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.
In a move that will have a lot of procurement professionals looking over their shoulders, PepsiCo has eliminated its global marketing procurement team. The maker of Pepsi, Tropicana and Quaker runs one of the world’s most respected brand and marketing firms. But a push for improved speed and flexibility, essential in this age of quickly produced multichannel advertising, has caused Pepsi to reconsider a centralized procurement department's role in that effort.
As we rapidly approach the end of the year, and as the witches and wizards appeared on our streets in October and the nights lengthen, can our three Spend Matters stock-pickers turn their performance around and beat the market over the final months of the year? We’re talking about our portfolio of procurement-related stocks, of course, and whether myself, Jason Busch and Nancy Clinton can beat the overall weighted portfolio that contains all 24 of the firms with a procurement interest. We had a reasonable month of October, with our portfolio following the market and up some 7%, although it is still some 8.5% below where it started on Jan. 1.
LeanLinking is one of our 50 Providers to Know. We will be highlighting 100 companies (50 to Know, 50 to Watch) from our 2015 Spend Matters Almanac over the span of 100 days. Practitioners are encouraged to browse the categories listed in our Almanac to find the provider that best fits their needs.
LeanLinking has taken a neat idea and run with it. Whether a small startup in Denmark — and with a real procurement practitioner at the helm rather than a hyped-up startup software provocateur — can succeed these days is less clear.