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FALLEN ANGELS

Investors can feel left out of the information loop given the length of time between RNS announcements.  Our only clues are often the week to week share price movements.  Only the company’s management and analysts know the true story.


I can sometimes be guilty of buying more shares or averaging down on poorly performing stocks. Normally, it is more out of boredom and often an unwillingness to face a past misjudgment on a share. 


Given some of the worst stocks for the year included Crawshaws, Fairpoint, IG Group, and Sports Direct, is it wise now to invest or double down on existing investments? Will the worst performing stocks on balance this year outperform stocks with better prospects although on higher valuation?


Perhaps flawed thinking by other investors may have caused the maximum destruction of shareholder value to date already. These stocks may have hit a temporary low point in their respective companies’ share prices given the lack of RNS information.   Is it wishful thinking that the shares having stopped falling and have become flat knives as distinct from falling knives where the share price is flat lining.  Do they provide a safer investment point with a good reward/risk ratio?  Of course, it may be that all the bad news is not already out.


Some of 2016 Worst Stocks

Some of the worst performing 2016 stocks included Crawshaw, Fairpoint, IG Group, and Sports Direct.  Is it wise to invest at this stage or double down on existing investments? Will the worst performing stocks on balance this year outperform stocks with better prospects although on higher valuation?

Crawshaw (LON:CRAW) Share  - Price 21.5p.   I avoided this share at the top but as early knife catchers learnt, you can do just as much damage catching a butcher’s knife on the way down when you buy in size.   I was tempted once again and double down at 22p recently.  Obviously, I am hoping for a better outcome next year from Crawshaws on reduced expectations.  Need 50% uplift in share price for a break-even.

Fairpoint Plc

Fairpoint (LON:FRP) 14.5p.  No further market news since the recent trading update.  Is the business model struggling given the size of outstanding loans?  Fundraising on the cards perhaps! Some areas of its business are…

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