My first post of 2012!  Apologies for my inactivity, it’s just been a rather hectic start to the new year!  So what’s new?  Not a great deal to be honest!  We are still seeing the continuing problems with the eurozone, with the latest bad news being the the S&P’s downgrade of France and Austria, seeing their triple A rating falling to double A plus.  With that said, it seems the US economy is beginning to look a bit healthier and decouple itself from the euro, as we have seen positive movement in the S & P 500 over recent months.

Anyway onto more important things, the Borsof portfolio, here’s a run down of recent activity:

• Yule Catto (YULC) – As can be seen on the portfolio page I picked up some of these @ just under 163p and saw them rise to a high of around 184p within a week.  Didn’t sell out at the top unfortunately, but managed to get out at 175p making a small profit of £65 for the Borsof portfolio.   Their trading update back on the 11th of Jan suggests things are still moving along quite nicely, with net debt coming down ‘substantially’.   Demand was down in Q4, but as the update says, the chemical sector as a whole was down so nothing to worry about…yet.

• Zotefoams (ZTF) – Not been a great deal of movement with Zote, still hovering around the same price as when I bought in.  Again looking at the recent trading update the figures are much in-line with expectations.  Quite a considerable increase (13%) in average raw material prices since 2010, but this has been offset by increasing prices and cost management.  Apart from this no major news, will continue to hold and see how things are looking when their preliminary results are released on the 6th March.

• Entertainment One (ETO) – Not much has changed with ETO since my last update, continues to move around the 200p mark.   Don’t think they’ve got anything in the pipeline which is going to smash any box office records, but wouldn’t mind seeing Man on a Ledge and The Grey, doesn’t feel quite so bad if the movie is terrible when I know it contributes to eOne’s bottom line!  But again will continue to hold, hopefully to see continued expansion and the valuation of their library increasing.

• Beowulf Mining (BEM) - Finally, the current problem child of the Borsof portfolio, Beowulf.   I sometimes find it hard to believe that on 2 separate occasions since I’ve been holding this share I’ve seen profits of between £800 – £900, now all I see is a big nasty red number with a minus sign before it.  Since the last fiasco with illegal drilling, the local Saami community have objected to the work plans filed by Beowulf which has now led to all operations being halted at both Kallak North and South until May 2012.  In the interim they have got to resolve any issues with the local communities – let’s just hope this doesn’t materialise into something a little more serious.  I still have high hopes for Beowulf as nothing has changed in regards to the large quantity of iron ore they have sitting under the ground, it’s just hard to ignore recent events which seems to have shaken most of its shareholders. Read more

I’ve been doing some research today as I’m looking to expand the Borsof stock portfolio.   I started by shortlisting some stocks using Sharelockholmes and got back about 50 different companies, but after some basic eye-balling I decided to undergo further due diligence  on a company called Zotefoams (ZTF).   It’s by no means an in-depth analysis, but should hopefully provide an overview as to why they could be a medium to long term riser.

Company background

The company manufacture high-performance foams and operate in a range of different markets, including sports and leisure, packaging and building, to a name a few.  They operate internationally, having sites in Croydon, UK and Kentucky, USA.  As part of their ongoing strategy, they are looking to expand further internationally and continue to develop new products, supporting their efforts to develop their client base and break into new markets.  Check out their site @ www.zotefoams.com for more information.

The numbers

Current price: 120p | Market Cap: £48m | Sector: Chemicals

Here’s some of numbers from their books which I’ve been taking a look at:

• Last reported revenues (up until June 2011), were £22m, giving profits of £3.2m before tax and £2.5 after.  This equates to a solid 12% rise in profits from 2010, where pre-tax profits came in @ £2.92m. Read more

I thought, due to recent events (particularly with one of the shares I’m holding), I would write a post about the use of stop-losses in the stock market (not in the US army).  For those of you who have no idea what I’m talking about but would like to know, it’s effectively a way in which to automatically sell your shares when they hit a specific price.  So for example, lets say you’re holding Borsof Plc (yes, that is fictitious) and the current share price is 100p, you set a stop loss at 85p, when that price is hit, the sell order will be automatically executed and your losses are minimised.   These are not 100% guaranteed, as if the stock is dropping like a stone it can fall through your stop-loss but the broker will execute at the best price possible, so hopefully it will be something close to that.  If you don’t monitor your stocks regularly, in my view, a stop-loss is a must, particularly if you’re in high risk stocks.

A major consideration when setting a stop-loss is at which point the stop-loss is placed.  As the rule of thumb goes, and as you may have read elsewhere, 10% below the current price is around where this should be set.  But please don’t take this as gospel, as it’s not uncommon to be ‘stopped out’ the market, and I confess this has happened to me in my early days of trading.  By this I mean, the market makers (the people managing the order book of all the buy and sell orders being placed in the market), can manipulate the price, temporarily dropping the price below that 10% and thus activating a whole load of stop-losses.  Shortly after the price will come straight back up again, but you will no longer be holding those shares.  Second to this, if the share is incredibly volatile, e.g. oil exploration stocks, the trading range (the high and low prices which it regularly moves between) will be much wider than say, a FTSEThe Financial Times and Stock Exchange. This consists of a number of indices which provide benchmarks for companies trading in the UK. 100 stock like BP, HSBC or Vodafone, and could easily activate stops which are placed too close to the current price. Read more

Best news first, Beowulf Mining (BEM).  They’ve released a number of RNS’s relating to their Iron Ore study and operations and the markets have reacted well, finally seeing some movement north.  Things were starting to get a little painful, watching it continually drop from its highs earlier this year, as the graph below highlights:

Still awaiting the JORC from Kallak, but this should be completed by the end of October, fingers crossed this is as expected and leads to another step up in price.  We’ve now been given some hard figures as to the revenues which could be generated from their projects… Read more