A new learning from an old lesson. A 0.5% position can treble in value and your bottom line will barely move. If the same thing happens to a 5% position, you’ll be dining out for weeks. Your job as a portfolio manager is to react to reality, not cling onto faint hopes.
In the third quarter of 2025, I reduced holdings from 45 to 38, exited lower-conviction or structurally challenged positions, and sharpened the portfolio’s income quality and risk profile. The goal remains simple – I want fewer lines, stronger conviction, and a cleaner portfolio to monitor. The sales I have made have protected capital or avoided deteriorating economics.
Why I Pruned: Concentration Over Collection
A sprawling portfolio flatters activity but dilutes outcomes. If a 0.5% position triples, it barely moves the needle. This quarter I acted on that reality by tightening entry thresholds, enforcing sizing rules, and selling where the economics/risks no longer justified capital. Far too many positions in my portfolio had little more justification than dividend-seeking behaviour, and gradually I increasingly believe that dividends are an output of portfolio performance, not a substitute for it.
Disposals and Rationale
I reduced the roster from 45 to 38 holdings. Sales protected capital, banked sensible gains, or avoided deteriorating economics. All figures below include dividends where appropriate.
- London Stock Exchange Group +17%. Exited after four and a half years post profit warning; multiple rich, momentum fading.
- Atalaya Mining +97%.Exited after astrong re-rating achieved over a three-year holding period resulting in a more full valuation.
- National Grid +23% (12 months). Respectable total return but non-core holding in a highly regulated, debt-heavy business.
- Urban Logistics REIT +51%. Exited on a takeover approach for a 51% gain, mostly comprised of shares in LondonMetric Property, which I continue to hold.
- Team Internet Group +8%. Exited due to AI pressure on the industry plus a poor-quality acquisition weighing on earnings after a four and a half year holding period. The business was originally acquired as an investment in the “picks and shovels of the internet”, selling domain names, but was becoming increasingly exposed to digital marketing – a sector I have lost more than a little capital investing in.
- Kenmare Resources -24%. Exited after two and a half years followingfailed takeover talks. The shares have elevated Mozambique political risk due to seemingly permanent “discussions” over permitting and I have little conviction in a positive outcome.
- Dewhurst Group −23%. A small position I acquired in early 2025 which fell to a take-private proposal; I’ve no desire to hold an unlisted entity and this small holding was easily disposed of.
- Aberdeen European Logistics Income −28%. Originally acquired in 2021, this investment has been in wind-down and my smallest line for over a year; no desire to top up.
- Gore Street Energy Storage Fund −3%. Once one of my largest holdings of nearly five years, this business has recently faced adividend cut, weak asset earnings, and persistent NAV erosion which have all led me to move onto greener pastures.
- Life Sciences REIT −44%. Since originally investing in 2021, this business has suspended it’s dividend and faced a ruinous NAV collapse; I decided to cut my losses remaining capital preserved by exiting.
What these exits achieved
On the face of it, a fifty/fifty split between winners and losers, although on balance, all reduce my portfolio’s exposure to fragile cashflows and dividend-led narratives where payouts failed to be backed by robust economics. In addition, I have become increasingly aware of political and governance risks in many of these holdings with some playing out what I can only describe as “boardroom politics”. Such businesses are welcome to do so, but not with my money.
I have also banked a number of gains where I perceived the upside/downside risk has normalised. As an investor, especially a self-described “long-term” investor, it is important to remember to take profits on occasion. Markets can be a fickle thing, and I’ve watched more than one position lose a strong gain after sitting tight in the face of weakening economic performance.
What I Got Wrong (and the rules I added)
Life Sciences REIT felt like a positive investment in an interesting space, but I underweighted the risk of a dividend cut despite signalling cash strain. As a result, I am tightening my cash coverage requirements on dividend investments to reduce the likelihood of future cuts.
Likewise, with Kemare Resources, I discounted the political risk as “priced in”, and sat by as an increasingly short-sight local government delayed and prevaricated over working with a significant local employer. As such, I will apply an automatic haircut to fair value for single-asset, single-jurisdiction miners.
In addition, I have added a sizing gate to the portfolio, with no new lines to be added below 1% and no positions allowed to fall below a 1% weighting for more than two consecutive quarters. Holding onto old positions because I “like the yield” is a fool’s game. Either a line must have a solid thesis and conviction, or it must be cut. Dividend coverage and cash conversation matter, uncovered yield is just leverage.
My Top Ten Holdings
Cash – 10%
Dry powder for volatility and bid discipline; preserves optionality without style drift. Target range c. 7–10% depending on opportunity set. This position will drag on returns over time but protects against volatility and enables optionality in the event of a market crash.
UBS S&P 500 Index – 10%
Core exposure to the world’s deepest profit pool. A quality set of moat-heavy, cash-rich franchises compounding at scale. Low cost, rules-based anchor that lets active picks be truly selective. I am increasingly concerned about multiple compression in US mega-caps, or the risk of a US recession…but time in the market beats timing the market.
Chesnara – 7.2%
A steady life & pensions consolidator with prudent capital and reliable distributions; cash generation underpinned by in-force books. Classic “dull but worthy” income and one of my oldest holdings.
Legal & General – 6.9%
A capital-light asset gathering business with bulk annuities and alternatives. An attractive spread business with strong solvency and cash conversion. A cornerstone UK income compounder. There remains the usual risk of financial credit cycle downturns and spread/ALM mismatches…but this is a business I like and trust to navigate accordingly.
Secure Trust Bank – 4%
A specialist lender with niche underwriting and improving deposit mix; earnings recovery potential as cost of funds normalises. Skin-in-the-game culture. They run the risk of an arrears increase from a weaker consumer backdrop, but thus far are trading well.
Alumasc – 3.4%
High-ROCE building products (notably water management) with pricing power and disciplined cash returns. Asset-light, focused portfolio. They run the risk of the UK construction cycle softening futher and delaying projects, but thus far are performing well.
iShares Asia Pacific – 3.4%
Broad, liquid exposure to developed Asia’s cash-generative champions (Japan/Australia et al.), diversifying currency and sector mix away from the UK/US. Sensible ballast with dividend support.
Central Asia Metals – 3.3%
Low-cost copper/zinc producer (Kounrad/Sasa) with strong cash yields through the cycle and disciplined capex. Income-friendly commodity exposure. The business faces risks from commodity price volatility and jurisdictional risk.
Concurrent Technologies – 3.2%
Designer of embedded computing for defence/aerospace with sticky customers, rising order book, and scope for margin lift as mix improves. Small, high-quality niche. Revenues can be lumpy however, and the business faces potential execution risk as scale increases.
UBS MSCI Switzerland – 3.0%
Quality-tilted Swiss large caps in healthcare, consumer and industrials; CHF-denominated resilience and world-class balance sheets. Defensive counterweight with steady compounding.
Priorities for Q4 2025
As we enter the final quarter of the year, I’m seeking to further reduce the number of holdings in the portfolio to better concentrate on my highest conviction holdings and remove redundant lines. I’m seeking income, but robust income, with rising, cash-covered dividends over headline yield and debt-fed payouts. As always, quality will be key – I want to see high free cashflow conversion and conservative balance sheets.
A portfolio is a living organism. I’ve pruned so the strongest branches take the light. The objective is unchanged: fewer, better, bolder, to own businesses where time is a tailwind, not a test.