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Fevertree's ejection from the "Mindless Momentum" portfolio suggests the market is losing its fizz

Mixer drinks
Gone a bit flat

Here’s an interesting development in our “Mindless Momentum” strategy that suggests the market is running out of steam.

I ran the screen for blue-chip stocks (companies with a capitalisation in excess of £1bn) with a view to refreshing our 10-stock virtual portfolio, and as I usually do (to save me having to wade through dozens and dozens of companies) I restricted my search to those stocks that have risen more than 50% in the last year.

I barely got 10 companies; I got 12, to be precise, and one of those was Sky PLC (LON:SKY), which is set to be taken over, while others – Kvaerner, Lukoil and Unisys – were foreign stocks. I am sure this total is lower than when I ran the same screen in July and in May. I had to reduce the parameter to a 40% gain to get a full complement of new candidates for the so-called “Biglers” portfolio.

You can check out the stock screen’s parameters in the article below but essentially the idea is to find the 10 stocks that have risen the most in the last 12 months and invest in them.

READ Mindless Momentum strategy working a treat for blue-chips​

The performance of the portfolio over the last two months also suggests it is starting to flag a bit.

Back in late July, the portfolio was worth £11,605; not bad at all for an experiment that started with a theoretical investment of £10,000 in March.

Before the latest refresh, the portfolio’s value had fallen to £10,951, despite an influx of about £190 in dividends.

All but two of the existing portfolio – Evraz plc (LON:EVR) and Games Workshop Group PLC (LON:GAW) – got the old heave-ho in the portfolio’s bimonthly overhaul.

Blue Prism (+£164), Plus500 (+£180), Fevertree Drinks (+£137) and star performer Ocado (+£337) were among the winners to head for the exit along with heavy loser Computacenter (-£169). My colleague, Tom Howard, has spent much of this morning trying to find out why Fevertree has dropped more than 10% in the last two days and the best market makers could offer was “profit taking in a risk-off market”.

So, nothing to do with gin drinkers suddenly deciding to stay at home and play Games Workshop’s Warhammer 40k instead.

The new intake consists of Peppa Pig licence holder Entertainment One PLC (LON:ETO), a smattering of oil plays (Hurricane Energy, Petrofac and Premier Oil), plus Hikma Pharmaceuticals, NEX, Syncona and Jardine Lloyd Thompson.

Hands up who else was surprised to discover that Hurricane Energy was a billion pound company?

We use bid/offer prices when trading and assume £15 dealing costs, so every time we do a portfolio refresh the value takes a hit.

Company

Shares owned

Cost of shares

Cost per share

Current bid price

Current value

Change

% change

Entertainment One

259

£1,061

409.79p

403.8p

£1,046

-£16

-1.5%

Evraz

221

£1,003

453.79p

567p

£1,253

£250

+25%

Games Workshop

29

£934

3,221.72p

3,680p

£1,067

£133

+14%

Hikma

56

£1,064

1,899.54p

1,876.5p

£1,051

-£13

-1.2%

Hurricane Energy

1,842

£1,064

57.74p

57p

£1,050

-£14

-1.3%

Jardine Lloyd

56

£1,072

1,914.79p

1,886p

£1,056

-£16

-1.5%

NEX Group

101

£1,060

1,049.85p

1,034p

£1,044

-£16

-1.5%

Petrofac

161

£1,061

658.81p

648.8p

£1,045

-£16

-1.5%

Premier Oil

755

£1,064

140.99p

138.8p

£1,048

-£17

-1.6%

Syncona

368

£1,065

289.33p

285p

£1,049

-£16

-1.5%


 

  • Cash: £0
  • Value of current holdings (plus cash): £10,709
  • Change in value of portfolio since March 2018: +£709
  • Total dividends received (and reinvested): £264
  • Profit from closed positions: £184


 

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