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A change in fortune is not beyond the Realms

Michael Taylor explains how friends’ sentiments helped him unearth a bargain
A change in fortune is not beyond the Realms

It pays to have friends in the market. Trading is not a team game. But more eyes on the market certainly helps. Having access to a sounding board of people with similar strategies and also different methods of making money can help no end. You should never rely on anyone but yourself, but leads can come from many places

Some of London’s listed companies are the subject of much hype, some are left lying in the dirt, forgotten and unloved. Take Gaming Realms (GMR) – the result of a reverse takeover in August 2013. It opened at 21p and hit heights of 40p in 2014 before beginning a stage four downtrend. However, in autumn 2019 the stock’s fortunes began to recover.

I came across the stock not through my own work, but as the result of meeting with a friend for coffee. The company had exited a poor-performing business for a cash sale, with the goal of developing higher-margin business through licensing. The sale had allowed the company to streamline costs and reduce headcount and it believed that it had enough cash to get through to positive cash generation. Naturally, I’ve heard that one before. Management teams have been overly optimistic since the dawn of time. It pays to be optimistic (far more than being pessimistic!) but one should always temper it with a dose of realism. Unexpected circumstances happen (like this pandemic, for example) – but licensing carries high margins and with a relatively fixed cost base I could see the attraction.

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