Christmas trimmings - part 2
Recommendation
Yesterday, in Christmas trimmings – part 1 we explained why we undertake an annual stock cull and listed the first five stocks to fall under this year’s axe. Today, in the final part of the series, the final six are revealed.
Key Points
- Need to make the most of our analytical resources
- Ceasing coverage on a range of stocks
- Makes room for more buy ideas in 2012
Coal & Allied Industries (CNA): In a long-speculated move, Rio Tinto finally moved to buy out the minority shareholders in Coal & Allied. In the end it was a simple affair; Rio bid $125.00 a share (including an $8 fully-franked dividend) and Coal & Allied directors recommended it. With the coal company now a fully-owned subsidiary of the mining goliath, we’re CEASING COVERAGE.
ING Private Equity Access (IPE): Of the three private equity plays recommended in The Ideas Lab: Listed private equity plays of 10 Nov 2009, this was the only one that went up rather than down. We took our profits in The Ideas Lab: Pulling the pin on private equity on 17 Mar 11 and don’t intend to return any time soon. It’s the logical juncture to CEASE COVERAGE.
OceanaGold (OGC): In The case for gold special report from 03 May 10 (Hold – $2.65), we noted the New Zealand-based gold miner OceanaGold appeared cheap, but were concerned about the operating record and debt levels of the company. After watching the company for a year, we’ve not been sufficiently impressed to consider upgrading. The large Didipio project in the Philippines remains as difficult as ever, while OceanaGold’s other mines remain troublesome. CEASING COVERAGE.
Ramsay Healthcare (RHC): We initiated coverage on Ramsay Healthcare in The three keys to Ramsay Healthcare on 6 Apr 10 (Hold – $14.16). As Australia’s best hospital operator, we were hoping for a buying opportunity at some point, although since then the share price has risen 38%. We remain concerned about the company’s debt levels, which will make any setback potentially very painful. If you’re looking for health care stocks, we currently have positive recommendations on Sonic Healthcare, CSL, and Fisher & Paykel Healthcare. If Ramsay takes a tumble we’ll take a look but for now we’re CEASING COVERAGE.
Souls Private Equity (SOE): After botching both the original buy and sell decisions on this private equity investment company, the Ideas Lab swooped in for a low-risk 8.7% arbitrage return in just over three months after parent company Washington H. Soul Pattinson launched a bid for the group. Recently delisted, it’s time to CEASE COVERAGE.
Wotif (WTF): Online hotel booking company Wotif is a higher risk stock than many realise. You can read our thoughts in Uncomfortable night for weary Wotif on 17 Dec 10 (Hold – $4.88). The company is a tough one to analyse because its competitive position looks quite vulnerable, even though there’s a structural shift towards booking accommodation online. We prefer to watch from the sidelines rather than take a firm position, which is why for now we’re CEASING COVERAGE.