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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