Archived articleThis is an archived article from 2013 - please note that any content within the article may be out of date.
Naked Trader Stock Picks and Moves
This is a thread to follow analyse and discuss Naked Trader stock picks. He has certainly proved his worth as a top stock picker and shrewd mover, and has rightly accumulated a popular following.
I would like the discussion to enable participants to learn from his picks and help to find other stocks which would appear to have similar potential to be safe long term growth material or good position moves for market situations.
The website where he posts his trading diary is www.nakedtrader.co.uk - Lets go !
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48 comments
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thanks buddy, I have ordered a copy of the bookso lets see.....
I'm also keen on intrepreting volume, although the buys and sells can be manipulated. I trust the actually volume of stock can't be.
Also does anyone have any tips on how to spot institutional/large buy orders on the books?
Mark, Many thanks for the info
I've attended two of Robbie's follow up seminars and consider you get what you pay for. The follow up drills down further into trading skills, questioning what you are holding/trading, psychology side of trading, live trading and L2 also gets further scrutiny. I think he has a great knack of keeping it simple yet very effective.
I've also had a TA day with Susan Marmor (and Robbie)... Susan is very much on the ball as well!
Has anyone tried his more advanced course, I have been to the beginner level and quite enjoyed it even though a touch on the expensive side, was wondering what his more advanced course is like?
Attended two of Robbie's seminars early 2012 and have been investing/trading full time for just over a year. Certainly for somebody starting out in this line of business I would recommend reading Robbie's book and going to a seminar as being from the north I was expecting to listen to some "city slicker" which couldn't have been further from the truth. There's no substitute for "hearing it from the horse's mouth". It has taken a while to find the strategy I feel comfortable with (generally profitable companies with a sound balance sheet i.e. some tangible assets and a market cap of say 50m to 150m market cap - sometimes a bit either side of that). Try and always keep in the back of my mind Robbie's wise words of running with your winners and get out of your losers pretty damn quick - I feel it is a lot about psychology and personally I prefer to be the hunter rather than the hunted.
Worth it given the cost?
I was lucky, I got it funded as part of a redundancy package.
I've probably been investing for to long, to get the most out of it. The seminars are based around the experience of the group, so for me, as i'd been investing for a while, it was a bit basic (possibly because I tended towards his approach anyway), but I did find it useful, and it certainly has improved my results.
He does do a second seminar for those who have been on the first one, which I think concentrates more on use of level 2. so I think, when i'm feeling flush, which may be sometime away, i'll do that one.
A couple of things to note, I don't think nt follows stop losses slavishly, he tends to look at them in relation to the market as a whole, and use spreadbets (as index or share) to counter any downside he might see in share he holds, but does not want to sell.
I found the book great and its a constant reference point.
Does anyone know how he times his entries, or his use of level 2.
I have purchase level 2 and can’t seem to use it to gain an edge of any sort, nor can I really identify any patterns to break outs of any sort, has anyone else had any better luck ?
Romski999,
I tried level 2 for a couple of weeks after attending one of his seminars, but also struggled with it.
I think the key advantage, is on the day, I don't think it can show long term trends, it shows you where the key traders are on the day. I watched Robbie b (NT) demonstrate how he could pick a share, buy it and virtually immediately be in profit, because he could see where the next block of shares would be trading.
As he said its very complicated and takes quite a while (months) to get your head around it and I have struggled to find a good book on it.
so if any body has a recommendation, it would be gratefully appreciated
I think you are probably right re level 2. That and also perhaps having direct market access which I believe NT also uses, may mean that he gets in at a better price, certainly better than the quoted spread you often see for smaller companies (especially if you are spread betting as he often does). With the smaller companies it probably helps to see the build up of buyers or sellers that can move the price quickly. So, it helps to get in at the right time if you can master it, but you still need to have a good system for picking shares as it won't tell you what the likely price will be in 6 months+ time.
One other thing, as you have attended a NT seminar it would be interesting to get some feedback on it. Has it helped your trading/investing? Was there anything in the seminar that isn't covered by his books? Do you think it was worth it given the cost?
Hi DJLJ23,
Though it's somewhat out of date, if you want to understand L2, I highly recommend The UK Traders Bible. The basics remain valid, but nowadays there are alternative venues, such as Chi-X, BATS and Turquoise that trades take place on, as well as the LSE.
I do use L2 for trading activities and it can sometimes help judge an opportune time to buy or sell a stock and, most importantly, what sort of size you will be able to buy or sell in, close to the touch price.
For most investment activity, however, its usefulness is limited. With smallcaps, it's far more important to have a good broker, who has access to L2 and contact with market makers to advise you on the state of the market for a stock you want to buy or sell.
Cheers,
Mark
Robbie uses L2 when making his trades. It gives you a real idea of where the share price is moving and if its a good time to make a buy/sell. I use L2 and have come to rely on doing the same. I kind of feel blind without it.
Good article from NT in the latest Spreadbet magazine where he does say that occasionally he does become married - almost - to a share and lists those he currently has a long term liking for. As you would expect, Telecom Plus is in there, as is Dialight, both of which the long time commitment has paid off handsomely. He mentions a few new potential love affairs, Porvair, London Capital Group and Filtonic. Well worth having a read and the magazine is free to download.
Seven, a good entry on that this morning at 367p.
NT has updated his site today and seems to have closed a number of trades for healthy profits.
He gives Kentz Corp a mention having topsliced, but looking to get back in now it has fallen a little. This one does seem to have its ups and downs, but when it moves it does tend to go fast - either way.
Think they may have been around the time they 'sold off' their energy customers which was a loss making division at the time.
I think that is so and reference is made to the elimination of exposure to wholesale energy prices in the 2006 release. By 2007 TEP profits were on a roll again at £11.6million and a look at the chart shows that recovery into the long term upward trend that we still see in place today, with blips along the way, was in place. It would seem the company had a rocky and volatile to the downside two years though which would have been tough for anyone faithfully holding the shares through it.
I've had a quick look at his latest update and here are some observations.
He has said before that he might take this summer off and if he makes any selections they would have to be really special, which he repeated again. He feels that the current market trend may be ending or at least taking a break so being in cash isn't a bad thing.
He also says that he has started doing a little shorting on the FTSE and mining sector. I assume he means the mining sector index as he doesn't mention individual shares. This could work out ok, although the mining sector right now is well oversold. It's also very volatile so not for everyone. He's done well shorting the FTSE in the past and the current trend on the daily chart does look down to me, although it remains to be seen how far we go.
Interestingly, considering the discussion so far here, he does give a little further information about his holding in Telecom Plus as it has just smashed through 1000p and is now up around 1200p. He states that he initially bought it at around 18p, even though he nearly didn't buy. I would still be interested to know if he was a holder when it went from around 400p to a low of 80ish between 2004 and 2006. In fact, I'm intrigued to find out why the share fell that much and I did wonder at first whether it happened because there was a share issue or something like a 2 for 1 issue happened. However, as the move, at least on the charts, seems to have happened over a longer period it is difficult to say. I would still like to ask him if he was a holder during that time and why he stuck with it, after all, that is a 75%+ drop.
I did a bit of research and found a placing of TEP shares back in 2005 at 208p. Looking back at some of its results for the period 2004-6 it did seem to go from profit to loss. £6.4million profit Dec2004, £5.1million Dec 2005, loss of £1.6million Mar 2006. That's interesting, because on that basis it looks the kind of share that he would avoid and lets face it perhaps gives the reason why it fell so much. It was still a growth story, but profits were falling for 2 years. Maybe he did something which he would tell us not to do, he fell in love with the share!
Given that TEP is now around 1200p, none of that matters. 18p to 1200p is incredible, especially if he added along the way, but just think of the faith required and lack of stop loss policy needed to sit through a 75%+ drop!
None of the above is meant as a criticism of NT or his strategy and way of doing things, it's just that sometimes all is not what it seems.
he probably bought FTC in the low 50's, quoting a broker target of 79 so even a rise to 65 would give him 20% which is the minimum he would look for in a trade, 76p 40%.
On a 5 - 7K position thats not bad for a quick move !
No price on FTC purchase, interestingly enough its in contrast to Paul's comments this morning on the share.
So today we have Porvair (LON:PRV) Vectura (LON:VEC) Sepura (LON:SEPU) added and FTC rebought. Quite a bit of topslicing - yep there goes Lo-Q (LON:LOQ) ! Some sells incl Brammer (LON:BRAM) Filtrona (LON:FLTR) £ HNT.
Reckons market at pivotal point and may continue up or start to collapse. Certainly looking back end of April to July can be very weak, but can it repeat over and over ?! The few times end of April was ok it tanked in late July / August!
Interesting to see flurries of trades in some stocks he mentions. He is very keen on residual income and must have a huge following after all those seminars, which means alot of residual followers! Of course the picks have to be good to keep the momentum of followers (unlike the winnifroths and evils).
That is a comprehensive answer and quite sensible I think. Physical stops are sometimes good because it takes the emotion out of it, but then you get spiked out. Mental stops are better in that respect but then you actually have to pull the trigger and thats where the psychology comes in again, and before you know it you are well under water.
The stop loss discussion will rage on and on, and it depends on the investor's own ideals and strategy and the positions held!!
Personally, I think mental stop losses are best, as you can decide when to come out of a share, rather than being spiked out - this takes discipline and over trading can be expensive. The psyche of coming out of a share, if something does not feel right, has worked for me, where initial losses have later followed with subsequent gains and through Level 2 a greater understanding of how the share trades.
Well you choose TEP but he has huge belief in that as not only does he have a major stockholding he is one of their biggest commission earners as he has a huge downline or whatever its called, as he was an early starter. So whenever it fell much he just bought more, in fact him and a load of directors all piled in when it spiked down in Aug 2011, and even me!! So he wasnt bothered about those falls as he had total conviction.
I think you have to be adaptable. You cant have, or promote, a one fix for all strategy. If youve just bought into something you want to be sure it doesnt carry you further down with it.
The important thing is to stop you from losing large amount of capital by keeping hold of something that is in a downtrend and will just keep going. Or if you buy into something and it turns the wrong way, get out and have another go. If youve got something thats in the red, get rid of it cos the psychological effect at looking at a portfolio with too much red is very negative.
I dont know the answers to your questions, people use stop losses in different ways - how do you use yours ?
Well, I agree with much of what you are saying. The reason why I mentioned Telecoms Plus is clearly because a strict stop loss at say 8-10% would have taken him out many times and quite often once out of a share people move on to something else. He has more of a connection with that company because he is a distributor of its services.
I think when it comes to stop losses Robbie often gives a traditional answer, which is probably very helpful to beginners, i.e. get out and move on if a position goes wrong, but as you gain experience you see that a one stop strategy doesn't fit all. So, I would say that with stop losses, one strategy does not fit all, but until you gain that experience of time in the markets and a system of your own that you feel comfortable with, you are probably best sticking with the traditional approach which he advises.
To give a recent example of a spreadbet trade of my own, a smaller AIM company which I felt had solid fundamentals and ticked all the boxes that I looked for which also was an in a nice uptrend. Soon after I bought it began to fall at times quite heavily. I could find no news at all to explain the fall and the fundamentals remained solid. Despite this and including the dreaded AIM/smaller company spread, I was soon down around 20% but it began to level off. This was around my stop loss level but something told me that unless some bad news was hidden and waiting to get out my previous assessment of the fundamentals was still intact and this was more of a technical sell off. Soon after the price recovered and it is now in profit. It was a calculated risk on my part which worked out as the fundamentals hadn't changed. In fact they got better as the share price fell so I bought more as it leveled off.
I would say that if you are purely a technical trader, on any time frame, than you need stop losses because all you are looking at is the charts. If you mix fundamental and technical analysis as I do, then first and foremost fundamental boxes need to be ticked and then you look at what the charts are doing. Arguably if you stick to picking good companies then you hope stops will only come into play if and when things go bad. I'm less inclined to be too strict on stops if I think it is a technical fall rather than one based on fundamentals gone wrong.
Of course, none of this should be used as an excuse to ignore stops especially if your analysis turns out wrong or the company goes bad. That has happened to me in the past when I was strictly buy and hold and convinced myself that things would turn around - quite often they don't.
All of the website trades are documented on the website, apart from the very occasional few when there has been a big gap between updates or its been a quick buy and sell. Of course he does alot more than just the trades on teh website and we dont know what they all are but mostly they are just more transactions in the same stocks.
He may take a few positions while trying to get the price price, then dump some keep the rest and declare the best for the website.
I dont think its fair to say part of the strategy is speculative when riding high valued shares - as opposed to pure financial criteria he uses sentiment and populism as a measure too, and will use trailing stops to get the most out of some positions.
He has made plenty of clangers too but as you can see on the trading log stops will prevent massive loses.
It will be interesting to see how much Lo-Q (LON:LOQ) he got out of before it collapsed, and whe he will leap back in them again.
Stuff like Dialight (LON:DIA) and Telecom Plus (LON:TEP) just keep on going, although DIA is looking a bit tired now.
But apart from looking backwards at what has or has not happened, lets look at the next lot and find some more good stocks to get involved with.
Lex Van Dam said "Dont wait for the chart to prove you right" - so true.
So do you think he has ever employed a stop loss on Telecoms Plus?
The point is that over the years it has been steadily going up but it has had occasional sharp falls over time. Between Dec 2011 and Mar 2012 it fell around 200 points from around 800 to 600. Sep 2008 to Jun 2009, 339 to 252. Jan 2004 to Jun 2006, 408 to 87. I'm sure he's probably traded it many times, but if you look at the monthly chart you will see some longer downswings.
The question is worth asking because it is one of his biggest and long standing holdings. He has done well out of it in what seems to be a buy and hold and add position. He has had the type of long term return from this that most of us can only dream about. However, if you look at the charts it has had some big swing downs which surely would have hit stops, especially in its early days when it was a smaller company play? I don't know, but was he a holder when it went from 400ish to 80? If so it raises questions about stop loss strategy does it not?
There are many ways to make money from the market, and I think we should consider all of them.
None of us ever stops learning. I'm very receptive to ways in which traders can combine their market knowledge & timing with people who are really good at fundamental analysis. I'm sure there is a way you could combine those two separate skills to make a successful strategy, and I think that's what Robbie Burns seems to do.
Also it's easy to criticise, but he puts his trades up for public scrutiny, and that's very impressive. Who else would do that? Mine are a shambles! I make every mistake in the book. But I'm not a trader. The optimum strategy would be to separate the people who do the research from the people who do the trading. Get people who are good at each, combine them into a team, and get them to thrash out a strategy, and I think you could create something amazing.
Also, the market is often wrong. Being in a share that goes up a lot, but is priced completely wrong, and subsequently crashes, does not make you a good investor if you happened to be in that share when it shot up. It just makes you a successful speculator. Can that be repeated forever? I'm not so sure. Relying on market timing & speculative instincts seems to me a pretty flaky underpinning. Whereas a value approach seems a more firm underpinning, as it will always work, long term. But each to their own!
P.
That was precisely how Soros and Rogers made their money. Rogers was the analyst, Soros the trader.
I think it was Keynes who once said "Markets can remain irrational longer than you can remain solvent." - and every investor should burn that phrase deep into their hearts . It's no good being right if you have to go bust proving it !
He seems to employ lots of strategies and I think it would be a mistake for anyone reading his site to look for a holy grail one strategy fits all answer to his success. For example, there is a world of difference in the reasons behind why he bought Direct Line, eSure, Hellerman, 32Red and Vislink.
In the case of the insurers Direct Line and eSure you have two relatively big companies that will be FTSE250 and possibly FTSE100 candidates in the future. They seem to be longer term buys where the attraction is the dividend of around 6%.
Hellerman is a good old fashioned nuts and bolts not too exciting company that will probably just go about its business and steadily rise year on year.
32Red is a decent on fundamentals online small gaming company which he seems to have bought for the takeover possibility that it presents. He did the same with Sportingbet a while back.
Vislink comes into the smaller company with a good blue sky product that is making money and may have a great future which he sees as low risk and in a hot sector which happens to be cheap.
So, it is important for anyone following his selections to realise that while there is probably a general strategy which underpins his selection criteria, there can be many different reasons as to what he buys and why. He clearly likes smaller companies because of their growth potential which isn't there for the most part with bigger companies, but while he tends to stay away from FTSE100 stocks (occasionally he has bought them although he says avoid) he does buy FTSE250 companies quite regularly.
He tends to avoid outright speculation stocks which is one of the reasons why he doesn't tend to touch mining or oil juniors, yet occasionally he's jumped into with pretty good success, new energy type speculative stocks.
So, it can come across as a bit of a mishmash approach, but it has worked for him. Won't necessarily work for everyone, especially those that like a structured, ordered, very specific approach I would suggest.
Clearly he is not offering a tipping service and unlike many he puts it on the line each week for everyone to see.
He avoids big losses and "banana skins" by being very disciplined on the use of stop-losses. IE when he initially buys he sets a stop-loss figure and continues to move this up on the investments that go up in value
Well said - he protects his interests and gets out fast if things go against him - lessons many people would be wise to heed.
At the end of the day is it not simpler to acknowledge the fact that Robbie Burns is an exceptional trader/investor with results that few of us will achieve in our endeavours - but isn't it great that he shares with us his balanced, rational psyche, methodology and discipline which hopefully we can all learn from?
I am sure Robbie picked up SEPU early part of Sept. Looking back there was a rise in volume around 10th which is something else he also looks for.
Ram, he mentions in the previous edition his big stinker in Coffee Republic and says it wasn't his last.
The buy date he gives on his website is 24th September 2012. The daily chart shows that more or less around that time it was beginning to break out. 27th Sep to 1st Oct was the first big move which began the upward momentum to where the price is today.
Ah, he doesn't publish all his trades but he did a short write up on 10/9, I suspect 24/09 could possibly have been an 'average up'
'....An example would be Sepura which I bought recently. At the time of writing I'm up about 7 points and now considering my first "average up". However if I'd bought it and it was now down 7 points I suspect I would simply have already taken a small loss...'
Yes, there can often be a delay, even more so these days as he doesn't update his site as often as he did in the past. Something that those interested in his selections should note as quite often by the time they are mentioned on his site you aren't likely to get the price that he paid.
He has suggested recently that once he got to a £million in profit he might give up doing the site. Well, he seems to be well past that now and while his updates are less frequent than in the past it will be interesting to see if he keeps it going. One of the benefits to him from maintaining his site is that he does do regular seminars, so if he were to give it up then he would need to come up with something to attract people in another way. Unless, of course he gives up doing the seminars as well.
Like Paul I also downloaded his ebook on my iPad last week and it makes fascinating reading. One fact that I think hasn't been mentioned by anyone is that he shies away from AIM stocks unless they are exceptional ones. That's because he trades within an ISA. He uses his SIPP for the occasional AIM stock.The book is slightly biased in my view in that he mentions copiously about his sensational 'wins' (quite rightly) but nothing about big losses. I think his reputation would not suffer in the slightest if he did mention the occasional banana skin.
Ram
Well he does maintain that timing is one of the most important aspects of making money. He will sit and wait for the right moment for quite a while whereas alot of investors will jump in on news reports etc.
He does use some chart indicators like trends and breakouts, support and resistantce, trading ranges, in fact breakouts are a favourite. Looking at SEPU around Sep 24th there is certainly a breakout developing there after flatlining and consolidation.
One of Burns picks Sepura reported today. He got in when it was around 76p and today the market seemed to like its numbers as it is now touching 106p having been struggling to get through 100p. A look at the chart shows that he bought at just the right time 24th September, to catch the momentum that has propelled the share forward since.
He does seem to be good at catching moves like these early on although he does from time to time have a go at chartists and technical analysis. I do sometimes wonder whether he has a chart set up himself, mainly because quite often with his selections he is catching that early move which is difficult to do if you are purely a fundamentalist. I know he uses Level 2 to see if buyers are coming in, but that doesn't always signify that a consistent big move is under way. He seems to have the knack of calling it right more often than not.
His resource stocks do tend to be speculative but he does say they are punts and a bit of fun for him, but as long as he doesnt over invest and sticks to stop losses he ok with it.
As you say its the other stuff thats more interesting.
Hi,
Really good idea setting up a thread to look at his stock picks.
I read his Blog the other day, and have recently downloaded his book onto my iPad, as he seems an interesting and bright chap. A lot of his stock picks seem to have been jumping on speculative moves in resources stocks though, although I could also see some excellent GARP picks too.
So I shall certainly follow this thread with interest & am happy to run my slide rule over any non-resource picks he comes up with. I think he's in Vislink (LON:VLK), which is one of my current favourites too.
regards, Paul.
AHT toppy? ...................... looks hugely overpriced compared to URI, imho
http://uk.finance.yahoo.com/q/ae?s=URI
http://uk.finance.yahoo.com/q/ae?s=aht.l
oh, and not exposed to the uk nor the £
Thats useful Ed. I use some of his criteria on Sharescope for basic analysis. But theres also a data mining script for it there too, similar to yours on your NT-esque screen page. Trouble is they tend to be a bit behind as he will react quickly to the latest company reports, and the screeners are often a bit late to the party i think.
Yes thats right - and since catching the fall in the low 80's and seeing it rebase, hes bought more as it went over 100p. But his attitude to sudden share price drops in good companies, especially based on news events, are that they are a buying opportunity.
Where there have been continued falls his strategy is to have had a tight stop so you can get out and try again further down. Its ok to catch a falling knife as long as you let go if it cuts through your fingers and keeps going. Then you can take another swipe at later as it bounces off the kitchen floor.
Ericb - it's worth having a look at our Naked Trader-esque screen. While Robbie Burns doesn't believe in pure quant approaches we've nonetheless attempted to model some of the more quantitative aspects from his book. The performance of the screen has been remarkably smooth over the last couple of years - http://www.stockopedia.com/screens/naked-trader-esque-screen-164/
I occasionally write a little about his selections and strategies on my own blog. He's done exceptionally well over the years, so well that he is talking of selling many of his holdings and taking this summer off, no doubt he may want to spend some time enjoying his new house. I bet he doesn't sell Telecoms Plus though.
One thing on Greencore, he did go into his reasons behind buying it a little more deeply in an article in Spreadbet magazine which is worth a read. Fact is, he was catching a falling knife, apparently had tight stops, but it could have backfired because even though the company looks reasonably sound on fundamentals a big bad news story can often hit companies hard as shareholders in Cupid know. I would say that Greencore is a better company than Cupid, but I think you know what I mean about falling knives.
So latest picks are esure (LON:ESUR) Hellermanntyton (LON:HTY) Greencore (LON:GNC) and a quick short in Ashtead (LON:AHT)
Esure is a recent IPO, one of his favourite strategies is to snap up IPO's at listing. THis one hasnt done so well but its only early days yet.
Hellermann- another classic NT pick, a boring cable company, he reckons boring companies which churn out necessities are good stocks - assuming they are run properly and are making profit etc. This one has been around for years and is a real steady co.
Greencore - this was another classic, it listed onto LSE from Irish markets not long ago, and the price dropped dramatically in the height of the horsemeat crisis when a very small amount of its product was found to contain horse. That was a buying opportunity and he just bought another lot as he reckoned it was showing strength breaking over £1. it could do with getting past the previous high too really.
Ashtead hasnt really dropped much - its a popular stock in the rental equipment game but the chart certainly looks like it might be a bit toppy.