We are now some hours past New Year’s evening and it is time to look at the development of the portfolio in 2017. The year have been somewhat mixed. In general, though, I still wait for the potential rocket-shares to lift off. The overall picture you can see at the top of this post.
I will say a few words on both red and green shares… And I will start with the red, the three shares who have lost the most in 2017.
Total collapse in Recyctec, CybAero and Dignitana
The three worst performing shares in 2017 were Recyctec (-90%), CybAero (-87%), and Dignitana (-84 %). Luckily, Recyctec have never been very large positions, but still it is annoying being left with only one tenth of the value one year ago. It probably will take a while before the share is up 1,000 % which is required if they are to regain the value. CybAero on the other hand, has cost me over the years as well as in 2017! Despite a reverse split 10:1 during 2017, the share price is only slightly higher by the end of December.
Both companies are in troubles. Recyctec in lack of cash and CybAero in lack of customers. If the companies manages to get out of the quagmire in 2018, they both potentially can be winners next year.
It has cost me quite some money that Dignitana collapsed totally in late autumn. Before that, it was the largest position in the portfolio. As you can see on my portfolio page only fragments are left today. I hope that the share will recover in 2018! Income keeps rising quarter by quarter, and by moving to the US, Dignitana can significantly reduce costs. If successful, investors in the ongoing issue can make substantial profits, as the issue price is a low as 2.10 SEK. At closing time on Friday, the share price was 47 % higher (3.08 SEK) than the issue price. Typically, the premium is 0-10 % – sometimes even negative. In this light, the share price behaves extraordinary.
…And the winners are
The three winners this year is the only three shares that have actually risen during 2017.
Fortnox is a clear winner with a 44 % rise – and was a winner in 2016 (+79 %) as well. The company grows fast – and have grown even faster during 2017. In start-December the company announced costumer number 200,000.
Lately there has been a shadow over the company as the largest shareholder (and Board member) was first arrested then convicted for illegal insider trading. After the conviction, he left the board on December 15th and we will probably see the share regain the momentum that was lost during the trial. The share is down 12 % since beginning of November.
Phase Holographic is up 27 % in 2017. During July, the share even touched 67.5 SEK – the double of today’s price. Some weak reports have made the share slide down afterward. Sales are quite modest, but an increasing number of scientific publications might raise attention and in time generate sales. Phase Holographic has always been volatile and a roller coaster. Rising sales will probably put an end to that. Margins are very high so at some point cash ought to start rolling in.
The last winner is Hexatronic. I bought the share in November with modest expectations for the rest of 2017. One year ago, the share price was 37.9 SEK and in 2017, the share price therefore have doubled. I expect turnover to rise 40-50 % in 2018 and due to economics of scale profit will probably rise more than that. P/E is quite high but I find it justified by high growth organically as well as through acquisitions. Shortly after I bought shares, the company announced that NASDAQ moves it to the Mid Cap segment as of tomorrow (January 2th).
The past year compared to 2016
Compared to last year, 2017 is slightly better in terms of number of rising shares. Last year only Fortnox did rise. Losers last year was the same as this year: A1M, CybAero and Recyctec.
I predicted last year that Recyctec would be past breakeven – which did not happen. Then I predicted that Dignitana, Nexam and Heliospectra would be very close. They are not – perhaps except Nexam, which is difficult to say due to the acquisition in December. Nevertheless, they are much closer than a year ago, but still needs to go the final two or three steps. I hope this will happen in 2018.
BrainCool are highly volatile but seems to have moved far. During 2017, the company reorganised with two focus areas Brain Cooling and Pain Management. We might see sales go up significantly during 2018 – and we are still waiting to see when the BrainCool hand over the new company, PolarCap to the shareholders. BrainCool announced it to be in 2017.
You can find my post from last year here.
Small change in portfolio strategy during 2017
During 2017, I have changed my strategy a bit. My intention is to add more mature growth companies to the portfolio. During 2017, I have added two companies, Waystream and Hexatronic. Compared to companies like Cantargia, AroCell and A1M Pharma they are far more mature in terms of revenues and profits. Hexatronic along with Fortnox are by far the most mature today. Both companies have solid cash flows, makes profits, and even pays out dividends. Waystream are close to break even. By adding more mature companies, I hope to reduce portfolio volatility and turn the losses of 2016 and 2017 into profits in 2018.
I wish you all a happy New Year and good luck with your investments!