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Medium/Longer Term Stock Portfolio

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Been sifting through a lot of hay lately...

..To find that needle in a haystack, mainly in the speculative space to add a position to the speculative portfolio. Few stories here and there but bit risky at this stage with prices jumping around all over the place and trading at cents...

The more established companies are a different story and well run companies can attract a premium to it's trading price as can be seen with the hefty premium offered to Programmed Maintenance (PRG) take-over.

So I've been looking at similar industrial stocks in the service sector and noticed that mining services companies are making a come-back. Couple of the heavy-weights in this sector Monadelphous Grp (MND) and WorleyParsons Ltd (WOR) for example seems to be on the up up and away...

So looked at a few of the small to mid cap companies and narrowed the selection down to NRW Holdings Limited (NWH) to add to this longer term portfolio. Like it's peers the revenues has been in decline since the mining/exploration slow down, but starting to turn it around. Net debt also reduced by almost half from around $80m to around $40m. Preserving capital by having the dividend cut at the moment. Also bought a drill and blast business to grow the revenue streams.

 
One of the stocks in this portfolio Codan (CDA) has won order for an Emergency Communications contract today.
 
aus_trader said:
One of the stocks in this portfolio Codan (CDA) has won order for an Emergency Communications contract today.
Click to expand...

I may be wrong but I reckon that expectation may have already been priced into the uptrend that has been.
I did hold CDA for quite a while but saw a bit of selling over the last few months so I moved CDA funds to PTM, time will tell if that was a good idea or not
 
You are right, only time will tell Boggo, I guess any new contracts could still improve the bottom line going forward for CDA...
 
Bought one and let one go...

I've been monitoring Cash Converters International (CCV) and some of it's peers that operate in the same space of Goods lending / Short term personal finance etc. Since the days of just being your corner shop, CCV has become quite a large international player in the retail/personal finance space. It's had a few set-backs from what I have seen and now seem to be turning the business around:
  • Outsourced personal loan collections to ASX-listed Collections House (CLH) since CCV got into trouble with the regulators with compliance issues
  • Restructured leadership
  • Launched Medium Amount Credit Contract (MACC) to expand it's lending to higher income population
  • With one master stroke turned the UK business around that has been struggling for years
Also CCV dabbled in a new venture to combine car finance with leasing type arrangement but since it hasn't really gained traction they've restructured it into a more traditional car finance model.

Little bit about how it turned the struggling UK business around that might be interesting... The UK cash converters business has been loss making for years as far as I can remember and has been a drag on the company profit. So how did the UK business make a profit this time around ? McDonald's / Jim's mowing comes to mind... why they operate a successful franchise model. That's what CCV did for it's UK business as the company states "The UK business has been restructured and now operates solely as a master franchisor with 202 franchised stores. These changes have moved the UK business back into profit..."

CCV is not the only company that has had trouble with lending compliance. Some of it's peers have also run into trouble since the rules and regulations have changed for short term personal loans and one peer is facing class action from dissatisfied customers.

So CCV was bought and the one let go from the portfolio was the hotel operator Mantra Grp (MTR). It's been going nowhere stuck in a sideways grind for quite some time which was frustrating. When I saw it made a decisive move down, I decided to get out, so it was sold.



Closed Positions:
 
The Leisure and entertainment company Donaco International (DNA) also leaves the portfolio today having drifted south for over a month...

 
The Preliminary Full Year results for CAJ had an interesting piece of info about capital management as follows: "Capital management in FY18 expected to include share buy back and dividend reinstatement"
Does that mean CAJ might start paying Dividends again?
 
Yeah, that's what it means.
 
Cam019 said:
Yeah, that's what it means.
Click to expand...
Thanks Cam, Looks like CAJ is doing well... I've also found some research report that goes into the CAJ numbers and it's turnaround story. Hope it's OK to post it here Joe?

" ...
Capitol Health’s continued recovery and potential unicorn

Dean Fergie, Cyan Investment Management

Radiology and diagnostic imaging service provider, Capitol Health (CAJ), has announced their preliminary full year EBITDA result of $22m, 10% ahead of prior guidance. Along with the previously announced sale of their NSW assets (settling August 2017), the company’s total debt of $50m will be eliminated taking the business to a net cash balance of close to $45m. Factoring this in, the company has announced both a re-instated dividend and a share buy-back. Importantly, guidance for FY2018 (including just 2 months of the contracted NSW assets) has been set at ~$20m EBITDA.

Last financial year Capitol Health became another roll-up casualty, expanding too rapidly and making debt funded acquisitions that were not effectively managed or integrated. Adding fuel to the fire, proposed changes to the Medicare rebate scheme saw demand for high-margin MRIs drop, earnings fell and the share-price plummeted, almost 90% from its highs. New management was brought in in November 2016 and a $38m capital raising was completed in February 2017. In June 2017, the company announced the sale of their troublesome NSW assets including Southern Radiology to I-MED for ~$80m. Importantly after a year of decline, Medicare system growth is returning to longer-term growth rates.

There is no doubt Capitol Health’s footprint of over 50 Victorian radiology clinics is a strategic and valuable defensive healthcare asset. On those assets alone, a prospective forward EV/EBITDA multiple of 10x looks fair. Government restrictions for issuing new MRI licenses means barriers to entry are high and Capitol Health’s open register makes it an open takeover target. Further value can be attributed to Capitol Health’s JV with CITIC in China’s diagnostic imaging market and Capitol Health’s shareholding in US-based artificial intelligence company Enlitic is shaping up to be next tech ‘unicorn’ and could add serious value to Capitol Health shareholders.

..."
 
Also significant news on NRW Holdings (NWH) with acquisition of Golding Group.
 
Two stocks sold today from the portfolio.

First NRW Holdings (NWH) which had some significant news with Golding Group acquisition rallied hard today and sold it for a very good gain. Normally would be happy with a gain like this (close to 50%) after a few years of holding a stock, so when it happened within a month of buying NWH, I am pretty wrapped with the result.

The other stock leaving the portfolio is 3P Learning Ltd (3PL). Although the story has not changed since buying, after some period of consolidation, 3PL is moving sharply to the downside. So sadly decided to sell it and monitor it's progress as there may be another time to buy it again...

Closed Positions:
 
Got a chance to go through the SSM 2017 FY results. Numbers looked pretty good to me and they've beefed up the dividend as a result.
 
Bought Oil Producer Beach Energy Ltd (BPT) today. Very good numbers out today and it has doubled the dividend compared to last year. I had it in my watch list of stocks to consider but as it made a loss last year I wanted to see if there would be an improvement this year to turn a profit. Based on the numbers what a turnaround... From a price point of view, the stock gapped up and rallied so I thought to buy a parcel.

 


CDA still seems to be hesitating and your CCV popped up in my weekly, could be a turn up from here.

Looks like the chart got in first on the positive news from PTM today, love it when that happens

Some similarities in these two charts !

 
Let go of Nearmap Ltd (NEA). It had a nice run up but since it was going back down past my buy price I've tried to prevent it going too much into the red !

Closed Positions:
 
Personally I think your holding some far too long in HOPE rather than any valid reason
Certainly on a price (Chart Perspective) NEA,GTY,DNA None of these would have been in
my portfolio over this time period.
 
aus_trader said:
Let go of Nearmap Ltd (NEA). It had a nice run up but since it was going back down past my buy price I've tried to prevent it going too much into the red !

Closed Positions:
View attachment 72417
Click to expand...

I may have missed something, but what makes something a buy and what makes it a sell? It seems like you just buy something because it feels right and then sell when it doesn't feel right anymore. For a medium/long term portfolio there isn't much conviction.
 
tech/a said:
Personally I think your holding some far too long in HOPE rather than any valid reason
Certainly on a price (Chart Perspective) NEA,GTY,DNA None of these would have been in
my portfolio over this time period.
Click to expand...
It's a tough balance to get right Tech/a. Especially in the case of NEA it was painful to see a nice paper profit turn into a small loss, a loss nevertheless. Would've been nice if I got to exit with even a small profit or break even given the price went as high as 80c. I will be looking for locking in profits more actively going forward but it'll have to be well thought out as I still want to leave room for longer term retention of stocks.
 
No, you haven't missed anything. This is the way I go about investing and I do a fair bit of stock research to come up with portfolio candidates. I assume you wanted to know what makes a buy/sell such as condition A followed by B followed by C triggers buy/sell. Unfortunately don't have exact/precise method like that and everyone is different in their style of trading/investing I guess. But I do monitor the stocks and charts to manage the portfolio.
 
It is a tough balance I agree.

However I've noticed over the years that the more stock I hold
in a portfolio and the longer I hold them the smoother the equity
curve and the less Profit I make.


Shorter term

More profit and I've now flattened the curve and increased profit by
(1) Ratchetting stops. Regardless of direction the trade takes off in
(2) Adding to positions when a pattern or level is taken out.
(3) Ratchetting a trailing stop when multiple positions are on a single trade
(4) Trade a max of 5 Stocks.
(5) Ruthless trailing stops after 3 pyramids in a stock (BUB trade and example).
(6) If a trade is 1R in profit never take a loss stop at B/E
(7) All pyramid trades have the same trailing stop loss.
 
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