ShareHub Hotlist 2018 Review – Week 9

Week 9 was certainly not a dull one. Topped with a Trump initiation of Trade warfare and tailed with an embarrassing criminal case against an apparent pump and dump broker called Beaufort Securities. Thrown into the mix was the usual Brexit handbags which quite frankly is becoming more embarrassing than the UK’s response to a white powder called Snow. If a country grinds to halt due to some snow, I’m not sure future trade partners will be too keen on baseing their main offices or factories in good old fashioned blighty if everything grinds to a halt for a week. Add to this the subsequent ‘thaw’ and water companies across the country are out in force repairing pipes that they said they were going to repair some years ago… cough cough… must pay the shareholders some divi’s first before ensuring the UK’s water system is up to speed! It really is a bit of shambles of late. Does anyone actually know what is going on with Brexit in laymans terms? We are not far off the transition date of next year… and I don’t think the British man or women on the street knows any of the agreed or soon to be agreed terms. The irony is the EU have been hammering the retail sector for years with clear labelling for the UK consumer, laws on emissions, laws on noise from appliances… the list goes on. It’s all about giving the consumer clarity. Too right and that’s how it should be. So could someone in the EU provide a nice 5 dot coloured sticker with the agreed terms for Brexit please? Moving on… Trump’s trade war should see other countries retaliate. If Trump feels the US is getting a raw deal on steel imports, how does he feel about Amazon trading across the globe, pinching bricks and mortar retail sales and paying a nominal amount of offshore tax? Is the UK high street getting any relief from Amazon or Trump? Nope. So why is it that US companies like Amazon and Apple can sell their products into the UK yet we don’t slap tariff’s on them? The digital age is very much in its infancy, with gaping voids across the globe in commercial terms. Cyber space should have commercial borders in some form or another. By putting ‘America First’ he may be looking after his own but in reality the rest of the world will simply put ‘America last’.

Rant time over, back to equities. Whilst the markets continue to search for a solid bit of grounding amongst the plethora of global woes as mentioned above, attention turns to the dark dark world of the markets. Now called a Casino by many, the markets reputation is yet again falling apart. Beaufort’s corrupt dealings (alleged) reveal the active involvement of Brokers in small cap stocks. AIM has long been a volatile market but really, this type of manipulation has been going on for years and years. It was only by virtue of the US investigation that the Beaufort scam came to light. Which makes the UK FCA look a bit of a soft touch. Why aren’t the FCA doing more? Perhaps they are too busy racing around trying to ensure the new MiFID II is in full compliance. The latter brings with huge changes for brokers and the market as a whole. Under the new rules ‘dark pools’ are to be tightly regulated (about time too!) The law was due to come into play on Jan 18th but got delayed until March 12th.

See Bloomberg link here for more detailed information on dark pools and what to expect

So in summary, March looks like a month which should see some significant changes across many ‘abused’ casino type processes. Some believe the mid-day auction will simply be the place to get those large block trades stuck through. Certainly a time to watch stocks closely as you may learn a thing or two by the change in trading patterns, volumes and bid/ask prices range and fluctuations.

As for Beaufort Securities… well all I can say on that matter is that it takes a buyer and a seller to transact and the other market makers and brokers out there will have detailed insight into what is going on across the book on a daily basis. Sometimes ‘saying nothing’ or turning a blind eye is just as bad as doing the deed yourself. I imagine this US case into Beaufort will send shivers through quite a few broker houses. If MiFID II is giving them a headache then I think they’ll need to stock up on the ibuprofen.

Week 9 delivered nothing major across the stock picks. News was light. The 2 heads up picks MATD and PDL are performing better. MATD looks in excellent shape and without a doubt this years big blockbuster with 2 x exploration drills cue up and 2 more (TBC) to follow in H2 2018.

Week 9 Status: ShareHub leads by 1% but is in the red for the year. As news picks up in March/April the ShareHub picks should kick on. Significant progress should be seen on HUM and SOLG in particular – both stocks have been subdued of late despite great news flow. Perhaps a touch of the MiFID II‘s!

And just for the record (with Beaufort in mind) The ShareHub does not take payment or requests from any of the companies covered. All coverage is based simply on the businesses potential and outlook. TheShareHub invests in stocks just like any other investor or fund with a view to banking a profit. It’s the opportunities, or the undervalued nature of many stocks that attracts the coverage. If a stock looks good value and has some potential then TheShareHub seeks to cover it. Hence the mantra, Hunting for Multibaggers. TheShareHub cannot cover all stocks out there and believes that it’s counterproductive to cover too many stocks. The main focus has and always will be heavily geared to the commodity sector. The Newspaper picks are added as a comparable and presents some interest in seeing how ShareHub picks fare against the newspaper picks which are often provided by apparent ‘experts’. The newspaper picks are often conservative bluechip focused stocks although some higher risk plays do get thrown in there from time to time.

As with any investment, risks of losing money (often all of it) are high and each individual must take full responsibility for investment decisions. If in doubt seek advice from an FCA regulated advisor. You can find the risk warnings on TheShareHub site in the sidebar on the left.

Remember, whether you think you are Neil Woodford or Warren Buffet, all make errors and costly mistakes. Hedge funds frequently go under. Woodford often makes loses as does Buffet. The key to success is not simple. But the bases of all investing is to make more money than you lose. Oh and remember, it’s a casino out there and the big players don’t always play by the rules… think Libor scandal (see link here). Think credit agencies like S&P (and Moodys etc) see link here. Think Barclays foreign bail out and BoE? The list goes on. It’s not pretty out there and made that much harder by those that do not play by the rules. Hopefully with MiFID II and the recent Beaufort case, it will improve.