FTSE100

Interesting (!) action in the FTSE today.  Price has fallen below the recent uptrend from October

but is potentially still in an uptrend above 5450. 

Time will tell but I am anticipating a bounce from just below 5500 later this week perhaps.

Randgold Resources (RRS)

RRS has come into view.  It is one to keep an eye on but the coup in Mali has certainly created some uncertainty!

The multiyear uptrend has been broken

and the moving averages are pointing down

 I am going to wait for this to find a bottom before jumping in (which it may already have).  I will use teh moving averages to help 'confirm' a bottom is in place.

Shire plc (SHP)

Shire plc (SHP) is a FTSE 100 global pharmaceutical company.  It describes itself as “a rapidly growing global specialty biopharmaceutical company”.  This growth is the key reason for purchasing SHP.  It is forecast to grow EPS 32% and currently trades on a forward PE of 15.  Once again there is little debt, a small dividend and excellent cash generation and so SHP meets the same criteria as the rest of my portfolio.

 SHP has been making higher highs and higher lows for the last few years and is still comfortably within its uptrend channel.

More recently though the shares sold off in early April after the recent results and my entry is a 12% lower than recent highs in Feb 2012.  The daily RSI has come back from being oversold and the 5 day SMA has crossed the 20 day SMA and the 20 SMA appears to be turning up.  There is certainly a risk that the shares could fall more but this appears to be a reasonable entry point.

Another reason for adding SHP at this time is that my portfolio was too concentrated on small illiquid (and volatile) AIM shares.  AIM shares offer good upside potential but I was alerted to the imbalance in my portfolio and have decided to address this.  Going forwards I have decided to be approximately two thirds in small caps and one third in FTSE 250 stocks.

Aberdeen Asset Management plc (ADN)

Aberdeen Asset Management plc (ADN) is a newly promoted FTSE 100 global investment management group.  ADNs assets under management continue to grow (£184.7m, up 9% over the last six months) and pre tax profits are forecast to grow by approximately 35%.  ADN currently trades on a forward PE of 13.8.  There is little debt, a decent dividend (3.2%) and excellent cash generation and once again ADN meets the same criteria as the rest of my portfolio.

ADNs share price has been trending upwards strongly over the last few years and its more recent performance has also been strong.

There is always the risk of a pullback and the shares fell back not long after my purchase.  But just like Shire I am looking to add some larger caps to my portfolio and decided to buy ADN on weakness (although this is before the European markets moved sharply lower later in the morning).  My investment portfolio is “patient money” and the dividend means that I am being paid to wait (patiently).

I am mindful that we could see the markets slump over the summer and I plan to think about when to hedge my portfolio should we see a slump.