I just filled my boots with Kentz (LON:KENZ) two trading days before it announced two takeover approaches. Clever, eh. We’re all on here to learn so if you too want to get into a company on the eve of a takeover announcement - read on.

In the last couple of years I’ve read a lot about decision making and have become familiar with many of the concepts that hinder rational choices. One of the more obvious ones, and one very relevant to investment is “anchoring”.

Anchoring is where we latch on to a price at which we will enter or exit an investment based on some irrational attachment. It’s why we hold on to our losers, waiting for the price to return to where we came in, ignoring new information showing a deterioration in fundamentals. It occurs when we decide to buy something, but hesitate because it drops a penny, and we’ll wait until it falls another penny, instead it goes up a penny, and again, and so on, but now we’re anchored to the price we would have paid had we not hesitated.

I’m sure we can all recognise this tendency and think of painful investment experiences, particularly holding on to investments that we wouldn’t dream of buying today.

Despite my awareness of the irrationality of anchoring I again fell victim to it in the last few weeks, and I was all too aware that I was frozen like a rabbit in the headlights. And it was costing me.

Here’s the story.

Late last year I took a sizeable (for me anyway) position in Lamprell (oil support services) following a series of profit warnings. The share price had been hammered, and on valuation grounds it became very attractive. It operates in an industry that can only grow and operates out of dock facilities in the Gulf that are not easy to replicate. If it couldn’t sort out its operating problems it seemed a good candidate to be taken over. Be greedy when others are fearful etc - I managed to get in near the low at 80p.

Then this year I started looking at Kentz (oil and mining support services). I bought some. It too had a lot going for it: an excellent historic growth record, great…

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