See you in the queue...

Finweek English Edition - - COVERSTORY - MARC ASH­TON

While there’s no shame in go­ing with the tried and trusted, I’ve se­cretly har­boured a de­sire to make it on to the front cover of a mag­a­zine and I guess this is my one chance in life. I’m proud to say I’ve come up with a port­fo­lio that would make even Marc Hasen­fuss blush. (Freudian slip. I as­sume you meant “flush”? – Edi­tor.)

How­ever, to my credit I’ve put my money where my mouth is and bought each of the fol­low­ing stocks for my per­sonal port­fo­lio. If you go belly-up back­ing me at least you’ll know I’m feel­ing your pain and know I’ll be stand­ing in the soup line next to you.

Small cap shares have been out of favour with in­sti­tu­tional in­vestors and there are plenty trad­ing be­neath their net as­set val­ues. While NAV isn’t the be-all and end-all of in­vest­ing, it stands to rea­son shares will ul­ti­mately cor­rect that sit­u­a­tion as con­fi­dence re­turns.

You’ll re­mem­ber that both Beige and Build­max (my sec­ond pick, be­low) scored very highly in a re­cent cover story we did col­lect­ing data from McGre­gor BFA on var­i­ous fun­da­men­tal fac­tors. With some aborted and less than suc­cess­ful trans­ac­tions over the past few years, Beige hasn’t cov­ered it­self in glory and ev­ery time it seems to be com­ing right it lurches into an­other neg­a­tive story. How­ever, it’s a case of two steps for­ward, one step back.

It’s trad­ing be­low its NAV, im­prov­ing cash gen­er­a­tion, and while there’s per­haps too much paper in is­sue, it’s a grow­ing busi­ness.

This is a stock that hurt me in 2010 but I stuck with it all the way down be­low 20c and its rights is­sue. I have to bow to the su­pe­rior knowl­edge of the guys at Brait and Coro­na­tion who have put a lot of their own money into re­cap­i­tal­is­ing this busi­ness and as­sume they aren’t in the stock to make chump change, so why should I miss out?

Even with more shares in is­sue, the stock trades be­low its NAV and you have to go with the smart money in this case.

I can’t lie. Ev­ery time I walk into Global Trader in Mel­rose Arch I get a lit­tle jeal­ous that they all make those pin-stripe suits look so good. Maybe if I win the trad­ing chal­lenge I’ll in­vest in a few of those and cul­ti­vate the swag­ger.

Jokes aside, I like the team at Pur­ple Cap­i­tal. I think they’re en­tre­pre­neur­ial and I think they like the idea of be­ing the men who rock the boat – and those are the kind of peo­ple who are fun to back.

Global Trader as a busi­ness is reap­ing some good rev­enues and the trans­ac­tion with sports bet­ting busi­ness Volt­bet is an­other that could add some se­ri­ous vol­ume to their re­tail base. It also trades be­neath its NAV. In short, I haven’t got a cook­ing clue about com­mod­ity stocks. But my the­ory is sim­ple: if the share trades be­neath its NAV and Brian Gil­bert­son can give the hint he’s about to hit even one home run then Pallinghurst will fly.

Piet Viljoen said not to ex­pect fire­works from his listed in­vest­ment ve­hi­cle, but even the best will feel some pres­sure to do some­thing this year. At the time of writ­ing the stock was trad­ing be­low its NAV – which is pri­mar­ily made up of cash – so it can be the de­fen­sive corner of my port­fo­lio, with Viljoen pick­ing up the pieces from any fall­out from my riskier stocks.

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