Timing Indicators & CIS Portfolio Month End Update

After the strong recovery in October, November proved to be a bit more lack lustre with a small positive total return for the FTSE All Share of 0.57%. The Mid 250 led the way again, as it often does, with a 1.9% total return while FTSE 100 delivered a more modest 0.33% as the miners fell again after a strong bounce in October and the likes of Standard Chartered and Rolls Royce fell heavily on the back of corporate developments. Finally the Small Cap indices fell and produced a -0.33% total return.

Monthly Timing Indicators.
The modest returns for the headline FTSE All Share, FTSE 350 & FTSE 100 indices was not sufficient to break the bearish trends in these against their 10 month moving averages and  they remain 1.4%, 1.5% and 2.4% below these respectively.

Given the strong performance from the Mid 250 this finished the month 1.4% above its moving average, while the decline from the Small Cap index brought it back to just 0.1% above its moving average. So still mixed messages from the timing indicators on UK markets and it will be interesting to see if we can get the often anticipated year end rally to flip the markets back into a positive trend above their longer term moving average to start the New Year.

Compound Income Scores Portfolio - Month End Update November 2015.
The portfolio saw total return of +1.5% this month which put it 0.93% ahead of the FTSE All Share this month. This leaves it up by 13.3% since inception in April this year for out performance against the FTSE All share of 16.5% as the index is down by 3.2% over the same time frame. This is quite a reasonable outcome this month given the heavy exposure to Small Cap and AIM stocks which were down to flat over the month, although it was also, no doubt, helped by big exposure to Mid 250 and no exposure to miners.

At the individual stock level the biggest winners were: 32Red (TTR) +14.1% as it continued its re-rating, Howden Joinery (HWDN) +11.5% after an in line trading update this month and Diploma (DPLM) +11.3% as it recovered from an over sold position on the back of their final results which I wrote up here.

While the losers were Utilitywise (UTW) -18.8% which unwound last months bounce and fell back to its lows as well as going XD in the month. Maintel (MAI) -4.7% which also fell back after a strong rally last month and Paypoint (PAY) -4.3% which fell on some disappointment in the write down to the on line assets, which are up for sale, which was announced with their results recently and which I wrote up in detail here.

Finally to note we have had final results to the end of August for another CIS Portfolio stock - Character Group (CCT) today. At first glance these look like blow out results with earnings and dividend some 25% ahead of forecasts. However the basic earnings include a £2.05m gain from US$ hedging which they undertake so once you strip this out it looks like the basic earnings may be about 2% ahead and fully diluted may even be a bit behind forecast. Nevertheless the total dividend of 11p, thanks to the 6p final in these numbers, is definitely better than the expected 8.69p for this year and this also exceeded the forecasts of 10.5p for the year to 2016!

Therefore I would expect to see dividend upgrades, although these are probably required as even the 11p only puts it on a 2.2% at this mornings price of 505p. However it has a good earnings yield and looks good value on around 12x, although as it operates in the volatile toy industry so it is unlikely to get onto a massive rating. Nevertheless this rating and the current strong performance and growth still leave it on a CIS of 97 before any upgrades today and ahead of their all important Christmas trading update in January. So it seems likely to remain in the portfolio at the year end review and it will be interesting to see how their Christmas trading goes - lets hope its a good one, as the song says and it also says "war is over if you want it", as our MP's look set to vote for us to bomb Syria this Christmas - heaven help them & us!