It is week thirteen of our experimental portfolio that tries to identify recovery stocks and I am not superstitious but ...
... the portfolio’s recent good run has ended.
Last week, flushed with funds from the runaway success of MySquar, I (virtually) invested in five stocks.
Those of you who follow football will understand what I mean when I say the purchases were reminiscent of the splurge Tottenham Hotspur went on when it received all of that money for Gareth Bale.
In summary, all of them lasted just one week, running out of momentum shortly after being purchased.
READ A virtual portfolio of recovery stocks
Countrywide PLC (LON:CWD) was bought for £1,012 and sold for £986. It enjoyed a little upsurge on the back of directors buying but as soon as they stopped topping up, the shares levelled off.
Digital identity software outfit Intercede Group PLC (LON:IGP) also paused for breath, only resuming its sharp upward movement after I had hit the sell button.
To be fair, the portfolio only lost a tenner on the stock and that’s with £30 of assumed dealing costs, so in some respects it was not a flop and, as alluded to above, the darn thing is up 5.4% today.
Mobile Streams PLC (LON:MOS), sad to say, was a flop, and if I am going to have a gripe about having sold Intercede a day too soon I should mention that Mobile Streams is down 9% today (all of the portfolio’s sales were done last thing yesterday just before the market closed).
When the stock was added to the portfolio it was up 57% on a single day, and I said it was “defying gravity without the backing of any hard news”.
There still has not been any hard news from the media streaming specialist and the stock is no longer defying gravity.
The portfolio lost £188 on this trade, making it the Paulinho of the bunch if we are carrying on with the Gareth Bale analogy.
Biotech stocks fail to pan out but might be worth doing a bit more research on
Another flop was Microsaic Systems PLC (LON:MSYS), which lost the portfolio £124.
At 2.5p, the shares are a halfpenny off their 52-week low, having been as high as 8.25p a year ago.
No wonder the CEO slung his hook.
Lastly, Proteome Sciences PLC (LON:PRM) got the elbow, but actually made an £8 profit, and it is up another 2.3% today.
Like Microsaic, it straddles the border between technology and biology – if only there was a word (such as biotech) for such a company, and even its chief executive officer admits it is in a transition phase.
It was another stock that appeared on the radar following share purchases by directors, and now they have stopped buying, the share price had run out of steam.
Reinvesting the money
Selling that little lot generated enough to buy four stocks, given our recently introduced rule about not investing less than a £1,000 a time.
As it happens, only two stocks turned up on the stock filter this week, and they are Grafenia PLC (LON:GRA) and Primorus Investments PLC (LON:PRIM).
Grafenia: bought 25,600 shares at 9p each, at a total cost of £2,3041.
The web print and supplies group issued a profit warning in February, which followed a profit warning in November, which followed a disguised profit warning in October and a downbeat trading update in August.
About a year ago it fell into the red and axed its dividend, so this is not a stock to fill one with a lot of confidence.
Last week, it issued a replacement for a trading statement it released a month earlier, having left a bit of financial information out relating to its expected cash balances at the end of its financial year.
Like I said, the company does not inspire confidence.
My suspicion is it is in the wrong industry and no matter how much it cut costs it will struggle, but this virtual portfolio is not the place for fundamental analysis.
The fact is, the shares have risen by a third over the last month, after April’s mixed trading update.
Trust me, with this lot, “mixed” is an improvement; at least it was not a profit warning.
Primorus: bought 1,770,000 shares at 0.13p, at a total cost of £2,301.
One day, when you have a spare moment, read up on the South Sea Bubble, if you do not already know the story.
I sometimes feel we need one of those bubbles to get this virtual portfolio out of its hole.
Primorus is not in a hole – it claims it has no debt and £1.30mln in cash, which is not bad for a company with a stock market valuation of £1.27mln – but it would certainly benefit from a bit of South Sea-style hysteria over the “Gatwick Gusher” – although some would say there has already been a fair amount over this onshore oil discovery.
Primorus owns a 10% stake in Horse Hill Developments, the company that is developing the Horse Hill discovery in the Weald Basin.
The shares rose this week as the investment company said it would not, after all, be raising additional funds through a share placing – at least in the short term.
The recent fall in the company’s share price put the kibosh on that idea, apparently.
Let’s hope they hold off issuing shares long enough for us to make a profit on this investment.
Scores on the doors
Company
No. of shares
Total cost
Average price paid
Current bid price
Current value
Profit/ loss £
Profit/ loss %
Bilby
2,000
£1,035
51.75p
65p
£1,300
+£265
+26%
Grafenia
25,600
£2,319
9.06p
8.25p
£2,112
-£207
-8.93%
Primorus Investments
1,770,000
£2,316
0.13p
0.12p
£2,124
-£192
-8.29%
6,350
£1,031
16.24p
19.25p
£1,222
£191
+19%
- Cash: £3
- Total value of original £10k portfolio: £6,761
- Profit/loss on closed trades: -£3,296
- Unrealised profit on current holdings: +£57
- Total profit/loss: -£3,239
For those of you keeping track, the portfolio went backwards to the tune of £312, but as the Black Knight in Monty Python & the Holy Grail said, I’ve had worse.
It’s a mere flesh wound.