Funny Investing

We have had far more than our share of ‘little things’ coming really good since the Pandemic saw markets bottom in March last year. There is one collective fund which we hold which has bounced from its lows. I have to admit to not having bought any for a long time and even when we did it was only larger investors as it was very speculative and difficult to trade even then, as it was heading for the door ever since we first purchased stock rather than giving us a bright recovery but we kept the faith and its big year proved to be 2020. So, in October 2019, the price of shares in this fund, a mining specialist with a penchant for gold, were trading at 1.7p. Last month, they were trading at 32.5p yet at both extremes, if the Company shut-up-shop, sold its assets and returned cash to shareholders, they would have had a big bonus as they have always traded at a significant discount to the underlying asset value as well. It is a real tiddler, the Company only worth a couple of tens of millions even now (so think what its total worth was in October 2019!) so you won’t find anyone else who has any of this (bigger institutions can’t buy enough or sell either but even private investors won’t have spotted it). Its price has slipped back a bit and we only own 700,000 shares and maybe we should have continued to have added more but till last year, all it ever did was lose us money and well, clients can become tetchy and impatient too as they jab at the big loser on their portfolio report (whereas the big winners have already gone – sold at a profit, so relegated to history and out of mind)… What it reminds us however is that even if your £10,000 portfolio had a mere £250 in that investment at its bottom, that one investment alone would have generated a profit for you of £4,390 from trough to peak (so 44% on the whole pot!). That was a price increase of 17.6 times! And the maximum risk to the investor? £250. So next time you criticise an investment which your manager has acquired and yet which may not have shone as hoped… remember what potential there can be in an over-sold, wholly unloved situation in which he might still has some ounce of faith to justify continuing with it and yes, of course it is not always right but sometimes, the investment tail on your portfolio can be what makes the running on the whole account! 2020/21 was one of those years it seems and well done if you were patient – and that includes most of our clients!