Company Current Price Entry Realised Position
Morrisons (mrw.l) 276.9 276.1 0.002897501 Long
Apple (aap.l) 348.94 343.21 0.016695318 Long
JJB (jjb.l) 29.5 24 24.25 0.216494845 Long
Sports Direct (sdp.l) 182 190.3 -0.043615344 Long
HMV (hmv.l) 15.25 16.75 0.089552239 Short
Tesco (tsco.l) 381 389 0.020565553 Short
FTSE 350 Retail Index 1558.32 1651.45 -0.056392867 Long
Dixons (dxns.l) 12.5 16.86 -0.258600237 Long
Next (nxt.l) 1981 2043 -0.030347528 Long
Starbucks (sbux) 36.67 37.54 0.02317528 Short


The portfolio for retail sector this semester has been fairly dynamic and much of the profit has been made as a result of instability in the market. We have held a bearish outlook on the market, as consumption has remained bleak, despite a very low base interest rate of 0.5% set by the Bank of England to try and stimulate the economy. The FTSE 100 has fallen from 6013.90 to 6009.90 in last 3 months, which shows the stagnation of the economy. ( The FTSE350 GEN RETAIL index is also down from 1739.33 to 1576.17 over the last 3 months, which shows the lack of consumption in the retail markets.

Our investment approach has been a top down approach. Using this approach we started by first looking at macro economic conditions and trends. We then moved on to industry specific conditions, such as looking at retail indexes. We then looked to find companies that matched our view given by the trends identified in the previous stages.

We identified that the UK economy is still recovering from the recent recession, and feel that a double dip recession may be inevitable due to the implementation of government spending cuts and increasing in taxes. We feel that the government may also raise interest rates later this year, which would probably cause consumption to diminish further. We then found that the retail sector is currently struggling, as people don’t have the money to spend, and uncertainty is stopping people from spending the money they have. This led us to our bearish view of the market, and helped us to pick out our trades. Although, a fall in cotton prices towards the end of the semester changed our view of the market from bearish to a more levelled/ slightly bullish view of the market.

We have achieved an expansion in our portfolio every week apart from our final week. Furthermore, we have achieved a 19.3% realised gain over the whole semester. This has been achieved main through the volatility of our two most profitable positions; HMV and JJB, which we have traded both long and short throughout this semester.. Although a problem found with this, is that we moved away from our main top down approach, and followed a bottom up approach on these positions, as the trades were based on the individual companies’ performance.

William Gill

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