Beginners’ Portfolio: Pain at GlaxoSmithKline plc and Quindell PLC

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The Beginners’ Portfolio is a virtual portfolio, which is run as if based on real money with all costs, spreads and dividends accounted for. Transactions made for the portfolio are for educational purposes only and do not constitute advice to buy or sell.

It’s been a couple of weeks since we last checked on the Beginners Portfolio, and that time has not been kind to us. In fact, other than slight gains for Rio Tinto (LSE: RIO) and Barclays, we’ve seen falls across the board. Here’s what the value of our shares is looking like now:

Company Shares Buy Cost Bid Value Change %
Tesco 159 305.5p £498.23 256.2p £397.36 -£100.87 -20.2%
Glaxo 34 1,440.5p £502.22 1,368.5p £455.29 -£46.93 -9.3%
Persimmon 49 617.9p £352.21 1,222.0p £588.78 £263.57 +81.0%
Blinkx 1,319 36.9p £499.68 31.8p £409.44 -£90.24 -18.1%
BP 112 434.5p £499.01 467.9p £514.05 £15.04 +3.0%
Rio Tinto 31 3,132.9p £996.05 3,372p £1035.32 £39.27 +3.9%
BAE 146 332.3p £497.59 419.5p £602.47 £104.88 +21.1%
Apple 2 $65.50 £605.98 $93.80 £750.45 £144.47 +23.8%
Aviva 146 321.4p £470.71 494.0p £711.24 £240.53 +51.1%
Barclays 210 254.2p £546.56 214.0p £439.40 -£107.16 -19.6%
Quindell 249 196.5p £501.73 165.3p £401.60 -£100.13 -20.0%
Cash         £1.19    
Initial total     £5,073.66        
Current total         £6,306.59 £1,232.93 24.3%

Big pharma pain

GlaxoSmithKlineOur biggest faller was GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US), which suffered a price crunch after first-half results released on 23 July revealed a 4% drop in turnover in the second quarter, leading to a 12% fall in core earnings per share (EPS). That was at constant exchange rates — in sterling terms the strong pound led to falls of 13% in turnover and 25% in EPS for the quarter.

The company was forced to downgrade its full-year guidance from the previously-expected 4–8% earnings growth and now says it expects earnings to be “broadly similar to 2013“.

Precious dirt

We did get some good news from Rio Tinto, as the Anglo-Australian miner yet again reported record-busting production figures. Iron ore production led the way, but shipments also reached new heights, reducing fears of a supply glut. Copper production was also up strongly.

On the financial front things are looking good, with executive Sam Walsh saying that “During the first half we have increased underlying earnings by 21 per cent to $5.1 billion and enhanced operating cash flow by eight per cent“.

Insurance strength

The turnaround at Aviva (LSE: AV) is still going well, at least according to first-half results released on 7 August. Cash remittances were up 7% to £612m, with operating profit up 4% to £1,052m and operating EPS ahead 16% at 23.6p. The insurer was able to lift its interim dividend by 4.5% to 5.85p per share.

Chief executive Mark Wilson told us that “we are reporting improvement in all five of our key metrics, cash (+7%), operating profit (+4%), expenses (-8%), combined operating ratio (-0.7ppt) and value of new business (+9%)” — and that comes despite a radical overhaul of the UK’s annuities market.

Aviva is now our second best performer.

quindellGrowth risk

Meanwhile, we suffered more agony from Quindell (LSE: QPP), after a Financial Times report suggested one of the company’s biggest contracts, a joint venture with the RAC, has run into trouble.

A positive update ahead of first-half results expected on 21 August failed to stop the share price slide, and we’re down 20% on Quindell.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool recommends GlaxoSmithKline.