This article is the latest in a series that aims to help novice investors with the stock market. To enjoy past articles in the series, please visit our full archive.
The Beginners’ Portfolio is a virtual portfolio, which is run as if based on real money with all costs, spreads and dividends accounted for.
We haven’t had much in the way of price movements over the past few weeks, and the portfolio is steady on a gain of 41% since inception. But we’ve had some news from some of our companies.
Split
The much-anticipated stock-split from Apple (NASDAQ: AAPL.US) has happened, replacing every one old share with seven new ones — so we have 14 shares where we once had just two. Now, this really should be a bit of non-news, because a stock split makes absolutely no difference to the company or its valuation.
But psychology is a funny thing, and a share priced at around $80 or so just seems cheaper than one at more than $600. Since the split, the price has risen to $93 per share to give us an overall gain of 25% including dividends.
Reassuring
We had a positive first-quarter update from Aviva (LSE: AV) on 15 May, with chief executive Mark Wilson describing the company’s performance as “reassuringly calm and stable, in marked contrast to the weather and regulatory developments“. New business increased by 13% to £228m, driven by Europe and Asia.
Aviva’s aim to further reduce expenses is still bearing fruit, with restructuring expenses down 67% to £18m. External debt fell by £240m.
Overall, this strengthens my confidence in Aviva as an investment, and I reckon there’s a fair bit more to come on top of our 65% gain so far with the shares at 528p.
Fraud?
But not all news has been rosy, with the announcement on 28 May from GlaxoSmithKline (LSE: GSK) that the Serious Fraud Office “has opened a formal criminal investigation into the Group’s commercial practices“. Few details have emerged as yet, but it appears related to earlier accusations of bribery leveled at Glaxo in China.
It’s not good, but there’ll be no knee-jerk reactions here. The price has dipped a little since the announcement, but at 1,600p we’re up 17% including dividends.
No freeze
Over to the Gulf of Mexico now, and news that BP (LSE: BP) has lost its bid to have damages payouts frozen while a review of its settlements is in progress. In the scheme of things, it’s a relatively minor setback, and with today’s price of 506p putting the shares on a forward P/E of only 10, BP is a firm Hold.
Supermarket slump
Finally, we come to Tesco (LSE: TSCO) and its first-quarter figures — and a 3.8% fall in UK like-for-like sales in the quarter. That’s had the bears clawing for Tesco’s demise, but they’re surely wrong. We are about 8% down on Tesco, and I was expecting better things by now, but a time of maximum pessimism is not a time to sell.
