Some of you may remember that I started a virtual trading portfolio back in June 2014, I then updated the performance on two separate occasions to assess it's performance:-
http://michae1mouse.blogspot.co.uk/2014/06/vesuvius-set-to-erupt.html
http://michae1mouse.blogspot.co.uk/2014/07/virtual-trading-portfolio-update.html
http://michae1mouse.blogspot.co.uk/2014/07/addition-to-virtual-trading-portfolio.html
In the short term, the performance of this small portfolio that I had started was pretty poor, and as a consequence I decided that it had just confirmed that short term trading was not for me. I am by nature and experience a long term investor (micro-caps mainly). Certainly a long term buy and hold strategy has worked well for me, although you have to except that not all of your picks will be star performers.
I thought I'd just quickly review the performance of my virtual trades some ten months later to see how they had performed.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £5.205(+13.9%)
Vodafone £2.07 £2.24(+8.2%)
Morrison £1.93 £1.98(+2.6%)
Rightmove £22.96 £30.51(+32.9%)
Given a equal weighting to each investment the current return is 14.4%. Not too bad given a somewhat dismal start. What does this prove? Well it doesn't prove anything particularly, but it's further evidence to me (not that I needed it) that buy and hold is by far my best strategy, with at the very least a medium term view.
For those that missed it, you might also be interested in the performance of this virtual portfolio:-
http://michae1mouse.blogspot.co.uk/2011/08/very-little-research-but-are-these.html
http://michae1mouse.blogspot.co.uk/2014/01/hopeless-cases-portfolio-vs-ftse-250.html
It's worth noting that since I last reported, EMG (Man Group) is now above the original purchase price and most of the others have gone from strength to strength.
Tuesday 7 April 2015
Sunday 5 April 2015
Fool me once shame on you, fool me twice shame on me!!!!
Regular readers of my blog will remember my posts about a company called DCD Media. DCD Media was an awful investment on my part, but it did teach me some invaluable lessons and in truth you learn far more from your mistakes than you do from your successes. I have a "virtual" fondness for the ADVFN BB investors in DCD Media, and their recent optimism and the current strength in share price prompted me to take a second look at the company. Please bear in mind that less than 20% of the company is in free float. In other words, the shares are extremely illiquid. Following some exchanges of opinion on the DCD bulletin board (http://uk.advfn.com/cmn/fbb/thread.php3?id=32717631), I am posting my final response to shareholders:-
I said I wouldn't post again, but given the optimism expressed on this BB, I've had another look at the interim accounts to see if this particular leopard has changed it spots, and whether or not I'm missing a massive opportunity.
Here are my thoughts. With great respect to all shareholders please consider the following extracts from the report. Remember Craven is hinting that profitability is just around the corner.
Firstly, last year's gross margins were 33%, at the interim stage they had fallen to 26%. They may recover to nearer 33% for the full year of course, I don't know? Anyway let's be generous and assume that they do. We'll assume that admin expenses come in around £6m(again generous indeed). To break even, they need to make over £18m in revenues. Revenues fell at the interim stage and were around £14m last year. Admittedly the market cap. is a measly £2.2m, but then how much is a loss making company with negative current assets worth?
Next up. Here is a classic from the DCD accounts:-
"Funding of GBP0.8m secured in the form of new convertible loan notes from the Group's largest shareholders, including GBP0.6m issued to Timeweave Ltd in settlement of amounts relating to accounting and director services."
They have borrowed near £1m to pay the Directors and "settlement of amounts relating to accounting". Given what I have said above how often are they going to have to do that? Oh dear, have a look at previous accounts and my previous reports. Leopard and spots instantly comes to mind. Still not to worry, the loan notes only carry a modest interest rate of 10% and can be converted into equity at £1 in May of next year (current share price £4.875). Good grief.
"UK productions, consisting of September Films UK, Rize USA and Matchlight, contributed GBP3.2m to revenue but made an operating loss of GBP0.1m."
As mentioned in previous posts, they make s*d all from productions.
"September Films USA contributed no revenue to the Group in the period as a result of the cancellation of the Bridezillas series."
At least the Directors got paid. Note the heavy sarcasm which pervades this report.
"DCD Rights has performed well in the first half of the year although revenue has decreased by GBP0.3m to GBP2.2m. Gross margin has remained constant between the periods. A focus on content acquisition in the first half will benefit sales in the second half and beyond."
A long way to go with this then given that distribution is where their focus will lie. £6m in revenues at year end possibly? What is the gross margin and did they make a profit? In fact there is no mention of margins or profits for the separate divisions only revenues. To be frank DCD Publishing and Sequence Post are hardly worth mentioning since they contributed a combined £0.6m in revenues and again we have no idea about margins or profitability.
Despite Craven's bluster about:- "the foundation is laid for accelerated growth" and "These developments, we believe, position DCD Media well for a return to profitability". I can find no evidence within the report to suggest that DCD is any different to how I remember it. Loss making and still some way off ever making sustainable profits.
Still they could always sell September Films USA. What price a production company that doesn't produce anything and contributes zilch to revenues?
DCD, a trader's punt maybe, but personally I wouldn't hang around.
As ever AIMHO and happy to be proved wrong.
Michael.
previous blogs re:DCD Media
http://michae1mouse.blogspot.co.uk/2013_06_01_archive.html
I said I wouldn't post again, but given the optimism expressed on this BB, I've had another look at the interim accounts to see if this particular leopard has changed it spots, and whether or not I'm missing a massive opportunity.
Here are my thoughts. With great respect to all shareholders please consider the following extracts from the report. Remember Craven is hinting that profitability is just around the corner.
Firstly, last year's gross margins were 33%, at the interim stage they had fallen to 26%. They may recover to nearer 33% for the full year of course, I don't know? Anyway let's be generous and assume that they do. We'll assume that admin expenses come in around £6m(again generous indeed). To break even, they need to make over £18m in revenues. Revenues fell at the interim stage and were around £14m last year. Admittedly the market cap. is a measly £2.2m, but then how much is a loss making company with negative current assets worth?
Next up. Here is a classic from the DCD accounts:-
"Funding of GBP0.8m secured in the form of new convertible loan notes from the Group's largest shareholders, including GBP0.6m issued to Timeweave Ltd in settlement of amounts relating to accounting and director services."
They have borrowed near £1m to pay the Directors and "settlement of amounts relating to accounting". Given what I have said above how often are they going to have to do that? Oh dear, have a look at previous accounts and my previous reports. Leopard and spots instantly comes to mind. Still not to worry, the loan notes only carry a modest interest rate of 10% and can be converted into equity at £1 in May of next year (current share price £4.875). Good grief.
"UK productions, consisting of September Films UK, Rize USA and Matchlight, contributed GBP3.2m to revenue but made an operating loss of GBP0.1m."
As mentioned in previous posts, they make s*d all from productions.
"September Films USA contributed no revenue to the Group in the period as a result of the cancellation of the Bridezillas series."
At least the Directors got paid. Note the heavy sarcasm which pervades this report.
"DCD Rights has performed well in the first half of the year although revenue has decreased by GBP0.3m to GBP2.2m. Gross margin has remained constant between the periods. A focus on content acquisition in the first half will benefit sales in the second half and beyond."
A long way to go with this then given that distribution is where their focus will lie. £6m in revenues at year end possibly? What is the gross margin and did they make a profit? In fact there is no mention of margins or profits for the separate divisions only revenues. To be frank DCD Publishing and Sequence Post are hardly worth mentioning since they contributed a combined £0.6m in revenues and again we have no idea about margins or profitability.
Despite Craven's bluster about:- "the foundation is laid for accelerated growth" and "These developments, we believe, position DCD Media well for a return to profitability". I can find no evidence within the report to suggest that DCD is any different to how I remember it. Loss making and still some way off ever making sustainable profits.
Still they could always sell September Films USA. What price a production company that doesn't produce anything and contributes zilch to revenues?
DCD, a trader's punt maybe, but personally I wouldn't hang around.
As ever AIMHO and happy to be proved wrong.
Michael.
previous blogs re:DCD Media
http://michae1mouse.blogspot.co.uk/2013_06_01_archive.html
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