Portfolio update for November
Both our Equity Growth and Equity Income portfolios had a good month, returning more than the S&P ASX 200 Total Return Index in November.
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The Intelligent Investor Equity Growth and Equity Income portfolios had a good month in November, returning 3.0% and 2.0% respectively, after fees, compared to 1.6% for the S&P/ASX 200.
The top performer in both portfolios was News Corp (ASX: NWS), which gained 18% in the month. After years focusing on the disappointing performance of its print and Pay TV assets, the market finally seems to have woken up to the potential of its real estate classifieds businesses, comprising majority stakes in REA Group (ASX: REA) and US-based Move. Rumours of corporate activity around its old stable-mate, 21st Century Fox, have also dragged it higher.
After sitting on our Buy list for four years out of the past five, we've downgraded News to Hold, but continue to see plenty of value.
| To 30 Nov | 1m | 6m | 1yr | 2yr (pa) |
Since incep (pa)** |
|---|---|---|---|---|---|
| Equity Growth* | 3.0 | 6.7 | 11.8 | 12.7 | 12.8 |
| Equity Income* | 2.0 | 6.0 | 13.8 | 13.8 | 13.9 |
| S&P/ASX 200 TR | 1.6 | 6.6 | 14.6 | 12.3 | 9.6 |
| * After costs | |||||
| ** Inception on 1 July 2015 | |||||
Navitas (ASX: NVT) was another strong performer, rising 10% thanks to a series of positive announcements: a renewed partnership with Anglia Ruskin University, encouraging comments at its AGM and an 8% rise in enrolments in its University Partnerships Division for the third semester of 2017.
Farewell South32
Crown (ASX: CWN), Trade Me (ASX: TME), Carsales (ASX: CAR), ASX (ASX: ASX) and Computershare (ASX: CPU) also chipped in gains of 6% for both portfolios – as did South32 (ASX: S32), in only a week, before we took advantage and sold the last of our holding in line with our downgrade to Sell. We ended up with a total gain of 71% from South32 in the Growth Portfolio and 148% in the Income Portfolio.
Hansen (ASX: HSN) and Fleetwood (ASX: FWD) also provided gains of 7% and 6% respectively in the Growth Portfolio.
The biggest losers for the Growth Portfolio were Nanosonics (ASX: NAN), iCar Asia (ASX: ICQ) and Ainsworth Game Technology (ASX: AGI), which fell 15%, 13% and 10% respectively. The fall in iCar Asia was the result of another capital raising, while Ainsworth warned on profits for the first half of 2018 while maintaining its guidance for the full year. There was nothing specific from Nanosonics. We remain comfortable with all three holdings.
| Buy /Sell |
Date comp- leted |
Old weight. (%) |
New weight. (%) |
Avg. price ($) |
|
|---|---|---|---|---|---|
| II Growth | |||||
| South32 | Sell | 6/11/17 | 3.4 | 0 | 3.56 |
| Woodside | Buy | 15/11/17 | 0 | 4.0 | 30.64 |
| II Income | |||||
| South32 | Sell | 6/11/17 | 3.4 | 0 | 3.56 |
| Woodside | Buy | 15/11/17 | 0 | 4.0 | 30.64 |
PMP warns
The biggest loser for the Income Portfolio was PMP (ASX: PMP), which warned that profits for the next couple of years would be below previous guidance. Synergies from the merger with IPMG are not being realised as quickly as hoped and the company has been unable to make a number of planned price increases stick. After falling 35% in the month, the stock looks very cheap, but the risks have significantly increased and we're not minded to increase the holding.
Other than the sale of South32, our only transaction in the month was the purchase of a 4% weighting in each portfolio in Woodside Petroleum (ASX: WPL), in line with our recent upgrade.
The Growth Portfolio and Income Portfolio have now returned 11.8% and 13.8% over the past year respectively (after costs) compared to the 14.6% achieved by the S&P/ASX 200 Total Return Index. Since inception in July 2015, they have returned 12.8% pa and 13.9% pa (after costs), compared to 9.6% for the S&P/ASX 200.
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