September Stock Purchase – UK Laggards


There must be some value in the UK. Looking at London listed shares, they have performed terribly when compared to other benchmarks. Sure, there is an argument that the London Stock Exchange is full of old economy stocks, but this UK underperformance is not a recent phenomenon. It goes back 4 years all the way to the 2016 brexit vote. Even though Brexit will not affect the vast majority of the FTSE 100 companies in any meaningful way due to their huge international exposure, UK listings have some sort of stigma attached to them. It suggests that ever since the result of the 2016 EU referendum, political risk has deterred investors from putting money into UK stocks.

 

Since the Brexit vote the Nasdaq 100 (USA) is up 145%, the S&P500 (USA) is up 57.1%, the CSI 300 index (China) is up 52%, the Nikkei 225 (Japan) is up 43.9%, the DAX Xetra (Germany) is up 23.9% and the FTSE 100 (UK) is down -8.2%.

 

This should paint its own picture. The UK market is absolutely hated. Investors are fearful of the UK so now might be just the right time to buy.

 

I have written about this just last month. UK listed companies have lower ratings than their international counterparts. Unilever vs Procter & Gamble. BP vs Chevron, Royal Dutch Shell Vs Exxon Mobil. RB vs Clorox. Relx Vs Walter Kluwer. Intertek Vs SGS SA. Burberry Vs Prada. The list goes on and on. This why we are seeing a number of UK companies moving their listings or creating an additional listing in New York.

 

There should be no reason for individual UK shares to have discounted valuations as compared to their internationally listed peers. UK still ranks amongst the top countries for governance, independence and financial stability. I believe UK stocks will come good. Now is the time to lock in Great British companies at discounted prices to their international rivals. This is why I have been buying them.

 

For the month of September, I made the following purchase as part of my regular monthly investment programme.

 

  • Bought 229 shares in AG Barr at £3.86 each
  • Bought 77 shares of Jupiter fund management at £2.03 each
  • Bought 10 shares of Hargreaves Lansdowne at £15.87 each
  • Bought 15 shares of Royal Dutch Shell at £10.27 each

 

In total, the four purchases made have added £64 in dividend to my portfolio. The portfolio is now expected to generate £3,950 in dividends annually. Getting ever closer to breaking that £4,000 mark!

 

One observation from the above purchases is I bought shares in two asset management firms, Jupiter and Hargreaves Lansdowne’. Both these asset managers are a play on equity markets. As these businesses derive revenues from asset under management, both firms are set to be beneficiaries of raising equity valuations as well as increased savings due to tough times ahead.

 

I’ll leave you with the following quote from the excellent Nick train “If you think that UK economic and stock market performance could improve in 2020 – after the removal of political uncertainty – then it is possible HL will be a beneficiary of increased stock market volumes and savings flows. “