Sunday 4 November 2012

The very little research, but are these really hopeless cases? portfolio vs. FTSE250 - update

It's been a very quiet week for the micro/small caps that I have an interest in, and as such I don't really have anything new to add.

However, some of you may remember that, as a bit of fun in September 2011, I started to look at companies that had or were having a bit of a torrid time either from a trading or a share price point of view.

Out of interest, I started to compare the SP performance of these companies to the performance of the FTSE-250.

I was going to provide updates on a monthly basis, but unfortunately other commitments don't allow me to post as regularly as I might wish to.

Since September 2011, you might be interested to know that the FTSE-250 has risen by a very creditable 20.9% from 10,021.39 to 12,120.83, but how have the selected companies performed. Which have been the stars (if any) and which have crashed to earth with a bang?

Well the biggest casualty was Game Group. In fact it was Game over (I wonder how many times the press used that one?). One of the many high street casualties in recent years unfortunately, and an investment here would have cost you dear.

The next biggest loser (at the moment) is Man Group, falling from a price of 206.1p to 84.5p, a whopping 59% drop. Incidentally, I did mention Man Group in last week's blog for those interested.  Thomas Cook is next with a drop from 43.55p to 22.5p (a 48.3% drop).

Three of the other shares have fared better. In order of price gains Cable and Wireless Comms has increased by 16.2%,  Aviva and Vodafone by 6.2% and 3.3% respectively.

Cable and Wireless Worldwide succumbed to a bid from Vodafone (ironically), and if memory serves me correctly Vodafone paid 38p per share, meaning you would have bowed out with a reasonable 10% profit.

Finally, the biggest star so far is ITV, rising from 55.85p to its current 89.5p, a very healthy 60.3%.

Overall, the portfolio is down by 14%, and hence the FTSE-250 is the clear leader by some considerable way at this particular juncture.

As I stated at the time, I didn't and don't have any holdings in the companies mentioned and haven't carried out any research, I just thought it might be an interesting study for a year or two.

Are there any lessons to be learnt?

Probably not, but to state the obvious, it's essential to thoroughly research companies you invest in before taking the plunge, and investing at the right price is crucial i.e. What price are you prepared to pay for a company?

Cable and Wireless Worldwide was a classic example. Whilst a 10% gain is a decent profit in less than a year, at one point the shares slipped to about 14p (again from memory?) and if you'd bought them then you'd have made a killing, in fact a 171% profit in a very short period of time.

I hope to re-visit these companies again in a year's time.


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