Continuing troubles in the North Africa and the Middle East have obviously unsettled markets over the past few weeks, but overall little has changed for equities. Gold, and especially, oil have reacted with substantial and predictable rises. At the moment, the Libyan crisis has yet to resolve and we don't know if there will be trouble to come from Algeria or Saudi Arabia. If oil rises substantially from its current elevated level then there will probably be adverse consequences for equities.
On the month, Sterling rose a little from €1.1643 to €1.1700 and from $1.5846 to $1.6094. UK 10 year gilt yields fell slightly from 3.77% to 3.71%. Gold has climbed back to end of year levels, rising from $1319 to $1402 per ounce. Brent Crude future has rocketed from $99.39 to $111.64 per barrel and copper rose a little from $9625.00 to $9697.50 per tonne. The FTSE100 rose from 5881.37 to 6001.20 and the FTSE250 from 11546.02 to 11608.97.
Equity Portfolio (+1.26% on month, +2.36% on year)
The takeover of undersea pipe maker Wellstream (WSM) by General Electric was completed this month, netting me 786p per share, a profit of 324p on my original buying price of 462p. All very nice, of course, but I would have preferred to keep a holding in this area of energy facilities. As far as I can see, the quality companies in this sector are now fairly valued.
The market liked the results (broadly flat revenue and operating profits) and upbeat tone from Premier Foods (PFD), causing the shares to rise around 25% to 27p. Certainly, I was expecting something rather worse. Selling the Quorn and canning businesses has enabled the company to reduce its debt to a trifling £1261 million, about twice the market cap, but will hit future profits. While the recent rise is pleasing, I am still 20% underwater and won't be throwing any more cash into it.
It's hardly surprising that Dragon Oil (DGO) posted a nearly 50% jump in profits. Any oil company that is actually pumping the stuff could hardly fail to do well at the moment. With sufficient net cash to develop essential pipeline infrastructure, Dragon Oil has done well over the past couple of years, rising from my purchase price of £1.63 to £5.80. A welcome maiden dividend has just been declared and the company is thinking of expanding away from its Turkmenistan base. I sold a third of my shares around £4.50 a while ago, but I am holding on to the rest for now.
Almost subconsciously my thoughts are turning towards the construction sector, the idea being that a lean 2011 may well be followed by a fatter 2012/13 and that, on an 18 month look ahead, now may be a good time to start buying. Some of the big players such as Balfour Beatty (BBY) and Kier (KIE) have had a good few months, but I am looking at the smaller speciality companies. I've held Alumasc (ALU) for a while and purchased T.Clarke (CTO) last month. I've just bought at 7p the AIM tiddler Hightex (HTIG) which supplies membrane roofing for large venues such as Wimbledon Centre Court.
A welcome maiden dividend has just been declared and also the corporation is pondering of expanding aside from its Turkmenistan base. I marketed a 3rd of my shares close to £4.50 a although ago, but I am holding on towards the relaxation for now.
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