2018 Recap & Overview of My Top 5 Holdings (RRE, BMN, ARCM, INFA, SO4)
In Q4, I penned some thoughts on investing and how I’d successfully lost money on AIM during the course of 2018. Since that time the stock market has taken a further hit and my portfolio is firmly in the red for 2018. My portfolio finished the year down about 8%. I spent huge amounts of time, energy and effort to lose money this year – wahoo!
As someone who is 100% long shares with little excess cash, I’m not in a position to buy more shares at the moment, so I’m not cheering any valuation drops. But even though I’ve taken a hit this year, I’m enthusiastically holding on to some large positions – my top 5 shares make up over 60% of my portfolio.
RockRose Energy – oil and gas cash machine – 20% of pf
I first covered RockRose in late September and like the oil price the shares have been very volatile subsequently – they were briefly above £7 and have fallen back to £5.50 ask. The chairman Andrew Austin (who owns 28% of RockRose) was recently interviewed – link. Even though the oil price has dropped RockRose is 50% gas and lower oil prices should make it easier for RockRose to acquire assets which it has a proven track record. Assuming no disasters I find it hard to imagine RockRose shares will be at this level in a years’ time and that’s without any acquisitions.
Bushveld Minerals – vanadium powerhouse – 14% of pf
Since I last covered Bushveld here the shares have pulled back into the 30’s. European FerroVanadium prices dropped significantly during December from well above $100Kg to below $80Kg by month end – link. As Bushveld are one of the lowest cost producers in the world, it will still be generating significant cashflow. Production costs in Q3 were $20KgV and that was with workers on strike for part of the quarter and an equipment issue. In Q1 I’m looking for Bushveld to show what a full quarter of production looks like and announce the dividend policy which was originally due in Q4.
The Bushveld Perspective (no relation to cube) provides daily trade analysis and believes there may be some shorting against Bushveld.
Arc Minerals – soon to be cobalt/copper producer – 12% of pf
I covered Arc Minerals in November off the back of what I considered an excellent investor call here. Since covering Arc it has had high grade cobalt drill results and announced that one section of its plant has initial capacity of 10,000 tonnes per month. The company also released its interim results during which the (in my opinion conservative) chairman stated – “Shareholders can expect an active programme of news flow over the very near term with further drill results, updates on developments around the new anomalies identified from the airborne survey and commissioning of the small scale demonstration plant.”
I attended an investor presentation back in July and timelines have slipped from what the board hoped to deliver during 2018 which could explain some of the share price weakness, more positively this sets Arc up for an exciting Q1.
Infrastrata – UK gas storage – 8% of pf
I’ve never covered Infrastrata for Cube which is unfortunate as the shares have moved upwards dramatically in the last couple of months. Infrastrata own a salt cavern gas storage project at Islandmagee in Northern Island which is expected to provide 25% of the UK’s natural gas storage capacity and qualifies for “UK Guarantee Scheme” status. This means the government could guarantee debt finance for up to 65% of project costs. The project is important for the UK because 70% of UK gas storage will be lost as the Rough gas storage site closes.
2019 promises to be a transformational year for the company as CEO John Wood has stated – “we remain on schedule to conclude all matters and undertake the FID [final investment decision] by end Q2 2019.”
Salt Lake Potash – Australian quality potash play – 7% of pf
Since I picked Salt Lake as my potash play of choice(also see clarifications to some of the numbers I generated here). Since covering Salt Lake they’ve strengthened the senior project team by hiring experienced project directors who are ex-Fortescue, having previously worked alongside the new CEO.
The Western Australian government has committed to reducing mining lease costs and“will introduce a new rental rate for potash projects which will reduce the existing rate of Mining Leases from $18.70 per hectare to $2.32 per hectare in the first five years and then $4.64 per hectare thereafter.”
Salt Lake has signed native title land access and exploration agreements and construction activities are set to commence. There’s even a suggestion in that RNS from the company that rather than just building the 50ktpa demonstration plant, it may build a larger one – “Work is currently underway to enable the Company to report a Mineral Resource Estimate for the lake bed brine and the paleochannel aquifer for the ‘whole of lake’, which will enable the Company to examine larger production options.”
2019 investment strategy
My investing strategy for 2019 is mostly do nothing – I hold what I believe to be a basked of undervalued well run companies with management who can deliver.
Coming into 2018 I was convinced I’d make money on the stock market, my view coming into 2019 is somewhat gloomier however as Infrastrata shows even in a falling market delivery counts.
Ray Dalio covers long-short term debt cycles, politics and the markets connection with the economy.
Ed Croft covered the statistics as to whether 2019 is likely to see a stock market rally.
At the time of publication, the author holds long positions in shares discussed in this article.