​The humbug tree needs dressing.

7th Dec '16 by Dearg Doom

15 comments 9882 reads

Finding a humbug tree to suitably dress up this festive season is proving a bit of a challenge with markets up. Only a few stocks really qualify for the humbug tree. I am reserving the humbug tree for some of the worst performing investment ideas of the year.

Feel free to add your own suggestions later.

On the first day of Christmas I met the butcher who cut and diced......

Crawshaw (LON:CRAW) - On a second reading of the recent RNS trading update, I now realise that while the number of visitors to the butcher chain may be up, the like for like sales are still down. I reckon that future profitability is delayed much further out than I had originally thought. The extra footfall mentioned has come at the expense of margins.

No bounce back in the recent share price, No support by way of purchases from either the directors or large institutions. Crawshaw's business model is still in the repair shop so to speak. A spectacular share price fall is the result with the Crawshaw's share price falling from 88p to 44p, than 44p to 33p and recently 33p - 22p in double quick roasting time.

On the second day of Christmas, I met two solicitors touting for whiplash injury claim after a pedestrian was struck by a reindeer.

Fairpoint (LON:FRP) – A legal firm where I wish the CEO had taken a sworn oath on his investors' presentations, because the evidence of share price movement contradicts his utterances rather strongly.

The slump in share price from 170p to 52p surely must raise some judges’ eyebrows as to what is really going on.

On the third day of Christmas, I bought three replica sports jerseys tops……

Sports Direct – Mike Ashley CEO apparently hates the limelight and yet everything he does draws almost universal criticism of his business practice towards investors, employees and customers. No wonder this sports retailing stock has fallen from £7.00 to just over £3.00. Mike Ashley methods to keep costs down and to boost profits, should normally sit well with investors. However Ashley's own reluctance to take advice leaves investors concerned that he is mainly only looking after no. 1. How existing shareholders will actually fare is…

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Rusty2

7th Dec '16

Stanley Gibbons (LON:SGI), you must add it's fallen from 300p to 10p now. Management seem to have lost the plot with overpriced computer system that took about 5 years to bring on stream and expensive stamps that no one wants to buy anymore. Some of the acquisitions have not helped either.

Another good one is Entu (UK) (LON:ENTU), thats fallen from around 140p to 21p. An IPO 2 years ago, were hit by change of Govt. subsidiaries on solar panels, that was the start, not sure what happened after that as I sold out at 112p.

Also Vislink (LON:VLK) had a nice fall from 60p to 13p, after the board announced the Value Creation Plan it been going downhill ever since.

Almost forgot Lakehouse (LON:LAKE), down from 90p to 28p, another IPO gone wrong backed by Mark Slater, who tried to get on the board, several directors have resigned.

gus 1065

Spaceandpeople (LON:SAL) comes onto my Christmas stuffing list. Down from about 87.5p this time last year to today's c.23p. Still enjoys a stock rank of 71 and Quality rank of 97 (and V of 99 for that matter) but can't quite get any traction with the share price. Maybe next year .....

Trakm8 Holdings (LON:TRAK) and Mobile Streams (LON:MOS) possibly also due a dishonourable mention being down 55% and 58% respectively in the past 3 months (although Trakm8 Holdings (LON:TRAK) did put on a 16% spurt today so maybe all is not lost with this former rising star).

Humble pie time, I hold all three (although not purchased anywhere near their peaks)!

Gus.

WarrantStar

And the moral of the story is.....
Don't buy (or continue to hold) any share which continues to fall in price.
Instead keep an eye on the momentum rank or wait until the share price has been rising for a at least a few weeks.

Bushranger

9th Dec '16

£Fairpoint has just dropped another 37% No apparent news?

Make that 56%. Ooch.

Profit warning Edit my own post. I see Stockopedia have the report in news feed. Not an RNS. but hard to find for a newbie.

Make that 60% but there was a RNS, trading update and profit warning. Bad to issue it late on a Friday afternoon, why not this morning?

Do you not have alerts set up, its really useful to get an email as soon as anything is released?

No I dont. But I think I should. Could you explain how to set them up? Also I can't seem to get my company links right. How is that done again? I was going to buy Plus 500 and thought I might dabble with Fairpoint as it looked undervalued (if you believed the managements line), especially since Paul Scotts last report on it stating it looked cheap at 98p odd, but then had dropped to 55p without any further updates. Glad i didn't buy ethier. As you suggest though, that releasing such news on a Friday afternoon could catch a lot of private investors out.

Dearg Doom

Share Price 20p (Down Today 62 %)

Market Cap £9.44 million

Fairpoint (LON:FRP) is a strong contender for this year's Scrooge and Marley award for their unique contribution in creating genuine humbug at an unreasonable hour and time of the year.

Fairpoint (LON:FRP) delivered a knockout punch (no alcohol was used) to shareholders in an RNS that seem to have been rushed out late on Friday afternoon.

http://www.investegate.co.uk/fairpoint-group-plc--...

My surprise is that this news contained within it was not already factored into the price. Was it meant to reassure investors on a December evening?

At face value, the company is saying November and December will be poor but that the other 4 months were in line with expectations (whose expectations you may ask?). No one believed the old figures anyway. I have no doubt more realistic profit figures will be forthcoming over next few weeks with possible further downgrades as the year goes on.

Another obvious negative in the RNS was that the planned reduction in overheads is taking much longer than expected. Therefore I expect more once-off substantial exceptional charges next year.

The RNS was released at 3:43 p.m. The share price quickly dropped to 20p before the market closed. If I had noticed the RNS earlier, I would have perhaps foolishly dug in to acquire shares, believing the shares to be a bargain. Was it a missed opportunity?

I suspect on reflection that the some sellers may be disappointed to have sold out so cheaply next Monday at that price.

Bah Humbug

PS (No investment intended either to buy, hold or sell the stock mentioned)

I use Investegate, it's free and easy to set up, works most of the time but not always.

How do you mean company links? Do you mean on here for say Plus500 (LON:PLUS). You just put a £ sign in front of the TIDM code. You may need to put a . or , after it.

Thanks. I will investigate, Investegate! Yes I did mean that regrds cmpany links. I had been putting the £ sign in front but it did not seem to work for me no matter how i did it. I will try agian with a .
Fairpoint (LON:FRP).

12th Dec '16

Window dressing of results has tempted many normally prudent investors to wade into particular stocks. It seems doing your own research does not always lead to the best decision, whether to buy or sell. Simply put, if companies do tell porkies about their company’s prospects and where their own financial reporting misleads, it becomes very difficult to decipher what facts left are true and what are fairy tales subsequently.

Another share International Personal Finance (LON:IPF) dropped a clanger of a profit warning on Friday last, that sent a cold December chill through existing shareholders. A drop of 40% plus in a moment. Yet again another business model seems to be damaged goods/services. Each country it currently operates in, may, has or will introduce a new regulatory framework that will squash a once profitable lending niche sector for IPF. Apparently the amount of interest and charges that can be charged by IPF is now very limited in a lot of countries it operates in. The effect of the charges may mean it does not warrant the company offering the service at all in many countries. This is because the balance of risk falls too heavily on the lender without adequate reward.

The common theme among companies hanging on the humbug tree is a broken model. Crawshaw (LON:CRAW) chain of butchers' stores with its growth strategy appears to be in tatters and possibly the company is now more suitable to being a private limited company.

Fairpoint (LON:FRP) efforts to become a big player in a big industry has come unstuck as its management's reputation look like being down the tubes. Some CEO and CFO resignations ought to be on the cards. This looks necessary for confidence in a recovery business plan and before a share placing can be envisaged at a decent price.

IG Group (LON:IGG) being punch drunk with wounding blows to the right and then to the left due to different jurisdictions unfavourable regulatory announcements. This leaves the share price crumbling further down each day. I'm tempted however to believe it can stand further blows of confidence and still stay standing and be profitable.

Sport's Direct, on the other hand, is trying to change the business model from a retail company to more of a property company. It is so easy for a person who is successful in one area to believe they have expertise in other markets. More often than not it does not work. Laura Ashley another retailer seems to have gone down this road as well with uncertain results.

Plenty of space left on the Humbug Tree for disappointing stocks to be mentioned this year. Feel free to add your own.

Regards

Nick de Peyster

23rd Dec '16

This comment is under review

dscollard

6th Jan '17

Useful to differentiate trading from investing. I read the FCA ruling on CFDs and inferred impact on IG Group (LON:IGG) and couldn't work out what all the hysteria was about: limiting leverage on CFDs to new investors makes sense. IGG do offer super information and tools: this won't help punters who punt because they will always punt

Spread Betting is to my mind a tax efficient way of using leverage to take long and short positions on shares and commodities. It is very sueful for shorting UK instruments. I particularly trade US stocks and have developed an approach over many years that controls my exposure, leverage and maximum loss. Good capital discipline applies whether trading or investing with appropriate money management rules . I'd love to know how many small PIs lose money on AIM and similar punts - reckon it is not far off 80% either. Leverage just amplifies the errors and compounds ignorance

Meanwhile, IG Group (LON:IGG) punishing sell-off offered a super trading opportunity around the 450p level where there were good signs of bottoming and accumulation. I posted my views on this earlier IGG trade and built a position from 453p to 475p with a stop-loss in place - someanalysis and rationale posted hereIGG technicals.

One mans poison is another man's meat

The humbug tree needs dressing.

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Dearg Doom

15 comments

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​The humbug tree needs dressing.

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Dearg Doom

15 comments

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The humbug tree needs dressing.