This is the FTSE 100’s worst-performing share over a year. I’m happy to own it!

The past year has been pretty good for the FTSE 100 index. As I write, the Footsie stands at 6,919.88 points. On 14 April 2020, it closed at 5,791.30, hit by surging Covid-19 infections. Thus, the index is up almost 1130 points in 12 months — almost a fifth (19.5%). Of course, as a broad market index, the FTSE 100 tells us nothing about individual share successes and failures. Alas, my largest shareholding is the FTSE 100’s worst performer over the past year.

The FTSE 100 rebounds

As panic over Covid-19 gripped markets, global stock prices collapsed last spring. By 23 March, the FTSE 100 had plunged to a closing low of 4,993.89. However, thanks to massive monetary support from central banks and fiscal support from governments, optimism soon returned. Share prices soared, with this confidence continuing into this year. In 2021, the Footsie has already added almost 460 points (7.1%).

Over the past year, there have been huge variances in share performances within the FTSE 100. Good news: of the 101 stocks in the Footsie, no fewer than 89 have risen in value over 12 months. These uplifts range from a tiny 0.1% to an impressive 138.6%. Eight of these winning stocks have doubled or better since 14 April 2020. The average gain among these 89 winners is a tidy 45.5% (more than double the 19.5% gain of the wider index).

This is the Footsie’s biggest loser

At the other end of the scale lie 11 losers: the FTSE 100 shares that lost value over the past year. These losses range from just 0.5% to 16.6%, with the average loss coming to 7.4%. But these 11 losers include some real heavyweights, including a global bank, two giant oil companies, and a major pharmaceutical firm. Now for the bad news: shareholders of GlaxoSmithKline (LSE: GSK) own the FTSE 100’s worst-performing share over the past 12 months. I count myself among their number, as GSK is my biggest individual shareholding. Am I annoyed that the GSK share price has fallen by a sixth in a year? Yes! Am I rushing to sell? No! Here’s why.

I think the GSK share price is too cheap

As a young investor in the 1980s/90s, I would often make snap decisions, many of which backfired. After 35 years, I know to take stock before making considered decisions. So, why aren’t I selling the FTSE 100’s biggest loser today? Because I believe these shares to be undervalued and hence due a future re-rating. Also, having fallen over 30% from their 2020 peak (1,857p on 24 January 2020), I don’t see much more downside.

At the current share price of 1,295p, GSK shares trade on a price-to-earnings ratio of 11.26 with an earnings yield of 8.9%. But GSK is the world’s largest vaccine maker by revenue, so its 2020 earnings were depressed by routine vaccination programmes being abandoned during the pandemic. As Covid-19 recedes, these earnings should recover. Meanwhile, the steady 80p-per-share yearly cash payout equates to a dividend yield of 6.2% (almost double that of the wider FTSE 100).

GSK is undergoing rapid change and I do see some risks. It plans to split into two separate businesses in 2022 (BioPharma and Consumer Healthcare), which might hurt earnings. Also, the dividend is set to fall, which is bad news for income investors. And history suggests such radical corporate restructuring can have mixed results, often leading to worse returns. Nevertheless, while GSK’s stock trades at a big discount to the wider FTSE 100, I’ll keep buying more shares by reinvesting my juicy dividends.