XLM another Minervini type stock?

28th Oct '17 by nickwild

14 comments 6103 reads

XLMedia (XLM). This stock is showing the chart characteristics that Minervini seeks in his investments. The business appears to be financially sound and to have a "technology moat". Although it was predominantly a betting industry business XLM has expanded into the credit card and cybersecurity industries. This is a strong positive for me as I think that expanding the model into other areas/industries could lead to very significant growth. Their technological expertise is likely to allow them to do this successfully and keep ahead of competitors.

I also like the positive cash position and recent large director purchases. An excellent review of XLM was recently posted on Stockopedia.

https://www.stockopedia.com/content/lsquothere-once-was-an-ugly-ducklingrsquo-ndash-xlmedia-xlm-203107/

I am long in this share and recently topped up during the spurious dip in price caused by the dividend delay (not the fault of XLM and now paid).

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Mike888

28th Oct '17

XLM has had a good run, I am also a holder, so I am very pleased with how this stock has moved this year.

However from what I understand of Minervini it doesn't yet meet his criteria as a super performer, specifically from a fundamentals perspective. Although revenue is moving upwards, margins are not really increasing and EPS growth is reducing. So for the moment I don'y think it would tick all the boxes.

HumourMe

EPS growth rate is declining, which might disqualify it from a Minervini screen .

Margin growth might also be questioned. Despite those considerations I bought 11 Sep on a new high.

bobo

17th Nov '17

I would think the bigger concern is the intangible and goodwill assets noted at £117m. Given the high level of divi being paid out (which keeps the Director's share value up) there are some interesting questions to be answered.

Using stockopedia's own figures no depreciation has occured since a blip in 2014.

Not a long holder, more a dipper in I suspect

... and today I was stopped out for a small return (3.5%) despite being 20%+ at one stage. Positive is better than a loss though. Now 50% cash. Expecting one more similar result like this today. But who knows? It might reverse.

willhampson

I've never dared with a stop for XLMedia (LON:XLM), perhaps that will come to haunt me one day... It is fairly frequently subject to big spikes down, followed by swift rallys up; often coinciding with director buys. I bought some more this morning as I see it hitting new highs in the coming months, and suspect we will see a director buy rns shortly. Could very well be wrong, however...

Ramridge

RE. XLMedia (LON:XLM) With today's current SP fall, it takes the SP to below the 50-day MA. In Minervini's terms, a signal to think about selling or reducing your holding. But have to say it has been an excellent run since the start of the year.

No position.

To be completely transparent I had also a buy stop order in, above the recent highs, the sell stop just got hit first. I'm surprised at the decline from the recent high, but the order did its job. I suspect we are in for a period of market consolidation, where bases form, and give lower risk entry points, if not a decline.

Albertos

Looking more and more like a defensive quality stock - with the risk of Israel thrown in.

The growth and value stats are mediocre at best.

Guess I'm waiting to see if Mr Weihs wants to risk anymore cash.

Phil

AnonymousUser226237

19th Nov '17

Hi guys, I cannot find a Minervini screen in Stockopedia. Is there anything similar that shows which shares are for example on Stage 2 of Minervini's guide?

20th Nov '17

There are a few examples people have put together in the thread here: https://www.stockopedia.com/content/mark-minervini-interview-a-guide-to-superperformance-from-a-stock-market-wizard-173828/
However, I'm aware that the best time to look for bases is towards the end of a bear market or at the beginning of a bull, so personally I'm being very cautious. Another recent entry fell by the wayside today for break-even. Now 56% cash and 5% draw down from peak portfolio valuation.

nickwild

21st Nov '17

Very positive RNS update today

Examining this from a Minervini perspective, or my interpretation of it, we have just experienced a ‘base’ forming (a period of consolidation/pullback as weak holders transfer to strong holders). The ‘pivot point’ as the previous high was taken out, allows a lower risk entry, if the stop can be placed at a reasonable level. In this case the ‘natural stop’ is the last ‘reaction low’ (where the price zigged, after it zagged) which is about 20% below the breakout price. For me, that is too far, as my average gain is not 40%, although I could adjust position size to reduce risk – but I still would not get the 2:1 odds I’m looking for. For swing traders, today would have been lucrative. Longer term holders will be vindicated.

Hi Humourme - XLMedia (LON:XLM)
If you are looking at this from a Minervini perspective, Minervini does not hold a long position going into a results or trading update day. He sells his long position before the announcement day. The only exception (according to him) is if he has a good profit margin and he is confident about the share prospects. In this case he would reduce his holding ahead of the news.
Not saying it is right or wrong, simply what he does.

If you are looking at this from a Minervini perspective,

Trying to! I've now read both books twice and have trouble reconciling this statement (which he makes) with some of the spectacular share appreciation examples (which are largely irrelevant if not holding through results).

If the Minervini focus is though on the effect of compounding many small gains, which is fully compatible with both trading breakouts and not holding into results, then that's a slightly different approach.

I think it'll be a while before I appreciate all aspects that he is trying to convey.

XLM another Minervini type stock?

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Nickwild

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