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SKC fundamental positions

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End of Week 20

Portfolio value up 16.7%
XJO -0.05% (Last 4742.6, Starting value 4745)
XJOAI +0.83% (Last 34926.7, Starting value 34639.1)

Commentary
A very eventful 2 weeks on the market for sure. The portfolio recovered 2 percent again pretty much in line with the overall market. At the peak of the turmoil there were plenty of cheap shares aruond, but most of my really lowball offers didn't get filled . Plus I was very busy with my pairs trading which benefited greatly from the volatility so I couldn't monitor those on my watch list as close as I would have liked.

My stance is now neutral so I will looking for some buying now with the cash balance ~$44K.

CAJ - Announced that they are buying the Radiology operations of IMI for 45.56m shares (~$2m) + possibly $600k in performance based pay over the next 2 years. Overall I am not sure I liked the transaction.
- Information on the business was hard to come by even though the seller IMI is a listed company. As far as I can tell it had a revenue ~$2m and was making losses.
- CAJ increased its share on issue by ~15% but only bought revenue of $2m. They need major turnaround to make profit or it will be a large dent to EPS.
- CAJ shares were cheap (hence the hold in this portfolio). So using undervalued shares to buy a loss-making business just doesn't sound like an awesome deal.

It's difficult to really tell the impact of the acquisition, although the market seemed to like it. I will contend with the hold until their next update.

ZGL - A significant holder selling down but has been met with pretty good buying demand. They are now trading a 3 year high. Target remains 60c.
 

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ZGL was tipped by our good friend Roger Montgomery just recently which might explain the uptick but I think there will be a lot of supply as Ventrade seems to be a fairly commited seller so probably won't see a major uptick yet as it was up to nearly a 10% uptick for the day after the tip the previous night but ended only 2.5% up. They supplied 430k of the 675k volume on the 23/3 and 2.1m of the 3.7m volume on the 24/3 and had 20m left, volume was 7.1m on the 25/3 so will probably take a couple of weeks to churn out at this sort of volume, after which supply should start to dwindle.
 

Hmm didn't know that but it does explain the sudden interest in the stock. Too bad he's 20% too slow! Any info on his target / Intrinsic value?

On Ventrade - Agree they are committed but they don't seem desparate. Not sure what their final target hold is so they may or may not sell down all their holding. They probably have 7% left after Friday. A few more Roger's fans would be good.
 
There is much debate about the pros and cons of fundamental vs technical analysis over here...https://www.aussiestockforums.com/for...tal#post590126
Click to expand...

Been following this thread with interest.
Congrats to SKC on being able to trade profitably on a shorter type trade window than most "Fundamentally"

Being a technical trader I thought Id post once a month a print out of my monthly portfolio report. This is my actual report from IB. I wont post trades as I would be forever updating making far far more trades than SKC in a week and this is SKC's thread. The results I post just as a balance considering the initial post in the very first paragraph of this thread.
Ill not be trading Last week of May to Mid July as ill be in Europe travelling.

To kick off this is Last 12 mths Feb to Feb



And Feb 23 to March 25



Again just for some interest.
 
tech/a said:
Again just for some interest.
Click to expand...

Just outa interest.

  • How many trades per month/year and how much brokerage.
  • How much time are you spending per week trading

Y on Y (March) my fundamental trading profit (closed trades is 16.8%) with divis its closer to 21%
 
Sorry didn't post the 12 mth as Ive only been trading this portfolio since October when I got back from FIJI.

Trades around 10-20/week
IB is $6 in and out so negligible.
Time I have a trading screen on my desk
I guess in real time it takes around 30-40 mins a day.
 
Tech if you want to posts your results i would suggest doing it in a new thread so as not to derail this thread.

This thread isn't really debating FA vs TA, its pretty much just about SKC's fundamental positions.

Thanks
 
No dont want to start a thread.
Dont want to stuff up the thread either.
So Ill can the idea.
 

Great results Tech. Was there leverage involved and does that include your futures trading?

There is much debate about the pros and cons of fundamental vs technical analysis over here...https://www.aussiestockforums.com/for...tal#post590126
Click to expand...

On current run rate this thread is looking at similar percent return annualised, but it will depend on how much time I can devote to digging those opportunities in a few month's time... No, not going on a nice holiday, but got a new addition to the family coming along .

Having said that, this thread was never meant to show/prove one method being superior (return-wise) than the other. Too often people mis-understood fundamental analysis as buy-and-hold and never admit to making a mistake (as in the thread link above). Hopefully this thread has illustrated one approach to FA that is viable.

As a technical trader myself, I approach fundamental trading/investing in a similar mindset to technical analysis...
- Find a set up
- Set out the assumptions behind the set up
- Position size based on risk
- Make entry/exit based on those assumptions being validated/dis-proved

I am pretty convinced that both FA and TA will work well if you know what you are doing. And both will work terribly if you got them wrong (In case that isn't obvious enough). It just always annoys me when someone says FA doesn't work because TLS has been falling for the last 10 years!

tech/a said:
No dont want to start a thread.
Dont want to stuff up the thread either.
So Ill can the idea.
Click to expand...

Thanks and appreciate that. Besides the fact that there is little point comparing the return by one FA guy vs one TA guy, this thread is acutally a nice place for me to organise my own thoughts and information so would be great to keep it reasonably clean.

I do think however it would be great if you do post your balances on a new thread. It may be a simple summary like no. of trades, win, loss, R:R etc. Information on what is achievable in TA is difficult to come by... so if you are keen to share that I think a great deal of people will be interested and benefit from it.
 
skc said:
Great results Tech. Was there leverage involved and does that include your futures trading?
Click to expand...

Leverage on the futures side yes--other no--My portfolio would be better by 6K if futures were not included---I got belted on the public holiday in SA when Japan happened---but thats trading.


Congtats and glad the priorities are in order---Im sure the other half would ensure that!


I am sincere in my acolade I certaintly could not trade that way---voodoo---.

[/quote]As a technical trader myself, I approach fundamental trading/investing in a similar mindset to technical analysis...
- Find a set up
- Set out the assumptions behind the set up
- Position size based on risk
- Make entry/exit based on those assumptions being validated/dis-proved[/quote]

I understand--im a little different in that I have cut down the criteria to finding technical setups which are likely to fly in the very near future. AVQ is one today which I happen to have.


I have been around long enough to see some truely spectacular calls in F/A and the conviction to ride it.
As you are annoyed by TLS I get annoyed when people who place their value (Under value) on a rising stock and the rest of the market are supposedly wrong!


It does that doesnt it! So The secrets out on my copious postings!!


Could do---but cant see the benifit if Im just showing monthly balance---Frankly I trade so differently to convention that it would be impossible the type up!! Take too long.
 
Position Closed

1/4/2011 Sell 28,000 AMU @ $0.295 = $8,260.

Realised P&L = -$292.93

AMU announced that the acquirer had some tax problems and needed another few weeks to secure finance. At the same time AMU also appointed an accountant to sell the company again.

All this pointing towards a pretty uncertain if not a dead deal. Very lucky to read the news first and get out with minimal damage at 29.5c.

AMU probably has net assets ~22c so if prices do fall there it might be buying opportunity, but it will need to find another catalyst for the price to head back up north.
 
Howdy SKC, Enjoy the thread and appreciate your efforts.

I notice you are still holding BAU. Do you have an opinion on the "class action" supposedly being issued against them by IMF?

Also, I would really appreciate your opinion on AOH if you get a chance to run your ruler over it. The chart is not particularly flattering just at the moment, but the fundamentals seem very sound to me (My fundy analysis is pretty basic though )

Cheers.
 
Hi SKC,

Another newbie questions. What portfolio management software are you using? It looks pretty comprehensive
 
levin123 said:
Hi SKC,

Another newbie questions. What portfolio management software are you using? It looks pretty comprehensive
Click to expand...

As per response above. I would just add that I will disagree that it is pretty comprehensive...


Thanks for dropping in, Barney.

Re BAU class action - IMF is a pretty formidable outfit and has exceptional win rate (compared to industry norms), but the case hasn't actually been made yet. Personally I am a lot more concerned about many other issues (environmental and local resident opposition) than a 'class action' that may or may not be made, that may or may not be large in size and may or may not have any valid grounds. I could be wrong but I would be surprised if the class action hasn't been priced in already.

Re AOH - had a quick look but nothing jumps out (not after the first 5 minutes anyway). Perhaps you can share your thoughts on the AOH thread and I can add to that if there's anything of interest.
 
New position

8/4/2011 Buy 20,000 IDM @ $0.235 = $5,000.

Rationale

An emerging miner of mineral sands that is due to complete its processing plant in Oregon, USA this month. A bit of write up here on the Criterion

http://www.theaustralian.com.au/bus...eral-sands-plays/story-e6frg9lo-1226034329102

I am looking for a leg up in the share price when the announcement of plant commissioning and first revenue etc starts to flow. Iluka is trading at 25x EBITDA (for some reason). The current share price has IDM trading ~4.5x prospective management forecast of $30m EBITDA. So there's plenty of upside to the share price if the forecast can be met. Mine life is ~10 years with what's proven so far.

First target is 8x EBITDA or ~42c (fully diluted), but will try to ride this as long as the buyers are willing. I am wrong if they have significant problems with operation of the mines and plant and fail to deliver on the earning forecast.
 
New Position

8/4/2011 Buy 75,000 MLA @ $0.04 = $3,000.

Rationale

Medical Australia is a small cap company manufacturing and selling medical devices / consumerables. MLA has been in the dog house for a few years but there are now clear signs of turnaround.

Revenue is rising, new supply contracts are being signed, costs are under control, margin is improving and cashflow is now positive. A maiden HY NPAT of $136K was reported in Feb.

Assuming their current gross margin of ~60% is maintained, and their SG&A stays pretty constant, every $1 increase in revenue drops 60c into the bottom line. HY revenue was $4.6m... if growth continues and they achieve a rolling full year revenue of ~$12m (20% growth each half), NPAT can be up to $2.50-3m. This puts PE @ 5.5 or so.

Position size is small as there are quite a few ifs, but I like the momentum that the business has.
 
End of Week 22

Portfolio value up 21.3%
XJO +4.12% (Last 4940.6, Starting value 4745)
XJOAI +4.37% (Last 36151.8, Starting value 34639.1)

Commentary
Very strong 2 weeks by the market and the portfolio matched its performance despite having a large percent in cash. Still looking at various opportunities to add new positions...

Not a lot to say on individual stocks, except a strong 2 weeks by ZGL means the initial target of 60c is about to be reached. I will probably sell half at that point and put in a trialling stop for the other half.


 
I have to agree with your choice of IDM, biggest risks atm are the commissioning of the plant and the legal action against it. I think they paid for a write up in the Pick which was in the AFR not that long ago, gives a good description about the company.
 

The local residents were concerned and rightly so. But their case doesn't sound very strong (as they seem to focus a lot on 'potential' impact) and if it means tighter monitoring etc then that's a plus for the environment. It will be real trouble if they stuff up the operations and dangerous chemicals are detected. Hopefully that won't happen, or only happens after the re-rating of the share price (and I have my exit)...

I hope AFR doesn't get paid to have stories included...
 
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