Previously, we have introduced changes to the stock filter used for the Bombed Out but Bouncing Back (BOBB) portfolio to staunch the bleeding.
Whether by luck or judgement, those changes – introducing a minimum transaction size of £1,000 and favouring stocks with low bid/offer spreads – succeeded in reducing dealing costs and gave the recovery stocks in the portfolio a fighting chance of making a (virtual) profit.
Throw in a few spectacular winners – MySquar and Bilby – over the past few weeks, and the turnaround in the fortunes of the portfolio has been little short of astonishing.
This time a month ago, the portfolio was valued at £5,122; today, it is valued at £7,661.
It may, therefore, seem a strange time to contemplate another tweak to the stock selection criteria but, call me slow on the uptake, but I have just noticed a parameter in the stock filter that might mean we have missed out on the chance to “run our winners”.
A quick recap on the stock selection filter
The stock screen is run on all UK listed stocks, looking for shares that fit the following criteria:
- Share price up at least 2% over the last five days
- Share price up at least 4% over the last 10 days
- Share price up at least 10% over the last month
- Current share price greater than the 50-day moving average
- Share price down at least 33% over the last year.
It is the last criterion – the loss of at least a third of a stock’s value over the last year – that gives the portfolio the “bombed out” part of its name.
It’s a perfectly reasonable parameter to have when looking for new stocks to add to the portfolio, but do we necessarily need to apply it to stocks that we already hold?
In other words, why should we sell a stock simply because it has recovered enough to stop being bombed out?
This week, when I ran the stock filter, Primorus Investments PLC (LON:PRIM) failed to show up, because it had recovered enough to reduce its loss over the last year to less than 33% - by just a percentage point or two.
In all other respects, the stock ticks all the boxes, plus there has even been some director buying over the last three months, which is another positive signal, albeit not a specific parameter of the stock filter.
So, from now on, I am going to ignore the 33% fall over one year criterion for stocks that are already in the portfolio, but will continue to apply it for stocks that qualify for being added to the portfolio.
We’ll see how that goes; Primorus will probably now halve within 15 seconds of me publishing this article.
Over and out for Sepura
That reprieve for Primorus means we only sell one stock from the BOBBB portfolio this week: walkie-talkie maker Sepura.
The company has been taken over by Hytera, so we were forced sellers, but I am not complaining as a takeover means no dealing costs and at £1,254, the exit value is more than 20% above the cost of the holding only 25 days ago.
Which is nice…
The sale gives us £1,257 to invest in one company.
The candidates this week were:
Conroy Gold and Natural Resources PLC, Craven House Capital PLC, Goldstone Resources Ltd, HSS Hire Group PLC, Infrastructure India PLC, Intercede Group PLC (back again after we sold last week), Keras Resources PLC, Scotgold Resources Limited and Ultimate Sports Group PLC
My first thought looking at that little lot is: worra lorra lorra gold companies.
We’re not going to be buying any of them, because junior gold explorers tend to have very wide bid/offer spreads - around 20% for the likes of Keras, Scotgold and Goldstone, so we’d need a fairly major economic crisis to break out for those stocks to rise 20% to cover the bid/offer spread.
Admittedly, with the political leaders we have at the moment there is a good chance the next economic crisis will be round the corner, but be that as it may, the winner of this week’s BOBBB lottery is tool and plant hire group HSS Hire (LON:HSS).
Lifting me (hire and hire)
The share price is down 34% over the last year, after a series of iffy trading updates and a December fund-raising.
John Gill stepped down in April as boss of the company just days after the company published grim annual results.
Last week, the company announced Steve Ashmore as his replacement. His pedigree looks decent, as held a number of senior roles at logistics firm Exel before moving on to plumbers’ merchant Wolseley PLC, where he became UK managing director, and then on to Brammer PLC, the distributor of industrial products, where he was also the UK managing director.
So, if nothing else, he should get the company’s logistics sorted out.
He does not have a magic wand, however, but we wish him the best of luck when he clocks in for the first time on Thursday.
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
83p
£1,660
+£625
+60%
Grafenia
25,600
£2,319
9.06p
9.75p
£2,496
+£177
+7.6%
HSS Hire
1,875
£1,253
66.8p
64p
£1,200
-£53
-4.2%
Primorus Investments
1,770,000
£2,316
0.13p
0.13p
£2,301
-£15
-0.7%
- Cash: £4
- Total value of original £10k portfolio: £7,657
- Profit/loss on closed trades: -£3,073
- Unrealised profit on current holdings: +£734
- Total profit/loss: -£2,338
For those of you keeping track, losses were reduced by around £900 in the last week, which means over a quarter of the portfolio’s losses were slashed in one week, largely thanks to Bilby’s good run.