Week 20 of 2013
More bumper gains for the large caps and more records smashed as the markets soar higher and higher. The sell in May mantra has clearly been out of touch in 2013 as the major indices continue to pile on the gains. Growth stories dominated the week as BoE cited better times ahead. The French were not as bullish as they dipped their toes below the recession level for a second time.
It’s still not pretty out there and the major debt issues that have plagued the markets for the last 4 years are still very much evident. But in true market fashion – lets party anyway? Things can only get better right? Meanwhile – the resource sector continues to get battered as if in a different reality time zone. One where all of the above debt issues are all very relevant and real. A major concern apparently?
One has to assume as growth rates pick up in the future so will the demand for resource/commodities. If the markets are supposed to be forward looking – then you’d expect some reasoned rallying across the sector by now. So which is it? Is optimism over growth driving the large caps or is the free QE3 cash just getting invested in apparent low risk sectors only?
The Dow closed week 20 up 235pts at 15354. The FTSE 100 added 98pts to close the week at 6723. That’s over 300pts gained on the FTSE for the month of May.
A virtual portfolio has been set up using the 2012 final trading day close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. One newspaper top ten picks for 2013 has been included to help monitor/compare against. A pi ‘polled’ top picks list (from LSE bulletin boards) has been included this year.
Week 20 stock picks summary:
It’s pretty much as you were. Large caps booming ahead and small caps looking like the kid picked last for a game of park football.
Poor management decisions from the BOD’s at Antrim account for almost 76% of thesharehub’s hotlist decline. No high impact exploration or failed appraisals can be blamed. Just an inept management team who have undelivered for the last 3 years now yet all of those involved continue to take handsome salaries. Antrim really ought to be put up for sale now to realise the best shareholder value. At double the 8p per share (16p offer) a buyer could gain 3mmboe in reserves, 1000bopd (potentially rising to 1500bopd levels after workovers) huge tax credit breaks, licence block interest in hot demand areas like Ireland and Tanzania and debt free (apart from oil swap deal). Not bad for just £36mln. Of course – it would mean that the BoD’s are out of a job and i’m not sure a new job would be easy to find after their performances. So perhaps a sale of the business is not aligned with director interests at this time? Or ever in the future? It’s probably time for the largest shareholder (18% interest) to make some changes.
Elsewhere across the stock picks – Gulf Keystone stands out as a stock that looks ripe for the speculation rumour mill. The Court Case could finally end soon with a judgement expected as early as June. News emerged over the weekend that ‘Blackrobe’ the hedge fund 3rd party litigation player has decided to ‘fold’ and dissolve the business due to a lack of funding. Mmm – timing certainly looks a bit apt. Should GKP win the CC and wish to counter sue on some matters – Blackrobe and those behind the business will in theory be safe from the clutches of the law. Could this be a hint that the panto like Court case is about to end?
The independent continues to soar and whilst it is clear QE3 is flushing its way through the larger caps, I still wonder why on earth Thomas Cook has almost 3 bagged. The travel industry is changing fast and companies like Thomas Cook have been slow to change with it. As poor old Nokia discovered, it’s the innovators that pick up the mantle and run with it leaving the previous sector leaders looking like great grandma’s. Plenty of wisdom but just not able enough to compete anymore.
But in a market that is disconnected from reality – reasoned debate is becoming hard to find.
Current standings / Week 20 Results
1. The Independent 2013 +39.55% (weekly gain of 6.82%)
2. TheShareHub’s 2013 B-List +10.66% (weekly gain of 4.74%)
3. The LSE BB List 2013 -10.76% (weekly loss of 2.78%)
4. TheShareHub’s 2013 Hotlist -11.13% (weekly gain of 0.01%)