Simon Thompson's share recommendations

The list of companies is alphabetical and chronological and the offer price used is the price in the article when the recommendation was made. The bid price is the latest bid price.

The telling statistic for me is that you would have made significant gains overall if you had followed my first advice when I instigated coverage on every share in the list. In other words, buying when I first spot the investment opportunity has reaped the greatest gains. It also highlights the fact that if you are patient, and are willing to be disciplined in your investment approach, then biding your time to buy in as close as possible to my entry points has reaped substantial financial rewards even after factoring in the holdings that have failed to perform.

Making the best of the gains

It’s also worth pointing out that in almost all the recommendations I have made there have been repeat buying opportunities after the dust has settled and the short-term traders have made their exit. The best of the gains have undoubtedly been reaped by investors willing to run their profits as I have done.

For example, shares in Aim-traded financial services group and stockbroker Jarvis Securities (JIM) have more than doubled since I advised buying a year ago. I would still run the huge profits as this is a company in an earnings upgrade cycle and one that doesn't appear to have ended ('Making record highs', 20 February 2014). We have also made a 100 per cent plus return in the shares of Aim-traded Thalassa (THAL), a company that is making waves in seismic studies and permanent reservoir monitoring. On valuation grounds, I still believe there could be at least another 17 per cent plus upside as contract wins drive further earnings upgrades ('Expecting earnings upgrades', 26 February 2014).

Other big winners include solar wafer maker PV Crystalox Solar (PVCS) which is now rewarding my decision to reinstate coverage in January last year, and again in my 2014 Bargain share portfolio, albeit the price is still way off the level when I includeed the company in my 2011 Bargain share portfolio. I still see value in the shares as I do in those of stockbroker WH Ireland (WHI). In fact, even though we have doubled our money on that holding, this is not the time to take profits as there could be another 50 per cent plus upside to my fair value target price as I pointed out in my recent article ('Smashing target prices', 27 February 2014). Clearly, I can't get it right all the time and I advised banking profits on media company Entertainment One (ETO) too early, albeit the shares were up 50 per cent at the time and, in the absence of earnings upgrades, they looked fully valued.

Maintain a watchlist

The other advantage of maintaining a list of active buy recommendations, as well as a watchlist of shares offering decent upside when the price pulls back to a pre-determined buy-in level, is that when the market has short-term corrections, you can cherry pick the shares which have been marked down too far below fair value. That’s one reason why I published an article on Aim-traded software company Netcall (NET: 52p) yesterday ('Making the right call', 4 March 2014). Also, by monitoring share price movements on a daily basis, at a click of a button you can spot potential investment opportunities as they unfold. For example, the share price drift in software company Sanderson (SND) back to its 200-day moving average prompted an article highlighting the investment opportunity this week ('Undervalued and oversold', 4 March 2014).

Bollywood fim producer Eros International (NYSE:EROS) is another case in point as the shares are now finally making progress after the company listed on the New York Stock Exchange. In fact, having held my nerve, despite the shenanigans when the company transferred its listing from the Alternative Investment Market, the vast majority of readers who followed my advice are now in profit, and significantly so in some cases ('Waiting for price action', 18 February 2014).

The same can be said of oil exploration and development company Heritage Oil (HOIL). Shares in that company have soared in the past month and are finally rewarding loyal readers who followed my advice to buy a little over a year ago in my 2013 Bargain share portfolio. I would run your profits here as well.

Research pays dividends long-term

Of course there will be losers in any portfolio, especially for a stockpicker. That goes without saying as I have made no fewer than 400 investment calls in less than 18 months and clearly not every single one can make money. It’s also fair to say that a large number of readers use my recommendations as a starting point for their research and may indeed buy at some point, but not necessarily immediately following my article. I only make the recommendations after extensive equity research, but I would urge everyone to do their own research before risking capital on any of the companies or investment strategies I highlight.

The other point well worth making is that my asset allocation decision to focus on small cap shares for the past couple of years has paid off handsomely given their outperformance of both mid-caps and blue chips. It's also worth pointing out that having made a winning trade I analyse why it has worked out in order to learn lessons for the future. You can too.

Equally, I have revisited holdings in the red in order to decide whether the rational for making the investment still holds true in light of a price drift or recent newsflow. The key take for me in the eight losing trades is that generally they have been higher risk holdings. Three of them are commodity based plays, a segment of the market that has faced stiff headwinds in the past 18 months. These companies are Cairn Energy (CNE), Polo Resources (POL), Bezant Resources (BZT) and Global Energy Developments (GED). I will update all four next when there is newsflow to report on, but for now I rate them all buys at the current depressed prices. I also made a mistake of not taking profits on Aim-traded investment companies Aurora Russia (AURR) and Trading Emissions (TRE) when the holdings were massively in profit. The other two holdings that have disappointed - wafer maker IQE (IQE) and harbour operator Sutton Harbour (SUH) - are woefully undervalued and will undoubtedly come good. This is not the time to bail out and I continue to rate shares in both compnaies buys.

That said we have also benefited from following a large number of companies whose share prices have doubled in value over the past 18 months, and some very profitable portfolios or investment strategies too. Moreover, if I ran a table of my recommendations over an even greater period there would be a number of holdings that have trebled or quadrupled in value. Netcall is a prime example as I put readers into the stock in January 2011. As of today the price is up 300 per cent. That highlights the point I made earlier that the best of the gains reward those who have the patience and discipline to ride their winners, rather than investors who are continuously dipping in and out of the market.

Stick with winning strategies

The other point worth making is that if a trading strategy works then use it until it breaks down. For instance, my housebuilders trade this year is proving a dream, as it did 12 months ago, having advised readers to jump the gun and go long of the sub-sector at the end of November. The performance of Barratt Developments (BDEV) in particular stands out as shares in that company have surged by 33 per cent in little over three months. I have bundled all the nine FTSE 350 homebuilders into a portfolio in the list below. Currently, they are up around 16 per cent since the end of November. If you followed that advice I would continue to run your profits.

Needless to say, I will endeavour to update you on progress on all of these companies, as well as initiating coverage on dozens of companies on my watchlist. For instance, in the last month alone I have initiated coverage on 16 new companies I had not previously covered. Hopefully, many of you will have been able to profit from this advice.

Simon Thompson's recommendations between 30 Sep 2012 and 4 Mar 2014