The last post - well not quite probably!

Copied and pasted from the Advfn BB.

PJ 1 - Thanks.

"If you're not prepared to hold a stock for ten years then don't even think about owning it for ten minutes"

Can't remember the name of the guy credited with this quote? Although I think he then bought Tesco shares and regretted having said it. :)

On a more serious note.

Some sensible comments on here already by the posters that I bother to read (that's everybody except clocktower ;). Can't add much really. Obviously disappointed that results are a little below last year (although not significantly) since we all want to see growth, but in essence, nothing has changed for me. Profitable, cash generative, debt free, Directors interests aligned with shareholders, dividend payer (already received nice yield) etc. It ticks most of my boxes.

I'll sit it out as always, and possibly buy dips. The company is only valued at about £2.5m, and half of that is cash on the balance sheet.

Avesco was in a similar situation in 2009, I just kept buying the shares when they were in the 20p-25p range when it felt like it was just me against the "white-walkers" :). Now they're in the 200p range.

I still like the risk/reward balance at AEO.

Just in case you've missed my blog/post comment elsewhere, I will rarely be posting from now on. I am fortunate enough to have been quite successful over the years, and I sometimes build up shareholdings in companies over significant time periods. I have no intention of alerting the world and his wife to these opportunities any longer. Also, I am a long termer and generally most bloggers and BB posters are traders so we operate in different worlds with different time scales.

I've commented on AEO before, so in this instance it's no skin off my nose to perhaps make this one of my last posts.

Regards PJ 1 and others.

An excellent example of the sort of company to avoid!

My post from the Reach4entertainmnet Advfn thread:-

"BrianGeee - With respect, I not interested in reading research by allenbycapital. Surely R4E are a client of allenbycapital and the research is hardly going to be negative is it?

All I need to know is that in the interims the company was loss making, gross margins are poor, cash flow is poor and they have literally nothing in the way of tangible assets. They've had to make a massively dilutive placing to pay off some debt at 1p per share.

I will watch out for the final results with interest, but unless margins, and cashflow improve drastically then this is a company I'd avoid at all costs.

A company like this is too susceptible to economic shocks. It's worthless really unless it can throw off mountains of cash, and grows strongly. It's not doing that, and I doubt that it will in the near future.

What exactly are investors buying here? It doesn't pay dividends, it isn't growing strongly, and it has virtually zero tangible assets.

I'll leave you will this quote:-
"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
Warren Buffett
Good luck though."

Just one extra thing to add. Personally, I've nearly always found that applying simple metrics is all you need to make good (potentially multibagging) investments.

If you search hard enough, you'll find great little companies that are growing, cash generative, profitable with excellent balance sheets and reasonable p/e ratios. In other words the antithesis of R4E.

Don't throw the baby out with the bathwater

A post reproduced from the Advfn Trakm8 thread:-

r1singson - "But I'm just wondering why you being in such an enviable position (x10 even after this week) would still be a holder having made such bumper profits. Is it that you are reluctant to sell having been probably closer to x20 up? Or that you are very confident there is more to come rather than search for the next multibagger? As I say a very enviable/fortunate position, just a question."

Thanks for reading the blog. Just to emphasise though that it's just my ramblings and not a tip sheet.

As regards Trakm8 (I'm still up far more than 10 times BTW even at today's low point), yes I am convinced that there is far more to come.

I don't share my buys and sells on my blog as frequently as I have in the past, chiefly because the pot has grown to such a level that I can take considerably more time to acquire a position in a potential multi-bagger. If you consider recent market turmoil then I'm sure that you can sympathise with my stance. Trakm8 is an excellent example of investors throwing the baby out with the bath water. Irrational selling by the herd creates opportunities for the patient. If you do what everybody else does then you'll get what everybody else gets i.e. moderate returns or worse still, losses.

FYI - I have and am currently building a position in a micro-cap and it will become my largest conviction buy ever.

To answer your original question in a roundabout way, I have found an investing style that works for me. Imo many investors are far too short term in their thinking. In my early investing days I took profits far too early e.g. AHT (see blog), CKN, etc. At the time, I was as pleased as punch with double digit profits, but in time many went on to multi-bag. AHT would have been a 75 bagger.

My general rule is that unless the story changes then do nothing. Sometimes a share price may get ahead of itself, but sit tight and except that nothing goes up in a straight line. Ignore all noise, especially clowns on bulletin boards and third-rate tipsters.

In my experience at least one or two of my micro-caps will go on and more than 10 bag. Often more. If I pick ten shares and one ten bags and nine go bust then I break even. Of course it might 15 bag, 20 bag, 100 bag etc. I consider the first instance (break even) my worst case scenario. I started investing seriously around 15 years ago. In all that time only one company has ever gone bust on me, and in retrospect that was a highly speculative punt. I've been lucky enough to pick several multi-baggers.

I hope that goes some way to answering your question. All the best with your investing.