Fiscal Responsibility

October 9th, 2018 | Posted by shauniekent in Uncategorized - (0 Comments)

I forgot to publish and share but this made me chuckle from the Mcturra blog…. well if you don’t laugh you might cry.

Democracy is doomed

I haven’t posted in a long time and have neglected to post a 2018 NAPS style model portfolio. I explained in my 2017 NAPSesque post that i was nervous about the market and wanted to stay partly in cash. The FTSE 350 actually ended the year c. 8% up whereas my portfolio which was 50% cash ended the year about 1% up! So ultimately  ayear of lost potential gains.

The truth is that i continued to feel nervous at the start of 2018 and didn’t pick a 2018 NAPS portfolio….. but sitting here bearish indefinately is unsatisfactory….

2018 is showing a decline in the FTSE 350 so far. Perhaps a NAPS style portfolio would have outperformed. My wider market nervousness has led me to increase holdings of cash in my personal portfolio and to buy some put options on certain overpvied US stocks (Netflix, Tesla, Shopify, Snapchat) but what i really want to explore is the idea of a more systematic Stockopedia NAPS style long/short portfolio whereby we pair the highest ranking stocks in a portfolio with some short positions in the lowest ranking. Watch out for future blog posts on this…

 

So i wrote a post with my NAPs for 2017 but being short of time, and on the whole nervous about the markets i didnt post it. I then resolved to post my NAPS on the basis that i’d be notionally 50% invested, holding the other 50% as cash until a point in the year where i wanted to invest the remainder.

But i still haven’t posted. I just feel too nervous with Brexit, Trump, recession risk in the US etc etc. I know there are alwys things to be worried about and i have no long term experience – i just think i want to to sit out for a while.  I’ve decided to remain ‘in cash’ for the foreseeable future. I may publish my NAPS at some point in the year – else if i dont, my performance should be judged as holding cash against the market.

 

Here are the NAPS i thought about posting for 2017 (as it happens, i would have been up 5%). It’s also worth noting that in my real world portfolio i am still invested, but may well go towards cash at any point. Obviously NAPS are meant to be a but then forget until the period end.
BLVN Bowleven
CAPD Capital Drilling
CRAW Crawshaw
EMR Empresaria
FLYB Flybe
GENL Genel Energy
GYM GYM
HAT H & T
IGG IG Group
ITQ Interquest
NTBR Northern Bear
NTG Northgate
OPHR Ophir Energy
REC Record
RBG Revolution Bars
SAND Sandstorm Gold
SLW Silver Wheaton
SLW Silver Wheaton
STM STM
WTM Waterman
ZMNO Zamano

Time for a brief review of my 2016 NAPS performance …  overall a 17.8% gain. Not bad at all – not quite last years 24.2% gain but respectable nonetheless. Looking through the individual companies  a stop loss at circa 20% would have saved me from Genel and Fairpoint big losses but on the other hand would have triggered for Empresaria which subsequently recovered.

 

Genel is one of the only oil stocks not to benefit from my correct call that oil wouldn’t stay at $33/barrel. Fairpoint reminded me of the danger in buying into a story. In truth the numbers didn’t match the story – i assumed they would catch up – ie i trusted management. That’s something i’ve learnt not to do without very good reason.

BooHoo had a barnstorming year and personally I sold out at around 80p. Unbelievably its continued onto 130p to my dismay – but the NAPS rule based process meant it was not sold and so contributed nicely to the 17.8% gain.

I’m slightly puzzled why Capital Drilling wasn’t included – it has been my top pick for over a year now and scores highly in the stock ranks. I’ll make sure to include it this year..

2017 NAPS to be published shortly…

Out of interest – if I had kept with my 2015 NAPS I’d have made a 13% loss! The 2016 Naps heatmap looks similar to at the start of the year  -so it’ll be interesting to see how it does in a years time.

I informally keep track of short calls I make on various companies over the last 2 years. I post them all on my own ADVFN thread and log the opening and closing prices in the header. I post in the message box when I open and close a position so the dates and prices can be verified.

So far I’ve done outstandingly well.

32 short calls initiated in 2015 closed. 6 short calls initiated in 2016 closed. Overall i have got 32 correct and 5 where i’ve made a loss. That’s an 86% correct call track record!

43 total slots closed since inception with average profit of 36.8%. For those opened in 2015, average gain was 41.2% and for those opened in 2016 average profit was 32.4%. This ignores positions still open (24 of them)

If anyone else is interested in potential sort calls, do come and discuss them. This thread is a record of my ‘conviction’ shorts -ass opposed to my watchlist which i store in a stockopedia portfolio to keep tabs on.

Note this is a ‘fantasy’ short portfolio. I may have real life positions or may not. I wish they matched exactly as my real world performance has fallen far short of the fantasy portfolio…. More to be revealed in a separate post but safe to say I have learnt much about the art of shorting the last 2 years including sizing positions correctly and trying to second guess the market!

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:

2016Naps

 

And using the Stockopedia value vs quality ranks bubble chart we get the following picture:

valuevsquality2016naps

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,

Shaun