PORTFOLIO POINT: This is my final column for Eureka Report … and I’ll end by identifying those stocks held in my portfolio with recovery hopes in the New Year.
Each year I have started with a portfolio of cash and shares worth $50,000 in carry-over stocks at their year-end closing price, plus cash.
In the 39 years of writing this weekly column (since 1973 in the late Bulletin magazine, and more recently in Eureka Report), I have finished comfortably ahead of the All Ords index in 33 of those 39 years.
In 21 of those years, my annual gain has exceeded 50% and in 12 of those years it has exceeded by 100%, including a record gain in 1999 of 305.5% for the year when the All Ords gained just 11.5%.
For the latest 2012 calendar year however, I have little to crow about, with the All Ords index up 10.4% and my portfolio of shares and cash down almost 28%.
My final trading portfolio for 2012 appears at the close of this column.
Stocks with recovery potential
Image Resources (IMA): The emerging mineral sands producer is well off its 12-month high of 47c after having raised $6.7 million in a discounted placement of 33.5 million shares at 20c last month.
In common with so many other smaller companies, to attract cautious new investors the capital raisers need to sharpen their pencils. The new cash however, together with existing working capital, exceeds the estimated costs for Image to complete a bankable feasibility study on its North Perth Basin projects scheduled for July 2013.
Image is also the biggest shareholder, with 10.7%, of iron ore hopeful Magnetic Resources (MAU), which has a solid Asian investor base and is developing plans to extract and export coarse-grained premium magnetite from targets within 15 kilometres of the Trans Australia railway in WA.
Viralytics (VLA): The cancer-cure hopeful could see a big premium on its shares as success continues with clinical trials in the USA and further trials to be launched in the UK.
Potash West (PWN): I introduced the emerging potash producer to my portfolio at 22c early last year, saw them rise to a 12-month high of 35c, then sink back in line with the overall market to be priced now at 25c. It now seems seriously undervalued, with the company sitting on one of the world’s largest glauconite (a green sands source of potash).
In October the company announced it had defined an indicated JORC-compliant resource of 244 million tonnes of 3.5% potassium oxide, including 122 million tonnes of 4.6% K20.
This week, Arrowhead Business and Resources released a report in which it asserted a fair value range for Potash West shares to be from a low of 77c to a high of $3.87. Even at the low point, that’s three times the current share price level.
GoConnect (GCN) and Golden Gate Petroleum (GGP): My holdings in both GCN (the internet entertainment company) and the Texas oil explorer GGP, are both trading at around a cent a share or even less.
For holders stuck in the stocks, there’s little point in selling apart from a tax loss as mid-2013 approaches. On the other hand, optimists may recognise recovery opportunities in both stocks.
At an extraordinary shareholder meeting today, Golden Gate Petroleum’s executive chairman won the day, defeating a bid from a small group of dissident shareholders to elect two of their nominees to the board. Instead, the incumbent board won the meeting over to elect oil geologist Chris Porter and engineer Rob Oliver, both of whom have extensive international engineering experience in petroleum exploration and production.
This may well enhance Golden Gate’s prospects as it scores initial success with its horizontal well drilling program on its extensive west Texas holdings.
Quickstep Holdings (QHL): The share price of the advanced carbon fibre materials maker has more than halved this year from a 12-month high of 37.5c to as low as 14c, and today stood at 16.5c.
Part of that reflects some doubts about Australia’s continuing commitment to America’s joint strike fighter program due to production delays. Quickstep, however, is already delivering advanced carbon fibre components to Lockheed Martin from its recently-established production line at Sydney’s Bankstown Airport under its long-term contracts.
It is also lined up to win contracts with other aviation companies as well as international motor vehicle makers.
The shares at their current price represent an opportunity for recovery in the New Year.
Precious metals stocks: I would also not despair of precious metal stocks, particularly of prospectors almost certainly to become emerging gold producers such as Cortona Resources (CRC), Chesser Resources (CHZ), Robust Resources (ROL), Scotgold (SGZ) and Orinoco Gold (OGX).
Happy New Year, and my monthly Speculator column continues in Money Magazine.
David Haselhurst writes a monthly column for Money magazine. Please note that he is not able to provide personal replies to emails.
The Speculator portfolio (as at December 18, 2012)
|Company||Code||No of shares||Bought||Purchase price||Current price||Current value|
|Image Resources||IMA*||20,000||31/12/2010*||$0.338 av||$0.185||$3,700|
|Robust Resources||ROL||6,000||31/12/2010*||$1.49 av||$0.280||$1,680|
|Scotgold Resources||SGZ||27,500||31/12/2010*||5.5 av||$0.050||$1,375|
|GoConnect Ltd||GCN||250,000||31/12/2010*||0.034 av||$0.010||$2,500|
|Broken Hill Prospecting||BPL||30,000||22/02/2011*||0.132 av||$0.086||$2,580|
|Cortona Resources||CRC||25,000||13/04/2011*||0.146 av||$0.090||$2,250|
|Golden Gate Petroleum||GGP||408,500||20/04/2011*||0.0145 av||$0.006||$2,451|
|Orpheus Energy||OEG||19,250||17/08/2011*||0.164 av||$0.080||$1,540|
|Black Mountain Resources||BMZ||10,000||17/04/2012||$0.300||$0.210||$2,100|
|Total value of portfolio||$44,677|
|Owe the bank||-$9,655|
|Portfolio change since January 3, 2012 (started with $50,000)||-29.96%|
|All Ordinaries change since January 3 2012 (then 4155.22)||10.96%|
|All Ordinaries close 18 December 2012||4610.5|