Editor’s note: This article was first published in July 2014; the holdings, purchase prices and share quotes in this portfolio are from 17 July 2014. Abengoa later filed for pre-insolvency protection in November 2015, and Gamesa merged with Siemens’ wind business in 2017. This is the author’s personal portfolio in July 2014, kept as a historical record. It is not investment advice; several of the companies mentioned later collapsed or went through insolvency proceedings.
Here I review my investment portfolio and my winning and losing positions so far. Those of you who have been following us for some time already know what our investment plan has been since the summer of 2012, when I think we did the smartest thing in terms of speculation: getting into the recapitalisation of Spanish penny stocks, where we got practically everything right, except for companies such as URBAS and Quabit. One of the stocks that gave me my biggest returns was even the controversial Gowex, which luckily we sold months before the scandal.
As I took profits on the rallies in penny stocks, I invested in mid-sized companies. The investment strategy has been continuous reinvestment until all the capital was concentrated in a few companies. My main mistake, as you know, was selling Gamesa, a company I would have loved to keep in the portfolio, but what’s done is done.
Ezentis
Ezentis makes up about 50% of my investment portfolio. My average purchase price for Ezentis shares is €0.57, having made several purchases at the old prices of €0.115, €0.13, €0.14 and €0.17.
Ezentis is a company whose technical picture has become quite complicated, to the point that it is being punished excessively. We should not forget that all the investment the company has made in South America, as well as the new contracts it has won (the latest in Brazil), will sooner or later translate into a larger volume of business that will reflect its fundamental value (which is what we are looking for with this company).
That is why my recommendation is still to buy for the long term. That does not change the fact that I made a mistake by not getting out of the stock as soon as it made its second lower high, because if we look at the chart, it has been making lower highs and lower lows for months.
In Ezentis’s favour, I can say that what seems to make investors uneasy, the constant capital increases, is in a way reassuring to me. They are screwing me in the short term, but it is us investors who are financing the company and therefore helping to ensure that it does not take on more debt in the long term.
Abengoa B
In my opinion, Abengoa is the new Gamesa. It is a company in which I have been averaging up, with my first purchases below €2 and a last purchase around €3. My average purchase price per share in Abengoa is €2.45.
It is not crazy to imagine this company above €10 in a few years, because companies like Abengoa and Gamesa are the real “Brand Spain”, as long as Brand Spain supports them as it should, which for now it is not doing. At some point in the future, Spain will have to promote renewables to board the train of the future, as the rest of our neighbours have already done.
Lenovo
Lenovo is an example of how to make a profitable contrarian investment. Looking at this company was what led me to sell out of Gowex and use that money to buy Lenovo shares.
I took advantage of the fact that five research firms advised against investing in Lenovo, which gave me an excellent buying opportunity at 7.85 Hong Kong dollars. Right now Lenovo is struggling to break through a small resistance level around 11 dollars, and if it does, the stock will shoot up. In any case, with this company I already have what I wanted, which is an excellent margin of safety. For now I think the company will perform well over the next three to five years. After that, we’ll see what we do. I wouldn’t hesitate to take profits at some point either.
Navidea
Navidea is one of those investments that went “wrong” for me at first, because my first purchase was at $2.82. The next day Navidea shot up to as high as $3.30, but then it fell and kept falling, to $1.18. As soon as it started to recover I averaged down heavily at $1.25, and then made another purchase at $1.30, so my average purchase price is $1.72. That means my break-even point is around that level.
Even so, I think this company can do very well in the future, because it is a small pharmaceutical company but already has a product on the market and others that could follow. It is still a risky company, but I think the potential makes up for the risk. For now, I plan to use any falls in Abengoa and Navidea to increase my positions in them.
Speculative trades
Fannie Mae
Following Bill Ackman’s recommendation, I decided to open a long position in Fannie Mae, a company that has been at the centre of the storm in the US for years, with calls for it to be delisted. But it is a company whose profits are growing considerably, and I don’t think it will be delisted.
I bought at an average price of $4.09, and after falling well below $4.00 it is now trading at $4.48. So far we are being lucky, but it is not a stock I would recommend to investors with a weak heart, given the tremendous risk involved. Still, if the doubts were ever resolved and someone finally said it will remain listed on Wall Street, it would be one of those stocks that would reach a value above $20 (it’s worth that), and according to Ackman it could even top $40.
General Motors (short)
And finally, we have a short position open on General Motors at $36.72, because I think the market expects much more from this company than it will deliver in the short to medium term. For now, my position in GM is slightly in the red, with the stock currently at $37.26, although $38 has acted as resistance for the time being, and with new results coming up, it will probably give us the gain we are expecting. Remember that investors such as Buffett and Einhorn have unwound positions in this company, which could confirm that a bearish scenario is expected. And that’s where we are.
Herborium
I’m almost embarrassed to talk about this stock, in which I left a remaining 150,000 shares that, after a 1,000-to-1 reverse split, have become 150 shares worth a little under €1 (€1 for all 150 shares :-)). Since each buy or sell order on this market costs me €100, today I bought another 30,000 shares at $0.012, about €400, and so we’ll wait for some “wolf” to decide to heat up the stock. And curiously, while I was writing these lines, the wolf arrived and they are pushing it up 200%. Isn’t the stock market a beautiful world?
For better or worse, this is what is left of my investment portfolio. Not being in the most popular stocks has cost me some dividends, but in the end the return I have made over this time has been much higher than that of investments in popular stocks.
Featured image: alex lang, CC BY-SA 2.0, via Wikimedia Commons.
