Trade Alert: take profits from this long termer
11th June 2020 |
Originally published under Growth Stock Network on 11th June 2020.
Before we rip into this week’s update, first some quick trading action for a stock that’s been in the Growth Stock Network portfolio since October 2016, Bioventix (LSE:BVXP).
Bioventix is a biotech company that develops antibodies, generated in sheep, to help in clinical diagnostics. The company has delivered consistent growth over the three and a half years it’s been in the portfolio, showing a gain at the time of writing of around 277%.
Over that time period, that’s a great result for shareholders. Obviously year-to-date it’s been a rocky ride for the stock, and the markets in general. And in mid-March Bioventix traded as low as 2,587p, a far cry from its trading price today around 4,300p.
It would have been easy to tap out of the stock then and still bank over a 100% gain. But I was of the view the stock had been oversold on the wider market fears. And this view proved to be correct.
Bioventix is now trading at a value higher than before the Covid-19 crisis kicked off. With that said, I think this now presents a great opportunity to take profits off the table here, banking the full gain for a stock that’s been a real long termer in the portfolio.
It has achieved a desired result and I think it’s time to exit this stock and look to roll that profit to newer opportunities.
Action to take: SELL Bioventix (LSE:BVXP) at market prices.
Now, what you’ve seen this week is the market starting to realise that things aren’t all as hunky-dory in the economy as expected.
There’s a greater linking now with the economic impact of the government lockdowns and the wider market.
But the UK has been pretty good at reflecting this over the last few weeks. The market here is far more connected than the US market is right now. That’s just an absolute basket case over the pond.
Still we’ve seen two days of pretty substantial pullbacks in the market here. And that’s meant a few of our stocks have also put the handbrake on.
I’m not overly concerned about this, however.
Even if this slide continues and we even start to head back towards March lows, I’m not that worried about short-term movements now.
I’m confident enough that all our current positions have got their house in order in such a way that even if lockdowns were to continue (which they’re not) and even if social distancing measures were to be maintained long term (which they won’t) all our stocks will be ok.
As noted a number of weeks back, what was important when things seemed drastically bad, was these companies made sure to enable long-term sustainability in the face of this crisis.
Whether that was bringing in capital, reducing debt, extending covenants with lenders or reducing discretionary spending, all of these things were necessary at the time and appropriate business responses.
And I believe that’s put them all in good stead for a long-term investment time horizon.
Hence if they keep heading lower, sink beneath any recommended buy-up-to prices or really put the brakes on, then I believe there may be a chance to top up, or even jump into one or two that you might have missed due to them punching over the buy-up-to prices.
Downside market volatility hasn’t left the building, it just took a back seat for a couple of weeks there. But this week is a reminder that the road out is still going to be bumpy, and still going to be risky.
You need to ensure you’ve got a good plan down, a proper strategy, the right balance for you with your risk/reward tolerances and that you’re managing your capital risk by not betting the house, but enough in the positions where if they deliver on the long-term view we have, then you’ll still come out of all this in a very profitable position.
Speaking of things looking a little different…
Also you might have noticed that EVR Holdings is no longer listed in the portfolio. Not to worry, the stock is still there, it just it looks a little different now.
EVR Holdings processed a name change in late May. It’s now MelodyVR Group Plc (LSE:MVR). There’s no impact to your stock holding other than the name and ticker change.
The change is to reflect its core business which is, of course, the MelodyVR platform.
What’s interesting is there’s been a long extended thread going around the Southbank Investment Research editors this week, talking about the “metaverse” and what our world looks like and is shaped like over the coming years.
Clearly my view is that the next big shift in how we consume entertainment, and interact online and in the digital world will be increasingly through augmented, mixed and virtual reality.
And companies like MelodyVR are at the forefront of that. Again, which is why I think it’s important to take the long view with a pioneer like MelodyVR.
Once our inter-office thread concludes… if it ever does… I’ll see if I can bundle it up into a piece for you to read to see how the brains trust ticks over at Southbank Investment Research and give you a bit of a glimpse into the inner workings of what we do.
But until then, enjoy the ride!
Regards,
Sam Volkering
Editor, Growth Stock Network
