Emerging Investment Opportunities Welcome to the new Hot Copper forum with a focus on identifying outstanding investment opportunities with multiple upside potential. Whilst I have set out a list of guidelines and rules for the long term competition in another post below, I am open to anyone’s suggestions and fully expect the thread to evolve and improve over time.
The Investment Heirarchy I run my investment business categorising stocks into Short Term (day trades or multi-day holds), Medium Term (days to weeks or even months) and Long Term Strategic Holds (months to years). Hot Copper already has threads to cover the first two types of investments being the Day Trading and Short Term Trading threads. The focus of this thread is going to be on the strategic type investments with a longer investment time horizon.
The Strategic Investment Strategy Adopting a hierarchical approach to investing has been a highly successful strategy for me. It has resulted in the achievement of windfall profits on many companies over the past 10 years. My typical investment size in this category is usually around $50,000 and I expect to achieve six figure profits over time. However position sizes can easily be scaled to match people’s own circumstances. The success rate I achieve for these types of investments is consistently around 80% or 4 winners for every loser.
Due Diligence Process The more time that is spent conducting due diligence the better informed investment decisions will be. Before making strategic investment decisions, I spend a lot of time gathering and deciphering information about the company, its strategy, projects and management team. The typical due diligence activities I undertake are outlined below.
Once I have made the decision to upgrade a company to a strategic investment, I build a substantial core position which remains untouched whilst I have complete confidence that the company’s business strategy is being successfully implemented. In addition to this, I try to make additional income from both short and medium term trades based on chart technicals.
If a company shows signs of straying from the successful implementation of its strategy I will reduce or exit my position. I remember following a company called Solagran (SLA) many years ago when they were working on comercialising their pharmaceutical product “Ropren”. I went to two annual general meetings in a row and at the second, I felt like I was hearing the same story as a year earlier, with little progress being achieved in implementing the long term business strategy. I walked out half way through the meeting and sold 200,000 shares at $1.25 for which I had paid $0.10 cents. The company subsequently failed to deliver on its plans and is now suspended from the ASX. My point here is that it is critical to constantly monitor how the implementation of the company’s strategies are going and move the stock up or down the hierarchy depending on that ongoing assessment.
At any one time I usually have around five strategic investments. For example my current stocks in this category are Armour Energy (AJQ), Estrella Resources (ESR), Moko Soclai Media (MKB), Prana Biotechnology (PBT) and St George Mining (SGQ).
Anyway that is my introduction to this new Emerging Investment Opportunities thread on Hot Copper. I hope people using it benefit.
