I did something this week that I have never done before: I sold part, but not all, of my shareholding in a company.
This concept has always seemed flawed to me. If you think the company is going to slide, why not sell the whole stake? If you think it will do well, why not back your judgement by retaining the entire holding?
There were various factors that made 
Vodafone (VOD) a special case. I had built up a sizeable – by my standards – stake at around 170p, initially buying on the prospect of attractive dividends from the US joint venture Verizon Wireless that did indeed come to pass. I felt that this flow was not fully factored into the share price.
I also followed my advice to readers to top up below 170p, a floor that was breached several times before the impending buyout of the US operation pushed the price above 200p.
I have made clear in previous columns that the loss of the profitable and growing American business is a negative factor, producing a short term financial gain but leaving Vodafone too dependent on stagnant markets in the UK and continental Europe. Trading figures this week indicated that these markets are still suffering with group revenue down 3.6%. Hence I could no longer justify having Vodafone as one of my biggest holdings.
On the other hand, I have enjoyed considerable dividends from the telecoms group, the latest instalment arriving this week – I sold well after the ex-dividend date so received income for my entire holding.
The big question when you decide to sell is what are you going to do with the money and I would have struggled to find a parking spot for my entire Vodafone stake. Thus I settled for parting with about 40% and I topped up my newly acquired holding in HSBC, where I feel the shares have taken an unfair battering of late and where the dividend yield is about 4.7%.
In due course, after the sale of the Verizon stake, I will receive a special dividend that will reduce my holding to about half of its original size, which suits me fine.
I did not get my timing particularly right, although I avoided selling Vodafone at this week’s low point. I think the notion that Vodafone shares rose after the results because the figures were not as bad as expected is quite spurious.
The business is not worth more than 200p, even with a special dividend to come, unless there is a bid, which seems unlikely now that AT&T has dropped out of the running for the next six months. In any case, I never buy nor hold shares purely on bid hopes.
RBS Boss Moves On
There is a famous World War I cartoon in which a soldier stuck in a crater tells his moaning compatriot: ‘Well, if you knows of a better ‘ole, go to it.’
Stephen Hester has found a better hole after his sterling efforts at Royal Bank of Scotland (RBS), where he spent five years sorting out the mess he inherited without receiving the recognition he deserved from his political masters.
He joins RSA (RSA), the insurance group that found a black hole in its Irish subsidiary. It does seem that the contagion has not spread elsewhere in the group, so this should be a walk in the park for a man of Hester’s experience.
I’m not keen on insurers as I find them too erratic and it is hard to judge RSA’s yield, which is 6% on an historic basis but will be considerably less after the payout is reduced this year.
I would not chase the shares higher despite my high regard for Hester. In my view the share price recovery has gone far enough.
Hargreaves Come-down
At a time when Morningstar has been receiving complaints from Hargreaves Lansdown (HL.) customers about high charges on its funds supermarket, the broker has retorted with news that it increased its customers by 77,000 in the second half of last year. About 27,000 were drawn in by the Royal Mail flotation but that leaves another 50,000 who started trading for other reasons.
Hargreaves is a leader in fund supermarkets. Having more customers is always likely to produce more complaints. However, it seems that the broker seriously underestimated the effects of the banning of commission payments by funds to brokers and advisers, who must now be more transparent in their charges.
In what may prove to be the one useful thing that the unlamented Financial Services Authority did in its mercifully short lifetime, the banning of commission has slowly brought home to investors just how much of their capital has been soaked up by professionals.
Customer outrage is now pushing down those prices at Hargreaves and elsewhere but the lesson investors need to learn is that they can build their own portfolios, as I have done, and it is not difficult. Online stockbrokers such as Hargreaves have made this a cheap and easy option.
I’ve just completed two weeks lecturing on finance and investment to a very appreciative audience on the Fred Olsen cruise ship Balmoral on the first leg of its 2014 world cruise, which is why there was no column from me last week.
The feedback has left me in no doubt that many more investors could take their financial lives into their own hands. It simply needs the courage to take the first small step.
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