Cryptocurrency

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Quiet few months for me – its been very hard to find good ideas.

This has led me to look outside the beaten path and I have decided to put a small portfolio weight in bitcoin / related cryptocurrency. I’ve somewhat changed my mind on this.  I did think of them as tulips.  Now I think they might not be, and even if they are – there is opportunity for money to be made.  All one needs to do is double your money and sell half – in crypto world an easy thing to do, and its all free from there.

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DUPD – exiting at just over 15p – c+14%

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Just exited my Dragon Ukrainian Property position at a touch over 15p.  This is a pretty disappointing result.  It is far less than the company’s NAV which is more than double this amount.

The tender offer has been accepted by over 50% (59.61%) of the shareholders at 15p.  This means it will happen.  The remaining shareholders have until August the first to tender (brokers may have earlier deadlines)   If more than 75% accept it’s likely the company will be delisted, if 90% accept the minority gets squeezed out.

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Tejoori 37c tender offer – don’t accept, its worth almost double…

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Just got a notice from my broker – Hargreaves Lansdown that there has been a 0.37c tender offer for all of Tejoori from Southey Capital Ltd.

There havent been any RNS’s about this so many in the market may not yet know.

I have had a think about this and I won’t be accepting.

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$DDDD 4D Pharma – an experiment

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A couple of weeks ago I bought a very small (just over 1%) (probably too small) portfolio weight in 4D Pharma at 247p per share.

This is very much an experiment for me – its the first pharma stock I have ever bought in my 17 years investing.

DDDD are a company involved in developing remedies related to bio-theraputics.  This is using the body’s own bacteria / product of that bacteria to heal.  They are initially focused on gastrointestinal issues.

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$TRB – closing Tribal +57% / +200%

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Closed the last of my Tribal at about 79.  This is over 200% of my entry cost, however I only made 57% over the total position.

This is somewhat mitigated by the large size – at peak this was 20%+ of my portfolio.  This pretty much made it that I had to sell all the way up.  I have a rule that I dont go above 20-30% weights. Might be one to think about as it means I am not enjoying the full result of rapidly compounding shares but on the other hand it manages risk…  I think improving this aspect of my investing should be a focus going forwards.

It was very large when I started so I sold out all the way up.

I think at the current prices a recovery is very well priced in.  Even if we believe there is going to be a good recovery in margins to 10% – which they have struggled to reach then we get to a multiple that’s pretty high.  I should have looked at this / sold in the 90s and to some degree am reacting to the recent dip in the share price…

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DUPD – free put option on offer ?

Just bought quite a lot more DUPD – at an average price of just over 13p. .

I covered DUPD in a number of posts…

The investment managers Dragon capital have bought 10.69% from J&T Securities Management Limited this means they hold over 30% so need to make an offer at 13p for the rest of the company according to the takeover code.

I have bought as we are awaiting details of their offer.  I strongly suspect it will be higher than 13p, and even if it isnt, given that the bid price is at 13p you can just buy and sell the shares back for almost what you paid – getting a lot of optionality and paying next to nothing for it.

***EDIT 8/6 Offer details out at 13p. Needs 50% acceptances to be valid. Independent directors still to report so still chance they could raise over 13p. Have sold a bit and now wouldn’t add to this…***

https://deepvalueinvestments.wordpress.com/2016/02/05/dupd-it-trading-at-near-cash-value-discount-of-75/

https://deepvalueinvestments.wordpress.com/2014/01/27/dupd-he-who-turns-and-runs-away/

https://deepvalueinvestments.wordpress.com/2014/01/23/dupd-beginning-to-realise-but-price-not-rising/

Figures are laughably out of date but the argument still applies.  This is an out of favour, liquidating investment trust.  I have held it since February last year.

Short story behind this is that lots of money was raised at the top, invested and now we are picking through the remains.

There are reasons to suspect assets could be underpriced on the balance sheet.  Against the market they value their Arricano shopping centre holding at a discount of 70% OK its illiquid but I’m not sure its that illiquid.  They hold lots of little bits of land – near impossible to value as an outsider.  Even if we trust their valuations – which I dont, the company is worth $48m, I also notice on the balance sheet they have a large amount of accumulated losses ($225m), not at all sure as to the position in Ukranian tax, but this might be worth something for somebody.  This suggests losses can be carried forwards indefinitely in the Ukraine…

At the current price the offer is worth $17.62m.  Independent directors to me seem unlikely to recommend accepting an offer for less than 37% of what the company is worth, but I’ve been surprised before…

Further, large shareholders may no longer want the company managed by an investment manager which wants to take it off their hands and the inherent conflict of interest this could create.

Newsfeeds / volume today was very interesting.

Lars Earnst Bader (Hedge fund guy) busy buying all day at 13p went from 10.9% in the morning got to 15% as at close of business.

Other shareholders are Goldman Sachs at 15.5% and Guy Thomas / Hazell Carr Edwards FURB – 3.68%.

I think there is an element of risk on both sides, the investment management agreement expires in December 2018.  As a related party management can’t extend it themselves.  They dont have the votes to delist / do too much else unpleasant. particularly with the nature of the other shareholders, as Ukraine’s largest investment bank its well worth them owning this and equally its not in the interest of other holders to be too unreasonable as they can’t properly monetise it or manage it either….  I would also hope that as a large Ukrainian investment bank they would have a bit of a reputation to uphold so can’t behave too badly…

I strongly suspect a higher offer will follow.

There is some risk here, it is possible for the takeover panel to waive the requirement to make an offer (I dont think they will).  It is also putting money into ukraine – not the most stable part of the world.

My holding has increased from 2.7% of my portfolio to 13% and I am considering upping it further on weakness

*EDIT 8/6/2014 – see comment above, now not as attractive as I thought…

Alternative Liqudity Fund – adding a touch

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Added a touch to this at 17c last week…

It has done very nicely since I bought – returning 7.5c when I paid 13c for the shares to start with, hopefully the returns of cash will continue..

See original post for investment case…

https://deepvalueinvestments.wordpress.com/2016/08/21/alf-net-assets-6x-market-cap-cash-half-market-cap-potential-5-bag-opportunity/

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Selling DCI – Delay in returning cash / Portfolio update

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Changed my mind on DCI.  This is not to say I wont get back in if the price falls more.

I am getting out more or less flat. Announcement that they are going to use Pearl Island cash for working capital and that:

The Board will re-evaluate the Company’s distribution potential when there is more clarity on the pace of additional disposals.”

Makes me think selling these assets may take a while longer than I initially expected… I’m also more concerned about the price… I always was a bit concerned about the quality of this one…

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Review of 2016 + 33%

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2016 is almost over so I thought I would go through what worked, what didnt and my plans for 2017.

+33% is OK – FTSE100 is up 14%, 250 up 3% AIM all share 14%.  Peak to trough draw-downs across these are about 10% where as my portfolio (OK measured monthly) was only down 5% from peak at its worst.

My review of 2015 is interesting putting this in context.  I anticipated that TRB and SIHL would do well but not that I would come up with other good ideas or that TJI would do well.

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