Only two weeks to go until our webinar with riskmethods. The supply chain risk management provider’s software identifies risk along global supply chains, assesses the risk impact and defines appropriate and focused measures for risk prevention or crisis mitigation. The firm is the perfect partner for our upcoming webinar, titled “Keep your enterprise out of the rough: How Titleist built transparency and increased resilience into their supply chain.”
It was a dark month for our share portfolio of 20 companies that have an interest in the procurement solutions market. Last month, we were commenting that it was several percentage points ahead of the general stock market performance for the year to date, but that changed in October. Markets were pretty flat through October, but our portfolio lost no less than 6% of its value, to end October less than 5% up year to date, still marginally ahead of the Dow Jones and global indexes but behind the U.K. index performance for 2016.
* As for that headline, Google it if you aren’t British and over 40. It's time for news about our portfolio of stocks from publicly quoted companies who are all or partly focused on procurement solutions and services. We have 20 firms represented in our portfolio, from huge to small, and we report on overall portfolio performance every month, picking out a few firms to focus on more closely. September was — well, how can we put this gently — a somewhat boring month, at least if you look at the headline stock prices at both individual company level and overall for the portfolio. BUT if we look more carefully, we can find some points of interest, including two high-profile CEO departures. So what did the behind-the-scenes goings-on look like?
Did you have a good summer? Weather good, we trust? Too hot in some parts of the world, while in the U.K. – actually, it wasn’t too bad after a cool start. And now we’re writing this on a beautiful early September day, as the kids get their books and uniforms out ready for back to school this coming week. Yes, you might have guessed from the chat. August’s stock market movements of our portfolio of procurement-related companies did not give us the most exciting range of topics to cover. The weather is probably more interesting. It was a month where generally markets seemed to take a breather after a year so far in which there have certainly been plenty of events for them to think about, from the rise of Trump to the U.K.’s Brexit vote. However, the overall performance of our procurement stock portfolio was very good overall, up some 6% on the month, and it now stands some 10% above the beginning of the year level. That means for the first time this year it has moved clear of the overall market performance. U.K. markets are up 7% on the year, U.S. 6% and the global index about 5%, so procurement-related stocks are now ahead of that.
After the events of June, with Brexit dominating the headlines, stock markets actually did pretty well in July. The Dow Global index was up 4% on the month and is now positive for the year, as are U.K. and U.S. markets. The month was also a good one for our portfolio of 20 firms that have an interest in procurement services and solutions. The portfolio was up almost 5% on the month, driven by some of the giants of the industry, as we’ll see. It is now 4.8% up year-to-date, slightly better than the global stock market index but still underperforming the general U.K. and U.S. indexes by still a percentage point or so.
We are in the middle of a great period for procurement and supply chain books, with several very impressive examples being published over the last two years or so. (We’ve linked to our overview of some of those at the end of this article). Now, there is another impressive publication to add to the list. "Legal Blacksmith – How to Avoid and Defend Supply Chain Disputes" has a different perspective to any book we have seen previously in our sector.
Pretty much every consulting firm has its own process and tool-kit, too. Whether it’s seven steps, nine steps or 17 sub-processes, there is plenty of advice from those who will tell you how to implement CatMan successfully. But there is less in the way of hard, evidence-driven thinking and research that can bring objectivity to the questions around how organizations can succeed with CatMan. That's why the Future Purchasing Category Management survey is so valuable.
The month of June included some of the most seismic events to hit Europe since the fall of the Berlin Wall, as the U.K. voted to leave the European Union, leading to political and economic shock-waves not just in the U.K. itself but more widely. Our portfolio of shares was not totally unaffected by this, as we will see, but perhaps surprisingly, the U.K. stock market, in particular, had a good month, and that has continued into July. That is largely because sterling has crashed, losing 15% of its value against the dollar almost instantly when the result of the referendum became clear. So firms that have non-U.K. earnings and are quoted on the U.K. stock market (and that is a majority of large firms in the FTSE 100) will show better sterling-denominated earnings. There is (almost) always a silver lining to bad news! However, the FTSE 250 index has not performed as well, with its greater representation from more locally based firms.
Greetings from a slightly stunned U.K., which Friday morning felt like a guest waking up with one shoe missing, a hangover and a vague sense that something bad happened at the party last night. Something very bad. Procurement folk will be scrambling already to work out what exactly the U.K. voting to leave the E.U. means, and the whole Spend Matters team will have more analysis to come.
The timing was really quite extraordinary. I sat down to write this article about our recent webinar — all about social media and collaboration in the context of procurement — and as I started it, the notification about Microsoft's acquisition of LinkedIn popped up on my news feed. Microsoft has paid $26 billion, which is not bad for a business with a patchy profit record.
May was actually a pretty good month for our stock portfolio, and for the first time for quite a while, it has out-performed the wider markets for a couple of months running. We’ll come back to why that is later, but the portfolio stands at 5.4% up over the beginning of the year, while major markets are still pretty much where they started 2016. Indeed, the markets have been remarkably calm in recent weeks, despite Mr. Trump, the fear of the U.K. leaving the E.U. and other issues of global import.
It's time for news about our portfolio of stocks from companies who are all or partly focused on procurement. We have 20 firms represented in our portfolio, and while this year we have abandoned our personal stock-picking competition after last year’s disaster (when we all lost significant amounts of money), we will still be reporting on overall portfolio performance every month and picking out a few firms to focus on more closely. The most apposite word to describe April, at macro level anyway, would be “quiet.” After a turbulent start to 2016, markets generally last month were fairly flat, and on the major exchanges, overall levels are within a percentage point or two of where they started the year. Our portfolio overall was pretty much unchanged month on month, dropping just a fraction to end April some 2% above the start of the year, a small outperformance against the U.S. and U.K. markets. As always though, that concealed some larger rises and falls at individual stock level, so we will take a look at some of those significant movers.