transactions

History of Transactions.

I have learnt far more from my failures than from my successes, so I have listed them first. These are very brief outlines of some of the many companies I have bought into over the years but they are the ones which have had the most effect and molded my investment approach.

Losers

HOBSON: bought @ 25p, sold @ 10p. New company with unproven product which made dies for extruding aluminium. A potential market beater but ended up in a bitter management bust-up.

ASIA OIL & MINERALS: bought @ 5p average, sold @ 1p. Pure belief in a small oil company thinking it had struck it rich. I fell for the hype surrounding reports by "experts" which indicated a large find that could have a massive effect on the valuation of the company, needless to say, I and they were wrong.

OODLES: bought @ 12p, went bust. Classic case of management moving out of area of expertise and expanding too fast. They had a good vegetarian restaurant chain and tried to go up-market through the purchase of Bentley's of Piccadilly. Costs went widely out of control and the receivers were called in to sort out the mess.

FERRANTI: bought @ 8p, went bust. I thought I knew better than GEC who picked up what they wanted from this heavily indebted dog. They had some good businesses in the group but over expansion had left them with un-manageable debts. I got in as the story of a takeover bid went into overdrive and paid the ultimate price.

BOASE, MASSIMI, POLLIT: bought @ 756p, sold @ 421p. This Advertising agency, of which I knew nothing, appeared to be a good business which had won a lot of industry awards and high profile contracts. Profits had grown year on year but I failed to spot the management selling out big time. The next profits statement showed the marked decline in profits and they eventually were taken over at a lower price than I sold for.

Winners

HOBSON: bought @ 8p, sold @ 115p. Company became a shell after the debacle of their initial flirtation with the City, but now with new management. They reversed a cleaning products business into Hobson and the share price took off.

NEXT: bought @ 12p, sold @ 645p. Eighties wonder turned dog in early nineties recession carrying huge debts. The city lost patience with the management and they were replaced. The business turned around and became a great cash generator.

BRITISH AEROSPACE: bought @ 127p, sold @ 1268p. The city took fright at the failing profits from the Saudi Arabian contract, the early nineties recession and the heavy fixed costs within the business. Management cut costs dramatically and benefited from alliances they had forged within the aerospace industry. The investment in Orange was never taken into account either. 

GOLDSMITHS: bought @ 42p, sold @ 120p. Price had fallen since flotation along with profits. The business had turned around but market failed to pick it up. I was attracted by the very high margins generated by the luxury items they sold which would feed quickly to the bottom line once sales increased.

JF FLEDGLING JAPAN WARRANTS: bought @ 3p, sold @ 49p. A pure punt on the Japanese market. This investment company is one of the best in it's sector and I chose the warrants to gain the maximum gearing.

AVESCO: bought @ 22p, sold @ 127p. Company nurtured Videologic which was the reason why I purchased. The business was still in the early stages of development but the city got so excited that market lost grip with reality and drove price beyond all reason.

PSION: bought @ 423p, sold @ 1528p. I have been using Psion palm top devices for years and have always considered them more advanced than the competition but the marketing power of Microsoft and the like meant that their days as a market leader were numbered. The flirtation with Amstrad came to nothing and they seemed an excellent company going nowhere. I purchased on the basis that the EPOC running system would be licensed and after an initial price dip the city recognized the potential of Symbian and re- rated the shares.

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