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Bombed Out Portfolio: Say hello to HaloSource

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Someone's drilled a hole in the Bombed Out but Bouncing Back barrel

The “Bombed Out but Bouncing Back” column has returned from an invigorating week on a Greek island to announce wholesale changes to the portfolio.

The portfolio is normally adjusted on a weekly basis but last week I was getting away from the heat by spending some time in the cradle of Western civilisation, so it should not be too much of a surprise that all of the stocks in the portfolio are heading for the exit.

WATCH: ‘Don’t do this at home folks!’’ - Proactive’s virtual fund manager still hoping to strike it lucky

So, six stocks hit the trail, and as seems to be the norm with this portfolio, most of them do so after making a loss. It seems that a momentum-based portfolio such as this one relies on “hitting sixes”, such as we did a while back on MySquar, to make progress. This month's selections seem to have had a fair few "out first ball" selections.

LOSERS’ CORNER

The timing was not the best for City of London Group (LON:CIN), which shed 8.4% on Monday before we got on to the virtual online dealing service to liquidate our holding at 4.5p a share.

We bought at 5.57p, so we took a £236 loss on our original £1,143 investment.

Digital ID specialist Intercede Group PLC (LON:IGP) was bought at 65.86p a share and the share price has stalled at a mid-market price of 61.9p over the last week.

Bid/offer spreads mean we exited at 60p, and taking into account assumed dealing costs of £15, the loss on our original £1,46 investment is £117.

READ the principles behind the “bombed out” portfolio

The big loser was Papua Mining PLC (LON:PML), which has a ticker symbol - PML - that means “peed myself laughing” in text-speak circles.

It is safe to say I would not have been PMLing had I owned this share in real life.

The gold and copper explorer blagged its way into the portfolio on the back of a strong surge over three months that saw its shares rise more than 80%. Sadly, the shares appear to be taking a pause for breath, and that has caused the share price to fall below the 50-day moving average, which means it exits the portfolio.

The bid/offer spread is particularly nasty on this one, and we sold at 1.3p, versus a mid-market price of 1.46p. Proceeds from the sale came to £853, compared to the £1,151 the holding cost us.

South African Property Opportunities Plc (LON:SAPO) looks, on paper, like an even bigger loser than Papua.

We paid £1,155 for our holding and sold for £341, but the reason why the shares collapsed in the two weeks we owned them was because it paid out a handsome special dividend; not enough, at £570, to cover our losses, but enough to reduce our losses to £244.

WINNERS’ CORNER

Believe it or not, two of the stocks in the portfolio made a small profit.

Conroy Gold and Natural Resources PLC (LON:CGNR) was down 5.4% on Monday – it’s almost like malicious market makers are aware that I do my virtual trades on a Monday – but having paid 16.21p a share we still managed to exit at 17p a throw, for a small profit of £41.

There’s been no news flow since we bought but there is still the prospect of a board room coup after the company received a request on 8 June to convene a general meeting to vote on whether to remove some directors of the company and replace them with some others, including Gervaise Heddle, chief executive of sector peer Greatland Gold.

Lastly, spread betting firm CMC Markets Plc (LON:CMC), which, of course, is down in a rising market today, was sold at 150p a share, having been bought at 143.13p a pop.

That yielded a profit of £40, which is not much but considering that Goldman Sachs has reportedly been selling down its stake in the company following the recent good run, it’s nice to be involved in one transaction – albeit a virtual, fantasy-based one – in which Goldman Sachs was not the only winner.

Surveying the wreckage, the sales, plus the dividend income from South African Property, give us £6,080 to invest.

The stock screen has produced five stocks, including one with the hair-whitening spread of 20%, so let’s have a look at them.

PURCHASES

Halosource Inc (LON:HALO)

It is generally not a good thing for a water technology group to warn on possible insolvency, as Halosource  did on 9 June.

With the company set to run out of money at the end of this month it raised some cash (£1.8mln) in the nick of time a week ago, and followed that up with news of a new e-commerce customer agreement.

Things appear to be looking up for the company but a wide bid/offer spread of 2.25/2.75p tells you all you need to know about the market makers’ view of this one. As an aside, I am seriously considering imposing a new parameter for the BOBBB portfolio, excluding any stock that has a bid/offer spread of more than 5%, but we'll leave it one more week.

So, holding our noses, we buy 43,000 at a total cost of £1,198.

Infrastrata PLC (LON:INFA)

Here’s a curious one. Normally a stock tanks on the day we decide to sell, but on this occasion we are buying a stock that fell 12.6% on Monday on the departure of joint managing director Anita Gardiner with immediate effect.

The stock exchange announcement regarding the departure was terse and mercifully light on touchy-feely prose so it looks like this was not an entirely amicable parting of the ways.

The shares have halved over the last year, but since 21 April have risen from 0.463p to 0.59p.

The company announced a review of strategic options on 22 May and said it had been in discussions with interested parties to provide the remaining £2.2mln in funding required to complete the front end engineering design and a commercialisation work  programme to the Islandmagee gas storage project.

Bought 165,000 shares at 0.75p each for a total outlay of £1,252.

Metals Exploration Plc (LON:MTL)

Here’s another one that took a kicking on Monday – down 17%.

The natural resources exploration and development company with assets in the Pacific Rim region is looking to raise fresh funds (aren’t they all in this sector?) to pay off loans from its two major shareholders.

Bought 33,000 shares at 3.75p each for a total outlay of £1,253.

Mytrah Energy Ltd (LON:MYT)

It has been a good month for the Indian power generator, which reported a jump in full year profit.

WATCH Results 'a clear demonstration of our ability to grow the business' - Mytrah's Bob Smith

Bought 4,200 shares at 27.5p each for a total outlay of £1,170.

Strat Aero PLC (LON:AERO)

Full year results from the airborne drones maker suggested the company is, indeed, bouncing back under new boss Ian McLure.

Bought 1,050,000 shares at 0.11p each for a total outlay of £1,170.

Here, then, is how the new reconstituted portfolio looks.

Scores on the doors

Company

No. of shares

Total cost

Average price paid

Current bid price

Current value

Profit/ loss £

Profit/ loss %

Halosource

43,000

£1,198

2.78p

2.25p

£968

-£230

-19%

Infrastrata

165,000

£1,253

0.76p

0.70p

£1,155

-£98

-7.8%

Metals Exploration

33,000

£1,253

3.8p

3.5p

£1,155

-£98

-7.8%

Mytrah Energy

4,200

£1,170

27.86p

26.75p

£1,124

-£46

-4.0%

Strat Aero

1,050,000

£1,170

0.11p

0.10p

£1,050

-£120

-10%

  • Cash: £38
  • Total value of original £10k portfolio: £5,451
  • Profit/loss on closed trades and dividends: -£3,920
  • Unrealised profit on current holdings: -£592
  • Total profit/loss: -£4,511

 

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