Each year in the stock market, some blue-chip shares inevitably do better than others. And the very worst performers in the flagship FTSE 100 index in a given year are known as the dogs of the index.
Research has suggested that investing in the ‘dogs of the Dow‘ (the Dow Jones Industrial Average is the US equivalent of the FTSE 100 index) can be a rewarding strategy.
The theory is that these are large, established companies and often the price fall on bad news can understate that. On the other hand, it is rare for a share to perform worse than almost its entire peer group for no reason.
So how are last year’s three biggest dogs of the FTSE 100 performing so far in 2024?
Anglo American: up 4% in 2024
Mining giant Anglo American fell around 40% last year, worse than any other FTSE 100 share.
So far this year though, it has shown signs of turning things around. The share price has risen 4% since the turn of the year – a modest rise, but certainly far better than it managed in 2023.
While iron ore prices and sales fell in the first half compared to the same period last year, the company has benefitted from higher copper prices.
St James’s Place: 9% higher so far this year
Investment management firm St James’s Place (LSE: STJ) saw its own share price collapse last year, logging a 38% fall. But 2024 has been less alarming for the firm’s investors and the shares have moved up 9%.
Fresnillo: further 8% fall since January
Miner Fresnillo fell 34% last year, following the value of its core product: silver. It has continued to slide in 2024, falling 8% so far.
Revenues grew in the first half of the year compared to the same period last year, thanks mainly to higher gold and silver prices. Profits were up too.
The ongoing share price weakness partly reflects market nervousness about whether recent record high gold prices are here for a while, or just a flash in the pan.
Investing on strength – or weakness?
That trio of FTSE 100 dogs then, has put in a fairly underwhelming performance so far in 2024. Only St James’s Place has managed to beat the average FTSE 100 share price gain so far this year of 6%.
But that partly reflects just how far it had fallen beforehand. While the FTSE is up 12% over the past five years, the St James’s Place share price has tumbled 31%.
While it has performed better so far this year, I would have been nervous about investing in it at the end of last year (and did not). It felt like a turnaround situation due to upset customers, complaints of customer overcharging and a competitive positioning that makes it look ripe for cheaper competitors to try and attract clients.
In the first half, positive news included net inflows of cash. Assets under management hit a record.
I still see weakness in St James’s business model though, so have no plans to invest.
