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11 Jul | Cherry Picking Profitable AIM Shares

A couple of weeks ago now – prior to a little mid-summer rest and relaxationI penned a post (with one foot out the door) in which I fleetingly mentioned the fact we’d liquidated a number of holdings and topped up on one in particular I thought a little over-sold.

There wasn’t any great financial nous behind that decision, no fundamental or technical analysis. Charts weren’t poured over, ratios weren’t examined, calendars of upcoming financial events were not consulted.

I got what’s know in bad economic times as the heebee-jeebies, the financial jitters. It’s a desire, neigh necessity, to take what profit you can and head for the hills. And that was what pretty much what I did. I took anything that had made me a quid or two over recent times and hit the sell button.

That day we sold:

Asian Citrus Holdings (ACHL.L): 1,270 shares at 57.4 pence a share for a return of £729.

Dominion Petroleum (DPL.L): 18,806 shares at 5.11 pence a share for a return of £961.

Entertainment One (ETO.L): 900 shares at £1.62 a share for a return of £1,458.

Hutchison China Meditech (HCM.L): 200 shares at £4.30 a share for a return of £860.

Now cherry-picking profitable holdings to liquidate in a market downtrend should not form the basis of a sound financial strategy. Of that I’m pretty sure.

When an AIM-listed company maintains its price through the tough times like we’ve endured recently, surely it should act as a beacon; this is a company that should be part of a balanced portfolio whatever the market is doing.

It’s the train-wrecks I should be selling off, no?

Well that’s one way to look at it.

There’s still a part of me that wants to profit from every trade. And to be perfectly honest even with the bashing many AIM shares have taken lately, I still believe strongly in all of the speculative shares I hold in my portfolio.

For the most part the fundamental reasons I bought in to the Atlantic Coals, the Berkeley Mineral Resources and the Stellar Diamonds of this world have not changed for the worse. In fact some have changed dramatically for the better (but more on that and our most recent BIG purchase in our next post).

So by cherry picking those shares that have maintained their price through a slump it allows me to take advantage of those more speculative shares that have entered into over-sold territory.

It’s macro-economic events that have forced the hand of many an investor. And anyone with a nose for a bargain should be rubbing their hands together – if not now – then in the coming months.

I’m already excited by the opportunities out there at the minute. Companies that six months ago I thought I may have missed the boat on are bouncing around at bargain basement prices.

And with a little luck and some timely investing, maybe just maybe we can come out of this dip in a better position financially then when we entered.

Thanks again for dropping by.

Paul
rsvp@investorsoiree.co.uk