Monday, 28 December 2015

How did my 15 stock tips for 2015 work out?

Yes it is that time of year again when I review how my tips for 2015 worked out.  I know there are a few days to go technically in the year but I doubt if anything material will happen.

In 2014 I clearly had more hits than misses (link here).  Can I keep that record up in 2015?  Here goes...

Apache
Ahem...so pretty much any energy stock would have been a poor call.  Apache did nothing especially wrong during the year as they continued to simplify their business BUT the top-down drivers were simply dire.  You cannot buck such a weak oil price and Apache shares certainly didn't.  Unfortunately a MISS.

Aviva
I talked about the potential for merger savings from the Friends Life deal and they have started to come through. Add in impressive management communication and a 3%+ yield and the shares nicely outperformed local indices.  A clear HIT.

Barclays
Not the easiest year for the UK banking giant.  A change of CEO, continued regulatory burdens and not as much sum-of-the-part support as I would have hoped.  Nevertheless with the dividend it broadly broke even, matched the local index and for large swathes of the year performed well.  Pulling it all together I am going with NEUTRAL.

Coca-Cola Hellenic Bottling
I have already written a rhapsody to this name earlier this month (link here).  One of my best London-listed winners during 2015 from the basis of being oversold a year ago on Greek fears (despite the country only being a handful of a percentage of the group's sales).  Most certainly a HIT.

Citizens Financial
This spin-off stock from Royal Bank of Scotland performed ok over the full year but offered a particularly compelling return in the first half of the year - a performance which I managed to capture.  On this basis a HIT.

General Electric
A very, very solid year of gains for GE shareholders as the benefits of simplification and associated shareholder remuneration aligned with their market leading position in a number of industrial sub-sectors attracted new investors.  A clear HIT.

Google
Wow, a generally fantastic year for FANG (Facebook, Amazon, Netflix, Google) stocks with some massive market-leading gains.  Google announced a name change to Alphabet during the year and an associated company split initiative to help drive future innovation and returns.  I am struggling to justify the current valuation and have top-sliced.  HIT.

Lafarge-Holcim
The two largest European cement companies come together in one of the clearest opportunities for 'cost optimisation' seen in the region for a long time.  The trouble is the deal was nearly stillborn - and seemingly only saved by a compromise CEO - and trading conditions were tough.  The constituent parts rallied into the creation of the joint company but since then it has performed poorly even by European standards. Much prospective potential but a MISS.

NN Group
Yet another spin-off from a large financial behemoth, this time from the Benelux ING Groep. NN Group has been a strong performer during 2015 as the company discounted value versus its underlying return on equity generation plus an increasingly clean (lowered ex-parent overhang) shareholder base has raised investor interest. A clear HIT.

Randgold
The share was another pretty much break even stock during the year but given the mining malaise and lacklustre gold price the performance was heroic - clearly reflecting the company's position (in my longstanding view) as the best larger cap gold company in the world.  Huge relative performance but only correct given the lack of absolute performance to call it a NEUTRAL for 2015 as a call.

Remy Cointreau
In their corporate results there has been limited improvement in the company's Chinese results which are hugely critical for their overall sales...but perception has improved and this has been reflected in a higher share price. A HIT.

SJM
Hmm, along with oil stocks it was hard to escape disappointment and a lack of performance in Macau gambling stocks as the Chinese corruption crackdown continued to impact.  And so it was with the strong balance sheet and relatively conservative SJM.  It feels opportunistic for 2016 but from a 2015 perspective it is a MISS.

Smith & Wesson
Not everyone is completely comfortable with a gun manufacturer but such thoughts aside Smith & Wesson was my top share price performer in 2015 as a very sharp valuation discount to a more realistic level was reversed.  Strong product, a savvy acquisition and a good balance sheet helped combine to produce an extremely clear HIT.

Syngenta
Another excellent 2015 performer - particularly if you traded the volatility in the stock.  2015 ended with continued purported bid speculation despite the still troubled agricultural backdrop afflicting crop protection and related sales.  Most certainly a HIT.

Umicore
A Belgian refiner/recycling company with correlation to commodity prices?  That does not sound a classic backdrop for outperformance after a difficult year for most commodities but Umicore was too cheap a year ago and has put in a solid performance despite the obvious challenges.  I still believe it is better served within the portfolio of a larger global industrials concern - maybe that happens in 2016 - but from a 2015 perspective it is a HIT.

So what's the final results?  10 HITS, 2 NEUTRALS and 3 MISSES.  I am very pleased with that.  Of course I would have hoped to add a bit of value around the edges through trading throughout the year plus new and different opportunities but if I can continue such a ratio of HITS to MISSES into 2016 - with the requisite required risk control - then I will be very happy.

My 2016 preferred stock thoughts of course will follow in the next few days.

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