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Decision Journal
galumay:
Without documenting the process, I bought another parcel of ADA, the price is well below my range of IV, the business has no debt, a good flow of contracts and a comptetive advantage. I increased the position by $10k.I believe the price was depressed by the combination of a soft market and the news that ADA missed out on the NASA contract, once the next FY report is in I expect there will be a re rate of the business.
I am also considering putting another $50K into the EPGCVF fund, I would prefer to have the funds invested rather than sitting in cash, and unless I can find a compelling investment opportunity I am probably better paying a small fee for EGP's expertise and time in finding opportunity.
galumay:
Still equivicating about putting more money into EPG, in one way I feel like its an admission of failure to follow my strategy through, its accepting that even after fees EPG is likely to make a higher return than I can. Of course that may not be an admission of failure so much as a simple fact!
I did increase my holding in KME, i only bought a small parcel originally and the business has performed in line with my expectations and I think its looking like a good decision to invest in it so it makes sense to increase what was a very small opening position. I realise its not something I have done often enough, and it should be part of my strategy, averaging up as a business improves and consolidates and the market starts to recognise the unlocked value.
I also increased our stake in LPE, although its already quite sizable, EPG bought 3m shares off market this week from the 2 founders of the business, that is a large vote of confidence in a business that is just starting to show profitibility and I felt the opportunity to increase our position and average down a little was not to be missed.
My belief is that both KME and LPE will continue to show growth in the businesses and for different reasons both should see a reflection in share price with a market rerating as the long term earning potentials continue to be realised.
galumay:
Had another look at GCS, a construction business that EPG have a significant holding in, they got in at below 50c and when I looked at them last it was trading at around 85c which was towards the top of my calculated range of IV. Now they have slid back to 68c despite a very healthy HY report in Feb.
My IV range is around 70c-$1.00.
Bought in for 67c. 10/4/18
galumay:
Added to my position in LPE in our personal portfolio, I had built quite a large position in the SMSF and the more i look at it the stonger my conviction becomes. As mentioned previously EPG increasing their stake was a big confidence booster. For a fund to invest significantly in a business not yet paying a dividend seemed pretty compelling and strong endorsement. This will average down the cost in the personal portfolio and make the position a meaningful size.
galumay:
Owen Raszkiewicz from RaskFinance recently sent me an email with his "Better Half Checklist" - a series of questions his wife asks him prior to him taking a position in a company. I think its worth trying to add a version to my decision journal,
What does the company do?
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How does it make money?
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Why will it go wrong?
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Who are the competitors?
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Why is now the time to buy?
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