Speculative Stock Portfolio

[aus_trader]

Bubs Australia Ltd (BUB) was sold and I've added a dividend/distribution paying fund to my Medium/Longer Term Stock Portfolio, details in that thread...

 

[aus_trader]

Bought consumer products company McPherson's Ltd (MCP) which sells products to supermarkets, department stores and pharmacies. Their aim is to grow the business in the key areas of health, beauty and wellness. Well established in Australian marketplace with recurring revenues and pays a dividend close to 5% at current prices.

The X factor that could drive further growth is expansion into China, which is well underway with increasing sales. MCP is also targeting new export markets in growth regions: North Asia, Malaysia and India.

 

[aus_trader]

With some of the cryptocurrencies such as bitcoin showing a bit of recovery in prices, I thought to do a trade with asx listed stock that's right in the thick of cryptocurrency space, Digital X Ltd (DCC). I've had a bit of luck with it in the past, but if it continues to drop like a stone I plan to get out of the trade...

New stock entry:

 

[aus_trader]

Zip Co Ltd (Z1P) was sold today in this portfolio.

 

[aus_trader]

I guess you never stop learning from the markets. I wrote that I was going against the trend when buying renewable energy stock Windlab Ltd (WND) since the sector was pretty hated but I thought this one was a bit different. Just got out of it after being kicked in the gut (stock tanking), was trying to sell it last few days but due to large bid/ask spread I wasn't filled till today. Also I observed clear robot activity where there was an order that was getting in front of my order within milliseconds. Since there was around a 10c gap I moved my order a good 7c up and down and each time there was that robotic order that was jumping in front of me. It couldn't be human because if I amended my order to be in front, the robot order was still displayed as first to be filled as soon as I hit refresh. No human could have a reaction time that fast!

Learnt my lesson trying to be a contrarian and outsmart the markets.

 

[aus_trader]

Having another crack at Clean Seas Seafood Ltd (CSS). On it's way to make it's maiden profit after a lot of investment into farming the priced kingfish it sells.

I also noticed another stock in this space seems to be blasting into space lately, namely Murray Cod Australia Ltd (MCA) which is still in the earlier stages of development from what I can gather. Anyone know any info on MCA rise?

Open Portfolio:

 

[aus_trader]

Bought mining services company Maca Ltd (MLD). Results reported today and maintains a dividend close to 7%. Price had gone up quite a bit when I bought shares due to results reporting today.

Open Portfolio:

 

[aus_trader]

After holding for nearly 3 months, sold Capitol Health Ltd (CAJ) for a loss. There is a dividend coming up on 26th of September, I'm not comfortable losing any more capital on this one. Not easy finding winners these days...

Closed Positions:

 

[peter2]

Sold my CAJ recently also. They're either not working efficiently or can't convince the investing community that they are.

If it was easy then everyone would do it and that would make it hard again. The losers try something else (hoard gold) and that makes it easy for the few who stick to it.

Looking through your results I see that you're having a difficult 2018. We both know that there have been lots of great trending stocks this year. Have you wondered why you haven't had many in this portfolio? (Or were they all in the BIG portfolio).

 

[luutzu]

After holding for nearly 3 months, sold Capitol Health Ltd (CAJ) for a loss. There is a dividend coming up on 26th of September, I'm not comfortable losing any more capital on this one. Not easy finding winners these days...

Closed Positions:
View attachment 89067

For what it's worth, I think it's very tough investing in small/micro companies.

The only chance of making serious money, or any money, out of them is if you've done serious research into each of them.

By research, I mean talking to the manager, the contractors, consultants, the technician, the lady in the office. Really, really know what they're about.

From having that kind of detailed understanding, I think an investor could then make informed decision. And more likely to make a fortune or two with getting in on the ground floor and what not.

To get in from financial statements, managerial presentation or projections... armchair warrior stuff... It's going to be pretty tough for a couple of reasons.

One, the business might very well be legitimate. But business is tough, very difficult to get the funding and the product/services right, the marketing etc. Then there's the big boys who can pretty much crush you before you could walk.

So when there's sizzles, the market will tend to boost the stock skyhigh. The moment there's a bad rumour or a set back, it's a race for the exit.

Pretty tough to know when to go against the crowd so you'd just go with them to be save. Can't make money doing that, i don't think.

Second, I think established companies.. or at least ones that's profitable, pure play etc., They could do very, very well too if you can pick them right, or lucky enough to find them.

Just my thoughts.

 

[peter2]

I agree that it's hard trading/investing in small/micro caps and it's much harder with a small capital base. Aus_trader's task is much harder because it's a small portfolio and can only hold a few positions at once. It's hard to get lucky with only six picks. This can be offset by increasing the number of stocks in the portfolio and being able to hold through periods of falling prices. This requires a larger capital base. A fully funded investor may hold 20 - 30 small/micro caps to improve the odds of holding a few large winners.

Buying stocks after good reports means paying higher prices skewing the RR profile unfavourably, especially if a small account can't take the heat after a sell-off.

Of course I'd like to point out that it's possible to make serious money without talking to the manager, contractors, employees or even the tea lady (sorry, tea trolley attendant). The insto's competing to invest their capital in promising companies leave "footprints" and make patterns in the price charts. Insto's can only make money if the stock price goes up. Any "armchair warrior" with a drink at hand can buy into stocks with rising prices and "make out like a bandit".

 

[aus_trader]

Sold my CAJ recently also. They're either not working efficiently or can't convince the investing community that they are.

If it was easy then everyone would do it and that would make it hard again. The losers try something else (hoard gold) and that makes it easy for the few who stick to it.

Looking through your results I see that you're having a difficult 2018. We both know that there have been lots of great trending stocks this year. Have you wondered why you haven't had many in this portfolio? (Or were they all in the BIG portfolio).

It's been tough going this year in the speculative space, you are right. But my aim is to be consistent and also keep capital preservation in mind when investing. I know there has been a few good stocks (such as RHP, ASX, APT) to have been in but I would have had to cast a wider net i.e. buy many more stocks to find a few winning stocks to hold on to. Would have had to cut out many losers too along the way though since winners are very rare.

I sold CAJ since share price has dropped and I prefer to be out in case the drop continues. It's easy to change strategy and hold to see if price recovers or till dividend date etc but then I'll not be consistent.

The longer term portfolio is doing OK without any runaway stocks/ETF's in it so far. This is good as I can let it be and collect the odd dividend without tempting to sell a runaway winner.

 

[aus_trader]

For what it's worth, I think it's very tough investing in small/micro companies.

The only chance of making serious money, or any money, out of them is if you've done serious research into each of them.

By research, I mean talking to the manager, the contractors, consultants, the technician, the lady in the office. Really, really know what they're about.

From having that kind of detailed understanding, I think an investor could then make informed decision. And more likely to make a fortune or two with getting in on the ground floor and what not.

To get in from financial statements, managerial presentation or projections... armchair warrior stuff... It's going to be pretty tough for a couple of reasons.

One, the business might very well be legitimate. But business is tough, very difficult to get the funding and the product/services right, the marketing etc. Then there's the big boys who can pretty much crush you before you could walk.

So when there's sizzles, the market will tend to boost the stock skyhigh. The moment there's a bad rumour or a set back, it's a race for the exit.

Pretty tough to know when to go against the crowd so you'd just go with them to be save. Can't make money doing that, i don't think.

Second, I think established companies.. or at least ones that's profitable, pure play etc., They could do very, very well too if you can pick them right, or lucky enough to find them.

Just my thoughts.

Bruce Lee is one of my all time favourites by the way...

Lot of good points and agree with most of them. Especially about big boys can kick you out before stock taking off etc. If there was a way to invest alongside them... Its happened to me a couple of time such as with NEA which I got out of too early but look at it now.

In terms of holding on and adding to position every time when price crashes, yes you need to know the business inside out probably at top management level. I think below that level people don't know the real information but they generally like to talk highly of their company. I know workers who thought everything was going so well that when they went for the redundancy meeting with the boss who explained the company was going out of business they thought they were called in for a promotion

So my take is unfortunately we have to go with what's announced with the public companies since we don't have such insider knowledge.

 

[aus_trader]

Couple of stocks added to the portfolio today. One is a well established dividend paying company and the other is a pure punt that can go either way.

With financial stocks pulling back a bit I thought to do a bit of searching around for anything offering good value in terms of dividend yield but didn't want to buy a major bank just yet either. Came across Bell Financial Group Ltd (BFG) and decided to have a bid as the price was coming down. Went as low as 91c but by the time I put my order in it was bid up again so got in at 95c. Still happy as it offers a dividend yield of 7.5% which higher than any of the major banks at this point in time. Business is involved with investments and financial advice under Bell Potter brand and stockbroking under Bell Direct brand.

The other is a penny punt on Yowie Group Ltd (YOW), which seems to be undergoing a turnaround strategy. Well at least trying according to the company information and they are calling it a "reset" (see below), after the share price falling so much. Previously only supplied to the US but just started selling in Australia through Woolies, Big W, K mart, Target, Reject shop etc.



Open Portfolio:

 

[aus_trader]

Just got filled on the Digitalx Ltd (DCC) sell order, so it's taken out of the portfolio.

 

[aus_trader]

Although overall trend for Gold looks to be down, it seems to be flattening out at this stage. peter2 also mentioned about gold a few minutes ago in his "P2: A batch of FX market trades" thread as shown below:
""
WTI: going up, against trend, this rally may provide a short setup.
Gold: going sideways, no momentum
Silver: going sideways, no momentum
Copper: going sideways, ready to move up?
""
It's good to get opinion from other experienced traders I think.

Anyway the reason for mentioning it here is I've been looking for potential gold stock trades if the gold price is not heading south or ideally if it's going up. These are intended to be speculative in nature so not going to put any gold stocks in the Medium/Longer Term Stock Portfolio as they could fall if the gold price continues it's downtrend.

I took a position in the gold stock Aurelia Metals Ltd (AMI) which has recently become a miner. The numbers are impressive since becoming a miner:

While the gold price is heading down it's probably a good time to make a list of gold stocks that have some quality assets/business like this one. If other members are aware of awesome gold stocks with quality mining/exploration assets that are hidden gems at the moment list them on this thread here. At least a one liner for your reasoning will be good since there are too many gold stocks with almost worthless assets. We can pick up the best of the best at beaten down prices once the gold price turns around. I'll buy the best few of them myself when the time looks right and display those stocks in this portfolio.

Open Portfolio:

 

[peter2]

It's worth noting that my opinions on the markets are relevant to the time frames I'm trading. The market comments you posted above are relevant for the next 4 hours, as I'm trading 4H trends.

Soon after I posted those comments on gold/silver, the markets fell. The weekly and daily trend for gold/silver are down and it's going to take a lot of money and a complete change in sentiment to get them going up.

Please be careful about placing significance on any market opinions.

Like you, I've been reluctant to trade gold stocks while the price of gold falls. My reluctance is also due the fact that I've got a lousy record with them.

In spite of my opinion and reluctance there are several gold producers showing excellent chart trends. AMI is OK, but ONX is better.

 

[aus_trader]

In spite of my opinion and reluctance there are several gold producers showing excellent chart trends. AMI is OK, but ONX is better.

Thanks Peter, I'll also look into ONX to keep in a watchlist. Since Re-listing after company name change, it has made great progress and just last month poured the first gold from Comet Vale JV project. Would be good to see the financials of their operation as they continue to report...

I understand your comments regarding the short term and the longer term trends. Like ONX, AMI is one that is going against the grain at the moment. That is, these gold stocks seem to be in an uptrend while gold is in a downtrend, so I'm having a bit of a play (speculation). But I'll wait for the long term trend to change in gold before buying into perhaps a handful of gold plays. So in the meantime this is a great time to analyse, share ideas and gather information of the best gold plays that are staying under the radar and becoming cheaper in most cases while we wait...

 

[aus_trader]

Like you, I've been reluctant to trade gold stocks while the price of gold falls. My reluctance is also due the fact that I've got a lousy record with them.

Me too. My record is bad as well in the past with most mining plays not just gold. I've mentioned about this in my earlier posts about getting buried alive in the GFC days. Hopefully it's made me a more nimble, humble person. So I haven't thrown the towel in but continue to learn and become better at investing / trading.

 

[aus_trader]

Got out of McPherson's Ltd (MCP) this morning. There is a 2.5c dividend coming up on the 1st of Oct but share price looks to be heading down so I am not going to hold till ex-dividend date.

Also thought about adding Brainchip Holdings Ltd (BRN) to this portfolio since it's in an advanced chipmaking process. Decided against it after seeing another chip maker 4DS Memory Ltd (4DS) lost around 40% due to some hiccup (process modification) in the chip manufacturing process.