CVR (Conviviality) has been receiving all the attention today, having been suspended at 101p.
What hasn’t been talked about is SPO (Sportech). It fell 51% today to 37.50p. The RNS stated that a potential takeover is now off the table. It also identified “a number of write-offs and restatements … In addition, there are around $8 million (net) of exceptional items…”
Oh dear. To quote the timeless and enduring wisdom of Homer: “Christ on a Buddha”. Homer Simpson, naturally.
Those with an excellent memory, who are avid readers of this blog – an admittedly vanishingly rare set of people – will remember that I added SPO to the MHP (Magic Hat Portfolio) in January this year.
What I didn’t announce was that a week ago, I actually sold the shares from the portfolio. This is something I never do! Except this one time, of course. You can view the portfolio holdings over on Stockopedia. It’s a matter of public record, so you can see that I’m not making it all up to suit myself.
So what led me to take this unprecedented course of action?
It was all due to Twitter’s @ErikInvestor (https://twitter.com/EricUKinvestor) asking me what I thought about SPO trying to sell itself. I said that I didn’t have any strong opinions, and that I’d have to think about it. I wasn’t even aware of it. I can’t seem to find the thread of the discussion on Twitter, though, so I’m only working from a vague memory.
As you can see, I eventually did think about it, and concluded it was a sell candidate. The gist of my response was:
@EricUKinvestor informed me yesterday that SPO is trying to sell itself. Since the MHP is not really a special situations fund, I decided to replace SPO with BATS (Brit American Tobacco). It should be a fairly safe investment.
I actually performed an update on my blog (https://mcturra2000.wordpress.com/2018/02/05/magic-hat-bkg-in-sty-out/), but put it on the wrong article. Otters banging rock.
Unstated was my reticence about investing in takeover candidates. I’ve seen too many of them fall through to think of them as a good bet. This is exactly what happened here. I did not publicise the post, because I thought it would be of little consequence. I did not know how right my reasoning would turn out.
Although MHP is a largely mechanical process, I decided to bail in this instance. What with this and the fiasco that was DFS, I am now inclined to take a little bit more of a hands-on approach.
I should point out that it was only through sheer luck that I came to make the decision. If the circumstances had been only slightly different, the portfolio would be nursing a heavy loss.
So, I would say that Erik has definitely earned a beer from me.
I should really be paying more attention to the markets.
So that’s two major bullets I’ve dodged so far this year. Lest I be accused of puffing myself up too much, rest assured that I have received at least my fair share of flesh-wounds. I’m just not as vocal about them.
Stay safe out there.