Crouching Tiger Hidden Gems – a whole new angle on investing

How to invest in falling markets

Investing in falling share markets can be a daunting prospect for many investors, but it can also present a unique opportunity to buy quality stocks at discounted prices

Investing in falling share markets can be a daunting prospect for many investors, but it can also present a unique opportunity to buy quality stocks at discounted prices. Here are some tips to consider when investing in falling share markets:

Do your research: Before investing in any company, it’s important to do your due diligence and research the company’s financials, management team, and competitive landscape. This will help you identify quality companies with strong fundamentals that are likely to weather the storm.
Have a long-term perspective: It’s important to have a long-term perspective when investing in falling share markets, as short-term market volatility can be unpredictable. A long-term outlook can help you ride out market downturns and focus on the potential for long-term growth.
Diversify your portfolio: Diversification is key to managing risk when investing in falling share markets. By spreading your investments across a range of companies and industries, you can reduce the impact of any one stock or sector on your overall portfolio.
Focus on quality: When investing in falling share markets, it’s important to focus on quality companies with strong fundamentals and a proven track record of success. Look for companies with solid cash flows, low debt levels, and a competitive advantage in their industry.
Consider dollar-cost averaging: Dollar-cost averaging is a strategy where you invest a fixed amount of money at regular intervals, regardless of market conditions. This can help you take advantage of market dips and reduce the impact of short-term market volatility on your investments.
Be patient: Investing in falling share markets can be a waiting game, and it’s important to be patient and not panic during market downturns. Remember that quality companies with strong fundamentals will eventually recover and provide long-term growth opportunities.

In summary, investing in falling share markets requires a disciplined approach, a long-term perspective, and a focus on quality companies with strong fundamentals. By following these tips and staying patient, investors can take advantage of market downturns and build a resilient portfolio for the future.

This post was generated with the help of AI. Nothing in this article should be considered investment advice.

Serko ASX:SKO

This post was generated with the help of AI.

Serko was a small startup founded by three friends in New Zealand back in 2007. They had a simple idea: to make business travel easier by automating the process of booking flights, hotels, and rental cars. They named their company Serko after a Maori word that means “to journey.” They poured their hearts and souls into their idea and worked tirelessly to turn it into a reality.

Their hard work paid off. Serko quickly gained traction in the market and became one of the leading players in the travel industry. Their platform was intuitive and easy to use, and it saved travelers time and money. Serko’s user base grew rapidly, and the company expanded its offerings to include expense management and travel analytics.

In 2014, Serko went public on the Australian Securities Exchange (ASX), raising AUD 22 million in the process. The founders were thrilled with the success of their company, but they knew that going public would bring new challenges. They would have to answer to shareholders, and their every move would be scrutinized by the market. They were determined to stay true to their vision, but they also knew they had to be mindful of the bottom line.

Serko’s first few years as a publicly listed company were rocky. The travel industry was in a state of flux, with new players entering the market and traditional players struggling to adapt. Serko’s share price fluctuated wildly, and investors were skeptical about the company’s ability to compete. But Serko’s founders remained focused on their mission, and they continued to innovate and improve their platform.

Slowly but surely, Serko’s fortunes began to turn around. The company signed partnerships with major players in the travel industry, including Amadeus and Booking.com. They launched new products, such as Zeno, a travel management system aimed at mid-sized businesses. They expanded into new markets, including Australia, the United States, and Europe.

By 2021, Serko was a force to be reckoned with. They had over 6,000 corporate customers and processed over AUD 6 billion in travel bookings each year. Their share price had soared, and they had a market capitalization of over AUD 400 million. But despite their success, Serko’s founders remained humble and focused on the journey ahead. They knew that the travel industry was constantly evolving, and they were determined to stay ahead of the curve.

Serko’s story is a testament to the power of hard work, innovation, and perseverance. From a small startup in New Zealand to a publicly listed company on the ASX, Serko has come a long way. But their journey is far from over, and they are excited about what the future holds. They are committed to making business travel easier, and they are determined to continue to be a leader in the travel industry for years to come.

CTHGPRO October 2022 Update

Welcome to CTHGPRO’s monthly or should I say annual update for 2022. 😃

What can I say but the last 12 months has been anything other than boring. I’ve been asked a couple of times why I stopped writing the updates last year and was it because I knew the market was going to hell? First and foremost the main reason I stopped writing was because my personal life got in the way, my daughter moved away from home for University and my son was absorbed in graduate interviews. I don’t remember how many mock interviews that were conducted in my home for both of my kids but I’m happy to say the hard work paid off with both achieving their desired outcomes. Just when that part of my life was in order I managed to fall down the side steps during one of Sydney’s many months of rain resulting in a busted lip and cracked ribs. Seriously you don’t know how good you have it until you try sleeping with fractured ribs. Anyway with that behind me I decided to enjoy life a little before getting back into writing updates. With the fall I also resolved to write a book on investing for my kids if they choose to use it in the future. Once I’m finished the book which I think is still years away (as I keep adding and subtracting ideas) I will consider releasing to the wider public.

The CTHGPRO Portfolio

Someone jokingly remarked every time I stop writing CTHGPRO updates the market falls apart. Last time I stopped in November 2019 and Covid hit in March 2020. Then I stopped writing in November 2021 and we all know what happened after that. 🙂

So I’m back to perform CPR on the market so to speak.

In regard to the CTHGPRO portfolio we’ve been mostly in cash since the start of 2022. This was not so much a great understanding of where the market was heading but more insufficient time to dedicate to my style of investing. As I indicated above, sometimes in life more important things get in the way of making money but the CTGHPRO portfolio never been far from my mind.

My real slice of luck began in November 2021 when my portfolio hit an all time high. So high I even asked my wife to view how well our portfolio was performing. For anyone that knows me those actions would in itself be the ultimate sign of a market top. My golden rule is when you believe you’re a hero in the market that is exactly when you will get belted by the market. Just a few hours after I had stupidly boasted to my wife, I realised my sheer stupidity and sold 30% of my portfolio.

“In the market we must stay humble or be prepared to be humbled” Alonzo Circa 1929

From there as I said I had little time to monitor the portfolio and decided to slowly wind back exposure over the next few months.

The most notable investments I have made for the portfolio over the last 6 months were in the lithium space and into one of my favourite companies Lovisa. I came into the Lithium trade quite early following on tails of early coal investors on Twitter. While the Ukraine war saw energy prices rise it also saw the rush of many countries towards energy independence and the ramp up of renewable power sources. I’m not sure if ideology drives many investors currently in the energy trade such as oil and coal but so many people continue to fail to understand renewable energy and a large share of false information is being spread in the market. While this is a negative for humanity, its a positive for any investor in this space and I’ve happily been taking advantage of these misconceptions.

Lovisa, I’ve written before how much I admire the way this company is run. Even though they reported exceptional guidance in early April it wasn’t until their full year report that the market actually believed how well they were doing. Again I was happy to take advantage of this disbelief by the market.

Other than that I’ve been basically concentrating on special situations such as companies going through a takeover process (UWL,RAP GNX) milking dividend ETFs and my most recent “special situation” was DBI where I was buying below $2 while awaiting a long foreshadowed client pricing update. (I’ve since wound back this position on recent news). In regard to ETF’s I’ve noticed that ETF dividends have reacted quite differently to companies in the current environment when that go ex dividend and I’ve been fortunate to make some bread and butter money while the market has struggled for direction.

Macro Environment

No matter how long I’m in this game I continue to be amazed at how even experienced investors place their faith in broker/media pundit forecasts. While I love discussing macro I rarely use it for investment decisions and I’m yet to meet anyone who actually knows how the macro environment will evolve.

Portfolio Returns

Since my November 2021 update the portfolio has risen 37%. Again while I would love to take credit for side stepping the crash of 2022 this one was definitely more by good luck than by any good management on my behalf. I’ve written and spoken on Twitter numerous times that I’ve never seen conditions like this before in my 20 odd years of investing so I applaud anyone who has remained in the market and done well.

Current Cash holding 65%

Ok I think that is enough ramblings for the first newsletter back.

Bear markets

(This note on bear markets was an edit done on the 16/10/2022)

Something I forgot to put in my original post was my thoughts on bear markets. Once you experienced a loss in a bear market the natural emotion is to try and win back the loss as soon as possible even though the market conditions are at their worst to try and do so. It’s important to keep in mind during bear markets the aim of the game is survival. They say in bear markets that he who loses least wins and that is absolutely the truth. It’s hard not to act especially after you’ve lost money but always remember bull markets last a lot long than bear markets so when the tide turns you need to have real capital and emotional capital to take the exceptional opportunities that appear when new bull markets are born.

Once again, I would like to remind all readers that nothing in this update is financial advice. Please do your own research and consult a financial advisor before investing or even when choosing the type of milk you take in your coffee.

As always, the team at CTHGPRO would like to take this opportunity to thank me for trusting yours truly with my money.

Regards

Alonzo

CTHGPRO Portfolio Connoisseur

CTHGPRO Portfolio November Update 2021

Welcome once again to the monthly update for the CTHGPRO portfolio. Each month I wonder if it’s worth actually writing a monthly update, as by the time I complete the task the new month has taken on a completely new complexion, rendering my mumblings well out of date. The start of December has been no different with the portfolio swinging wildly up and down but sadly for my investor (me) mostly down.

World news

It’s no news to anyone that inflation and interest rates are all we hear about in financial circles. November saw the US fed move away from the term transitory for inflation but it’s important to keep in mind they are still talking about inflation lasting only for approximately 12 months. The Fed also penciled in 3 rate rises over the next 12 months but we wait to see if that actually eventuates.

The wildcard for the month was the emergence of Omicron. Despite many social media epidemiologists claiming Omicron is of no concern, real trained scientists in the field are still saying it’s too early to tell. What many pundits fail to grasp is that even a more mild virus which is many times more contagious can cause even greater problems for our hospital system.

Portfolio News

The big movers this month for the portfolio were CTT and CXL as the news of a significant increase in website traffic for Cettire leaked out to the market. As the price rose and the emergence of Omicron we began trimming our positions in CXL and Cettire more as a risk management play rather than any loss of faith in the companies. The portfolio also revisited its original holding in VALN and restarted a position on Omicron news. The move to reinstate Valneva was viewed again as more of a hedge on the rise of Omicron and future possible variants and how the market would react to a worse case scenario. If omicron is indeed milder and there is light at the end of the pandemic tunnel, we may well exit the portfolio’s holding. I continue to hold VALN in my personal portfolio outside of cthgpro as an all or nothing play. As I’ve stated many times biotechs are well outside my circle of competence so the final outcome is skewed towards the nothing end of the spectrum.

We also took the opportunity to reduce CHL which has been the best performer for the portfolio so far. Again it’s not a reflection on the business but more on the Omicron outlook. Once the real scientists understand Omicron better I will revisit my weighting. PPL was another holding which spiked in price during November and again we trimmed our position.

While we increased our cash holdings we used some proceeds to add to our highest conviction stock UWL which informed the market that the consolidation of their acquisitions were complete at their AGM. As threaten prior to the commencement of the new portfolio November saw the portfolio’s first venture into the crypto space by taking up positions in SOL and LUNA. Again these were viewed as a hedge to current uncertainty. I will write more on why we chose these 2 in upcoming monthly updates

Finally the portfolio also started a position in a very small ASX listed company but due to volume constraints I’m unable to mention it at this time.

Analyst Angle – Cettire

About Cettire:

Cettire is an online luxury goods retailer, using a dropshipping business model to deliver products directly from suppliers to consumers, without holding any inventory. After launching in 2017, the company operates globally and offers free express shipping across its wide catalogue of over 200,000 products. More recently, Cettire has expanded its product range into childrenswear, allowing them to access a much greater portion of the market.

Financials:

• Gross Revenue: $124.5m (+333% YoY, representing 40% prospectus forecast beat)

• Sales Revenue: $92.4m (+304% YoY, representing 32% prospectus forecast beat)

• Active Customers: 114,830 (+285% YoY, to 114,830)

• 40% of gross revenue from repeat customers (FY20: 26%)

• Cash: $47.1 million cash (and zero debt)

Since listing on the ASX in December 2020, Cettire has grown exponentially, highlighted by their financials which have significantly outperformed their prospectus forecasts. Cettire’s Founder & CEO, Dean Mintz, commented on these results:

“It has been an exceptional year for Cettire, with the Company rapidly growing. I am particularly proud of the substantial increase in active customers, very strong revenue growth, robust product margins and the increasing proportion of revenues from repeat customers. The achievements over the past 12 months, both operationally and financially, demonstrate the traction we have with consumers, the scalability of our business model and the benefits of our proprietary technology platform.

Rapid Growth:

Aside from financials, Cettire’s strong growth rates are supported by its rapidly rising levels of website traffic. SimilarWeb (see graph below) highlights how Cettire has been experiencing significant interest in their site over the past months.

A comparison of Cettire to its greatest competitor, Farfetch, reveals Cettire to be an upcoming major player in the industry. As illustrated by SimilarWeb (see graph below), Farfetch saw a decline in website traffic in October, before rebounding in November. Cettire, however, had a strong October and had an even better following month.

Alonzo Angle

Cettire contains the things we love the most, high end fashion and penny pinching. That’s all you need to know!

Stats

CTHGPRO Portfolio rose 7.1% in November.

Top 5 (random order)

CXL, UWL, CTT, CHL and AND

Cash Approximately 35%

As always, the team at CTHGPRO would like to take this opportunity to thank me for trusting us with my money.

Regards

Alonzo and “The Analyst”

CTHGPRO Portfolio Connoisseurs

CTHGPRO Portfolio October Update 2021

Welcome once again to the monthly update for the CTHGPRO portfolio.

October is well known for being a wild month for markets so much so it still sends a shiver down the spine of many seasoned players.

October 2021 can best be broken up into a fortnight of gain and a fortnight of pain.

Campify led the portfolio higher with a solid 4C despite lockdowns and news of a new acquisition in New Zealand. The next best performer was Ansarada a company not mentioned before but as announced on my private tweet feed, it was one of the first companies we started buying for the portfolio. Ansarada with very low liquidity has taken the portfolio the longest time so far to build up a position.

I’ll now hand you over to “The Analyst” to tell you more about Ansarada, because as a famous market player once said. “I have no idea what they do.”

The Analyst Angle

Ansarada (AND) operates a SaaS model, providing a cloud-based software that allows all aspects of legal and financial transactions to be undertaken on a single platform. The company has achieved a growing and profitable business, serving a diverse customer base that regularly performs large or complex transactions. This customer base includes companies, governments, investment banks, legal and accounting firms.

Having completed over 24,000 deals globally, across areas such as M&As, capital raisings and IPOs, AND has been able to tap into the growing market opportunity, worth an estimated US$35bn.

FY2022 outlook.

By investing in data, tools and other features, AND has significantly simplified the signup and activation journey for their customers. This has helped improve their conversion rates. AND has further improved their operating leverage and completed a significant acquisition to accelerate their growth strategy and multi-product adoption with the comprehensive TriLine GRC Solution.

Financial Statement Overview:

In terms of financials, AND achieved total revenue of $10.2m in Q1 FY22, representing a 44% increase YoY. Whilst the company’s YoY cashflows were slightly down (-8%) to $2.5m, they have been improving their cash balance, now holding $23m in cash (+138% YoY).

ASX News

Outside of the portfolio, news has once again turned to inflation fears with the ASX selling off on rising bond yields running into the end of October.

Again I’d like to emphasize while I keep an eye on the macro it does not directly affect how the portfolio invests. We always keep in mind that macro considerations does indeed influence a large section of market players and this alone deserves our consideration.

Tiger Tantrum

This month I thought I’d write a little on position sizing for the CTHGPRO portfolio. As outlined in the first newsletter I believe in concentrating my bets, so I limit the number of holdings to 10 or less. At the same time unlike many fund managers I don’t believe it is possible to know which company will be my best performer as such I allocate and equal 10% to each position.

When first entering a position I use technical analysis or a near turn catalyst to start a 20% position (20% of the final 10%) if the price fall 20% I sell reassess my thesis and start again. If the chart confirms my idea or new information comes to hand to reinforce my thesis. I will aggressively add the remaining 8%. Picking winners is hard, picking which will be your biggest winner I believe is impossible.

This brings me to my next topic – Knowns and Unknowns

No matter how much you learn about an investment there will always be things you don’t know but generally it’s not the unknowns that will keep you from investing or which will force you to sell but more the knowns. Every single investor in this area is different, to me a known problem may not be a deal breaker but for another investor it maybe the one thing that keeps them from investing.

The sum of known problems and their validity in our mind determines the level of conviction you will possess in a given stock. The longer you wait to seek clarity on the knowns which bother you, the higher the price you’ll ultimately end up paying.

This brings to the reason I enjoy investing in early stage companies because to me it’s a competition of making decisions on very limited information both positive and negative for the new company. If you’re right, big returns are your reward if you’re wrong and you over commit too early, negative outcomes await.

That’s why I take my 20/20 approach when entering a new position.

October Performance

Pleasingly the portfolio was up 11% in August. This brings the first quarter of the new portfolio to a positive 46% return.

Top 5 Portfolio Holdings

CHL, CTT, PPL, CXL, AND (Random Order)

Current Cash Levels – Approximately 25 %

Again, I would like to advise all readers that nothing in this update is financial advice. Please do your own research and consult a financial advisor before investing in anything or even when choosing which shade white to paint your ceilings.

As always, the team at CTHGPRO would like to take this opportunity to thank me for trusting us with my money.

Regards

Alonzo and “The Analyst”

CTHGPRO Portfolio Connoisseurs

CTHGROPRO Portfolio September Update 2021

Welcome to the CTHGPRO September 2021 update.

Wow, what a month! September was possibly the wildest month the portfolio has ever experienced.

Firstly, Valneva, what can we say but we didn’t see that one coming. The UK government announced on September the 1st, that it was pulling out of the $1.7 Billion agreement. The UK government first announced it was because Valneva had failed to live up to its side of the supply agreement but later changed their reasoning announcing Valneva’s vaccine was unlikely to be approved for use in the UK. It also came at the same time the UK announced their preferred booster was the Pfizer vaccine which they have already ordered in large supply. Whatever the real reason, we exited our position on the news. Just to rub salt into the Valneva wounds the very next day ASIC announced UWL’s executive director was being investigated for insider trading. The investigation related to the period prior to his time at UWL.

This presented both an opportunity and a moment of sheer panic for the CTHGPRO Team. Fortunately, I was at my desk when the price of UWL began to crater. As such I was able to call the whole team to search for possible reasons for the fall, once establish, we decide to add to our position at $3.50 and we were able to exit our trading position a short time later north of $4. The portfolio will generally not engage in such short-term trading but believing the market was panicking for the wrong reasons, we decided that the new information would not affect the day-to-day business and would soon be forgotten.

Most will know the original portfolio did not engage in such short-term trading and it’s unlikely the portfolio will do so again. Just for reference while my overall record for short term trading is profitable the % return on turnover is much lower and requires much more emotional capital then I am now prepared to give on a day-to-day basis. Emotional capital and the preservation of emotional capital should always be in the front of any trader or investor’s mind. If you can place your mind and emotions in equilibrium when making any decisions, and this applies to not just investing the better your final decision will be. On many occasions in your investing journey you will feel the need for speed, when in truth that is rarely the case. If you can slow down the process and remember the market will always be there offering you choices, all of which you can decide not to engage in, the better off your results will be.

World News

If you had never heard of Evergrande before September, you’re not alone but by the end of September it seemed like everyman and his dog was an expert on the company. Various analysts for what seemed like the whole month were gracing the media explaining why Evergrande would or wouldn’t bring down the market. Personally, I am not greatly concerned by the real estate market in China. I believe the Chinese Government will do everything to stop the real estate market falling apart but they have voiced their concerns on housing prices and borrowings, so the current events come as no real surprise to the team at CTHGPRO. Again, I repeat while I find macro events interesting, they do not generally affect how we invest.

One of the smartest things I have read outside of the CTHGPRO newsletter 😊 was written by another fund manager who made a key component of his fund’s mandate was to always remain optimistic about the market and the world. I think a lot of investors can learn and prosper from taking the same approach to their investing careers.

Portfolio News

Besides the two disasters mentioned above I can now announce 3 new positions which I have already announced on the CTHGPRO forum. CHL, CXL and PPL.

Each month I will generally look at a holding and try to explain a little on how I found the position and why I like the company. This month’s company is CHL.

I will now pass you over to “the analyst” for his take on Campify.

Camplify

Camplify is Australia’s largest digital peer-to-peer RV rental platform. The Camplify platform provides a marketplace to match owners with hirers and covers all the necessary steps to ensure both parties are looked after throughout the duration of the rental period.

Camplify’s platform is well constructed, being developed in Australia with a team of 15 developers. Camplify’s platform is aimed at providing users with the best possible experience, including having 99% of owners approved within the first 24hrs of registration. Their platform further handles all forms of payment processing, insurance claims and any other form of customer support. Moreover, Camplify has strong room for growth, as the supply of RVs in Australia sits at 741,000 (Jan 2021), with Camplify only having 6,000 registered on their platform (<1% TAM). Further growth in Australia, as well as overseas, is strongly expected by the company.

In terms of revenue, Camplify makes money by charging a commission, as well as offering premium memberships. In terms of commission, Camplify charges users a percentage of sales (25.7%). For memberships, subscribers are charged a monthly subscription fee and receive additional benefits, including marketing, reduced commission, and full insurance.

For the Financial Year to June 30, 2021, Camplify facilitated more than 30,000 user bookings, with an average user booking value of $1,019 (with a 25.7% take rate). The company finished the year with $8.4m in revenue, representing a 190% increase over the prior corresponding period.

Alonzo’s Camplify wrap.

I have already told this story on Twitter but I feel it’s worth repeating here. A father and son were working on a van just up the road from my home. They installed a bed, table and sink inside the van along with a pull out annex to the side of the van. I’d often stop to chat with them about their plans and how great I thought it was for them to be working on the project together. During our conversations they mentioned the “van” movement and from there I found Campify. I must admit when I was around 19 years old, I thought of buying a Kombi and traveling around Australia, not sure now why it never happened but I think it would be a great idea for any young single or couple to try now, especially with Covid19 part of lives and who knows what winter will bring for overseas travel.

So what should you take from this story as a new investor?

No doubt you’ve heard the saying that “investing is more art than science” well for me that means, you should allow your inner artist to research and find the companies, while ensuring your inner scientist always manages the risk”

Portfolio returns

The team at CTHGPRO is pleased to advise of a positive 15% return for September and we thank our shareholder for showing faith in the CTHGPRO team despite demanding to redeem every cent after the Valneva fiasco. Fortunately, “the analyst” in the well honoured tradition of elite fund managers hit the no redemptions button seconds before our investor was able to hit the cash out option.

While Valena was the biggest detractor on performance, Pure Profile and Camplify more than made up for its demise.

Top 5 Portfolio Holdings

CTT, UWL, CHL, PPL, CXL

Current Cash Levels..Approximately 40%

As always I would like to take the opportunity to thank me, for trusting us, with my money.

Regards

Alonzo and “The Analyst”

CTHGPRO Portfolio Connoisseurs

CTHGPRO Portfolio August Update 2021 The journey Begins.

August has been a busy period for the portfolio and we welcome onboard the first CTHGPRO Analyst!

CTHGPRO Portfolio 2021 August Update

Welcome to the all-new CTHGPRO Portfolio.

Let me start off by thanking my investor (me) for entrusting “us” with my money.

Why us? Because I would like to welcome onboard the first ever CTHGPRO analyst who will help with every aspect of the portfolio, so I can sit back and enjoy the applause or someone I can blame if it all goes horribly wrong.

Firstly, I am sure many are asking why restart the CTHGPRO Portfolio now? and will it be the same as the last one? Let me answer the second part of the question first, yes. It will pretty much be the same as the last one. Once again, my aim will be to turn every dollar invested int0 $5 within 3 years. The reason I am starting now is I have plenty of time on my hands with lockdown and secondly, I hope it brings some entertainment to those who are stuck at home. Those hoping me to succeed can cheer on my wins, while those hoping I crash, and burn can enjoy a good laugh at the weird and wonderful companies the portfolio will invest in.

For those that don’t know, the only real mandate for the fund is to make money. I can invest the lot in one company (I won’t) or to a maximum of 10 positions. So, it’s a high conviction play. Most of selections of the portfolio will be on the ASX but the portfolios current largest position is situated in Europe.

The next question I get asked a lot, is should you try and copy my selections? the answer is definitely NO. The reason you shouldn’t is firstly because I have no idea what I am doing and the CTHGPRO Portfolio newsletter is not financial advice. Secondly you will never know when I sell. A great example of this occurred with the first position I started for the portfolio on the 1^st of August which I have already exited as new information came to hand. So please don’t try to copy, just have a good laugh with me along the way. What I will try to do is explain a little more on why I bought a company and hopefully that will aid you to perhaps think a little differently for your next investment.

World Outlook

I written numerous times on how I rarely consider the macro environment when investing. This year we have heard how inflation was set to raise its ugly head, gold would go through the roof and basically world markets were going to implode. I will be honest and say I have no idea what is going to happen in the future so I will just stick to what I know and find companies that I believe are and will continue to grow strongly. The sooner I can find them in their life cycle the bigger profits I can make. Now its not that I don’t have opinions on what the Macro will or wont do, I love thinking about it but that’s not what I am good at so I desperately try to stick within my circle of competence.

Covid19

You will be pleased to know unlike many fund managers I am not an expert on viruses, so I won’t bore you endlessly with my opinion on the subject. Having said that if an investing opportunity is presented by the virus like it recently did I will take that opportunity to hopefully make money.

Portfolio News

If you followed the original CTHGPRO Portfolio you will be aware the original version had 14 months of positive returns. While I can’t guarantee that will continue, I will be aiming to keep drawdowns to a minimum. This will not be a buy and hold portfolio.

So let’s get to the part you’re actually interested in, what is the portfolio buying ? Currently the portfolio is holding 5 positions two of which are in the building stage. By building stage, I mean I haven’t allocated the full amount to the position I am hoping to. I am either waiting for additional information to confirm my thesis or I am waiting for the chart to confirm an upwards direction. Once I complete the full allocation of a position, I will then mention the company in the newsletter.

Valneva SE

Anyone who knows me or has followed my twitter account knows that biotech is not my preferred investments. Of course, rules are meant to be broken and sometimes and opportunity comes along that is so good, you just need to be exposed to wherever the ride may take you

Valneva is an emerging French Biotech company, Valneva, is currently in Stage 3 clinical trials for its COVID-19 vaccine, VLA2001. Despite not yet completing trials, Valneva is already of great interest to governments around the world, particularly the UK, which has preordered more than 100 million shots.

The UK has further options to order more, pending approval, the supply agreement with the U.K. is said to be worth €1.4 billion for five-year’s supply. The deal could eventually bring in 190 million doses by 2025. The company is currently preparing to deliver 60 million of those shots (pending successful trials) in the second half of 21.

Interestingly Australia is also amongst those who have expressed heavy interest in VLA2001.Whilst vaccines are nothing new to biotech, what makes VLA2001 unique from other COVID-19 vaccines is that it uses inactivated, whole particles of SARS-CoV-2 to trigger an immune response from the body. Current vaccines such as Moderna and Pfizer instead use mRNA. mRNA vaccines do not contain any part of the virus, instead use synthetic mRNA strands which enter cells and instructs them to make antigens which helps the body’s immune response in future encounters.

On top of that, Valneva’s jab doesn’t come with stringent cold-chain requirements and has a longer shelf life than current mRNA options. The thinking is that governments may choose to stockpile VLA2001 for if and when the need arises

Whilst Valneva is not the first to use inactivated virus particles, they are currently the only producers of its kind being produced in Europe. By using the whole virus the vaccine may even be effective against future variants.

A bonus is that the vaccine, which incorporates a CpG 1018 adjuvant from Dynavax, could have a safety edge since mRNA shots are still novel technologies and adenovirus vaccines from Johnson & Johnson and AstraZeneca have been plagued with concerns of rare but serious blood clots.

While all these possibilities sound great, it is important to keep in mind that its still needs great results from his phase 3 clinical trials and anyone who has invested in biotechs before, knows that a positive outcome is anything but certain

Other holdings

In an effort to hit the ground running the CTHGPRO Portfolio has taken up positions in two of my highest conviction and longtime holdings UWL and CTT. We decided to take positions in both during early August prior to their FY21 Financial Reports. Again, most followers will know I believe it’s better to wait until after financial reports to start a new position but as I currently hold and know both companies well, I saw early August prices prices as an opportunity rather than a risk. We have also started 2 positions in new companies which we will discuss in future monthly updates.

August Performance

Pleasingly the portfolio was up 12% in August mostly due to the rise in Valneva’s share price.

As always, the team at CTHGPRO would like to take this opportunity to thank me for trusting us with my money.

Regards

Alonzo and “The Analyst”

CTHGPRO Portfolio Connoisseurs

Update!

13/9/2021

The portfolio has sold its position in Valneva with news that the UK government has pulled out of the supply agreement.

It is interesting that the UK government has done so after preliminary data on the vaccines booster trials was due for announcement. This raises the question on wether Valneva’s results were poor or half dose results from Pfizer or AZ were particularly good. As an example UK has agreements for 60 million Pfizer shots to be used as boosters. If half dose results are good that effectively doubles the UK supply and halves it’s price.

How to stop your investment portfolio from catching the Coronavirus.

After a great couple of years market conditions have started to turn. While a falling market is never easy, here are a few tips and tricks to ease the pain.

Ok it’s a stupid title but I thought after reading some of the crazy tweets on twitter any investing article at this time deserved to be a little light hearted.

On one side of the ledger we have some pundits screaming buy the dip and exclaiming this to be greatest investing opportunity ever. I assume those who posted comments along this vein have never actually experienced the GFC or have very short memories. While at the other extreme sees “experts” calling for the hoarding of gold and encouraging everyone to rush into the local supermarket to stock up on can goods and toilet paper for the plague to come.

As with all things investing, there is no right or wrong answer with the truth generally laying somewhere in the middle. While no one knows where this will end up, both sides are extremely confident of their positions, not for one moment giving an inch.

First let me start by saying I have no idea how this will play out but like most things in life which includes my investments, I hope for the best but prepare for the worst.

Anyone that knows me, will know I am constantly reminding anyone that will listen, that if you want to play in the investing game you need to have a plan. You need a plan for the good times, you also need a plan for the bad times. A plan gives you a methodology to fall back on when emotions take hold in times of euphoria and in times of despair.

Now I’m sure you’re looking for me to tell you the exact plan you need to follow to avoid any further losses and I’d love to do just that but investing is not so cut and dry. What works for me may not work for you and what works for you may not work for me. Investing is a game of emotions, forget what you’ve been told about valuing a company or buying and selling on a technical signal they mean nothing if your investment plan does not suit your personality.
As an example buy and hold is a genuine investment strategy for some but it doesn’t suit my personality. Buying the dip works for some investors but for others it can bring them undue distress.
Swing trading works for a particular type of investor while others I’ve known have been completely destroyed by the emotional roller coaster that manifests inside their heads.
Plans will also change with your stage in life. If you’re in your twenties and just starting out, the decades you have left to invest will take care of any mistakes you made buying the dip, but if you’re close to retirement and its not actually a dip but a long drawn-out crash, your life and retirement could be put on hold until the market decides to come good.

OK let cut to the chase, here is what I would be doing for the following styles of investing

Value investors

If you call yourself a value investor and you’re not getting excited by the markets sharp pull back then you really need to consider other investing styles. As value investors this is the type of market that can present life changing opportunities for you. You need to be able to stand in front of a wall of sellers convinced that you’re getting real value for money. If you haven’t already build yourself a list of dream stocks and calculated the value of each company then get the hell onto it!!!!… time is running out!
Value investing is not easy, it needs many hours of work to understand the financials and you a need a deep discount to cover any mistakes you’ve made in your valuation. Simply buying the dip is not value investing as I hear too many times.

Tips and Things to look out for:

• Debt. Let me say that again DEBT! As they say debt can stop a train and it can certainly stop even the very best businesses particularly during financial crisis. Often businesses at this time can’t find lenders to refinance debt (everyone starts to panic even banks) and while its assets might look cheap, I can tell they rarely if ever fetch what you’ll find in their books, so don’t think they will be your get out of jail free card if it all goes wrong. In times of market trouble look for strong balance sheets even if you pay a little more. (thank me later)
• Buying, just because you’re a value investor doesn’t mean it’s easy to buy when the market is saying the world is coming to an end. If you don’t have the nerve to face the stampede break your orders up into smaller limit orders starting at your margin of safety price cascading in stages down to your “dream” price then walk away. Let the market panic, you job is to stick to your plan.

Momentum investing

For last few years momentum investors have been the scorn of the market particularly from value investors but don’t let that get to you. Your returns are the real reason value investors are so jealous and now is not the time to give those life changing returns back. If you haven’t already exited the market you obviously do not have an exit plan, fortunately your returns have been so good over the last few years you should be still well ahead but you need to accept much of your good fortune has been just that, good luck. Get a plan to exit or find a way to hedge your gains.

Tips and things to look out for:

• The biggest problem for momentum investors after such a great run is to start to believe your own hype. New to game momentum investors will be rushing in on any bounce and many will be caught out on the possible dead cat variety. Just as value investors need the patience of Job waiting for their turn to buy, it’s now your turn to wait patiently for the market to suit your investing style again. Many will not be able to resist the allure of the market and will squander their gains over the coming 12 months.
• Momentum investors who are sitting on huge capital gains may consider shorting options rather than selling any companies they have held under 12 months to reduce capital gains tax when the market is telling them their time in the sun has come to an end

Chartists

Just like momentum investors the last few years have been some of the most bountiful in living memory. So like momentum investors the biggest issue for chartists is starting to believe they are better than they really are. Everyone looks like a genius when the market winds are directly behind your sails.

Tips and things to look out for:

• Chop! Chop! … Chop is a killer for new TA exponents especially after a good run. Once a market breaks down it will show many false break outs before a new trend is established. Stay true to the signals which has served you so well. New players will stray from their proven plan and give back much of the huge gains before they even know it.
• Patience is now your friend, watch the sector indexes for a new trend to be established then trade only the strongest names. Take this time to understand what other players in the market are doing. And yes even have a conversation with a value investor, you’ll become a better trader for it.

Disclosure and warning

Please Note: None of the above should be considered investment advice. These are my own opinions based on a number of years market experience. Please do your own research and consult a qualified financial advisor if you wish to invest.

Has Vault Intelligence Ltd (ASX:VLT) finally unlocked its potential?

With Vault Intelligence Ltd (ASX: VLT) recently hitting $6 million CRR now may be the perfect time to take a closer look.

Vault Intelligence Ltd (ASX:VLT) shareholders have endured a frustrating time since the company’s IPO back in 2016. This may all be about to change with the company’s outlook appearing to have finally turned the corner.

Company Video

https://www.vaultintel.com/

In layman’s terms Vault’s software takes the hard work out of OH&S compliance. It replaces paper and excel spreadsheets in both large and small companies to ensure companies meet and exceeded regulatory requirements.

Vault Intelligence Limited (ASX: VLT) was listed on the Australian Stock Exchange (ASX) in July 2016 as the only provider of Risk and Safety Management Software listed in Australia.
Vault software is used in over 30 industries by over 400 customers with over 1 million individual users and 22,000 mobile app users. Vault has offices in Christchurch, Melbourne, Sydney and Perth.

Besides the regulatory requirements businesses are embracing vault software because they’re actually seeing a return on investment.

They see this in two ways.

Firstly insurance premiums are reduced for companies which use the software. Secondly workplace efficiencies gained by moving away from legacy OHS systems to Vault’s software has seen significant reductions in costs spent on compliance. So in short, the customers find vault software more than pays for itself.

Catalysts for future share price growth.

When looking for outsize gains in small companies it’s is import to understand what might see the market rerate the value of the company.

Possible catalysts to rerate Vault’s share price include:

Cashflow positive operations. It’s a simple concept but many small companies struggle to ever reach this mark but when they do the market takes notice. Vault is well on the way to such a milestone with their latest announcement showing they had hit the forecast $6mill CRR figure.
The Chinese market. OHS issues are just starting to get recognized in China. The Chinese government has recently enacted laws requiring companies to adhere to OHS standards. Part of the legislation involved the use of OHS software. Vault is currently partnering with a Singapore/Chinese company in an effort to break into both the Asian and Chinese market
Solo software and its partnership with Samsung on wearable technology. Many workers in varying industries such as mining or telecommunications work alone well away from home base. Solo software helps companies keep track of where it’s workers are and their condition. When Solo software is installed on a Samsung watch the home base is able to monitor not only where a worker is but also their heart beat and things such as if they fallen off a ladder or injured themselves. Employers are also able to set invisible barriers so if an employee wanders into a dangerous zone the software will alert them to such an occurrence.

From all reports Solo software has been well received in the market place and looks set to be a possible company maker for Vault Intelligence.

Useful Links on Vault Intelligence

Investor Presentation June 2018 (available on YouTube)

Latest Trading Update

ASX Announcement

https://www.asx.com.au/asxpdf/20190708/pdf/446g20h3ty0ft6.pdf

Do you have an opinion on Vault Intelligence ?

I would love to hear it!!

Please join me and over 800 members on our investing forum. Just click here.

Disclosure and warning

At the time of publication Alonzo owned shares in Vault Intelligence. Price at time of publication 22 cents.

Here’s why an investment in Smartpay Holdings Ltd (ASX:SMP) could be a smart move

Smartpay Holdings Ltd (ASX:SMP) renewed push into the Australian market is a make or break move for this promising small company.

So who is Smartpay Holdings Ltd (ASX:SMP) and what do they do?

Smartpay Holdings Limited SMP (ASX) designs, develops and implements innovative Point-of-Sale (PoS) payment solutions for customers in Australia and New Zealand including banks, retailers and merchant businesses.

Wait on Poindexter, layman’s terms please!!!

You know when you buy something from a shop, you need to tap your credit card on a little box next to the register to pay?

Yes

Well they own the little boxes and the associated software.

Boring….. Zzzzzzzzzzzzzzzzz

Hang on! Think about how many times buyers tap and go everyday across Australia and how many millions of dollars are being transferred.

Hmmmm so they get all that revenue?

Not quite. Let me explain. In New Zealand where they originated they own around 30% of all terminals and charge vendors a monthly fee to use the terminal. They have recently raised capital for a serious push at rolling out their terminals in Australia were they are able to charge a fee on all transactions processed, currently between 1-2% of the total transaction.

Hmmmmm. So I’m guessing if they can get a foothold into the Australian market they could end up a nice little money spinner

Very true, it’s a big opportunity for the company, but let’s not kid ourselves it won’t be easy.

Why?

For starters the market is currently dominated by the big four banks.

I knew there had to be a catch. So how can Smartpay possibly compete with the big four?

Good question. I recently attended the ASX small cap conference in Sydney and was able to speak with the managing director and I asked him the exact same question. What Smartpay offers, that others don’t, is built in software that allows shop owners to run reports and link into stock management software. They are also partnering with these software packages to offer Smartpay as an option. In Australia they are able to compete on transaction fees with the banks, offering vendors a better deal. Another interesting point is that they have just inked a deal to be able to accept Alipay on all their terminals. You will also be interested to learn that unlike many small cap stocks they are actually turning a profit from their New Zealand operations.

You know you really should attend these events

I’m far too busy

Did I mention the ASX offers free food and drinks at these seminars?

I’m so there

Now before you rush off to invest in Smartpay or any company for that matter, I suggest you start by doing your own research and discussing your decision with a qualified financial advisor.

I have included a link here of Smartpay’s presentation taken from the ASX small cap conference and their 2016 presentation here to kick start your research.

Do you have an opinion on Smartpay ?

I would love to hear it!!
Please join me and over 600 members on our investing forum. Just click here.

Disclosure and warning
Please Note: None of the above should be considered investment advice. These are my own opinions based on a number of years market experience. Please do your own research and consult a qualified financial advisor if you wish to invest.

At the time of publication Alonzo owned shares in Smartpay. Price at time of publication 20.5 cents.