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The Shareswatch Random Stocks Portfolio: February 2016

February 22nd, 2016 · Greg Atkinson · 19 Comments

It has been some years since the last review of the Shareswatch Australia Random Stocks Portfolio and so it will be interesting to see what impact the slump in commodities prices has had upon it.  The last review of the portfolio was back in November 2013 when the S&P/ASX 200 was around 5400.

At the last review in late 2013 commodities prices were still helping to edge the Australian stock market higher. But in just a few months the situation would change and the downward trend for most commodity related stocks would begin.

Despite this the overall portfolio is still holding onto a gain of just over 18%. However back at the last review in November 2013 the unrealised gain was around 38% so clearly the last few years have not been kind to the portfolio. The major drag on performance has been the commodities related stocks and also somewhat surprisingly a few blue chip companies – namely Woolworths Ltd (WOW), National Australia Bank (NAB) and Westfield Group (WDC).

As can be seen in the table below, there are now unrealised loses with most of the holdings but thankfully a few star performers are keeping the overall portfolio in the black. The star performers being Challenger Limited (CGF) and Platinum Asset Management Limited (PTM)

The Shareswatch Random Stocks Portfolio: 19th February 2016

CodePurchase Price($)Last($)UnitsMarket Value($)Profit/Loss($)Change (%)
CCL8.018.75124810,920923.529.24
CGF1.97.7526340,525.13,0525.4305.26
DUE2.722.3536768,638.6-1,360.12-13.6
MAH0.870.089114941,022.97-8,976.81-89.77
MND9.676.5410346,762.36-3,236.42-32.37
PTM3.786.35264516,795.756,797.6567.99
WOW26.522.953778,652.15-1,338.35-13.4
ARI3.380.015295844.37-9,953.67-99.56
WDC*11.110.849009,756-234-2.34
AWE*1.320.4675753,484.5-6,514.5-65.15
NAB*30.425.623288,403.36-1,567.84-15.72
TEN*0.360.962777726,665.9216,666.2166.67
Totals$141,671$21,73118.12%

* Indicates added to the portfolio in March 2013

If we look at a some charts we can see just how nasty the last few years have been to companies with exposure to commodities or the mining and energy sectors.

Arrium Ltd (ASX:ARI) – 3 year stock price chart

Arrium Ltd 3 year stock chart

Since the start of 2014 it’s been generally all downhill for ARI and then things only got worse.  As of the 19th February 2016 the portfolio’s theoretical investment of around $10,000 AUD into Arrium Ltd back in October 2008 was worth just $44.37. That’s a pretty good example of how brutal the stock market can be and why it’s best to hold a range of stocks and not been too focus on any one company – no matter how good it appears.

Macmahon Holdings Limited (ASX:MAH) – 3 year stock price chart

Machmahon Holdings 3 year stock chart

Macmahon Holdings provides engineering services to the mining sector and its share price has also fallen significantly over the last few years. In terms of the portfolio, the theoretical value of shares in this company has fallen by around 90% since 2008.

Finally to finish with a stock that is helping support the portfolio.

Challenger Limited (ASX:CGF) – 3 year stock price chart

Challenger Limited 3 year stock chart

Despite the recent market pull-back, Challenger Limited shares are up around 305% since they were included in the portfolio back in 2008. This again stresses the importance of having a diversified portfolio. It also highlights how a well performing stock can help mitigate some of the damage caused by losses in other areas of an stocks portfolio.

This article was written by Greg Atkinson who is the Managing Director of Ohori Capital. Greg is from originally from Australia but now works and resides in Japan. He can be followed on twitter via GregAtkinson_jp


19 responses so far ↓

  • 1 Greg Atkinson // Mar 9, 2016 at 7:51 pm

    Looks like a few of the stocks in the portfolio have been getting a boost over the last week or so. Even AWE is up now to $0.67 and maybe it will be close to a $1.00 by the end of the year?

  • 2 lachlan // Mar 9, 2016 at 9:39 pm

    Yes there’s been a profitable bounce in some stocks I am watching Greg. The big question is over this predicted imminent big leg down in the market. I’d like to see it happen so I can buy something for nearly nothing 🙂
    Otherwise who knows?

  • 3 lachlan // Mar 15, 2016 at 5:48 am

    Hi Greg
    I had a bid under the market for one of the stocks in the random portfolio, MAH, no fill. Anyhow I look at the dj this morning and it is approaching some resistance here and obviously some intense selling has smashed up the days gains. Not sure what I will do just yet.

  • 4 Greg Atkinson // Mar 17, 2016 at 6:24 pm

    Lachlan it’s going to be interesting to see if the ASX 200/All Ords can push much higher from here or if it will drift sideways again. Maybe the resources sector has bottomed out but a sustained rally seems unlikely for now.

  • 5 lachlan // Mar 18, 2016 at 4:01 pm

    Greg imo it is and has been a good time for an accumulation program in terms of some commods. I have picked up some WOR and will grab more if any further downside prevails. Do you have an outlook for oilers?
    I did think about buying back into AWE. I was erring to a divi payer this time.

  • 6 lachlan // Mar 18, 2016 at 4:05 pm

    The markets are very interesting now too with some resistance looming. The fed is still on a rate rise agenda even if they have cut back on the severity.

  • 7 Lachlan // Mar 21, 2016 at 3:30 pm

    Despite a short term picture which is overbought I have begun some accumulation buying Greg. I don’t know if the markets will go up or down for sure but I do know that oil is way too cheap and some stocks are looking very nicely discounted with the long term view in mind. If they go up I will stick with what I have and if they go down I can accumulate more.
    I am watching very closely right now, technically we could interesting tonight on the dj or next few days at least.

  • 8 Greg Atkinson // Mar 29, 2016 at 10:34 am

    Lachlan I reckon if an investor is very patient then most commodities classes are a reasonable investment at current prices. But it is likely to take more than a year for commodities prices to crawl off the bottom which is where they seem to be trading around at the moment.

    The main indicator I watch is the Baltic Dry Index and that’s still at historically low levels so thus far there is not much to be encouraged by.

  • 9 Lachlan // Mar 29, 2016 at 4:58 pm

    Yes Greg the BDI is really bearish and it makes me think there will be plenty of time for accumulation. Even if commodities are headed a for a long term decline I think they are too cheap to simply ignore. I’m watching to see if the oil price will recapitulate.

  • 10 Biker // Apr 6, 2016 at 8:47 am

    Oh, those goldbuggers!~

    http://www.watoday.com.au/wa-news/wa-authorities-take-legal-action-to-stop-man-sending-money-to-african-scammers-20160405-gnzcrf.html

  • 11 Lachlan // Apr 10, 2016 at 6:10 pm

    Anywhere there’s money to be had eh BP!

  • 12 Lachlan // Apr 10, 2016 at 7:22 pm

    Greg I held off on MAH. I will be buying more into a coal producer I already own at a greatly discounted rate if there are further falls, which do look likely very soon. Dividend available there. I’m not really going hard. Not at all. In fact I have cash sitting idle and I know it will likely get larger quicker than I invest it.
    This week I will be watching the XJO closely because it is trying to breakdown more. Will be watching for discounts as usual. So too the DXY has taken a bearish look for now.

  • 13 Greg Atkinson // Apr 11, 2016 at 9:40 am

    Lachlan I have been sitting on sidelines mostly for the past few weeks although I am keeping a watch on Woolworths and could be tempted to take a position if they get a bit closer to $20.

  • 14 Lachlan // Apr 11, 2016 at 7:39 pm

    Woolies is taking a hiding. It’s interesting indeed.

  • 15 Lachlan // Aug 18, 2016 at 4:22 pm

    MAH and WOW look good there now Greg. It would be a good buy for MAH now still imo however I have plenty of juicy plays in the water now anyhow. WOW had a reversal after you were looking at buying and my guess is it will have a move now from its current spot to 28/29 after a little bullish flag breaks. I am not sure if this is the start of a long term rally yet though but looks good for a run of some length.
    I cut DCN altogether today for a good profit since it looks well over done and up for a technical reversal with the chart shape. Bought another gas/oil play (operating not far from where I live actually) with strong balance sheet, oil production and prospects.

  • 16 Greg Atkinson // Aug 22, 2016 at 9:33 am

    The portfolio has been on a bit of a wide ride this year Lachlan but things might just be settling down now. I guess with interest rates so low now it will tempt some cash to come across into stocks.

  • 17 Lachlan // Aug 24, 2016 at 6:04 am

    Yes Greg it could well be. Well the Fed and others have kept everything moderated by warning of rate rises and every other thing that could spoil the party however the technical case for a bull market has not been reversed yet, not just yet anyhow and so today I see both our market and the DJ are flying little bull flags. Not that price analyses is a crystal ball however I will skew my prognosis just slightly in favour of trends so for now I feel like we will see more upside more than I am concerned about selling. In fact the XJO if it rises any more in the next couple of weeks will have a good chance of 6000 again. A lot of my gold stocks have been consolidating for a good while now too. Waiting to see if they break up or down. WOR has been getting close to $10 which like many oilers means it is nearing a significant test of resistance.

  • 18 Lachlan // Aug 24, 2016 at 6:13 am

    Well just to demonstrate more on the point about oilers there is AWE approaching the $1-$2 band of resistance and it now sits at 90 odd cents. Could these things just sail through the test areas without much worry? Yes prices can do that, who knows. The oil price itself has just behaved pretty bullishly at its first test of resistance and if it holds up much longer will likely sprint to 60 odd dollars.

  • 19 Greg Atkinson // Sep 1, 2016 at 7:28 am

    AWE along with many other energy/oil/gas stocks will test our patience Lachlan but over the longer term I reckon most of the major players will recover the ground they have lost.

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