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What should I do with shares in Imagination Technologies?
The Diary of a Top Stocker continues with a guilty confession over BP (BP.L) and a cry for help on Apple supplier Imagination Technologies (IMG.L).
Markets
It’s been nearly a month since I last wrote about how I was getting on with the Citywire Top Stocks portfolio. So far, it’s been a so-so experience.
Just to remind you, I have been given £10,000 by Citywire to invest in shares of the companies on our Top Stocks list. This is a compilation of the top 10 holdings of a panel of five UK fund managers chosen by our Citywire Selection team.
For a full list of the funds they recommend, go to the Citywire Selection page.
My guilty BP secret
Since I last wrote, I have piled into BP (BP.L). I confess this wasn’t part of some well thought out plan. More of a knee-jerk trade, I’m afraid.
A comment in the Financial Times on 5 March that the shares were likely to do well after its legal settlement in relation to the Gulf of Mexico oil spill had me splashing just over £1,000 of my company’s money on 196 BP shares.
It’s been a disappointing move so far. The shares, which I bought at 508.65p, didn’t rise much on the day and closed today at 483.4p. I’m not so much annoyed at the fall, but at myself for thinking I could make a quick buck. I don’t think I am a day trader!
BP wasn’t my favourite oil play, so I may sell it later down the line and reinvest the money. However, that may be some time off as I’ve still got £6,000 of Citywire’s money burning in my pocket.
Down, but plenty of money left
So far, including dealing charges I am down 4.25%, with the £3,999.60 I invested worth just over £3,829.
Vodafone (VOD.L) is up 2% today but has fallen 4% over the past month since I bought it and my other two defensive holdings. GlaxoSmithKline (GSK.L) has edged up and is up 1% over the month, while Shell (RDSb.L) closed 1.2% lower today and is down 1.8% over the month.
I was surprised to see from my Barclays Stockbrokers that I have as much as £15,832 available to invest. Is the bank tempting me to spend money I don’t have? Perish the thought! I shall turn a blind eye or I will have our accounts team on my case.
New Top Stocks
It’s tough keeping up with events. Just as I get accustomed to the stocks on my list, another monthly update comes along and changes the line-up.
New additions this time round are Micro Focus International (MCRO.L), the software provider owned by Derek Stuart, manager of the Artemis UK Special Situations fund; Yule Catto (YULC.L), the chemicals manufacturer held by Edward Legget, manager of Standard Life Investments UK Equiity Unconstrained ; Misys (MSY.L), the banking software provider being pursued by Vista Funds; and Taylor Wimpey (TW.L), the house builder. The last two are both top 10 holdings of Richard Buxton’s Schroder UK Alpha Plus fund.
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Look up the funds
- Artemis UK Special Situations I Acc
- Standard Life Inv UK Equity Inc Unconstr Ret Acc
- Schroder UK Alpha Plus A Acc
Look up the shares
- BP PLC (BP.L)
- Royal Dutch Shell Plc (RDSb.L)
- GlaxoSmithkline PLC (GSK.L)
- Vodafone Group PLC (VOD.L)
- Micro Focus International PLC (MCRO.L)
- Yule Catto & Co PLC (YULC.L)
- Misys PLC (MSY.L)
- Taylor Wimpey PLC (TW.L)
- Experian PLC (EXPN.L)
- Rolls-Royce Holding PLC (RR.L)
- Standard Chartered PLC (STAN.L)
- Lupus Capital PLC (LUP.L)
- Devro PLC (DVO.L)
- Imagination Technologies Group PLC (IMG.L)
- Cookson Group PLC (CKSN.L)
- DS Smith PLC (SMDS.L)
- Howden Joinery Group PLC (HWDN.L)
- Galliford Try PLC (GFRD.L)
Look up the fund managers
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- Diary of a Top Stocker: 5 quality blue chips I've got my eye on
- Diary of a Top Stocker: Kenmare is a winner and I'm on the launch pad
- Citywire Top Stocks
- Citywire Selection
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4 comments so far. Why not have your say?
sgjhaghsdg
Mar 20, 2012 at 17:56
Yes, high growth companies are *very* difficult to value as all the usual metrics go out of the window., and even PEG ratios tell you little.
My approach with is to spend a few days (yes, days!) reading and understanding their key patents to see what barriers they present to any potential competition. I then look at how effectively the company is using this advantage to deliver rising profits.
You can stare at charts and ratios all you like, but what matters with technology companies is the value and strength of protection of their technology, and I would *never* trust anyone else to assess this on my behalf.
report thisRalph Wombley
Mar 20, 2012 at 23:42
I was expecting you to expand on your question about Imagination Technologies, but in the absence of any comment, I suggest that the best route to take is the 'holdfast' lane. This company has world class engineers whose brilliant work for the company is now starting to motor. Who knows, but Apple already a stake holder in the company, might decide to make a move on IMG?
report thisRalph Wombley
Mar 20, 2012 at 23:46
Sorry Gavin, I missed the pars about IMG on the turn!
report thisJonas
Mar 21, 2012 at 09:54
"And speaking of Apple, I’m becoming preoccupied with Imagination Technologies (IMG.L), the Citywire Top Stock that supplies the Californian tech giant with its computer chips." - Gavin
They don't make chips - they are an intellectual property company, and this might explain your valuation problem. The revenue today is from work done 2-3 years ago. The IP released this year (and worked on for over 3 years) will start bringing royalty next year.
Successful Investors in this stock have been able to see the new IP, work out its importance way before financial metrics catch up. The first signs of success are licenses and the last sign is royalty (by then you have missed the boat). The new IMG powervr6 has just past the license phase and all indications from this phase is that it will eclipse all previous graphics IP, plus the older technology will still bring in royalty revenue for many more years. More than that the IP portfolio is rapidly widening beyond graphics.
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