The Speculator

In with the new: 10 of the 16 stocks carried over from last year show promising gains.

PORTFOLIO POINT: This week we publish two performance tables – one for the close of 2011 and the other for today’s opening 2012 portfolio in which 10 of our 16 carry-over stocks show promising gains.

The closing portfolio for 2011 shows our speculative portfolio finished down 10.45% in what was a fairly miserable year, but the broader All Ordinaries share price index fell further – down 15.18% since January 5, 2011 (then 4846.9).

Each year we start with a portfolio of cash and shares worth $50,000 in carry-over stocks at their year-end closing price plus cash.

In 38 years of writing this column (since 1973 in the late Bulletin magazine and more recently in Eureka Report), we have finished well ahead of the All Ords in 32 of those 38 years. In 21 of those years, our annual gain exceeded 50% and in 10 of those years it exceeded 100%, including a record gain in 1999 of 305.5% for the year when the All Ords gained 11.5%.

In those profitable years we’ve simply written off the gains and started again with a base, as in recent years, of $50,000 in shares at their closing market valuation plus residual cash. That maintains year-on-year comparisons.

As the closing table shows, our 2011 portfolio of cash and shares closed at $44,777 – a loss of $5223. We’ve written that back out of previous profits to open with a base of $50,000 in retained shares at year-end closing prices plus cash.

-The Speculator portfolio, as at December 31, 2011
Company
ASX
No of shares
Bought
Purchase price
Closing price
Year end value
Image Resources
IMA*
15,000
31/12/2010* *
0.362 av
$0.280
$4,200
Viralytics
VLA
500
11/06/2010*
$0.690
$0.335
$168
Robust Resources
ROL
6,000
31/12/2010*
$1.49 av
$1.340
$8,040
Scotgold Resources
SGZ
25,000
31/12/2010*
$0.053
$0.066
$1,650
Scotgold Resources Options ex
30/4/12 @ 8c
SGZO
2,500
$0.000
$0.010
$25
Coalworks
CWK
10,000
31/12/2010*
$0.830
$0.600
$6,000
GoConnect Ltd
GCN
120,000
31/12/2010*
$0.038
$0.037
$4,440
Minemakers
MAK
20,000
25/01/2011*
0.425 av
$0.275
$5,500
Platsearch
PTS
20,000
8/02/2011
$0.130
$0.085
$1,700
Broken Hill Prospecting
BPL
20,000
22/02/2011
$0.160
$0.085
$1,700
Austpac Resources
APG
40,000
2/03/2011
$0.060
$0.047
$1,880
Potash West
PWN
11,050
30/03/2011***
$0.200
$0.185
$2,044
Cortona Resources
CRC
20,000
13/04/2011
0.146 av
$0.130
$2,600
Golden Gate Petroleum
GGP
270,000
20/04/2011
0.013 av
$0.023
$6,210
TNT Mines
TNT
4,440
22/07/2011
$0.000
$0.250
$1,110
Quickstep Holdings
QHL
20,000
23/11/2011
$0.185
$0.170
$3,400
Orpheus Energy
OEG
19,250
17/08/2011
0.164 av
$0.150
$2,888
Total value of portfolio
$53,554
cash at bank
-$8,777
Total
$44,777
Portfolio change since January 5, 2011 (started with $50,000)
-10.45%
All Ordinaries change since January 5 2011 (then 4846.9)
-15.18%

In our new opening 2012 portfolio we’ve added as foreshadowed in the final 2011 column in Eureka Report on December 31, $6000 worth of Viralytics (VLA) shares under that company’s share purchase plan (SSP).

Readers might recall that the cancer-cure hopeful Viralytics announced on November 30 a generous share purchase plan to support the accelerated clinical development of the company’s promising oncolytic drug Cavatak. Eligible Australian and New Zealand shareholders (registered at November 29) were invited to subscribe for up to $15,000 worth of new Viralytics shares with no brokerage or transaction costs.

We promptly sold 12,000 Viralytics on market at 40¢ to take advantage of what was to be a discounted entry price.

Stockbroker Patersons Securities was appointed lead manager and underwriter for up to $1 million, with the issue price based on a 15% discount to the volume-weighted average share price for the five trading days up to December 14.

Late last month, Viralytics managing director Bryan Dulhunty confirmed the issue price to be $0.3084 a share – and due to overwhelming shareholder support no shares would be issued to the underwriter. The issue raised $4.7 million, boosting Viralytics’ cash resources to about $8 million, That’s expected to be more than enough to complete the company’s current Phase 2 clinical trials in America and other research programs through to at least mid-2013.

Canny investor trebles holding in Quickstep

The respected and conservative portfolio investor Washington H Soul Pattinson (WHSP) confirmed on January 3 it had more than trebled its holding in Australian aerospace materials supplier Quickstep Holdings (QHL) – supplier of advanced carbon fibre components to America’s Joint Strike Fighter program.
On December 5 last year Quickstep (one of our portfolio stocks) launched a one-for-4.25 rights issue of shares of at 16¢ a share to raise some $10.34 million, partially underwritten by Perth stockbroker State One Equities.

Quickstep’s largest shareholder, WHSP, agreed to act as sub-underwriter for up to $5 million, provided its interest in Quickstep at no point exceeded 19.9% (otherwise it would have been obliged to mount a full takeover).

Quickstep managing director Philippe Odouard then explained: “The primary purpose of the capital raising is to continue the establishment of manufacturing facilities at the former Boeing facility at Bankstown Airport, NSW; to support the Joint Strike Fighter program and other future potential manufacturing opportunities; and to continue the commercialisation and further development of Quickstep processes including its resin spray transfer process.”

As a consequence of the capital raising, WHSP has lifted its holding in Quickstep from 11.04% (20,675,300 shares) before the new issue to 19.57% (63,172,570 shares). Total funds raised in the exercise amounted to $7.5 million before costs.

In an interview lodged by Quickstep with the ASX on December 7, Odouard predicted that Quickstep was “now poised to move forward and achieve a quantum leap in its development over the next 18 months”.

Even more positively, at WHSP’s annual meeting in early December, chairman Robert Millner was asked about the company’s investment in Quickstep. His response was reported as being that they believed in the technology and expected it would yield a “very good return” over the next three or four years”.

Other stocks retained

We’ll review other stocks retained in our portfolio next week, including progress made by Image Resources, Golden Gate Petroleum, Potash West and GoConnect.

David Haselhurst writes a monthly column for Money magazine. Please note that he is not able to provide personal replies to emails.

-The Speculator's opening 2012 portfolio
Company ASX
No of shares
Bought
Purchase price
Current price
Current value
Image Resources IMA*
15,000
31/12/2010* *
0.362 av
$0.290
$4,350
Viralytics VLA
19,995
20/12/2011
$0.308
$0.390
$7,798
Robust Resources ROL
6,000
31/12/2010*
$1.49 av
$1.225
$7,350
Scotgold Resources SGZ
25,000
31/12/2010*
$0.053
$0.065
$1,625
Scotgold Resources Options ex30/4/12 @ 8c SGZO
2,500
$0.000
$0.005
$13
Coalworks CWK
10,000
31/12/2010*
$0.830
$0.750
$7,500
GoConnect Ltd GCN
120,000
31/12/2010*
$0.038
$0.044
$5,280
Minemakers MAK
20,000
25/01/2011*
0.425 av
$0.295
$5,900
Platsearch PTS
20,000
8/02/2011
$0.130
$0.081
$1,620
Broken Hill Prospecting BPL
20,000
22/02/2011
$0.160
$0.090
$1,800
Austpac Resources APG
40,000
2/03/2011
$0.060
$0.045
$1,800
Potash West PWN
11,050
30/03/2011***
$0.200
$0.220
$2,431
Cortona Resources CRC
20,000
13/04/2011
0.146 av
$0.140
$2,800
Golden Gate Petroleum GGP
270,000
20/04/2011
0.013 av
$0.025
$6,750
TNT Mines TNT
4,440
22/07/2011
$0.000
$0.250
$1,110
Quickstep Holdings QHL
20,000
23/11/2011
$0.185
$0.160
$3,200
Orpheus Energy OEG
19,250
17/08/2011
0.164 av
$0.140
$2,695
Total value of portfolio
$64,022
Cash at bank
-$9,554
Total
$54,468
Portfolio change since January 3, 2012 (started with $50,000)
8.94%
All Ordinaries change since January 3 2012 (then 4155.22)
-1.16%
*Shares held from previous year, carried at their December 30, 2011 closing price. Subscribed $6000 under share purchase plan for 19,595 VLA at 0.308 each to join our residual holding of 500 shares.