Finance Friday: RBS, Tesco and Solo Oil
If you have been following my finance posts you will know I started investing on the stock exchange a few years ago. I see it as an education, I’m still learning. Yesterday, was an interesting day just before the market closed there was news of an oil strike that sent shares in Solo Oil soaring.
The last investment I made was the TSB IPO, which added to my investments in Lloyds and RBS and made my portfolio less diverse. I’ve been thinking about selling RBS ever since. Yesterday my dealing fees were cheaper than usual and so I sold RBS. I bought them in February 2012 and my return was about 26%, so that was reasonable. I could have sold Lloyds, for a much greater return, Lloyds is a multi bagger for me. Lloyds have gone from just under 30p to just under 77p today, so a that would be a good return if I sold now. I think Lloyds still has a lot of potential, far more than RBS. Lloyds are cutting staff and moving more into digital and internet banking. They are also well placed to start mini banking halls, they could include Lloyds, Halifax, TSB and others in the short term and maybe all the banks in the long term.
Tesco also has plans for banking and have decided not to join in the price war with Lidl and Aldi. This makes sense. They are in competition more with Asda and Morrison’s, they have similar choice to Tesco. Tesco can cut prices on some things that Aldi does well with but not compete with the ones they don’t stock. Tesco has been run badly, recent scandals include bad accounting, falling profits and there was also that affair where they refused to stock products from Premier Foods. I think now they are over the worst of it, have a new CEO and Tesco could be a good investment. Yesterday, I used the money I got from selling RBS to buy Tesco. Tesco has dropped another 1.67% this morning, but seems stable now.
Premier foods price got trashed yet again yesterday, because the last quarter saw falling sales. The price this morning is 29.25, which I think is rock bottom. I bought a couple of years ago at 40p and the rights issue was 50p. The directors bought at an average of around 80p. The massive debts have been paid down and so I think with a quarter now that includes Christmas, the future looks better but we may have to wait a while for the price to hit 186p again. I like the new advertising campaigns and they are using social media effectively. There are also new products coming into the shops and export opportunities in the USA and China.
Solo Oil created some excitement yesterday when a rumour said they had found oil at Horse Hill. That sent the share price up in the closing minutes before the exchange closed. A RNS this morning confirmed the find, but we’re still not sure how big it is. It could be over a billion pounds in oil and Solo has a 6% stake. This morning the price has dropped again, nearly 15% and the spread has widened to nearly 6%. The day traders are taking their profit and the market makers too. I’ve nearly tripled my investment in Solo, so I’m watching and waiting. I could take profits and try to get in again at a lower price, but small investors get ripped off with dealing fees and Solo will go up again next time there is some good news. In the next week we could find out the size of the oil find and they are drilling now to the next layer where they hope to find gas. This exploration, is not fracking, it’s conventional, which shows how stupid the protests are. I assume the protestors are all turning up in wind powered cars? Right?
Remember, I do not give advice on investments. I just tell you the crazy stuff that I do. There are lots of posh boys in the city who will give you advice on losing money! My investments are a little more diverse now and could be a little more fun to watch too. I still have my investment in Zopa too, lending money for around 4.5%. Not quite as good as the 10% a year I made buying and selling RBS, but we have to be diverse.
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