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.
It's time for news about our portfolio of stocks from companies that 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. Overall, March saw the improving trend continuing, with markets continuing their recovery from the January woes, and our portfolio in general is performing well. Indeed, for the first time in over a year, the procurement portfolio significantly out-performed the wider market. The procurement stocks in aggregate were up almost 5% on the month and now stand at over 2% above the beginning of the year, whereas the markets in general were up a couple of percentage points and are pretty much back to where they started in 2016.
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 (fake) money, we will still be reporting on overall portfolio performance every month and picking out a few firms to focus on more closely. Overall, February was a better month for the markets than January, with some stability returning in most countries following the dreadful start to the year, although the Dow Jones Global Index is still some 7% down year-to-date. Our overall portfolio is down some 2.5% so far, but while many of the stocks have been fairly quiet this year, the overall number conceals some big swings, positive and negative.
Regular readers will know that, for the last couple of years, we have created and then followed a stock portfolio, created from the firms who are quoted on various stock exchanges and have a significant interest in the world of procurement technology and solutions. We have also run an internal competition, whereby Jason Busch and I (for two years) and also Nancy Clinton (last year) chose our own portfolio from among the 20 or so firms. But last year we suffered the ignominy of underperforming the market and our overall full portfolio. So although Jason won, we have decided to lick our wounds and not choose our own basket of firms for 2016.
Our three Spend Matters stock-pickers have now sunk into a late autumn pit of despair as the nights lengthen and the leaves lie heavy on the saturated ground. The portfolio of 24 procurement-related stocks we put together continues to underperform the wider market, and our three “heroes” — Jason Busch, Nancy Clinton and Peter Smith — continue to underperform the portfolio by some distance with their specific picks.