QUALIPORT
Qualiport Beats Market For Third Consecutive Year

By Maynard Paton (TMFMayn)
December 18, 2003

The Qualiport looks set to beat the market for the third consecutive year. So far in 2003, the portfolio has gained 19.3% -- it's best-ever annual performance -- and outrun the 14.6% achieved by the FTSE 100 (with dividends re-invested).

Final standings

Here's how the Qualiport stood at the close of trade yesterday (December 17th). To clarify, the Qualiport's value includes all dividends received and charges incurred (dealing commissions and stamp duty):

Company            Number     Average     17/12/2003        Value
                  Of Shares    Cost       Close Price       (£)
                                (p)           (p)

Carpetright          166       562.7         819         1,359.54
DFS Furniture        236       466.6         374           882.64
Emap                 372       796.9         839         3,121.08
Halma              1,920       111.3         141         2,707.20
Johnston Press     1,608       268.8         453         7,284.24
London Stock Exch  1,948       331.3         330.5       6,438.14

Cash                                                        42.83

Portfolio Value                                         21,835.67

And here's how the Qualiport performed against the FTSE 100 and the FTSE 100 Total Return Index (which accounts for reinvested dividends) in 2003:

                  Value at         Value at          Change
                 31/12/2002       17/12/2003          (%)

Qualiport         18,307.00        21,835.67         +19.3
FTSE 100           3,940.40         4,354.20         +10.5
FTSE 100 TRI       1,927.07         2,208.93         +14.6 

All share gains

Every company held by the Qualiport throughout 2003 reported share price gains:

Share                  Value at         Value at          Change
                     31/12/2002       17/12/2003          (%)

Carpetright            586.5             819              39.6
DFS Furniture          354               374               5.6
Emap                   748               839              12.1
Johnston Press         368.5             453              22.9
London Stock Exch      315.75            330.5             4.7

A good return from Johnston Press (LSE: JPR) (at 32%, the portfolio's biggest holding at the start of 2003) and a fabulous run from Carpetright (LSE: CPR) (which provided a 46% return if dividends were included) supported the Qualiport's 2003 achievements.

Passive

The market-beating performance was done with little trading. In February, the Qualiport sold its entire holding of Lloyds TSB (LSE: LLOY) for 404.25p a share. The proceeds were reinvested in Halma (LSE: HLMA) during March at 110p a share.

At the time, the decision to dispose of Lloyds TSB caused quite a stir. 'Selling at the bottom' and 'a good contrarian indicator' were the themes from the discussion board pundits (read more | more | more | more).

Yet Lloyds TSB shares are now just 424.5p and including dividends would have produced a 13.5% return had the portfolio not sold. Contrast that to the market's performance though, which is up 16.8% (excluding dividends) since the disposal and Halma's share price, which is up 28% from purchase (excluding dividends). So far at least, the critics have been proved wrong.

The only other trading the portfolio has indulged in was during November, when part of the Carpetright holding was sold and more London Stock Exchange (LSE: LSE) was bought. Carpetright shares have since gone up and those of the London Stock Exchange have gone down. But at a 330.5p share price, the Exchange is a great long-term buy and, with it being the portfolio's second largest holding (representing 29%), I'm hoping it will be the driving force behind the Qualiport's out-performance in 2004.

More: Qualiport Beats 2002 Bear Market | Qualiport Beats 2001 Bear Market

The author owns shares in Carpetright, DFS Furniture, Halma, Johnston Press and London Stock Exchange.

The next Qualiport article will be published on Monday 5 January.