As this week I’m now eligible for the 12 month CGT discount, I’ve been waiting to sell off my Supply Network (SNL) shares at $1.60, and today the order filled. I began buying SNL at 42c, however this block cost me 89c – giving me a mere 80% profit for the period. Not bad!
After only writing about Nearmap (NEA) a month ago, I logged in to see I was currently sitting at a 50% profit, so I sold them too. I believe Nearmap have long-term prospects, but such a fast windfall is worth taking now, and if it falls back around the 7c mark I will buy in again.
Finally, while I hadn’t written about Mincor (MCR) I bought a small block of shares due to their low-cost operation, exploration upside, and competent management. In retrospect I probably should never have bought MCR with the current systemic risk out there, which could easily hammer the price of nickel into the ground. It’s another competent firm which I believe will be cheaper in the future, so I have decided to undo my mistake, and picked up 8% profit while I was at it.
I am planning to sell down my BigAir (BGL) too, but since HY13 numbers came out the share price has been hovering around the 50c mark. I plan to sell down at least part of my shares when they return to 60c.
My medium-term portfolio strategy is not going to be holding a lot of value, I’m more focused on a few explorers, cash, and precious metals. Hardly a value portfolio. I still hold CKL in anticipation of an inevitable re-rate of the stock.
In my view, the global economy (including Australia, China, and everybody else) is going to have to eat an enormous shit sandwich in the very near future. My super is now in 100% cash and I get a guaranteed tax-free return by paying down my mortgage. I will keep an eye out for value picks that are less subject to systemic risk, but in the meantime I am sitting and waiting for everything to play out before I go risk on again.
I’ll be honest, when I originally posted about SNL back in 2011, I thought I’d found a cheap company with a stable business that wasn’t set to grow much faster than the economy. Back then, it was a $19m market cap minnow, selling for 9.2 times earnings. Since then market cap has more than tripled, to $53m, and earnings have kept a reasonable pace, with a P/E multiple of 13.39. Over the past 2 months alone it has rocketed from the $1.20 range up to $1.60!
So today management released preliminary HY13 figures. NPAT of $2.08m represents an increase of around 17% against PCP, with a half year dividend of 3.5c. I’ve already sold down half my holdings, and my 1 year capital gains discount applies at the end of February. I’m still sitting on a 75% profit on my most recently bought parcel, so if share prices are still at current levels in a month’s time I will take profits. Much of SNL’s growth has been from Central Queensland mining, and if commodity prices fall it could lead to reduced sales.
In reviewing my current book, there are a couple of stocks I have either sold down, or plan to sell down in the near future:
AMM: I have now fully exited my position in AMM. There is likely to still be good growth but with the recent price appreciation I’m happy to book a healthy profit and look for new opportunities.
SNL: I’ve got a parcel that comes to 1 year holding in February, so I’ve sold half and will sell the other half when I get my 50% CGT discount. Another fine company but with recent price appreciation it’s not the same bargain it was at 42c.
COH: This was an opportunistic buy for me, due to a temporary scare driving the price from the $70 range to the high $40s. I’ve just ticked over 1 year of ownership so have put in a sell order at $68. No hurry, but I’ll be happy with that price, and the profit.
I’m going to continue holding BGL for now – the recent rise in share price looks like the beginning of a broader appreciation of BGL, and they are generating cash like the billy-o. I’ve got my eye on a few other blue chips, and will be undertaking a new sweep of “cigar butts” to find more SNL-type opportunities.