Residents' Association Forum

This experimental portfolio started on 5 Feb invests an equal amount (£1000) in companies that have aroused indignation (to put it politely) among customers here or generally, on the theory that they must be making too much money for what they provide. At inception, the FT all-share index stood at 3297.

On the news that Greencore supplied horse bolognese to Asda, Greencore has today been added to the portfolio which now comprises:

Associated British Foods (various reasons, also reported tax dodging in Zambia)
Barclays (LIBOR, PPI, swaps mis-selling, aggressive targeting to shakedown customers including me: let's see whether new CEO Jenkins succeeds in reforming this into an honest bank)
BT (I switched to Virgin after years of erratic broadband service and billing messups from BT.  Out of the frying pan, into the fire!)
EDF (results now show EDF profit up 7.5pc after bills rise.  EDF was named by regulator Ofgem as the most complained about of the "big six" energy firms at the end of last year. I switched from them in disgust with their mess-up over my billing)
Greencore
May Gurney (highways contractors for SCC)
Stagecoach (owners of SW Trains)
Standard Chartered (don't ask!)
United Utilities (as representative of water companies, who lately hiked rates by double the rate of inflation - can't buy shares in Thames Water)
Virgin Media (see thread)

As of today, two working weeks after inception, the portfolio is showing a profit of 2.14% while the FT all-share index has risen by 0.067%

Excellent idea for a fund!

I will watch its progress with interest!!

...Off to an excellent start to the week this morning.  Greencore a good buy (damn, I had no dosh to get some for real on Friday, contrarian buy on the horsemeat news, it's up 11% already).  The portfolio is now showing  profit of an average +3.61% while the market has moved sideways. Only Stagecoach and United Utilities are showing a slight loss.

Portfolio now weighing in at +4.6% not counting dividends.

Any other candidates for purchase?  I can't find a way to buy Finmeccanica/Augusta-Westland in the portfolio platform but it seems to me that the allegation of bribing an Indian official represents a salient example of commercial rapacity where shareholders might reap the rewards.  But it is a long way from Thames Ditton....

Well how about the Volkswagon group!!

;)

Ever since they bought out Porsche :(

they seem to have gone from strength to strength...

No, you misunderstand the selection algorithm; VW are a force for good and decent value.  I am a contented owner.   We need candidates where ROC stands for Rip Off Company rather than plain old Return On Capital.  It is, if you like, an Unethical Fund.

I have added Nestle today as they have also been fingered as purveyors of horsemeat (wittingly or unwittingly).

That leaves processed food manufacturers heavily represented in the portfolio; but on the analysis that world population is growing, food getting scarcer, processed food can be cheaper/more profitable and hell, you can't tell just what's in it so there is plenty of scope for the centuries old traditions of merchanting,  investors in the fund can live with that I think.

And on the principle of Unethics perhaps a tobacco company..... I'll add BAT tomorrow

I understood the selection completely!
'Fund of misery' tis called!

I was trying to be funny about how upset I was that vw bought Porsche!!

(hence the wink!)

Fund is up 4.67% overall.  Shortly after I added British American Tobacco, they went up by 1.6%.  So now I know that the smart City people are tracking this thread.  There can be no other explanation.

Despite juddering in the markets these past two weeks, the Fund is still up by 3.9% as I write (compared with the FTSE All-Share , up a measly 1.3%)

Today's question is: do I add Centrica (British gas) after the rise in profits of 11%?  I say no: household gas is still cheaper in Britain than anywhere in Europe except for Romania and Lithuania.  The profit margin does not seem unreasonable.  Also, I never had any admin problems with British Gas (unlike EDF who messed up my electricity billing).  So I don't think they are a Misery stock.  What do you think?

I never had any problems as a gas supply customer, but after a variety of experiences with their 'service' engineers (and I use that term loosely) I would no longer touch them with a barge pole for anything, as I couldn't bear the thought of any of my money going anywhere near the company.

My husband has to leave the room when their adverts come on as he's tired of me throwing things at the TV.

Just my personal experience of course.

Well, despite the rocky state of the stock market lately the Fund of Misery is doing rather well.  After United Utilities produced their results, which showed that water companies were having a harder time than one thought, I 'sold' them to book a virtual profit of £100.   With the gain on United Utilities the Misery fund now stands at a notional  £11,918 on an investment cost of  £11,034.  This is a gain of 8.01% since the beginning, against the FTSE All Share index which has risen by just 2.39%

The fund was helped today by the announcement that Costain is bidding for May Gurney, who are Surrey's contractors for highways maintenance and whose performance on potholes etc has been, well, shall we say "patchy".  Other stars are EDF Energy (incl. our local supplies to street lights etc) which has received broker upgrades and Greencore which is recovering from the horsemeat taint.  Oh yes, and even though the fund acquired a holding in Virgin Media after the takeover announcement (damn!) they have still gone up by 12.4% and their misery status was further underlined by yet another outage of my broadband this morning....

The biggest loser among the fund's holdings is Barclays Bank, down 4.3%  In view of new CEO Jenkins' repeated fine statements about reorienting the bank's culture to one of good behaviour and real focus on customers, I am looking to sell - but only when an alternative misery holding appears.

Hmm I understand the RA has quite a big cash pile (oops reminds me I need to pay my subs for the year... ooer) - maybe you should be getting those sort of returns for that pile?

;)

Keith,

How do you decide when to sell?  When is a company no longer a misery?

Criteria to sell are always harder than reasons to buy!  Particularly when the criteria should be based on some notion of misery rather than any close attention to market value, earnings potential or market dynamics.

There could be several reasons to sell.  For example, when a company is taken over (as with Virgin Media and May Gurney) we should reassess whether this is likely to lead to less misery for the company's customers.  As yet there is no such indication for either!

Or company results (UU suggesting water companies might not be screwing customers blind after all) or leadership reorientation (Barclays under Jenkins) may signal a reassessment of how cruelly the company is exploiting its miserable customers.

Or news items cumulatively indicating that e.g. all processed foods from a hitherto tainted supplier are now really clean and fair value.

Sounds fair - really you need a brand reputation index that updates daily.  I don't think there is one.

Interesting idea that - there are brand indices on top brands but not on negative reputations!

http://www.brandindex.com/

And of course there are funds that only invest in ethically 'good' companies (be it good environmental policies or other measures of 'goodness' - you could perhaps try and do teh 'opposite' of them in your fund of misery!!

The Fund of Misery continues to do well.  Despite a slump in the markets last week, the fund is now standing at an overall gain of 9.16% compared with the FTSE All-Share which stands at just 0.21% higher since this portfolio's inception.  The losers are the two banks (Barclays and Standard Chartered).   Following reports last week concerning apparent attempts by GlaxoSmithKline to delay rival pharmaceutical products by paying their producers, and that they intend to sell off my much-loved Ribena, I have today added GSK to the portfolio.

9.1% profit in just over two months certainly puts a cash ISA (guaranteeing slow impoverishment in real terms) in the shade....

Juninho's idea of shorting shares held by ethical asset managers is intriguing but practically impossible for the small private investor to do, alas.

The Fund is now showing a profit of 11.78% compared with the FTSE all-share's rise of just 3.31% since the fund started on 5 February.

A resident asked me whether this is a real portfolio with real money invested in it.  Alas, I wish it was - it has done better than my real world investments over the period!  I think we're on to something...

...and now the Fund stands at a somewhat staggering 15.41% gain (FTSE All Share: 5.8% gain).  Helped by the bids for May, Gurney, Surrey Highways' roads contractor......  Clearly rapacious companies attract bigger predators!  And the jump in BT after their results also helped. But Standard & Chartered reported a slow Q1 and is weighing on the Fund at -7.4%, one of only two losers in the portfolio.

I know you are itching to learn the latest Fund Of Misery score, following several days of market mayhem as the investing herd gets spooked unnecessarily by the Fed.

The Fund now stands at a gain of 16.82% compared with the FTSE All-share's increase of 6.3% over the same period.

Following the streetlights cockup, which has antecedents in local misery, I would have added Skanska to the FOM portfolio but their UK company is private, not listed, and the parent is listed in inaccessible Stockholm.  So - no changes to existing holdings.

How has the Fund of Misery stood up to June's "correction" - a slide of over 11% percent in the stock market, which has since recovered a bit.  Pretty well, it turns out.  The Fund today is showing a gain overall of 14.3% since inception, compared with a gain of just 0.08% in the FTSE All-Share index over the same period since 5 Feb.

Shame it's just virtual!

What is the balance of the fund, please?

Current balance of this virtual portfolio is £13,702.65.

There is no weighting at 'purchase'.  Approx £1000 was invested in each holding at 'purchase', total invested £12,031.98

Gain £1,670.67 that is 13.89%

The earlier 10% profit on the one holding sold off, United Utilities (see earlier post), I count as 'reinvested'.

Currently, Associated British Foods, Barclays, GlaxoSmithKline, Nestle and Standard Chartered are showing losses.  These are more than offset by gains on the others, of which the star performers are Greencore (a horsemeat selection) which is up by 56.7% and our  Highways maintenance contractors, May Gurney, up 67.1% on takeover moves....

Not a bad return, I agree, but just two queries;

What is the monies for?

Can you publish you accounts here for 2012?

To update:

In this virtual fund (bluesky please note it is only a virtual fund) Kier Group took over May Gurney (our beloved highways contractors for Surrey), after a bidding war with Costain, increasing the value of the £1000 notionally invested to £1733

Liberty Global took over Virgin Media, showing a profit of only £141 for the Fund on the initial £1000 which alas was invested after the takeover bid was announced.  Virgin Media is now under the private company Liberty Global PLC, unlisted (a subordinate of the American parent listed in NY).  In any case, the miserable problems with Virgin's local service seem to have been resolved - at least, I have had continuous stable broadband, up to the advertised speed, for a few months now.

With the proceeds plus the earlier profit of £100 on United Utilities the Fund has reinvested about £1000 in Kier Group, which continues to contract for Highways, and has put a similar sum into Renew Holdings.  Renew, listed on AIM, provides engineering services for public infrastructure including Network Rail (I'm thinking of the miserable state of the Thames Ditton railway bridge here....).  Network Rail has been castigated by the regulator for a backward state of maintenance nationwide, so Renew seems not only a natural Fund holding but probably stands to gain from NR shelling out more money to bring maintenance up to scratch.  (I might add that as soon as AIM shares could be held within ISAs from 5 August, I really did buy some Renew for myself...and they're up already ! - pure luck....)

That leaves a Fund of Misery cash holding of £1001 ready to put into another Miserable share, if I can identify one.  Thinking about G4S !!

Overall the FOM is up by 23.6% against a gain in the FTSE All-share of 5.91% since 5 February.  I only wish it was a real fund!  My own real-life ISA pf is showing a total return of just 10.57% over that period & I'm happy with that, although it is quite hard work.

Comments: 
- an increasing number of our infrastructure suppliers & services are foreign owned.  Thames Water, EDF Energy (and E-On), Virgin Media, Skanska .....  This means we small investors cannot profit from our misery by buying their shares in UK. 

- Barclays has been a poor performer, but the Misery headlines go on: vastly increased provision for PPI mis-selling, and now  its murky recapitalisation with the aid of Qatar funds in 2008 is reportedly being investigated by not only the Financial Conduct Authority but the Serious Fraud Office too.  Where will it all end...?  I guess the Fund of Misery will be taking up the rights issue with some of the spare cash, as Barclays clearly continues to qualify on the Fund's criteria....
- GlaxoSmithKline continues to be a holding following the revelations of bribery in China.

U still haven't answered, what is this fund for??

This is a virtual fund, Bluesky.  A fantasy portfolio.   A whimsy.  It doesn't exist in reality.  It is a sample portfolio built on the strategy of investing in companies which are complained about, particularly (but not only) locally in this forum, as having rip-off tendencies of one sort or another.  The idea is that they are particularly rapacious enterprises, and are therefore making too much money at customer expense, often by questionable practice or poor delivery, and therefore their shareholdeers will benefit more than the average.  It differs from the examples of ethical / unethical funds in that it is not concerned with ethics in the sense of alcohol, tobacco, sex, damage to environment etc etc., but purely with what firms can get away with at customers' expense.

And so far, the strategy seems to be borne out by the results..

So it's a total waste of time!

I thought the residents were cobbling together a fund for things like the pedestrian triangle in the village / bump removal etc etc

Is there another fund for this?

I'm sure I dropped off a couple pounds as some fair for TD residents .

hahahahaha

Why don't the residents association have some collection boxes in the village for such improvements?

I would be happy to drop in loose change when buying a paper etc.

would work if in a shop but would likely get stolen otherwise, although that said, I got to my car this am and somehow i'd left the window open all night on the high street, nothing touched, sat nav, sunglasses all there.