AVAP

This is one of those shares that when I reflect on it makes me feel like a fraud benefiting from tips, luck and a rising market!  I ask why am I in this stock?  I am not sure I can answer this one.

I can’t remember why I bought AVAP. I first bought in June 2015 at 155.7p and sold out 2 months later at a small loss because I did not understand why had bought the stock. I then bought back in this year at 139p in September, and topped up on 16th November and 18th November at 190p and 191p respectively.  It is now 4.2% of portfolio as I write, so not large for me and definitely not conviction size. 

I am now sitting on a 14% gain after two months and I am tempted to exit on the basis:

  • that I don’t know why I bought the stock
  • The rise is probably only due to the possible sale of its 24 ATR72 aircraft 
  • Stockrank is only 52
On the positive side:
  • It is misunderstood by the market which leads to
  • The low PE of sub 8
  • Sub .8 PEG
  • It trades well below book
Also:
  • Has $48m of cash on the books
  • has a history of a small but steadily rising divis
  • If the ATR sale comes off there is likely to be a nice special divi
  • Jim Mellon (not my favourite person BTW) tipped it right at the end of his MI presentation
So if it can rise another 10%/15% from here before next September this will give me a nice 25% gain. Going the other way I think a 10% pull back from here and I will exit, put it on the barge pole/too difficult pile and move on. 
 
I have set myself an alert on Stockopedia as I am not in favour of hard stop losses. 
 
As far as I can tell we seem to be in a momentum driven market and the market seems to have got behind this stock, so for now I will hold but I think I must resist the urge to top up unless I gain some special insight in to the company and at the moment I don’t have the time to research in more depth.
 
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FIF

FIF was a stock I purchased initially back in March 2014 at 57.10p and then at 105.8 in February 2016.  The reasons? They are lost in the mists of time!

Looking back at the Stockopedia Stock Report for March 2 2014  I can see that:

  • the stock had good quality and momentum scores on Stockopedia
  • PEG was at .44
  • PE was 9.66 with estimate for 2015 of 7.89
  • The stock was paying a dividend
  • It was trading below book
  • Looking at the chart sentiment did seem to have changed

I made a small purchase equivalent to about 3% of my portfolio inc cash.

I should have been purchasing more on the way up but was yet to learn the benefits that this can bring to a portfolio.

The second purchase in February this year was well timed (luck not judgement) as give or take 105p is the YTD low but if I had known I was going to sell out so soon I probably would not have bothered. That said I have seen an 11.0% + return in 9 months on this second purchase so not to be sniffed at.

Anyhow at some point I learnt about the FIF LTIP.  I am not a fan of these and especially when they seem to give directors pretty big chunks of my company for nothing.  Taking the RNS (Investegate) from April this year where it talked glibly, in my opinion, about

have been issued 1,102,957 and 1,214,867 Ordinary Shares.”

and

cash amount of £1,196,503 and £1,317,904 respectively will be paid to meet the PAYE and national insurance payable in respect of the settlement of the options.”

This is a company with a market cap of £150m and annual profits of around the £8m mark (Stockopedia shows an estimate of £13m for this current financial year). Surely these figures are too large for this size of company and shows that directors and shareholders interest are not aligned.

This was simply too much for me and I sold half my holding on May 17 at 113.6p.

I then sold the rest of my holding last week (28/11/2016) at 117p for total return ex divis of 63% over the period. My initial investment was up 100% give or take in the 32 months I held them. Overall a very satisfactory return. 

Now we will just have to wait and see whether my instinct was right in the same that it was with VLK