Tuesday, 11 March 2014

When to sell?

Fyffes leaps 40%

Shareholders in Irish fuit company Fyffes will be wearing banana shaped smiles with yesterday's announcement of a merger with Chiquita to create the world's largest banana company. The share price jumped 40% on the news.

Writing about Individual Stocks

As a mechanical investor I don't try to analyse a stock and decide whether or not to invest. No doubt there are people who think this is crazy. Well they can think what ever they like - its my money after all.

For me the main downside is that as a blogger my approach of strategic ignorance makes it difficult to write about individual stocks and what specifically makes them a good pick.

A Screaming Buy

What I can say is that the MB method picked out this stock as a screaming by right at the beginning of this experiment about 8 and a half months ago. The Composite Rank score (an earlier variant of Stockopedia's Stockrank) had a score of 99 while putting in appearances in 7 their screening strategies.

Why makes things so complicated, when such a simple approach seems to deliver the goods? I'm now up 80% in this stock in less than a year. That's good enough for me.

I now know when to buy, but when to sell?

I am convinced more than ever that I have a reliable method for picking stocks that will outperform the market. Where I am less certain is about whether I have quite got it right in terms of when to sell. Fyffes now has a score of 92, which brings close to the point at which initially I would have expected it to be close to selling.

However, a couple of my initial picks (WH Smith & CSR) I have sold only for the stock price to keep moving higher. WH Smith has ben especially perplexing as the MB score dropped and then rebounded, along with the share price. Perhaps I need to lower the sell trigger?

This is something I will revisit as the strategy matures. I will run some simulations to test different sell triggers. I will also track the performance of my sells along with those that replaced them.

Ticker Name Mkt Cap £m # Screens (Long) Composite Rank MB score
DTG Dart 273.3 7 99 106
FFY Fyffes 169.5 7 99 106
CSR CSR 915.9 7 99 106
STAF Staffline 101.7 6 98 104
CRE Creston 55.6 6 98 104
SMWH WH Smith 970.1 5 99 104
MTW Mattioli Woods 52.7 4 99 103
KLR Keller 623.1 4 99 103
CPS CPL Resources 129.4 4 99 103
PHTM Photo-Me International 291.4 4 98 102
SPRP Sprue Aegis 35.1 2 100 102
MCRO Micro Focus International 1,043 3 99 102
SVS Savills 765.5 3 99 102
ADN Aberdeen Asset Management 5,692 4 98 102
MTEC Matchtech 78.5 2 99 101

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