Portfolio review - winners, losers and spinoffs

Tuesday, Apr 14 2015 by

With another tax year under our belt, it's time to pause for reflection, assess what we've learnt about investing, and hopefully boast about how our smarts led us to bag some big winners.

Unfortunately, I have nothing to boast about this year. My portfolio was down 6.2% during the (tax) year, compared to a positive return of 2.8% for the ASX (FTSE All-Share). I therefore lagged the the index by around 9%, a truly pitiful performance. I haven't underperformed that bad since the 90's.

What went badly?

  • Story stocks – specifically, an investment in Plethora, a pharma company aimed at tackling premature ejaculation. I was convinced it was onto something big (no pun intended!), and in late stage development. Alas, so far it has turned out to be a typical AIM serial disappointer. The only saving grace is that it was only a small part of my portfolio, and I am hoping it will still come good. Try not to read too many double entendres into that. I should have followed Lynch's advice: wait until a company turns a profit before investing
  • Catching falling knives. “It can't possibly get any cheaper" has been the siren call that has lured me onto the rocks. Buying into miners was the main culprit. Buying companies that are of only mediocre cheapness was not a good idea. I bought Netplay and SpaceandPeople before their big fall.

I think, if you're going to buy value stocks, you really need to buy them in deep discount territory. Buying them when they're “merely OK" does not seem a particularly good strategy.

I am underwater in miner KAZ Minerals, having bought in at 303p in June 2014. Price declines followed, and I bought again in January 2015 at 180p. The price has recovered to 220p at the time of writing. So buying cheap might work, or it might not.

Lonmin has been another disappointing buy on my part. I'm down 31% on that one. It's now on a PBV of 0.37, and I'm holding on because I think it represents good value. It's loss-making, and the PBV is the lowest it's been for a decade. The pain is possibly not yet over. Glencore has a big stake in LMI, which it plans to distribute to its shareholders later this year. There is therefore a major overhang on this stock, and I…

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NetPlay TV plc is a United Kingdom-based online gaming company. The Company operates various interactive gaming services under an Alderney gaming license. The Company operates through two segments: Business-to-Customer (B2C) and Business-to-Business (B2B). B2C consists of various online products and ancillary income. The brands operated in this division are Supercasino.com, Jackpot247.com and Vernons.com. These brands operate online gaming and betting products. B2B relates to the online marketing, product development and technology business. The Company allows its customers to interact with its games on various platforms, such as television, Internet, mobile and tablet from a common integrated wallet. Its SuperCasino offers slot machine games, live dealer blackjack and baccarat, card games, a selection of casino table games, video poker and instant-win arcade games. Its Jackpot247 hosts games in the Playtech Latvian studio and their online casino games. more »

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SpaceandPeople plc is a United Kingdom-based media specialist company. The Company is engaged in marketing and selling of promotional and retail licensing space on behalf of shopping centers and other venues throughout the United Kingdom, Germany, France and India. The Company's segments include Promotional Sales, Retail, Head Office and Other. The Company markets, sells and administers promotional space in a range of footfall venues across the United Kingdom, including shopping centers, theme parks, garden centers, retail parks and airports. The Company offers a service covering from consultancy services to the provision and management of retail merchandising units in shopping centers. It enables venues to market, administer, promote and sell their promotional space. Its subsidiaries include MacPherson & Valentine Limited, SpaceandPeople GmbH, Retail Profile Holdings Limited, POP Retail Limited, Retail Profile GmbH, SpaceandPeople India Pvt Limited and S&P+ Limited. more »

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6 Comments on this Article show/hide all

MGerard 16th Apr '15 1 of 6

Hi. In respect of Netplay do you now see it in "deep discount territory"?

When you strip cash out of the market cap I see a very low p/e. Presumably the market has priced point of consumption tax so from these levels this looks a good potential play?

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Ramridge 16th Apr '15 2 of 6

Hi Mark -
Great piece, thank you. Like you, both story stocks and catching falling knifes cost me dearly in 2014. There is a fine line between being confident and hubris, and I crossed it too often to my detriment. This calendar year I have been more disciplined with the result that I am up 11% on year to date. Nothing to boast about really since FTSE100 is up 8.5%. But the more satisfying change is that I sleep better at night!
Regards, Ram

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Mark Carter 18th Apr '15 3 of 6

In reply to post #96822

I don't know. I kept it in my fantasy fund because I can see the argument for it being cheap. I don't own it myself, though.

There have been a couple of directors buys lately, but they were so small that they look like they were for show. So I'd actually read that as a negative. According to my calcs, the stock dropped 4.5% when it released its results, so presumably the results were worse than the market expected.

NPT has a Value score of 63, which doesn't put it in the super-cheap camp.

Other people may have a completely different take on the situation. I don't want to influence anyone's decision, as I really don't know how to read the situation.

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lightningtiger 26th May '15 4 of 6

Hi Mark,

Sorry to hear you have been struggling last year.Have you got a system plan in place? By that I mean, written down as a plan of action. You mention "It might work, it might not".

Taking the graph of PLE above for example, it is clearly declining consistently over the year.The 50 day moving average line in green is above the the share price.instead of below it. The sector  is Pharmaceutical. Compare it with PVG also in the same sector. The 50 day moving average is below and the share price is increasing. 

If you use that as a point of a number one rule, it works. There is no "it might, it might not. Although it is not 100% all of the time it is a rule that has served me well over the years.

Falling knives are to be avoided at all costs and story stocks can be checked easily by the 50 day moving average.

Another check I use is a sort of stocks that have gone up at least 30% in a month (usually about 70 or 80 stocks). Put them in a watchlist. The final check is a sort of at least 100% growth in a year and still going up.(about the same number)

If you look in that sector, click momentum & then %age in 1 month and %age 1 year, Does anything stand out to qualify on both counts? Is the moving average OK?

In sector of Biotech & Medical Research DDDD,VER &VRP all qualify. Good hunting Mark,

I got this "spin off from Alex"

Hope this helps

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herbie47 27th May '15 5 of 6

In reply to post #99774

Thats interesting. I notice DDDD,VER &VRP all have low SR.

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Daniel Neale 27th May '15 6 of 6

If you liked Prezzo, the restaurant company £TAST is run by the some of the same management I think. Maynard Paton makes a good case for Tasty in his blog, so maybe worth a read? The actual product they offer is great, and i'm contemplating buying, but haven't just yet.


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About Mark Carter

Mark Carter

I am a private investor living in Scotland. I am a computer programmer by trade.


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