LONDON -- A lot of investors let the numbers do the talking. They don't like to make qualitative judgments, preferring instead to look at raw data.
Today's featured investor is such a man. In taking a fresh look at a number of portfolios from people who make their living from investing, this investor is notable for his quantitative approach.
"MrContrarian" is well-known to posters on the Fool's discussion boards. He is a numbers-based investor who eschews most growth stories, but he isn't averse to taking risks. And as his username suggests, he isn't afraid of swimming against the tide of popular investor opinion. His portfolio is notable by the absence of any FTSE 100 company in the top 10 (excluding preference shares).
Mr. C makes his living from investing. But he hasn't been making too much of a good living from his capital since we last looked at his top investments in late October. His portfolio value is roughly where it was, though he has pulled in a decent amount of income from his bank preference shares and high-yielding ordinary shares.
Since we last heard from him, Mr. C sold his Diamond Offshore shares at $68.90 in March for a 10% overall gain. He also took profits on his BP (NYS: BP) shares in November at 455 pence for a 17% gain, saying, "I was (and am) overweight in oils and the reversion to mean had slowed a lot."
The rest of the portfolio shown in October remains, but there are new investments, and the top slots have shifted around due to their respective performances. The top 10 now look like this:
Mr. C now has a whopping 13% of his portfolio invested in theme park queue-busting techie Lo-Q -- an investment he has in common with a previously featured Foolish investor, Carmensfella.
He hasn't taken profits, despite the company's shares doubling since October. Lo-Q plans to expand into Asia; some of the world's biggest theme parks are in South Korea, Japan, Hong Kong and China. Mr. C clearly thinks Lo-Q will enjoy further success. The shares are currently 298 pence, valuing the company at 51.5 million pounds. This price is way ahead of earnings growth. For once, the numbers man is placing a high value on intangibles -- the hard-driving newish CEO and potential to manage queues outside the theme-park segment.'
2. Soco International
At No. 2, FTSE 250 stock SOCO International currently accounts for about 11% of the portfolio. The international oil and gas exploration and production company has generally been popular with many Foolish investors over the past 10 years.
Mr. C is sitting on an overall loss here, following his buy price of 332 pence. The shares are currently 276.8 pence, after the planned ramp-up of oil production in Vietnam was delayed in November. Nevertheless, earnings expectations for next year place the shares on a prospective price-to-earnings ratio of 4.5. There also remains the possibility that the company could sell its Vietnamese assets or be bought in its entirety.
Old-fashioned liquid cash currently accounts for 10.2% of Mr. C's investing pot. He likes to keep some powder dry to take advantage of opportunities as they arise.
4. Lloyds preference shares
He currently has 9.7% sitting in various Lloyds Banking (NYS: LYG) preference shares, including LLPC and LLPD. The bank reinstated dividends this month on the prefs, and Mr. C has increased his position despite an increase in the price of the preference shares.
A long investment in gold via a spread bet accounts for 7.1% of the portfolio. Mr. C increased his position by 50% at $1,590 and is currently showing a slight profit at $1,621 per ounce. He describes this golden investment as "a macro bet on the historic strong correlation with negative real interest rates in the USA," adding, "You need a strong stomach to ride out the monthly swings."
The spread bet on gold will also be a good overall hedge against Mr. C's generally long positions in equities.
6. Northern Petroleum
Next up is oil and gas explorer and producer Northern Petroleum, accounting for 6%. Mr. C recently bought more at 92 pence when a bid for Wessex Exploration valued Northern's indirect stake in a Guyana field at around 60 million pounds, or 63 pence per share. That bid failed, and Northern's shares have slumped to 66.5 pence.
7. Real Good Food
At No. 7, accounting for 4.3%, is another investment Mr. C has in common with Carmensfella: the Real Good Food Company looked at in-depth by my Foolish colleague Simon Murphy in October. Mr. C is in a good profit on the shares, which he sees as a solid long-term investment.
8. France Telecom
Next on the list is high-yielding France Telecom, accounting for 3.7% of the portfolio. The shares are expected to yield a crazily high 14% at their current price of 12.60 euros. Clearly, the market thinks this can't be maintained, but Mr. C is hopeful that it can, or that the cut will be relatively small. He also holds a stake in Vodafone (NAS: VOD) .
9. Serica Energy
He also has high hopes for Serica Energy, which accounts for 3.6% of his investments. I took a closer look at Serica when the shares were 27.5 pence. They're now 25.5 pence, having been as high as 44 pence in March.
Mr. C thinks the company's operations and assets, combined with its cash of around 7 pence per share and $146 million of ring-fenced tax losses, make it a good risk-reward prospect.
Last and least is SeaEnergy at 3.4%. This company's valuation made little sense to me at 25 pence in January, given its cash position and 25% stake in Lansdowne Oil & Gas. The stake is currently worth more than 15 pence per share to SeaEnergy.
Lansdowne recently updated the market on what seems likely to be Ireland's first offshore commercial oil and gas discovery. But at 28.5 pence, SeaEnergy is still at a discount to its net cash of more than 30 pence a share and has plans to return 10 pence per share.
So what do you think the next six months have in store for Mr. C's starting lineup?
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At the time thisarticle was published David owns shares in BP, Serica Energy, SeaEnergy, and Soco International. He doesn't own shares in any of the other companies mentioned. The Motley Fool owns shares of France T. Motley Fool newsletter services have recommended buying shares of Vodafone Group Public and France T. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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