Can I CAN-SLIM? 4 - NMC Healthcare

Wednesday, Aug 23 2017 by
9

Happily, for me at least, I’ve been away on holiday for the last 2 weeks in sunny Spain – we went to a lovely resort in the South West called Islantilla. Although I didn’t get to write anything other than reply to some comments, I did mention that I was in the process of adding NMC Health (LON:NMC) Healthcare to the portfolio. I thought it would be interesting to go through my thought process in making the purchase from a CAN-SLIM point of view so here goes. As always, please remember, that I’m seriously amateur, unlike many contributors my accounting skills are basic - do your own research. And definitely buy the O’Neil book..


NMC Health (LON:NMC)


In the last edition of “Can I Canslim?” I mentioned that I had had my eye on NMC for some time since it appeared in the CANSLIM-esque screen earlier this year. I said something along the lines of “Watch the cup with handle appear before our eyes” but wasn't sure how it would pan out.  I had been interested because it fulfilled all the requirements of the screen, it is a fairly large company @£4944 million and seemed to not feature so much often on the discussion boards.

After I highlighted it in the last post, I checked it each day (while sitting on the beach or drinking a red wine spritzer with lots of ice) focusing at the weekly trends and the daily trends. I used the weekly trends to get an overhead view of the base forming. When I saw the handle forming I used the daily trends to look at the daily volumes. Depending on where we are in the week, the weekly volume is not useful to pick up a significant change in volume. For example, if the volume is 500k/week, then on the following Monday the volume doubles to 200k, the increase for the week will not become obvious on the chart until the Thursday (800k) or Friday (1000k).

The volume picked up on the 11th to 14th of August from around 100k/day to over 200k/day. When the price reached the high of the handle on the 15th, that was the buy point

Moving on 8 days, they have announced positive half year results (I won't even attempt to comment of the results - I'm working on my accounts reading, but for now I'll leave that to others) and the share is up 11.7% from the purchase price. The question for now is will this gain stick and continue? Only time will tell, but a promising start.

O'Neil stresses the importance of cutting losses, so I have set a stop loss to sell automatically if I'm wrong on this occasion and the base is a failure.


599deb0f465bfScreen_Shot_2017-08-23_at_2



The Portfolio

I'll try to get more consistent about how I discuss this - I was thinking maybe once a week to look at the "M" of CAN-SLIM, Market Direction, and once / month to review how the portfolio is performing and then, once or twice / month look at the new shares in the screen + the ones leaving and the reasons why. 

So how is the portfolio doing? I'm pleasantly surprised by the results. The blue line is the "CAN I CANSLIM?" portfolio performance including dealing costs. The orange line is the screen performance over the same period excluding dealing costs. I'm pleased to say timing the buys, protecting losses, careful selection, input from others commenting on the post has lead the portfolio to outperform the screen by a factor of 2.  In reality, I think there was a heavy dose of luck involved too!!

599de66f90867Screen_Shot_2017-08-23_at_2


Here is the current breakdown of the portfolio. Please bear in mind that the portfolio is a mirror of my own portfolio, I have long positions in all the shares, however the actual amounts are different for privacy reasons.

599de8bb9d362Screen_Shot_2017-08-23_at_2

Well that's all for now. I'm off - looking forward to some interesting discussions.


Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


Do you like this Post?
Yes
No
9 thumbs up
0 thumbs down
Share this post with friends



NMC Health plc is a private healthcare services provider in the United Arab Emirates. The Company operates through two segments: healthcare and distribution & services. The healthcare segment is engaged in providing professional medical services, comprising diagnostic services, in and outpatient clinics, provision of all types of research and medical services in the field of gynecology, obstetrics and human reproduction and retailing of pharmaceutical goods. It also includes the provision of management services in respect of a hospital. It owns and operates hospitals, day surgery centers, medical centers and pharmacies. The distribution & services segment is engaged in wholesale trading of pharmaceutical goods, medical equipment, cosmetics and food. The Company also owns and operates Spain-based Clinica Eugin. It operates a total of approximately 30 healthcare services assets and over 15 pharmacies, including the approximately 205 bed Sheikh Khalifa General Hospital in Umm Al Quwain. more »

LSE Price
2901p
Change
-0.2%
Mkt Cap (£m)
5,941
P/E (fwd)
30.2
Yield (fwd)
0.6



  Is NMC Health fundamentally strong or weak? Find out More »


4 Posts on this Thread show/hide all

maffs0 24th Aug 1 of 4
4

Great analysis, mate! Well done. The results were fantastic and with further growth planned into the wider GCC region, this may have quite a bit further to go.

I had a full sized position that I bought in April, but got stopped out in June for about a 9.5% gain. I went in again at the end of July at 2300p with a 1/4 sized position but got stopped out on 10 August, this time with a 6% loss. This was right before your volume pick up.

It was hard to buy after this, but I took the plunge first thing on results day and again at the end of the day so I now have a 1/2 sized position. I won't be topping up again until the 10 day MA catches up and/or the price consolidates a bit. (BTW, a full sized position for me is 12.5% of my portfolio value. I try to build a full position by averaging up two or three times).

Fevertree has been a lovely share to have in the portfolio. It is a classic "tennis ball" share that bounces back quickly after pull backs. I sold half my shares on 26 July at 2206p for a 36% gain and continue to hold the other half. I will top up if another O'Neil / Minervini buy point appears.

I'm back in BooHoo with 1/2 a position but sitting on a 6% loss as I bought on the failed breakout at 244p and then 248p at the beginning of August. Got my timing wrong on this one. I have a strict 7.5% stop loss policy so I may well get stopped out here if there is any further weakness. I hate having red on my portfolio so hoping that this might take off soon with interim results due at the end of September and possibly a trading update before then.

I don't own Caretech or Impax although I've seen them on the CANSLIM-esque screen. Worth looking into?

My biggest position is currently IQE which doesn't meet all O'Neil's criteria, but certainly passes the "N". My current full position is up 70% and it is now about 20% of my portfolio. It seems to be building a new base in the 125p-135p range. Definitely worth a look.

Finally, I am watching XLM and BUR like a hawk. XLM is in a three month 120-140p range with results out in early September. BUR has pulled right back (Provident Financial effect?). It was unbuyable as too extended from its 10 day MA but now sits underneath 10 day but above 50 day; I always like buying a share like that on an up day.

Thanks for keeping this going.

M.

| Link | Share | 1 reply
poughtibridge 24th Aug 2 of 4
1

In reply to maffs0, post #1

Hi M,

Good to hear from you as always...

"I hate having red on my portfolio" - that is why I like CANSLIM so much - whatever happens, you won't have red for too long, because like you said, if you follow the system you have to sell! Red - Gone!! For some reason that seems to really help me psychologically (and some much of this is psychology, don't you think?)

I think there are a few buying opportunities building, BOO is one of them...

As for Caretech - I'm not sure and I guess that is why I haven't written about it much. It has been a slow burner. There could be a base building now, but I'm concerned the top of the handle may be in the lower part of the cup. Difficult to know where to measure from. For now, I'm holding but preparing to sell if the base becomes a failure. 


599f39e1a08faScreen_Shot_2017-08-24_at_2


I like Impax - it seems very predictable. Goes up drops back a bit, flatlines, goes up again... Not a lot of volume, so maybe not ideal from a CAN-SLIM point of view.

Thanks for sharing your latest thoughts - I'll be definitely checking them out. I tend to focus on the screen, but there is so much out there that misses the screen just one or two criteria. Well done on IQE - awesome trade - looks like it won't be long before you hit 100%!


UPDATE: - Just been looking at IQE - very tempted, even though it misses a few criteria. 



| Link | Share
maffs0 27th Aug 3 of 4
3

I agree: psychology is massive in all investing and it is this that probably accounts for the fact that many struggle to make a consistent profit. Sticking to the rules when you don't "feel" like it is very difficult.

I think it was Livermore who said fear, greed, hope and expectation were the biggest barriers to success. Stick to the rules and let the money look after itself. Easier said than done!

I have been a value investor most of my investing life and consistently made 10-12% a year. It takes some courage to be a contrarian. But I think psychology is even more important in the O'Neil (and Minervini) "superperformance". I have been stopped out of quite a few stocks that have then gone on to perform amazingly. I bought KWS at about £8, got stopped out at £7 something only to see it fly up to over £13. I bought Ferrexpo at £1.80, got stopped out at £1.60 and now it is £2.80 and continuing up. But I have to be able to be ok with that. The goal isn't to get everything right, it is to protect my capital and to make money.

Before I started using a strict stop loss, I lost a massive amount of money in a stock called Niko Petroleum. I lost even more in Petroceltic. Both looked sure winners when I bought them. I averaged down again and again. If I'd have sold them at a stop loss, I would have saved far more than I missed out on KWS and Ferrexpo. And most importantly, I wouldn't have lost my confidence.

Any feeling that stops us sticking to our rules has to be overcome or we'd be as well not having the rules int he first place!

Take care,
M.

| Link | Share
maffs0 1st Sep 4 of 4

I have been doing some research on Mortgage Advice Bureau (MAB1) and it is growing on me. They basically sell mortgages but have a growing number of agents around the country. H1 results were not great growth-wise due to a very strong comparative in H1 2016 as the new BTL tax rules came into play. I don't usually like excuses like that, but it seems reasonable in this case.

Chart wise, it looks like a classic cup with handle and I'm looking to but at a breakout of 507 with decent volume.

M.

| Link | Share

What's your view on this thread? Log In to Comment Now

You can track all @StockoChat comments via Twitter




Stock Picking Tutorial Centre


Related Content

Low Share Turnover LittleKnown Shares Do Best
Low Share Turnover, Little-Known Shares Do Best!
Euromoney Institutional Investor 25th Mar '15

Setting Alerts
Setting Alerts
Stock Screening Wed 4:00pm


I Read The News Today Oh Boy 23Oct2017
I Read The News Today Oh Boy! 23-Oct-2017
Real Good Food Mon 8:05am


Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis