Billion dollar Boom?

Not much news to report from my current share portfolio this week, although there was an interesting RNS from an indirect holding.

As previously reported, I hold shares in a company called UBC Media which will change it's name on Tuesday as it reverses in it's recent acquisition 7Digital. The enlarged group will hold 20% of Audioboom, a recently floated (by reverse takeover) social media site that describes itself as the audio equivalent of YouTube.

The RNS announces that CBS Radio Limited ("CBS") and Sky Sports Limited ("Sky Sports") have agreed to become major new content partners on Audioboom's social media platform.

This potentially sounds very exciting.

Rob Proctor, CEO of Audioboom, commented, "CBS and Sky Sports are two of the world's biggest broadcasters and we are delighted they are using our technology and platform to further utilise and share their wonderful audio content. They are two of the most significant channel partners we have signed and are a great boost to the expansion of our sport and entertainment vertical audio markets.
"CBS also gives us fantastic reach and exposure in America which is a key and rapidly expanding market for us. Agreements with world class companies such as these illustrate the potential global reach of Audioboom as it continues to build momentum and become a major social media company."

It's very early days for Audioboom, and make no mistake this is a highly speculative investment in a company that will report negligible revenues in 2014, however, given the lofty valuations of successful social media sites, and the potential to be acquired by a major player (e.g. Twitter, Facebook etc.) then success could easily mean a $1bn plus valuation, and a hefty windfall for 7digital.

Whilst both 7Digital and Audioboom are highly speculative, they are also operating in an exciting and potentially very lucrative space. I don't directly hold shares in Audioboom, but I do like the fact that through 7Digital I will have a finger in both pies.

It would be fantastic if one or preferably both companies blossom, although I am mindful of the possibility that neither may prosper. It will be interesting (and hopefully lucrative) to watch developments over the medium and long term.

On a separate note, my virtual trade in Vesuvius is pretty much flat so far, although I notice that Directors are still keen buyers with a further purchase reported on Friday, and a small tick up of around 3% in the share price.

I am adding Vodafone and Morrison to my virtual trading portfolio. Vodafone is yielding over 5% and is off it's recent highs as investors "park" there special dividends elsewhere. My buying price for Vodafone is 207p. Morrison's I mentioned in my blog 31 May. Just to emphasise that these are all virtual trades, and I'm doing this just for a bit of fun. Of course I will continue to report on my actual holdings and purchases at regular intervals as usual.

Virtual portfolio                 Price paid                      Current  price               Price sold

Vesuvius                            £4.57                             £4.58
Vodafone                           £2.07                             £2.07
Morrison                            £1.93                             £1.93

                                                                 

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.

The Micro-caps of today can become the Large-caps of tomorrow!

Two news items in this week's FT weekend have caught my eye. Firstly there is a full page article entitled "Pharma opens new front in war on cancer". The article is essentially suggesting that the big pharmas may be on the cusp of the biggest breakthrough in cancer therapy for decades, and goes on to describe how several companies including Bristol Myers Squibb, Roche, AstraZeneca, Merck and Glaxo are developing new block buster drugs which could be worth several billions of pounds in revenues should they prove successful.

First and foremost let's hope that most are successful, and that the breakthrough proves to be as exciting as oncologists believe it could be. These drugs could really open up a whole new front in the war on cancer, and potentially prolong and save the lives of many thousands of people.

From an investment point of view, if these companies are successful with their pipeline drugs then clearly their valuations will increase substantially by the boost to their earnings. However, there are a number of hurdles to overcome yet, and it's difficult to predict the potential winners from the also-rans.

It did get me thinking about a company I hold shares in though.

Angle at £35m, is a minnow in comparison to the pharmas mentioned above, but it's Parsortix device is potentially a pivotal tool in any big advances in fighting a whole range of cancers. A non-invasive (simple blood test) way of monitoring the effectiveness of existing and potential drugs (and combinations) in the war on cancer has got to be highly desirable.

A lack of newsflow in recent weeks has meant that Angle's share price has dipped from it's highs whilst the company awaits further feedback from Key Opinion Leaders. However, if the feedback for the Parsortix device continues to be favourable then I fully expect substantial sales to follow, and the share price to resume it's upward trajectory, although ultimately I expect the company to be bought out by one of the majors. Angle have already achieved CE approval for their device, and currently await FDA approval.

The FT Money section also includes a small article on insurance fraud. Most notable is a 34% rise this year in the number of bogus car insurance claims. In fact, motoring accounts for more than three-fifths of fraudulent insurance claims. How long before insurers insist on a Telematics black box in every car? Not long methinks. I'm hanging on tightly to my Trakm8 shares. Right place, at the right time? Here's hoping. Trakm8 is a profitable, cash generative company in a potentially explosive growth industry. The shares are very modestly priced given their prospects.

In a recent blog, I mentioned that buying shares in relatively illiquid small/micro-cap stocks required a "strong stomach" as price fluctuations are often quite severe. Trakm8 is a good example of this type of stock. In my experience, as a long term investor, if the story remains in tact, it's best just to buy and hold. The micro-caps of today can soon become the large-caps of tomorrow!!

Finally, talking of large -cap companies, John Lee has written a brief article in todays' FT and has mentioned that he recently bought shares in Morrison's based on a 6% yield, activist shareholder base and freehold property assets. John Lee is an excellent value investor and ISA millionaire.

If I was interested in an income based portfolio, I'd definitely be adding Morrison's, alongside Sainsbury's, Tesco, GlaxosmithKline and Direct Line. Quality companies which are highly unlikely to go bust anytime soon and pay dividends around the 5% mark.