When is a loss a loss?

A rhetorical question. When is a loss a loss or a profit a profit? Answer: Not until you take it. Sorry if that sounds patronising but bear with me.

In 2002, I invested in a company called Ashtead, I was still a relative novice but I noticed that the company had considerable assets and that the market cap. was around or below the value of it's assets. What I hadn't quite grasped (through naivety) was the size of it's debt.

I originally bought shares for 30p. However, the company started to look like it was in trouble and about to break it's banking covenants. I watched as the price sank from my 30p purchase price to an intra-day low of around 1.5p.

However, the company survived chiefly because of it's assets and as the share price and confidence began to return, I bought again at 15p. The price rose and I felt so proud of myself having survived the experience that when my holding turned a small profit I sold my shares. Hurray.

Ashtead's share price today is £11.27. Even my original 30p purchase would have 37.5 bagged. My 15p purchase would have 75 bagged. Oops.

Make what you will of my anecdote, but it was an invaluable and chastening lesson for me. Catch a few of these companies in your investing lifetime and the rest of your portfolio becomes almost immaterial.

Avanti win BT contract

I have mentioned Avanti Communications several times on my blog. It's a speculative investment that I have made and, as such, I certainly wouldn't "bet the farm" on it. However, I am encouraged by the progress that they are now making and the contracts that they are winning. This morning they have announced a new contract with BT:-

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/12611890.html

This contract is highly significant since it provides a ringing endorsement of Avanti's technology from BT and the British Government.

Avanti has been a popular target for the shorters. Who knows what the future holds, but I would suggest that there are better targets to short than Avanti, particularly after today's news.

Avanti also boasts Facebook as a client and all of the national carriers in its core African markets.

My gut feeling is that they may be reaching a tipping point in their favour and that growth will accelerate from here. We shall see. There also remains the possibility that one of their larger clients may eventually fancy acquiring the whole group.

As speculative investments go, I am relatively happy with a long term hold here. Given this mornings news, I certainly wouldn't be comfortable holding a short position. Each to their own I suppose.

Is this a FCUKing recovery or not?

French Connection is an interesting company. Once a darling of the high street, it has lost it's sparkle in recent years and, as a consequence, investors have suffered a torrid time. However, the stock is certainly a potential turnaround and recovery situation.

Investors will no doubt be heartened by this mornings trading statement which is encouraging.  Sales of their Winter collection have been strong and all other areas of the business are also trading in line with expectations. Importantly, as they continue to close non-profitable stores they will also vacate their Regent Street, London store at the end of March 2016, at which time they will receive a compensation payment of £2.4million, while also removing the on-going trading losses of the store.

Certainly all of this sounds encouraging and they sound pretty confident of meeting market expectations, despite still having the all important Christmas period to come.

The attraction of French Connection as a recovery play has always been the strength of it's balance sheet and whether or not it can achieve a turnaround in it's fortunes before significantly depleting it's cash pile.

In the half-yearly report net tangible assets were around £47.5m with no debt against a market cap., after this mornings sharp rise in the share price, of around £36m.

I'm not a holder or potential investor, but it does look interesting, although what the FCUK do I know?

By the way, I do hope that they have dropped the FCUK branding since it will stop me posting puerile jokes?

Actually, I'd guess they did this some time ago.

AEOREMA

http://cheerfultwentyfirst.exposecms.com/news/global-reach

Sounds encouraging. I am a holder of Aeorema. The company is a profitable, cash generative, dividend paying micro-cap. The company is growing and has a very solid balance sheet with no debt.