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Game Group looks to be dead. Its suppliers and by the sounds of today RNS, its bankers, have, may or most likely will, pull the plug.
You might think this would make me angry and sad but it makes me pleased instead, as everything that my investment strategy is meant to do has occurred.
I buy lots of companies I hope will make a Lazarus like come back. However, some will die.
According to theory, or at least my take on it, you can’t tell which or when or the outcome.
If you are certain they fit your criteria then you would buy more as a company sags.
If the company fits the criteria you go with it. There is no stop loss.
A diverse portfolio should protect from the percentage which die, Game is one of currently 21 stocks which amount at purchase price to 3% of the portfolio. It’s been sagging while others have been doing very well.
Today when it died it has cost me 1% of my portfolio, which is basically about 4% of my profit over the last 6 month (it’s actually a bit less but I like to keep things in nice round numbers).
I have considered buying more as it has fallen and have turned that idea down a few times. I considered it again this morning, but passed up the opportunity on the basis the RNS is pretty clear the “game is over.” The comment “no value for shareholders” in any context in an RNS means “no chance” and “bye bye.”
I could have traded this at .8p but didn’t as this would have been gambling. The trade I considered would have already clipped 20% off the overall loss, but that trade would have been wrong even if it paid off. In the long run gambling does not make profits, it just costs commission.
Shorts will be covering like crazy at these levels as holders dump, but there is no certainty in this chaos of anything – the only thing to do is hold out for a miracle and write the holding off.
13 of my portfolio are bought to double or triple or more and I expect 3 to 4 of them to die as a counter balance. Game appears to be the first, while Enterprise Inns and Cable and Wireless already more than counter balance; white TRT and Robert Wiseman are already sold and in the bag.
Today was a good day for my investments as a fatal blow to one of its constituents was just a scratch to my portfolio.
I have bought a clip of AGA “Rangemaster.”
A 5 p/e, directors buying and a nice dividend is more than I can resist even if the whole idea of Agas is a non-compute to me. I should of perhaps bought a few more but I’m still a little edge with the market right now.
