Yesterday was quite a dramatic day for Craven House Capital ($CRV.L), the company announced it would delist from AIM and join the Specialist Fund Segment of the London Stock Exchange, along with securing funding for $150m of new capital priced at 1.25p per share. The stock exploded from around 1p to a high of 1.8p and has now stabilised at 1.4p.
Of course, being a genius, I had a limit order in place that I’ve had for many months…at 1.1p. The thing about these low volume stocks is that the price can spike for just a few minutes and I have missed out on several other spikes to close within 1.25p in the past. So I have maintained this limit order to capture one of these spikes, and of course it got filled easily when the big news came in, to some lucky market maker that seemed to sell them on within a few minutes at over 1.4p.
Anyway, I can’t be too bitter, as I bought these shares at an average price of 0.28p, and do not see any reason that they are worth more than 1.25p. The investments it holds (and likely will hold in future) are illiquid and valuations difficult to determine. The thesis here was simply that large amounts of new capital would come in at 1.25p, and that happened.
This was a huge position for me, at the end of the year it was 34% of my portfolio, but I downsized this to roughly 25% earlier in the year. You can imagine what a return of 300% (still not bitter that it could have been 640%…) to such a big holding does to one’s portfolio, but that 300% has been spread across many years. Annualised it is a 58% return per year, and whilst this is not my highest annualised investment return ever, the fact it was compounded over 3 years definitely makes it my best idea to date. Thankfully, I recognised this beforehand and bet big.
After selling this position I now have a huge amount of cash (49% of portfolio). Perhaps opportune timing given the UK market’s current situation. I still don’t have much time or energy to research stocks, so this may end up going in a fund.
Investing Sidekick
Founder of Investing Sidekick. Works as a research analyst and is an avid value investor, always searching for undervalued shares.
Well done on this one, I am still holding an awful lot of CRV shares and have avoided the temptation to sell any so far…..
Think this has a long way to go, we shall see but very glad we have both profited on this one!
Congrats!