I’ve chosen a selection of ‘NAPS’ for 2016. To recap the idea being to see if my choice of companies (no changes allowed during the year) beats my personal portfolio by the end of the year and how it compares to the Stockopedia mechanical NAPS and FTSE/AIM indexes. I’m also hoping to establish over a long time frame whether i can successfully pick stocks.
I’m also hoping that my personal knowledge and insight might help to boost performance against a mechanical selection…. or ultimately will my over confidence be shown for what it is. I think the latter may be proved correct but i can’t help but hope otherwise
This years selection:
And using the Stockopedia value vs quality ranks bubble chart we get the following picture:
This gives me confidence i’ve chosen generally better value & higher quality companies. The outliers are the oil stocks, a gold miner and BooHoo who i believe has potential to be a long term star.
These selected ‘low stock rank’ companies are the key differences between a Stockopedia stock rank selected portfolio and my NAPS where i use a bit of personal judgement.
Oil, which i may do a separate post on if i have time, cannot i believe stay at $33 a barrel for much longer – its below the cost of production for large parts of the world, capex is being cut leading to lower future supply and ultimately current supply is only 1 – 1.5mmbl/day greater than demand. Total supply is about 95mmbl so the margin is actually quite small. Figures show global oil demand is continuing to rise something like 1.5mmbl/day each year and supply i’m sure will be showing signs of decreasing imminently – due to natural oil field decline rates which are anywhere between 8% and 3% annually (this is where if companies do not invest in their producing oil fields, production actually falls away – it needs continuous investment to maintain, let alone increase). Hence i think supply will fall below demand within the next 2 years with potential for a price spike. Oil in this sense is perhaps unlike other commodities eg copper where mine production does not drop away with significant capex cuts, whereas oil field production does. Anyway – i think ignoring the media headlines and doing a little research of the fundamentals suggests that this may be a once in a generation buying opportunity. For some good discussion on this see here.
BooHoo looks like an excellent GARP stock and as most of us know, growth stocks rarely look cheap and investors often over pay for growth, however i thin with BooHoo at 36p you are not. Paulypilot has done plenty of analysis and i agree with it. You can find some of it here, here and here.
Oh and Randgold Resources. Im not a gold bull, i’ve researched it and there are so many divided opinions from end of the world as we know it survivalists advocating stockpiling of gold coins so those who look at gold as nothing more than a pet rock. I’m neither, but if the price falls below global costs of production i’m interested. Assuming demand remains unchanged, supply must decline in the medium term. Gold is not far from this point globally by some reports. Many gold miners will be high grading and cutting back on exploration. If the price remains as it is at levels that discourage exploration then at some future point supply will fall below demand as mines around the world are depleted. No-one knows when this will be but i’m certain there will be another great gold bull run again at some point in the future. This could be 5 years from now so i’ll keep watching and waiting for clues, with only a modest exposure through one of the best gold miners there is.
Further posts if time allows will give some detail on why i think each of the selected companies will do well.
All the best,
Ok so like so many i’ve neglected to update my blog given everything else going on. New job, new home etc. I am reading as much as ever and adding to my ever growing watchlist of ‘potential’ companies.
I’ve been putting new funds into minting over the last few months. The whole sector has been an absolute disaster for investors over the past 18 months with concerns about global growth, access to funding/capital and falling prices for metals. Bombed out…. the perfect place to go looking for bargains.
The problem is that there are cheap miners out there….but they just keep getting cheaper. No-one can call the bottom, but at current valuations i’m thinking it cant be too much further (but i really cant back that view up).
What with the recent dive in the price of gold, gold miners have been hammered furthermore. I don’t know much about gold or what the price of it will be, but it seems to make sense to me that it will not stay below its cost to extract for long – currently somewhere in the region of $1150/oz on average across the world. I also believe that the whole mining sector will pick up, metals prices will recover. Many companies will go bust, but pick the survivors and i believe you’ll have a multi-baggers galore.
Gold miners with the financial capacity to survive a short to medium term drop of gold below these levels are probably the safest bets (but then they arent quite as bombed out (cheap) as some of the less financially strong).
I want to remember the pessimism and valuations that exist now, because if and when things change, it’s easy to forget. It’ll reinforce my confidence as a value/contrarian minded investor.
My end of first calendar year investing review and yes its very late! I had written but not published. I thought it might still be of interest to some so hear it is….with a couple of updates clearly marked.
I will try and keep this to an analysis of my trades in 2012. The good, the bad, the ugly. I only really started 5 months ago but it’s a new year and seems appropriate to look back.
Update: Ive since sold two thirds of my position as the court case didnt end early. Result is due in two months and i expect a slow drift downwards during the vacuum.
UPDATE: mining stocks rose along with other shares during the last 3 months, Frontier are back at the level I bought them hoorah. I continue to hold.
UPDATE: idid sell NBI for a small profit but held THAL after further analysis…. Great decision they have tripled on new contracts
Nostra Terra – NTOG – A recent buy on the tip of a well known private investor/blog owner BrokerManDaniel. Recent well results wre good and he obviously believes that well results due soon for nearby wells have positive read across. It all sounds plausible and im happy to take a small punt with near term catalyst. Ill tell you what i’ve learnt from this once well results are out :-p UPDATE: results were good and I sold out on a rise. Decent profit.
ViaNet – VNET – A paulypilot favourite. Software developer for restaurants/bars who want to track drinks sales from the tap. Fairly easy idea to understand. Definately scalable. The company has undergone a transformation away from petrol forecourt systems in previous years so i think this company is somewhat misunderstood but will be re-discovered by investors if it can start producing good results. UPDATE: Underwhelming full yr results have pushed the SP lower. I continue to hold.
CarpetRight – CPR – Short – How can somethign so right be so wrong? Daring feats of levitation by Caprpetright keep its on a P/E of somethign like 50. Ridiculous. I’m even on this at present and wondering how much patience i have left. Recent results were in my view disappointing, they still make bugger all profit and Europe has worsened for them. Perhaps at some point some owners will wake up to the ridiculous magic carpet ride and sell leading to a re-rating.
This has reminded me that the market can defy logic, and of the famous phrase attributed to Keynes i think that the market can stay wrong longer than you can stay solvent.
JPR – Johnston Press – Short – I lost money as this rose and hit my stop following a results announcement that i took as fairly negative considering their significant troubles (debt, newspapers, cash flow etc) Obviously the market disagreed and i lost a small amount of money quite easily. I havnt researched this company further sice but at the time i don’t remember thinking this company has a great chance of survival. Nevertheless am i prepared to disagree with the market in the short to medium turn, risking untold losses if im wrong? No. Another trade that reminded me of the importance of market sentiment. Focusing on company fundamentals alone is not enough (in the short or medium term at least).
Falkland Island Oil and Gas – FOGL – A short term trade. Massive interest in this as results for the potentially massive Loligo well were due imminently. The market took a sudden drop just as results were expected. I speculated that this might be a news leak. Who knows but the drill result was disappointing and the share price dropped.
FGP – FirstGroup – Large company with debt expecting to maintain the dividend which was something silly over 10%. Maybe it was 13%. I bought prior to trading update and expected the price to rise once dividen guidance was maintained. Well the price didnt really react. Normally high yields are a sign that the market believes the dividend will be cut. It was only a short term idea so i sold out for about evens.
SRT – Software Technology – Very small loss. I tried to buy in before a results statement and the results weren’t as great as we all hoped. They still have a great product and the market is potentially huge but orders aren’t coming in . Could be great investment but its been a bit of a let down for past couple of years.
I’ve been reminded that buying in advance of results may or may not work. It helps if you have an insight the market doesnt – i remember years ago seeing SuperDry clothing everywhere and planned to buy in before the following results announcement….i wish i had!
SnoozeBox – ZZZ – Highlighted on Paulypilots blog. very intereting idea about portable temporary accomodation in refurbished shippig containers. It rallied well following positive trading updates. Rebooking rates are high but i sold once the value of the company started to look high for an unproven company still in its first year i believe.
Chariot Oil and Gas – CHAR – Message board rumours persuaded me to take a small position. Nothing happened. Price drifted. Only buy on your own conviction i no tell myself.
Aurelian Oil and Gas – AUL – Looked attractive in that last RNS said management were about to come to a decision about the companies future. Without going into the whole story this was likely to be a good strategic decision for the company. Made a small profit.
IndigoVision – IND – Another Paulypilot highlighted company. Very bullish trading statement about growth rates in its markets and wanting to match or exceed this. Following RNS was less enthusiastic and the share price reflectd this. Without such 20% growth promise i sold at a loss.
PV Crystalox Solar – PVCS – I’ve writen this up previously on my blog and on the Motley Fool message boards. I still hold at a paper gain and expect this to rise further until management disclose the restructuring terms and most importantly the cash return. 90m euros in cash. 50m euro mkt cap even after recent gains.
All in all I have learnt a lot and I am enjoying my new ‘part time job’.