Monthly Archives: August 2014

Flash Boys by Michael Lewis

The latest book by the former Wall Street trader and now financial commentator Michael Lewis is called Flas Boys.

Without spoiling the book, it is about the growth in High Frequency Traders (Robots). The book revolves are the good guy Brad Katsuyama, a  trader at the RBC (Royal Bank of Canada), who worked out that the high-frequency guys were effectively hijacking his orders by effectively front running his orders. Using low latency high speed fibre-optic cables that link superfast computer servers to brokers, these high frequency traders intercepted and bought his orders, selling the shares back to him at a higher price, and pocketing the margin. Thus an decent trader is unable to get best prices.

The effect of this is most serious, as long term investors like pension funds unable to get best prices for clients, when you have High Frequency Traders just in the market for micro seconds to make a margin. One has to really ask the economic benefit of a robot owning a share or bonds for a few micro seconds.

The US National Debt

A good place to see the size of the US National Debt is the famous US Debt clock that is located on Sixth Avenue in Manhattan, New York City.


How large is the US National Debt ?

It is $17,682 Billion = $17 Trillion = £10.25 Trillion.

This is literally a sum of all the outstanding US Treasury Bonds outstanding, issued by the US Federal Government. This number is now over 100% of the US Annual GDP.

Another way of looking at it, is to divide it across the US population.
319 million is the US population.

$17,682 Billion = $17,682,000 million.


$17,682,000 million / 319 million = $55,000 dollars per person in the US.
[=£33,000 per person in the US]

The scale of the US national debt is colossal.

UK Balance of Payments.

The Balance of Payments is sometimes known as the UK Current Account.
What this is the actual difference between imports and exports.

So for the first quarter of 2014, (April, May & June 2014) the the current account was a deficit of £18,500 Million = £18.5 Billion.

That means the UK imported more goods than it exported to a tune of £18.5 Billion.


As the economy rebalances, one has to see the UK regaining some lead in exports. With the devaluation in Sterling, the UK as the ability to export itself out of recovery. Look at our Coal and Oil reserves. Jaguar Land Rover, a world class product. Take Astra Zeneca and Glaxo SmithKline workd class pharma. Weir Pumps the leader in industrial pumps. Edwards High Vacuum International, precision engineering. McLaren the main player in Formula 1. Ineos the UK chemical giant with Sodium and Chlorine production.

Bluefield Solar Income Fund

Bluefield Solar Income Fund

The Bluefield Solar Income Fund in a London Listed investment fund, specialising in the Solar Energy Sector.

A £150m investment vehicle.


This fund, is a newly listed investment fund that started trading in April 2014 is planning to be an equity instrument that pays a healthy dividend to its investors.

Peer to Peer Global Investments.

The listed investment vehicle Peer to Peer Global Investments is a £217m investment fund.


The objective is to deliver a dividend income and capital growth through investments, directly and indirectly from loans that are originated through online peer-to-peer (P2P) platforms


By getting access to loans that have come from the Funding Circle, RateSetter, Zopa and Crossflow Payments the potential yield could be as high as 8%.

As peer to peer lending becomes more mainstream, the idea of being able to create loans and help more enterprises get access to credit is a very appealing proposition. As small firms prefer debt finance, the ability to by-pass the banks can only be a good thing. As more and more platforms try and compete to give funding for small businesses, greater access to capital is helping re-balance the economy.

It is easy to blame the banks for not willing to lend, but one has to remember that many peer to peer lenders have just noticed and opportunity to make money from banks by under cutting them as the banks are under pressure from regulators to hold more capital and reduce their balance sheets, retreat from some areas of lending. Peer to Peer lending is filling in that critical gap

The August Vodafone Dividend 2014

On the 6th August (last week) Vodafone PLC paid the final 2014 dividend. This payment was £0.0747 [7.47p].

Now, the total voting rights of Vodafone PLC is 26,497,615,161.


This number is the effective numbers of shares that are available in Vodafone PLC.

So with this number, one can work out how much cash was paid to shareholders on August 6th 2014.

26,497,615,161 x £0.0747= £1,979,371,852.53.

That is £1,979 million = £1.97 Billion to the shareholders.

A nice dividend that rewards the long term shareholders in this premier mobile phone company.

Artemis Alpha Trust PLC

The Artemis Alpha Trust PLC is a £125 million investment trust, managed by Artemis Fund Managers.

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Its top 10 holdings are:

The Hut Group, Internet Retailer: 4.5%
Polar Capital Holdings, Financial Services: 4.2%
All the World’s Entertainment, Media: 3.5%
Skyepharma, Pharmaceuticals & Biotechnology: 3.3%
Reaction Engines, Aerospace & Defence: 2.9%
Brewin Dolphin, Financial Services: 2.7%
Emis Group, Medical Software Provider: 2.7%
Gift, General Retailers: 2.7%
Metapack, Industrial Transportation: 2.6%
Africa Oil, Oil & Gas Exploration: 2.5%

What is interesting is that this little company has had some good money from wise investments in smalll oil exploration companies, such as Hurricane Energy.


Libyan Oil

The political crisis in Libya is getting worse.


The tragedy of Libya is that this country has massive mineral wealth.

Just take the oil reserves and its oil production.

Libya has proven oil reserves of 48,000,000,000 barrels of oil.
That is 48,000 million barrels of oil or 48 Billion barrels of oil.

Crude oil today is worth $104.66 a barrel. Thus the oil reserves of Libya are worth

48,000,000,000 x $104.66 = $5,023,680,000,000

That is $5 Trillion = £2.985 Trillion = £2,985 Billion. (that is about 200% of UK annual GDP).

Today Libya oil produces 1,509,000 barrels of oil a day.
That is worth:

1,509,000 x $104.66 = $157,931,940 = £93,855,700, yes £93 Million a day.

It is a real pity that with an income stream of £93 Million a day just from oil, Libya should be a wealthy country, with the EU as a massive customer, just across the water, and yet we see today that Libya is in much a political mess.

The Witan Investment Trust.

The Witan Investment Trust is an investment trust company listed on the London FTSE-250 Index.


Founded in 1909, to manage the estate of the first Lord Faringdon Alexander Henderson today it has assets of £1,501 million (£1.5 Billion)

It’s top 10 holdings are:-

2.0% Reed Elsevier
1.6% Diageo
1.5% London Stock Exchange
1.4% Unilever
1.2% Comcast
1.2% Daily Mail & General Trust
1.2% Pearson
1.2% BP
1.1% Princess Private Equity
1.0% Sage.

The fund is managed by many fund managers:-

Veritas, Pzena, MFS, Tweedy Browne, Lansdowne Partners, Artemis, Heronbridge, Lindsell Train, Marathon, Trilogy, Matthews and Witan’s Executive team.


A 2% yield on this fund, that offers exposure to international markets.

UK HM Government July 2014 borrowings….

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In July 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office ( to raise cash for HM Treasury :-

22-Jul-2014 2¾% Treasury Gilt 2024  £3,567.2500 million
17-Jul-2014 1/8% Index-linked Treasury Gilt 2024  £1,628.4850 million
08-Jul-2014 4% Treasury Gilt 2060  £1,924.9850 million
01-Jul-2014 1¾% Treasury Gilt 2019  £4,000.0000 million

When you add the cash raised:-

∑(£3,567.2500 million  + £1,628.4850 million + £1,924.9850 million + £4,000.0000 million) =

£11,120.72 million

£11,120.72 million = £11.120 Billion

On another way of looking at it, is in the 31 days in July, HM Government borrowed:-

£358 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2019, 2024 and 2060. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…..