Trade Alert: sell this US long-termer
2nd July 2020 |
Hopefully by now you’ve got full access to the stocks in the new-look portfolio and quite possibly even taken a position in one or two (or more of them).
Again, apologies for the technical difficulties in this last week, but hopefully now everything is smoothed out and working as it should.
As noted also, you’re now going to be receiving weekly updates from us, to cover off on the markets, areas of focus, what we’re looking at, what we’re thinking about the state of play and looking where necessary at the stocks we’ve got in the portfolio.
What you’ll find we won’t do is just week on week run through company announcements and rehashing what they’re saying and the usual company spin they put on things.
We think you’re grown up enough to be able to stay abreast of the companies you’re invested in by either subscribing or regularly checking on their market announcements.
That’s not to say we won’t be looking at them too, and bringing you the things we think are important and pertinent to know. It’s just that we don’t want our weekly updates to just turn into an information vomit that covers off on stuff you can easily see for yourself.
What we aim to do is look beyond those announcements, or look to other industry developments the companies isn’t necessarily talking to shareholders about. That’s what we’re here to do.
If you just want data and announcements, there are a million brokers out there that can spit out data at you. That’s not us.
We try to find the aspects of a company and a stock you might not initially think about. We look to provide an analysis of the market, of the industry that brings opportunity that isn’t immediately apparent.
Sure our analysis looks through financials and announcements, and occasionally we’ll speak to a company. But most of the time we’re looking for that x-factor that isn’t always immediately quantifiable.
Of course if you ever have any questions on our approach, or think we’ve missed a trick somewhere with a stock, flick us an email to sam@southbankresearch.com.
Prices and buy-up-to reviews
Now, we also want to revisit the movement in our bonus stock recommendation last week, Corero Network Security (LSE:CNS).
We are well aware that the stock spiked after our recommendation. The stock is relatively illiquid and it moved up to and then quickly beyond our recommended buy-up-to price.
We will adjust our portfolio entry price right up to our initial buy-up-to price in order to be more accurate with the performance tracking. There were trades below the buy-up-to price last Friday but we will adjust and record the entry point at 6.45p.
We also know not everyone necessarily got a chance to get into the stock under the buy-up-to price. And as it stands the stock closed yesterday at 9.08p, 40% over our recommended buy-up-to.
We continue to keep an eye on it, but the company has released no news to suggest that the spike in volume and price again yesterday. I continue to expect that the price will retrace to a more suitable entry point, and we’ll review the buy-up-to and let you know if we think it warrants a change.
But right now there’s been no change in the situation for the company to warrant that just yet. And while we’re almost a week along, we continue to encourage patience on this stock.
It’s also worth noting that we’re currently working on your next recommendation for July that you can expect to get next Thursday after the market closes.
So while you may be in Corero or maybe not, that doesn’t mean there won’t be other opportunities to take a stake in a new recommendation. And we’re clearly conscious of making sure we can deliver a stock that as many can invest in as possible at a reasonable price.
That means our recommendations won’t all be as small or relatively illiquid as Corero – some may be, but on the bulk of it, it’s something that won’t happen all the time.
Make sure to keep an eye on your inbox next week for your July recommendation.
And while on that, just so we’re also very clear, when we work on a stock and recommend it to you, we don’t take a position in it before the recommendation. To do that is known as “front running” and it is illegal market behaviour.
We have compliance processes and checks in place to ensure we abide by the market behaviour laws and regulations. And while I’m well aware that on forums around the place we’re often accused of front running or manipulation, rest assured if that was the case, we’d probably be in jail and certainly wouldn’t have a business.
Just wanted to make that abundantly clear!
Sell recommendation
Finally with a load of stocks now in the portfolio, we’re also conscious of making sure that you’ve got plenty of great opportunities to invest in some great companies and also that we’re not sitting with a portfolio that balloons out to 30, 40 stocks or a silly number like that.
At any given time, we’re likely going to have somewhere between 20 and 30 stocks in the portfolio. They will be a mix of active buys and hold recommendations (for whatever reason they are on hold for). And as usual, you’ll continue to receive at least one new stock a month as well.
But with a number of new ones having entered the portfolio in the last week, we also have been reviewing ones that have been around a while and whether we want to keep them in the portfolio.
Right now, one in particular stands out as a stock that has been okay, but considering the time passed since its initial recommendation, it hasn’t really delivered on the big opportunity we expected.
Ormat Technologies (NYSE:ORA) has been in the portfolio three years as of next week. That’s a long time and the good news is it’s in a profit position, albeit at the time of writing just a 7.8% gain.
Yes, it took a clip off the market crash this year. But it also hasn’t really shown any sort of bounce from that, while much of the US market has boomed again. Our worry is that if the US market takes another big clip, stocks like Ormat won’t be spared, and may fall from a profit position.
Also, over three years it hasn’t really kicked into gear as we’d expect. And with new stocks on the way with what we consider more explosive potential, we think now is a good time to take the small profit off the table, and look to reallocate that into new opportunities.
Action to take: SELL Ormat Technologies (NYSE:ORA) at market prices.
Regards,
Sam Volkering
Co-editor, Frontier Tech Investor
