Investment Review - September 2021

 Here's the combined portfolio summary as at 30 September :-

Shares / Fund Purchases in the Period

I subscribed for a large chunk of HydrogenOne Capital Growth IT (HGEN.L) at its IPO at the end of July.  I was rather surprised that the issue wasn't very well received, and instead of raising anywhere near the £250m target it only just crept over the minimum line of £100m - if it hadn't reached this hurdle the IPO would have been abandoned.

Although I do like what this new investment trust is all about, I'm concerned that it will now be limited in its ability to invest sufficient cash in its main target assets, particularly in private companies which might prefer other offers from investors with deeper pockets.  Additionally, the fixed management & administration costs for the IT will now be shouldered by fewer shareholders.

Therefore, on the very first morning of HGEN.L trading, I decided to hedge my bets and offload half of my holding, and was surprised again at being able to do so at slightly above the IPO offer price, so I lost nothing at all on the deal.

But who were the counterparties now buying HGEN.L shares at above NAV and incurring transaction charges, when just three days earlier they could have picked them up with zero trading costs and no stamp duty ?   Anyway ....

In late July, I took advantage of the price falls in funds with exposure to China, with a small top-up of my existing holding in VFEM.L.

And in August, anti-China sentiment deepened further and so I bought into a new position of JCGI.L at 556p net, the first time I've held a pure China fund for more than ten years.  I didn't take a large position at the outset, but my idea was that I'd top it up on the last day of each month for as long as the offer price remained below what I'd paid initially, so I topped it up in both August & September.

In late September, I decided to increase my holding in DKL.L, so I opened a new position in the SIPP and simultaneously sold all my existing smaller holding from within one of the old ISAs.   I first bought this AIM company in early 2014 at 13.9p, and held on throughout all of its trials and tribulations because I like what the company does and still think there may be future growth prospects.   So I've booked the full hit of a 66% loss within one account and I'm starting with a clean slate in another at 4.87p per share gross.  

DKL.L is one of only two holdings I have in individual companies, the other being RDSB.L - all my other equity exposure is via collectives.

Shares / Fund Sales in the Period

Some rare sales activity during this quarter !

In mid-September, I sold all my holdings in VFEM.L and ADIG.L.  Although I made a profit on both, neither of these have performed very well in either good times or bad.  I'd held VFEM.L for more than seven years, and topped-up once or twice (see above), but the annualised performance was still only around +2% including dividends reinvested.  ADIG.L had only similar performance, but over a much shorter holding period, despite this being one of the funds I piled into during the depths of the initial coronavirus spike in early 2020.

Anyway, we'll see how much of a rout this current slump actually turns out to be, because I'd be prepared to buy either or both of these funds again at the right price, but I'd be thinking of them as trades rather than long-term holdings ...

As mentioned in the 'purchases' above, I sold my entire holding of DKL.L within one account, at a big loss, only to buy an increased amount of shares inside another wrapper.

Passive Income Index

At the end of Q3 my index value stood at 846.8, representing 91.1% of last year's total income, so it seems almost certain that we'll set a new record in 2021 for the amount of cash received from dividends during a full calendar year.

Commentary

New portfolio highs were reached again in July & August, but the gains had almost slipped back by the end of September.

And cash was briefly king again for a while in September, although recent purchases have pushed it back into second place.  The last time that cash topped the charts as the largest weighting in the portfolio was back in November 2019.