Value's 2009 Scorecard

Stephen Bland reviews his value picks from last year.

New Year and time for a review of all the selections I made last year. I refer only to last year because that was when I was disinterred. Regular readers will be aware that I was absent from the Fool for a while until they saw fit to dig me up around May 2009 and like Frankenstein's monster, revivify my lifeless corpse with the lightning bolt of being given a new column to write here.

A lot of my selections were not the very deep value and often small cap shares about which I used to write. That sort of thing is now served quite well elsewhere on this site so I decided to vary the selection criteria somewhat in a number of cases. I'm still looking for value, can't get that concept out of my system, but it has frequently been a bit looser and often concerned big caps.

Here are the twelve I picked in 2009:

I have used offer prices for cost and bid prices for current values to take the most conservative and realistic view. On small caps which have large spreads, MS is one in particular, this can make a significant difference to accurate performance reporting.

It's very early days for many of these but I am fairly pleased with the progress so far. Remember that value requires great patience and it is quite common for a share to do nothing for quite a while before outing.

Note too that there is nothing significant about my doing a New Year review, it just happens to be a common time to do such things but the date should have no relevance to any decisions an investor might make. 

With value, the decision to sell is not based on time but on the development of the share's price and its fundamentals. You sell when you consider sufficient value has been lost, not because it's the end of the year or you have held for any particular period.

In top spot...

Way out winner is IG Group, one I'm still in myself and which still has a forecast yield of over 4% despite its strong price rise. Mucklow and Anglo Pacific are also showing good rises whilst De La Rue, another one I hold, has been useful. In addition to their prices rises, all these three had decent yields at their purchase prices too. I find it pleasing to receive dividends whilst waiting for value shares to do the business, the best of both worlds, income and gains.

Three of the shares are showing small losses but as far as I can see that's not because their value has been blown, merely that sentiment hasn't yet turned in their favour. Small caps often attract far less attention than bigger businesses.

Yield plays

Some of these shares, especially the bigger caps, could also be considered as possible High Yield Portfolio (HYP) selections. I'd put Aviva, BAE, Cable & Wireless and De La Rue in that category. Aviva in particular has a substantial forecast yield of over 6% with dividends now anticipated to grow following recent cuts in the recession.

This crossover between my short-term value plays and eternity HYP plays is not that odd, given that in this value series I have considered several big caps. The criteria that I use to choose value shares overlap those used in the HYP selection process to some extent with yield being the most obvious common feature.

You might ask if I consider any of my twelve to be sells. No. However I'll qualify that by saying that I probably wouldn't buy IG Group now as a pure value play because growth from here on in, absent any corporate action, is likely to be more pedestrian rather than the strong outing growth it has seen to date. 

If I was still into holding just one or a very few value shares, then I would be a seller of IG now as it has outed its deep value since I bought at 202p. But these days I have a wider portfolio, a lot of which is for income, so I'm remaining in for the time being.

The others all remain value buys, to a varying extent, in my view.

More from Stephen Bland:

• My First Trade
• Look At Aviva, Ta, Kool
• The Gig's Not Up At IG Group

Stephen holds shares in Aviva, BAE Systems, IG Group and De La Rue.