More year-end introspection – but only a little

I made a little note to myself to review a post I made on 6 Jan 2012.

Thomas Cook (TCG)

I puffed myself up like a peacock having correctly called the collapse of TCG in 2011. I had nothing to say about it for 2012. It’s a good job I didn’t bad-mouth it, because the shares went up 200% during that period. I suspect we’ll see further recovery for 2012, given they’ve got new directors, some breathing space for debt, and an actual plan as to how they’ll get out of the hole they’re in.

It’s a bold call on my part, and one for which there’s considerable risk that I’ll look foolish over, but we shall see. 45p

Blacks Leisure

I spoke about that in a recent post. Moving on.

GEONG International (GNG)

A company with more cash than market cap (ostensibly), and a PER of 2.5. I actually called it as a short candidate. Turns out I was bang on the money, because it lost 67% in share price. I seem to have a very good track record with shorting ideas, although I have never followed up on them. To some extent, I think it’s much easier to have good shorting ideas than it is to have good long ones. It is a Chinese stock – which very much helps if you’re looking for short ideas. Revenues were down, there were new auditors at some point, and I remember reading from the accounts that directors couldn’t seem to keep their story straight. In an RNS they might mention how they were paying attention to cash collection, and in others they said that it would go down due to their new improved business model. Glancing over the stats on Sharelock Holmes, I see that their interest cover is inadequate at 3.3, the z score is a suspicious 2.3. In fact, the interest cover is too generous – now, as ever, they are net cashflow negative, so the P&L account isn’t worth the paper it’s written onk, as far as I’m concerned. They have net cash of 2.5m, against net operating cashflows of 2.2m, so presumably they’ll run out of money soon unless they can convince someone to pour in some more caipital, or they convert their receivables to cash. Ah yes, the ol’ receivables situation. Receivables now stand at over 2 years of revenues. Many words have been spilled over the legitimacy, or otherwise, on this situation, but I’ll boil it down to one word for you: un-freaking-believable. OK, it’s hyphenated, but it’s still one word. Investment recommendation? Cannot Recommend A Purchase. ’nuff said

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Afferro Mining Inc (LON:AFF)

I talked about that recently. Moving on.

Justin Urquhart Stewart

He’s the real reason I’m bothering to do this writeup. He mentioned late 2011 that distressed debt investing would be an area to look at. This piqued my interest, because I had a holding in ICP (Intermediate Capital) that also good opportunities in debt, and had been raising funds to pursue them. Over 1year, Intermediate Capital (LON:ICP) is up 40.1%, beating the healthy returns of the FTSE250, even. Just goes to show. Justin isn’t just a city mouthpiece in red suspenders. It’s conceivable that he’s actually worth listening to! Go Justin!

I think 2012 has been a very useful learning experience for me in the markets. I hope to provide a more thorough “what I learnt” around April time. Tax time.

Until then, happy investing, and may you all have a healthy and joyful 2013. Later dude.