Week 365 Review - Big losses realised in SIPP clear-out

I had a big clear-out of duffer stocks from the SIPP and took around £2,500 of losses, which immediately benefited the deficit between cost and value but hammered my performance stats. Unfortunately a 2.5p drop in OPTI:Optibiotix cost around £4,700 so I still had a widening gap between cost and value by £2,156 with my third down week in a row. The deficit is now £81,009 and total portfolio value just stayed above £100k at £100,500.

There were no big fallers this week, at least in terms of 5% or more, as even OPTI:Optibiotix only dropped 4%.

APAX:Apax Global Alpha has been my monthly SIPP investment for the last 4 months, although I've stopped it now as it doesn't qualify based on my new system. My small holding went up by 6% this week and is only 7% down now. I'll hold these because it is in my top 30 magic formula shares, but is in a downward momentum which would now stop me buying. I'll certainly exercise my new 15% virtual stop loss if they should fall further, which they got very close to last week.

CEY:Centamin seems to be staging a bit of a recovery, with reasonable results this week and a 6% climb in share price. They are still 23% down so a long way till break even.

Share of the Week is JLP:Jubilee Metals which went up 7% of my original purchase price. As that's only a small percentage of the current price I wouldn't normally give it Share of the Week, but I'm feeling positive about it at the moment and hopefully my holding in the trading account will get into profit soon so I can try and resurrect the fortunes of that account.

Rather painfully the combined portfolio value has dropped back below the injection line

Following the same angle as the trend line, but at least still above it

Here's the ISA and shares portfolio after week 1 of year 8.

			Weekly Change
Cash	£96.25		-£3.75
Portfolio cost	£82,912.77		+£0
Portfolio sell value (bid price-commission)	£43,488.09	(-47.5%)	-£2,318.31
Potential profits	£1,285.05		+£40.50
Yr 8 Dividends	£0		+£0
Yr 8 Profit from sales	£0		+£0
Yr 8 projected avg monthly profit	£0	(0%)	+£0
Total Dividends	£11,768.92		+£0
Total Profit from sales	£28,094.06		+£0
Average monthly cash profit	£469.38	(12.7%)	-£1.34
(Sold stocks profit + Dividends - Fees / Months)
Compound performance	89%		+0%

Cash went down due to monthly ISA fee and most of the damage to portfolio value was the drop in OPTI:Optibiotix. Potential profits went up £40 thanks to JLP:Jubilee Metals, and we start year 8 so all the annual stats re-set.

Back below the injection line

Dropping steeper than the trend line

The SIPP looks like this after week 349 overall and week 37 of year 7.

			Weekly Change
Cash	£194.90		+£91.17
Portfolio cost	£96,385.01		-£2,004.92
Portfolio sell value (bid price - commission)	£55,939.78	(-42.0%)	-£1,853.23
Potential profits	£297.49		+£60.77
Yr 7 Dividends	£10,727.13		+£0
Yr 7 Interest	£0.01		+£0
Yr 7 Profit from sales	-£2,151.78		-£2,427.09
Yr 7 projected avg monthly profit	£987.84	(21.0%)	-£321.60
Total Dividends	£13,931.52		+£0
Total Interest	£0.21		+£0
Total Profit from sales	£21,572.85		-£2,427.09
Average monthly cash profit	£428.88	(9.1%)	-£31.67
(Sold stocks profit + Dividends - Fees / Months)
Compound performance	61%		-5%

A lot happened this week!

I'm reading a book and it's been quite inspirational. "Trade like a stock market wizard" by Mark Minervini had already made me change my magic formula ranking to use 3-year growth rather than P/E ratio, the reasoning being that the "cheapness" of a share is meaningless if the company is growing. You can buy an expensive share and it can still go up.

It was when I got to the section about getting out of losing stocks quickly that I had a change of mind-set. Several other books have said the same thing but I never really bought into the concept. This book stated it differently. The author reckoned 50-60% of his trades were loss making, but that by limiting those losses to around 10% and letting the profitable shares climb much higher, he saved himself taking big losses and watching his capital tied up in failing companies for years.

That's where I'm at. Nearly all my companies are failing, but I'm in such deep losses that I won't accept defeat and spend every week watching the losses deepen, or at the best stagnate. The complete failure of the trading account shines a light on what is happening all across my portfolio.

So I decided to have a bit of a clear out in the SIPP. Granted I should have cleared out a long time ago and would have only been nursing around £500 of losses, but I waited until now and so suffered around £2,500 losses.

The first share to go was HUM:Hummingbird Resources. They are spending way more producing gold than they can sell it for, and there's no sign of that improving. An absolute disaster of a company and one I wouldn't have gone near if I wasn't stupid enough to read bulletin boards and believe the rubbish spouted on them. I sold my 1,538 shares for 7.7456p taking a loss of £404.62 (77.3%) but at least liberated £107 from a company that will probably go bust. I'm just glad it was a very small toe-dip investment.

The next to go was IQE:IQE. I bought them on a wave of optimism that they would lead the world in making wafers for micro-chips, and I did really well in their early rise making £7,116 profit. However I bought back in at the peak of their share price which promptly plummeted on the back of the Muddywaters report of dodgy accounting and what has now become a company spending more on producing their product than they get back for selling it. I sold my 1,809 shares for 43.901p taking a loss of £1,607.66 (67%) but at least liberated £782. I guess I'm still up over £5,000 from my IQE holdings so shouldn't grumble too  much.

The other 2 shares I cleared out were both magic formula shares that are in decline and so would not qualify to be bought now.

The first is ASY:Andrews Sykes Group which has been stagnant for years, so although paying a reasonable dividend they are unlikely to go up in price, as they haven't managed it for the last few years. I sold my 176 shares at 492p and took a loss of £154.66 (15.2%). My new rule is to put in place a virtual stop loss of 15% which basically gives you 10% on price drop and 5% to cover spread and commission. The sale liberated £853.

The final sale was ASHM:Ashmore Group. They have been declining steadily for years, and I've been concerned about their exposure to Evergrande bonds for a while. I sold my 358 shares at 214.299p and took a loss of £260.15 (25%). That liberated £755.

So although I took some hefty losses, I liberated a total of £2,498 that had been stuck in loss making shares for a long time - years in the case of IQE. I can hopefully re-deploy the money where it can make some profit.

There are other shares that have declined much more than these, but they have gone way past the point of selling because the benefit of getting the tiny return back isn't worth the cost of the losses. I may have to hold them for 15 years before they go bust or break even, but I may as well because there's nothing worth getting back just now.

I decided to get one new magic formula share, and went through my top 30 list looking for ones whose share price was growing. The one I picked was NUM:Numis Corp. They had been on a pretty steady climb for years until peaking around spring 2021 and going into a gradual decline until February this year. For the last 3 months they have been steadily increasing, and the key for me was the opening of their Dublin office which gives them access to EU markets. They are also doing share buy-backs at the moment which is sensible seeing as they are on a P/E ratio of 5 (not that it came into my consideration when ranking the stock).

I bought 374 shares at 266.75p costing £1,009.60 and they went up to 269p so I'm only 2% down which is less than the commission. If they drop by 15% I will sell them.

I couldn't help myself with the other £1,500. I bought 4,591 shares in OPTI:Optibiotix at 32.67p costing £1,511.83. I'm still as convinced as I have ever been that everything about this company is about to lead to a massive re-rate. It happened 6 years ago prematurely and I should have seen that there was a long way to go before the market would be convinced by a new science like this. However, once the market sees what's coming with Sweetbiotix and microbiome modulators, they will be flocking to buy the shares. I know this has been a disaster of an investment so far, but that's down to the timing of my purchases, not the performance of the company. The purchase took my holding to over 190,000 shares.

That's not the end of it. I switched my monthly saving from APAX:Apax Global Alpha to EMG:Man Group which have been on a long term climb in share price since late 2020, but which took a nose-dive following their recent interims. I think they'll get back on their trajectory, and they also go ex-dividend next week so I added £400 to my AJ Bell SIPP and bought 164 shares at 237.45p costing £399.37. When my £130 is automatically invested next week, I will have a nice £500 invested and an instant dividend.

The effect of all that and the 4% drop in OPTI:Optibiotix meant a drop in value of £1,853 but an improvement in the deficit between cost and value of £151. Annual performance was hammered by £321 a month and long term performance to a £31 a month hit and dropped from 9.9% to 9.1%.

Potential profits went up by £60 as both CAML:Central Asia Metals and PLUS:Plus500 had positive weeks.

The value line has dipped below the injection line, but only by £300

The deficit between cost and value actually improved a tiny amount thanks to taking the loss

The trading account looks like this after week 315 overall and week 3 of year 7.

			Weekly Change
Cash	£43.18		+£0
Portfolio cost	£1,877.84		+£0
Portfolio sell value (bid price - commission)	£738.39	(-60.7%)	+£10.44
Potential profits	£0.00		+£0
Year 7 Dividends	£0.00		+£0
Year 7 Profit	£0.00		+£0
Yr 7 projected avg monthly profit	£0.00	(0.0%)	+£0
Dividends	£60.10		+£0
Profit from sales	£226.60		+£0
Average monthly cash profit	£3.94	(2.5%)	-£0.02
(Sold stocks profit + Dividends - Fees / Months)

Sell value increased by £10 as JLP:Jubilee Metals climbed a little. Will it climb enough to sell for a profit?

It's thinking about going up a bit

If it stays like this I will take about 50 years to break even!

DDDD:4D Pharma announced that they have approached 50 different pharma companies in a bid to sell the company. They are confident there will be enough to pay off all debtors and have something left over for shareholders, but I don't think anyone believes we will get anything like what we paid for the shares back again. I'm still steeling myself for losing the whole lot, so anything we might get back will be a bonus. I'm never going near pharma stocks ever again!