Vesuvius - set to erupt?

Regular readers of my blog will know that my investing style is to try and find interesting companies at what I perceive to be bargain basement prices, and then hold for the long term in the hope that the share price multi-bags. I have been very fortunate to have had a number of successes, and I hope there will be many more to come in future.

However, just for a bit of fun, I've decided to try some virtual trading. I intend to report on my virtual trades via this blog to see if I'm any good at it. I don't intend to move away from my long term buy and hold strategy because it has worked well for me so far. In the distant past, I have found it to be very frustrating after thoroughly researching a small/micro-cap company only to watch as the company's share price multi-bags (long term) when you thought how clever you were selling it earlier to realise a (mere) double digit gain.  As mentioned yesterday, my mantra is if the story remains in tact, and the company is growing at an acceptable rate, then just buy at a good price and hold (I would add top-up on the dips when Mr Market turns miserable and throws the baby out with the bathwater!!). What is it that Warren Buffett says? Our favourite holding period is forever (or words to that effect).

Anyway, here goes, my first trade is to buy shares in a company called Vesuvius at £4.57.  Please note that I haven't researched this company in any depth. What I do know is that the company was originally part of Cookson group until relatively recently. The company demerged with it's spin-off called Alent group.

Vesuvius is a global leader in metal flow engineering, developing, manufacturing and marketing mission-critical ceramic consumable products and systems to demanding applications, primarily in the global steel and foundry industries. Vesuvius also supplies fabricated precious metals to the jewellery industry in Europe and has significant precious metals recycling operations.

Why the trade? Firstly the share price is off it's recent highs of £5+, Directors have been recent purchasers of the shares (not insubstantial amounts), the company pays a dividend of over 3% (easily covered by earnings), it boasts a single digit p/e ratio, and doesn't have much interest on the BBs.

Whilst their interim management statement wasn't exactly inspiring, investors might have missed the fact that margins have improved and management are confident in meeting expectations for the full year.

In addition, Peter Lynch likes "spin-offs". He says:- "Spinoffs of divisions or parts of companies into separate, freestanding entities often result in astoundingly lucrative investments."

I'll let you know when I make a virtual sale, and keep you updated with my virtual trading activity.

Nothing to lose, or indeed nothing to gain.