Top of the stocks: Most bought and sold shares in October

We canter our way through the most popular shares and investment trusts last month…by Jo Groves

 
In the third instalment of our new monthly series, we highlight the most popular buys and sells among UK retail investors in October.

Having largely trodden water in the previous month, the leading US and UK indices both headed downwards in October. After a bright start, the S&P 500 gave up its monthly gains after a bruising sell-off in the Magnificent Seven on the final trading day of October. Microsoft suffered its largest one-day drop in two years after a lukewarm reaction to its quarterly earnings outlook, while Meta slid by 4% on its latest results.

On the other side of the Atlantic, investors remained jittery ahead of the incoming government’s inaugural budget. The sizeable fiscal loosening prompted a climb in gilt yields to a one-year high (and not far below the spike caused by the ill-fated Trussonomics mini-budget), together with a scaling-back of interest rate expectations in light of an inflationary Budget. As a result, the leading UK indices also ended the month in negative territory.

With monthly trading on the London Stock Exchange hitting a four-month high, let’s take a closer look at which companies were flavour of the month with UK retail investors.
 

Top 10 most bought and sold shares in October

 
These were the most (and least) popular shares with UK retail investors on four of the largest investment platforms last month:

 
Source: Hargreaves Lansdown, AJ Bell, Bestinvest and interactive investor
 
Once again, UK stocks dominated the most bought list for the third month running, with stock market darling NVIDIA (NVDA) and MicroStrategy (MSTR), the world’s largest corporate Bitcoin holder, being the only US companies to make the cut.

Not many stocks can put NVIDIA in the shade but MicroStrategy’s 390% one-year share price increase is almost double that of the chip giant. While the label on the tin may say business intelligence provider, the company’s share price has been largely fuelled by its proxy play on Bitcoin. MicroStrategy’s decision to begin buying the cryptocurrency in 2020 has paid off handsomely, though it’s arguably the epitome of a white-knuckle ride.

Lloyds (LLOY) made its debut appearance on the most bought list in October, storming straight into the number one position. A 15% fall in the company’s share price in the final week of October prompted some bargain hunting by investors, as the FCA’s review into the mis-selling of motor finance continues to make waves and the Court of Appeal sided against lenders in the latest case.

Looking at the fundamentals, Lloyds kicked off the earnings season for UK banks with a flourish, reporting quarterly pre-tax profits comfortably above market expectations. Falling interest rates triggered a pick-up in credit card use, along with a rise in mortgage and unsecured loan books. On the income side, a chunky dividend and share buyback programme currently offers a ‘cash yield’ in the region of 10% for 2024, according to forecasts by AJ Bell.

Barclays (BARC) took the silver medal as the second most popular share, reporting an above-expectation 23% increase in net profit in the third quarter. Performance was boosted by high interest rates and a pick-up in deal-making in its investment banking division. The company’s share price bucked the downward trend in UK equities to close the month with a 9% overall gain.

Elsewhere BP (BP) and Rolls Royce (RR) featured on the most bought list for the third month running. BP suffered a 5% dip in share price over the month after the company reported a 30% year-on-year fall in earnings, thanks to lower oil prices and pressure on refining margins. New CEO Murray Auchincloss has pledged to cut costs alongside a potential watering down of BP’s net zero strategy, which may help to close the performance gap against its peers.

Moving to the most sold list, MicroStrategy topped the table as investors decided it was an opportune time to profit-take after the Bitcoin holder’s blistering run. Interestingly, the sell list was almost a mirror image of the buy list, with only Tesla (TSLA), Shell (SHEL) and BAE (BA) not featuring in both.

October proved a bumpy month for Tesla, whose share price fell by 17% before posting their largest one-day gain since 2013 on the back of higher-than-forecast quarterly profits. Despite slowing global demand for electric vehicles, chief executive Elon Musk unveiled ambitious plans to increase sales by 20-30% in 2024, driven by the launch of a new, lower-cost model and demand for autonomous driving software.

Musk also said that lower interest rates for car financing were having a meaningful impact on demand, although Tesla continues to face stiff competition from low-cost Chinese manufacturers such as BYD. The much-vaunted unveiling of the self-driving Cybercab was doused with a healthy measure of apathy and the share price closed the month broadly as it started.

Otherwise, investors continued to cash in on NVIDIA gains as the chip maker’s share price added a monthly rise of 13% to its year-to-date increase of more than 180%.

High dividend-paying UK large-caps accounted for the rump of the sell list, with a distinct banking and energy theme. Lloyds may have been the most bought share but it was also the second most sold as investors cashed out after its share price hit a four year high during the month. Despite a healthy bounce after better-than-expected third quarter results, Shell also joined BP on sell lists against a backdrop of weak oil prices.
 

Top 5 most bought investment trusts in October

 
Turning to the world of investment trusts, these were the most bought trusts last month:

 
Source: Hargreaves Lansdown, AJ Bell, Bestinvest and interactive investor
 
Once again, income-focused trusts proved popular with UK investors in October and Greencoat UK Wind (UKW) knocked Scottish Mortgage (SMT) off top spot for the first time in the last three months.

Greencoat aims to provide an RPI-linked dividend and is currently trading at a dividend yield of more than 7% but perhaps it’s the 16% discount that’s been catching the eye of investors, with the infrastructure sector falling out of favour during the rate hiking cycle. As my colleague remarked in his recent note, UKW’s discount travails can first be traced back to when ten year Gilt yields spiked in summer 2022. If rates start to fall, a narrowing in the trust’s discount could provide outsized returns for investors.

JPMorgan Global Growth & Income (JGGI) celebrated its third month on investors’ buy lists while RIT Capital Partners and City of London made their debut.

RIT Capital Partners (RCP) has a flexible investment mandate aiming to achieve growth and preserve capital from a multi-asset portfolio of quoted and unquoted investments, as well as uncorrelated strategies such as bonds and physical assets. RCP’s discount has widened in recent years and currently stands at 30%. However, it has been making significant efforts to improve its marketing efforts, which by the looks of October, seems to be paying off as the trust moves firmly onto retail investors’ radars.

City of London (CTY) is the largest trust in the UK equity income sector and has earned the accolade of the longest track record of dividend increases amongst the AIC ‘dividend heroes’ with 58 consecutive years of increases. It’s also outperformed its benchmark over one, three, five and ten years, which is an impressive achievement. On the flipside, it’s currently trading at a modest sub-1% discount, compared to a 5% discount for the sector.

Looking ahead, it will be interesting to see whether lingering concerns about the hefty capital expenditure by the US mega-caps and their knock-on effect on profit margins come 2025 will persist. Or whether the small matter of a new US president will propel the S&P 500 to another record high. Will UK investors continue to stick with the safety of their home market or will FOMO prompt a shift back into the Magnificent Seven? November may well provide the answers…
 
All data as at 04/11/2024 unless stated otherwise.
 

 

_Disclaimer

 
_{This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.}