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Waiting for the share price to hit bottom #finance

My portfolio of investments looks like a disaster zone at the moment. Many of the share prices have crashed in recent weeks and this week the share price of Carillion crashed from around 190p to just 55p although it is beginning to rally a little today. The share has been shorted a lot in recent weeks but this crash doesn’t really make sense. Carillion has huge debts but it recently paid a very good dividend. Why if its cash flow was in question did it pay such a large dividend? The CEO has now resigned and they have hired HSBC as a second corporate adviser. It seems likely that their debt will need to be restructured and Jeffries are saying they will need a 500 million rights issue. The rights issue should have come a couple of months ago, along with a suspension of dividends. What was the board thinking? Hopefully, the share price has now hit bottom and the only way is up!

has your share price hit bottom?

The share price has now hit bottom?

Carillion isn’t the only share price I have been hoping has hit bottom or the only share to have been shorted in recent weeks. Tesco which is usually very resilient to market movements has been shorted and dropped to just 175p. There is uncertainty there too. Solo Oil, I was surprised to learn was rumoured to have been shorted and that could have been a sign that a takeover was around the corner. I think someone has been selling large amounts of shares and although small investors might sell when they get desperate the quantities suggest an Institutional investor. My money is on Helium One dumping shares which would make them very desperate for cash. While I think Helium One is a good investment for Solo, it was overvalued. Solo is now at 0.25, 0.23 – Bid and 0.27 – Ask. A 17% spread which is ridiculous. The market makers are suppressing trading in the share. They need to take the brakes off for a while and let the private investors buy. If they dropped the Ask to 0.26 the private investors would see that as a hit bottom. In fact, it would be below what we expect to be the bottom and a real bargain.  We do need the board of Solo to get real and start understanding the private investors and stop taking them for granted. Solo needs to manage its releases of information and when the share price rises raise cash with a rights issue and stop dodgy issues to corporate investors.

Have they hit bottom?

Other shares in my portfolio that I hope have hit bottom are ITV, The AA and Debenhams. All three now seem undervalued but I think I’ll be waiting a while before they recover.  My two small pharmaceuticals look more promising. Immupharma hit bottom some time ago and is now steadily rising and looks like being a rising star. I see their new lupus drug Lupuzor being a success. If the current phase of the trial is a success I expect the share price to lift to around 100p. Verona Pharma is in a similar position with its new drug. Verona Pharma consolidated its share which was a mistake (Solo have suggested making the same mistake) so is now undervalued.

Lloyd’s Banking Group hit bottom and I’m pleased to say is on its way up and will hopefully pass the magical 100p mark this time. Premier Foods which I have stuck with through thick, thin and a rights issue is making progress with its products and so we eagerly await its renewed efforts to market those products. Marketing has changed in recent years and now includes social media which Premier Foods tried to use to market Mr Kipling. They weren’t very good at it. They should ask me to be their marketing advisor! I can explain associations. They need to get back to marketing in an exceedingly good way.

That’s all for this week. When things are looking bad and getting worse and you’re hoping that share price will finally hit bottom and start to go back up, you have to think long-term. Traders have jumped out of windows when the value of their portfolio has crashed. I’m on the ground floor so I stay calm and think long-term. Short term falls look bad on your spreadsheet but over the long-term things should work out if you have invested in a diverse way.

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