Tuesday, 25 March 2014

In The Saddle Again (Portfolio Buy)

From the horse's mouth
As I have said several times before, to me the stock market is a lot like one of those slightly ramshackle funfair carousel rides: loud and colourful, with gold leaf decorated horses riding up and down on their poles, going round and round (yet getting nowhere). I like to think that I can ride one horse to the top and then jump off and cleverly hop onto another one that is just taking off. And what is more, I dream I can make a living from it!

The reality does not always fit the dream, of course - sometimes you fall off and sometimes the horse spins off, out of control. Sometimes the horse you think should be going up decides to stay put.

But the other similarity with the fairground ride is that the same horse comes around and around - and sometimes you get to ride it more than once...

I have bought and sold many different shares and other securities - but some I have bought (and sold) again, in the hope of another exciting ride. My latest 're-mount' purchase is an not-so-old favourite: Tullett Prebon (LSE:TLPR). I bought it previously in March 2013, later adding another chunk to my holding (which I sold out in July 2013, with an average capital gain of 35% - at a price of £3.51). Then I sold the rest of the holding in September 2013 at £3.80.

Tullett Prebon operates as an intermediary in wholesale financial markets facilitating the trading activities of its clients, in particular commercial and investment banks, through its electronic broking solutions. In addition to its brokerage services, Tullett Prebon offers a variety of market information services through Tullett Prebon Information.

However, the carousel has spun several turns since then and the share price has fallen in line with TLPR's results - largely due to 'quiet' market conditions. And. to pique the interest of DIY Income Investors, this poor performance has led to the attractive current yield of over 6%, well covered by profits. The latest results contain a commitment to continue the dividend at the previous year's level - and as this is well covered, it seems like a reasonably safe bet.

The key 'plus' is however the likely investment climate over the next year or so. I'm expecting it to be choppy - the kind of environment that should provide a lot of business to Tullett Prebon.

So, call it a gamble on market volatility - and hopefully this horse should thrive on it.

[Purchase price: £2.86]

I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.

1 comment:

  1. DIY

    I too have added recently, part trade, part hold. Don't know whether you listened to the webcast concerning the annual accounts for '13 but TS felt it would be another year of grind. Could just be bluffing but he does not strike me as the sort of fellow for bluffing. I have a lot of respect for him and his down to earth approach to business which lends weight to my conviction and underpins the fundamentals. But as you point out, that does not preclude them from the merry go round. But then again, that is half the appeal.