Beginners’ Portfolio Hammered By Quindell PLC And Tesco 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.

September has been a pretty traumatic month for the Fool’s Beginners’ Portfolio, with all bar BAE Systems and Barclays dropping in price — and those two didn’t sparkle. Blinkx and BP slipped from profit to loss since our last update.

Here’s what things look like on the last day of September:

Company Shares Buy Cost Bid Value Change %
Tesco 159 305.5p £498.23 186.7p £286.85 -£211.38 -42.4%
Glaxo 34 1,440.5p £502.22 1,414p £470.76 -£31.46 -6.3%
Persimmon 49 617.9p £352.21 1,319p £636.31 £311.10 +95.7%
Blinkx 1,319 36.9p £499.68 32.3p £416.04 -£83.64 -16.7%
BP 112 434.5p £499.01 452.5p £496.80 -£2.21 -0.4%
Rio Tinto 31 3,132.9p £996.05 3,031p £929.61 -£66.44 -6.7%
BAE 146 332.3p £497.59 466.5p £671.09 £173.50 +34.9%
Apple 14 $65.50 £605.98 $98.70 £835.46 £229.48 +37.9%
Aviva 146 321.4p £470.71 523.5p £754.31 £283.60 +60.2%
Barclays 210 254.2p £546.56 227.8p £468.38 -£78.18 -14.3%
Quindell 249 196.5p £501.73 132.3p £319.43 -£182.30 -36.3%
Cash         £89.04    
Initial total     £5,073.66        
Current total         £6,374.08 £1,300.42 +25.6%

tesco2A £250m overstatement!

The big fall was from Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US) which reported a shock error in its accounting on 22 September, telling us it had overstated its profits for the six months to 23 August 2014 by an estimated £250m!

New chief executive Dave Lewis was quick to say “We have uncovered a serious issue and have responded accordingly.  The Chairman and I have acted quickly to establish a comprehensive independent investigation“, and several staff members have been suspended while the investigation, by Deloitte, gets under way.

It came at a time when I really did think we’d reached a point of maximum pessimism for Tesco and that there wasn’t really any downside left. But how wrong I was! The shares crashed by 11.6% on the day and have slipped a little further to 186p as I write. The portfolio is now down 42% on Tesco.

Still, there can’t be any more downside left now — can there?

Software update disaster

Shares in Apple (NASDAQ: AAPL.US) faltered a little as well, after the mobile computing giant was forced to pull its latest iOS 8 operating system update. The update was aimed at fixing a few glitches in the initial version of iOS 8, but for many users it turned their phones into useless bricks.

Apple shares fell by 3.8% on the day the update was withdrawn, but they’ve recovered and are only slightly down since our previous update — we’re up a comfortable 38% on Apple so far.

quindellAnd then we come to the troubled Quindell (LSE: QPP), the insurance outsourcer whose rising star quickly waned in the midst of short-selling and all sorts of suspicions about its profit model and its corporate governance. The most recent major shock was that the firm’s plan to roll out a telemetry package in partnership with the RAC was canned, in the course of which the company went from touting it as a wonderful opportunity to dismissing it as not really very important — and they wonder why people are less than enthralled by their management?

No idea why!

Then on the morning of 29 September, Quindell was moved to release an RNS statement, after its shares ended the previous Friday with an 8.7% fall on the day to take them down 18% on the week. The firm said it “knows of no reason for such falls“, ahead of its next quarterly update due by 15 October.

We’re down 36% on Quindell so far, with the portfolio up just 26% overall.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of Apple and Tesco. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.