Sell Alert: two long-termers whose time is up
1st December 2022 |
When we recommend purchasing a stock for the Frontier Tech Investor portfolio, we take a long-term view. That means that we recognise that it may take the company in question two to five years in order to realise its potential.
Some of the recommendations deliver in a short period of time. Others deliver, but over the long term. As for other recommendations… as this is a family-friendly publication, let’s just say that they disappoint mightily.
When a position in the portfolio slumps below the entry price, it is not time to go to panic stations. However, it is time to think long and hard about which of the three categories listed above is the one that the stock falls into.
The title of Frontier Tech Investor points to innovation and new technology, which are the things that excite us. But people matter a lot too. Can the people who are running the companies in which we invest actually execute the strategies and deliver to shareholders?
Sometimes, the answer to that question is: sadly not.
In some situations, we have to concede that our timing was bad, or the view we had on the company’s investment idea, whilst good, hasn’t been realised in the most important metric for investors… capital gain.
We have had 29 stocks on our Buy List. There are two where our patience is exhausted. We have given these companies – and their managements – the time and opportunity to deliver. However, we now think that it is time to cut our losses.
Immotion Group (LSE:IMMO) has been in our Buy List now for well over two and a half years. The company is developing immersive virtual reality (VR) technology for location-based experiences. In short, it’s got cool VR setups at places like zoos and aquariums.
The company has made steady progress in getting its technology into locations and making better and more engaging content. However, the stock price continues to flounder.
Bearing in mind what has happened over the last two years, the company has done well to survive. However, we want more than just survival.
Putting it brutally, it is no longer clear that the company’s strengths are going to produce good returns for shareholders. After a long period of time since we recommended purchase, the position is down by 11%.
Action to take: SELL Immotion Group (LSE:IMMO)
Entry price: 3p
Exit price: 2.67p
Profit/loss: -11.11%
It pains us to say that that thoroughbred stallion of UK industry Aston Martin Lagonda Holdings (LSE:AML), has fallen at just about every hurdle. Â
The takeover and realignment of the company towards becoming a luxury brand under the leadership of Canadian billionaire Lawrence Stroll looked to us to be very good news. His track record clearly indicated to us that he knows what he is doing. The alliance with the Aston Martin Formula One team also looked like a sensible move. However, neither of these developments has had a positive impact on the stock price.
The DBX is a fantastic vehicle that sells well in the global market for luxury sports utility vehicles (SUVs). It is perhaps the company’s greatest success in the time that we’ve been involved. The large investment from Saudi Arabia’s Public Investment Fund strengthened the company’s finances, but diluted the interests of existing shareholders through the four-for-one rights issue.
The one upside is new stock from that the aforementioned rights issue in September is trading at a premium to the issue price of 103 pence. So while our initial position that we track our data from is at a heavy loss (around 80%), the rights issue return of around 31% (which we don’t track) does cushion the blow somewhat. Nevertheless, we exit with a 52% loss.
Action to take: SELL Aston Martin Lagonda Holdings (LSE:AML)
Entry price: 1023p
Exit price: 134.25p
Profit/loss: -86.88%
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our Buy List.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good: this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
Volex (LSE: VLX): Volex is a global manufacturer of power and connectivity products. These include power cables, fibre optics and charging plugs. It might sound a little basic, but these are critical mechanisms that are powering some of the key technologies of the modern day. These technologies comprise electric vehicles (EVs), artificial intelligence (AI) and big data networks. Volex has huge credibility behind it, particularly as it does business with some of most widely recognised companies in the world, including Tesla. You can find the original recommendation here.
HydrogenOne Capital Growth (LSE: HGEN): HydrogenOne is an investment fund listed on the LSE. It provides broad, diversified exposure to several private and publicly listed hydrogen companies, encapsulating the entire hydrogen trend. One of its main constituents is Elcogen, a market leader in the provision of hydrogen fuel cells and stacks. With the UK government injecting £240 million into the hydrogen sector as part of its hydrogen strategy, now could be an opportune moment to take a position in the stock. You can find the original recommendation here.
The HANetf Sprott Global Uranium Miners UCITS ETF (LSE: URNM): URNM is an exchange-traded fund which provides diversified exposure to the nuclear energy industry by investing in uranium producers. Uranium is an essential ingredient in the generation of nuclear energy. The index it tracks invests in giants of the nuclear energy world, including Cameco and Kazatomprom. With tailwinds behind nuclear power remaining strong in the face of rising energy prices, geopolitical conflict – and the wider green energy transition – we believe that URNM has a strong investment case. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
