I was anticipating a relatively quiet month in my Stocks and Shares ISA in May. But as is so often the case, things were busier than I expected them to be.
In the end, I bought three stocks – including a new one. And I also ended up selling one stock entirely, which I didn’t expect to do at the start of the month.
3i opportunity
The big new addition to my portfolio is 3i (LSE:III). The share price fell very briefly when the private equity firm reported its results for the 2024-25 year, but I managed to grab the opportunity.
The company’s latest report values its portfolio at £23.32bn, but I bought the stock at a market value of about £39bn. It therefore looks like I’ve overpaid, but there’s a catch.
3i achieved a return on equity (ROE) of around 19% in 2024, which is very impressive. Even buying the stock at a 67% premium, the implied return’s still around 11%.
If the firm maintains that ROE, I think there’s still plenty more to come from the stock. And with its long-term advantage – the ability to invest counter-cyclically – I think there’s a decent chance of this.
Of course, there are no guarantees. 3i’s ability to maintain its impressive returns comes down to its ability to find new investment opportunities and the continued growth of its existing subsidiaries.
I think there are reasons for optimism on both fronts. That’s why I took advantage of a brief 5% drop in the company’s share price to buy it for my Stocks and Shares ISA.
Other bets
I also made two smaller investments. Both involved buying more shares in companies I already had an ownership stake in, but that’s pretty much where the similarities end.
Chord Energy is a US oil producer. The stock’s been falling as a result of oil prices coming down and that’s a risk neither the company nor its shareholders can do much about.
The firm however, has a strong balance sheet and a policy of using up to 75% of its free cash flow for dividends and share buybacks. Over the next 10 years, I’m expecting a good return from this.
The other stock I’ve been buying is Celebrus Technologies. Shares in the customer data software company have been volatile recently, but I’ve been looking to buy while they’ve been down.
Uncertainty around global trade can cause customers to become more cautious with their spending. This explains why the stock’s been up and down recently and it remains an ongoing risk.
At today’s prices though, I don’t think the growth assumptions are too optimistic and with patents protecting its key technology, I think the long-term outlook’s positive. That’s why I’ve been buying.
What I sold
To finance my investments, I ended up selling my shares in US railroad Norfolk Southern. I still have a positive view of the business, but I thought the 3i opportunity looked unusually attractive.
I’m certainly not ruling out coming back to Norfolk Southern in future. But I’m happy with the changes to my portfolio that I made in May and I’m looking forward to see what comes along in June.
