something and tout it round.  I'll see if I can find time to draft a straw man article on the mech portfolio as suggested in the action.

0427: No progress

0523: No progress

0621: No progress

0726: No progress

0831: No progress but Dave G agreed to draft a 1-2 pager on the mechanical strategy

0920: No progress

1018: No progress

1113: In progress – Dave G hopes to send something out for review in the next couple of weeks

1213: No progress

0116: Dave G will send something out for review in the next couple of weeks

0215: Yes, well, erm…..when Dave said “will”…..

Mar 15

KP/0726/01

Provide a Chairman’s Report for the year to June 2006

0831: No Progress

0920: No Progress

1018: No progress

1113: No progress

1213: No progress

0116: No progress

0215: No progress

Mar 15

CB/1115/01

To co-ordinate the provision of identification details to Abbey to allow our new account to be set up.

1213: No progress. We are now being charged on a monthly basis.

0116: Still DaveG, KitP and RichardW to provide their details

0215: All details now provided  – just now needs to be posted off

Mar 15

DG/0116/07

Submit entry to Proshare for the annual awards

0215: Not done but will do so by deadline day of 16th Feb.

Feb 16

DG/0116/08

Contact Proshare about possibility of keeping an eye on (or even negotiating) rates at banks and brokers for investment clubs

0215: Not specifically progressed but there is a move by Mourad of the Mobius Club and others (via the Proshare message board) to establish a Steering Committee to help investment clubs, as Proshare no longer appear to be motivated to offer anything to clubs.  Dave to keep in touch with Mourad for progress and contribute where necessary.

Mar 15

RW/0215/01

Investigate status of BetOnSports to check whether or not it has now officially been de-listed and whether there is any value remaining in the shares.

Mar 15

CB/0215/02

Move BetOnSports to the Speculative Portfolio from the Mechanical Portfolio

Mar 15

RW/0215/03

Sell ISG and buy Royal Dutch Shell, ScS Upholstery and Renold

Feb 16

DG/0215/04

Update the Strategy document to incorporate the new relaxed value filters

Mar 15

CB/0215/05

Open an account with SelfTrade to allow us to trade in overseas shares

Mar 15

ALL/0215/06

Once SelfTrade account is set up, all to vote as to whether we’re still happy to progress the purchase of Wipro

Mar 15

 
 
Proposed agenda for NEXT meeting.
 
RSIC Monthly Meeting – Thu 15th Mar -  between 17:00 and 18:30

Venue: Brocklebank

1.       Agenda Changes? (2 mins)
[Any items for AOB or any suggested reordering of agenda?]

2.       Date of Next Meetings (2 mins)
[Agree a date for the next meetings]

3.       Minutes of last meeting (1 min)
[Any comments on minutes from previous meeting

4.       Actions from last meeting (10 mins)
[Progress on actions]

5.       Treasurer's Report (10 mins)

6.       Portfolio Management (30 mins)

6.1.    Monthly “Money Management” threshold checks

6.2.    Mechanical Portfolio

6.3.    Monthly Report for each Company in Fundamental Portfolio

6.4.    Speculative Portfolio

6.5.    Other Investments

6.6.    Latest sell conditions for each share held

6.7.    New Buy Proposals

7.       Lucky Llama Competition (5 mins)
[Latest positions and any new buy/sell decisions]

8.       Competitions (1 min)

9.       Spending of the “Fun” and “Learning” budgets (5 mins)
[Any magazines?]

AOB