The fifth addition to our beginners’ portfolio heads in a different direction.
This article is the latest in a series that aims to help novice investors with the stock market. To enjoy past articles in the series, please visit our full archive.
For our Motley Fool Beginners' Portfolio, we've so far stuck mainly to blue-chip, dividend-paying, FTSE 100 (UKX) shares, which is essentially the investment policy followed by Neil Woodford, investment head at Invesco Perpetual, and widely considered among the world's top investors. If you want to base your portfolio on his strategy, the free Motley Fool report "8 Shares Held By Britain's Super Investor" is what you want -- click here to get a copy.
We have also brought the FTSE-250 housebuilder Persimmon (LSE: PSN) into the fold, for reasons I explained last time -- as it's essentially an educational portfolio, we're not sticking to one rigid strategy, but will include shares that I think are bargains for different reasons.
I do think Persimmon is still a safe long-term purchase, but today we're branching out into something very different.
A new type of share
I've said all along I want to add one or two small-cap companies with growth potential, which partly reflects my earlier liking for Jim Slater's approach. And today I've gone for one that I've been looking at with great interest of late -- I've added shares in video technology expert Blinkx (LSE: BLNX) to the portfolio.
Here's what the deal looked like...
Our £500, invested using TMF ShareDealing, got us 1,319 shares at a price of 36.94p for a total consideration of £487.24. Add on the £10 commission and £2.44 stamp duty, and we get a total of £499.68 spent.
The total portfolio is now looking like this...
|Company||Buy price||Share cost||Charges||Total cost|
|Vodafone (LSE: VOD)||168.5p||£487.07||£12.44||£499.51|
|Tesco (LSE: TSCO)||305.5p||£485.80||£12.43||£498.23|
|GlaxoSmithKline (LSE: GSK)||1,440.5p||£489.77||£12.45||£502.22|
One of the things I like about Blinkx is that it is pretty much impossible at the moment to put any meaningful fundamental valuation on the company. Wait, what, I think that's good?
Yes, because at this stage in a growth company's life, before people are able to quantify things, it can mean opportunities for the brave. So let's get in on this potential high flyer and take a punt on the technology, I thought.
And that technology does impress me. Targeted advertising is a really big game these days (and it's often woefully done -- eBay, for some reason, keeps trying to sell me parts for a Myford ML7 lathe).
Targeted means searching
Good targeting depends on the ability to be able to search and analyse the content that people are looking at, and Blinkx's video search tools, backed by Autonomy technology with an in-perpetuity licence, stands a good chance of becoming a major leader in the field.
The share price fall, from a peak of 158p last year, was partly based on fears after Autonomy was taken over by Hewlett-Packard (NYSE: HPQ.US). But I reckon it's overdone, and we have a nice buying opportunity now.
If you want some beginners' help on how to make it big, the Motley Fool's free report "10 Steps To Making A Million In The Market" should accompany this Beginners' series pretty well. It's still free, so click here to get your personal copy.
And please feel free to let me know what you think of this latest purchase.
More for beginners:
> Alan does not own any shares mentioned in this article.