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Carillion kills off the "Bombed Out" portfolio

Described last week as the "mother of all binary punts", last week's purchase of Carillion backfired spectacularly and now the "Bombed Out" portfolio has lost half of its starting capital, which can mean only one thing ...

Fire
Going down in flames

Video killed the radio star and Carillion killed the “Bombed Out but Bouncing Back” portfolio.

Last week I asked the question: is it time to buy “bombed out” Carillion?

Well, we know the answer to that, now, and, in fact, we probably knew the answer to it last week but because the “Bombed Out” virtual portfolio is one where the virtual fund manager does not get a veto, the stock was added to the pot and now we can’t sell it because trading is suspended.

READ Is it time to buy 'bombed-out Carillion?

READ Carillion collapse confirmed as firm takes steps to enter compulsory liquidation

We have been able to sell two stocks, however: Dixons Carphone Plc (LON:DC.), sold at £2 a share for a £48 loss and Provident Financial PLC (LON:PFG), sold at 841.2p a share for a loss of £146.

The timing of the sale of Provident was unfortunate as the doorstep lender’s stock dropped today after Argos dropped Provident’s credit card arm, Vanquis, from its list of financial services partners.

Stick a fork in it, this one's done

Not that it matters, as the current value of the portfolio has dropped below £5,000 – assuming a nil value for the Carillion holding – and I’ve previously said the experiment would be dropped when (not if) the portfolio had lost more than half of its starting capital of £10,000.

It’s a bit unfortunate, actually, as the two other stocks in the portfolio, Hurricane Energy PLC (LON:HUR) and Interserve PLC (LON:IRV) have been flying.

Despite being down more than 4% today the former is showing an 18.1% profit for the “Bombed Out” portfolio while Interserve, which somehow escaped the fate that has befallen Carillion, is up 23.5%.

Both stocks might be worthy of further investigation as investment opportunities, though neither strikes me as a stock for widows and orphans.

For what it is worth, if the portfolio had continued it would have seen us buying back two stocks – Petra Diamonds and Petrofac – that we sold last week, and buying them at prices above the level at which we sold them.

That's no way to carry out an investment strategy - sell low and buy high - so, it is with little regret that I abandon the “Bombed Out but Bouncing Back” portfolio, and this time there will be no rebirth.

I’ve tweaked the algorithms, made sacrifices to the small caps deities, crossed my fingers and stroked my lucky rabbit’s foot (it wasn’t that lucky for the rabbit, come to think of it) and nothing has worked.

If there is money to be made through frequent trading and in momentum investing, the way to do it is not by following the edicts of this virtual portfolio, which has seen £1,545 wasted on (virtual) dealing fees.

We’ll need a replacement portfolio to fill the weekly Stockpot slot and I have some ideas that probably won’t provide as much gallows humour but which might actually, you know, be worth reading as investment pieces.

Here’s how the portfolio was buried

 

Company

No. of shares

Total cost

Average price paid

Current bid price

Current value

Profit/ loss £

Profit/ loss %

Carillion

5,700

£1,206

21.16p

0p

0

-£1,206

-100%

Hurricane Energy

3,630

£1,205

33.19p

39.1p

£1,419

£214

18%

Interserve

1,065

£1,043

97.91p

120.7p

£1,285

£243

23%

 

  • Cash: £2,245
  • Total value of original £10k portfolio: £4,893
  • Profit/loss on closed trades and dividends: -£4,302
  • Unrealised profit/loss on current holdings: -£749
  • Total profit/loss: -£5,051

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