Today I will show you 2 of my historical investments on the Warsaw Stock Exchange – the companies PROCAD (PRD) and KERNEL (KER). I had the shares of both companies in my private financial wallet but the companies were not present in WSE wallet which results I publish on this blog every week – see tha last post +20.75% (+32.31% including change of GBP/PLN ratio) during 4.5 months, WSE wallet – week 08/08/2016 – 14/08/2016.
PROCAD SA is a company operating in the IT market. The company is one of leading suppliers in the market of computer-aided drafting software (CAD).
At the moment of buying this company, PE (price earning ratio) was around 6.5; PB (price book ratio) was around 0.7 and PS (price sales ratio) was around 0.25. Net profits were growing 6 quarters in a row. Apart from this, the company was paying dividends for the last 3 years. In terms of fundamental values, it was very cheap – either the investors had not noticed that company yet or something wrong started going on with the company and the investors did not trust the board of the company. The next quarter results showed a decline in the net profit. The price of shares started to drop. The board also decided not to pay the dividend to the shareholders. My decision was made, I decided to sell the shares. However, I did not do it quickly. I decided to wait for a good moment. And such occasion appeared in the second half of April 2016. I did not know how high the price could go so I was selling shares part by part – see the red dots in the chart below. As you can see from the chart, my decision was good.I gained 11.52% in less than half a year. Since the moment of selling shares, the price dropped about -24% (at the same time my wallet performance was +17.98%).
The second investment was KERNEL. It is a description from company’s website:
“Kernel is a leading diversified agribusiness company in the Black Sea region listed on the Warsaw Stock Exchange. Handling about 7 million tons of agricultural commodities per year, Kernel supplies international markets with grain and sunflower oil produced in Ukraine and Russia.”
So generally it is a company operating in the Ukraine. Because of the unstable situation in that area and also the bear market on the agricultural commodities, the price of shares of the company dropped below 25 PLN per share – see the chart below.
I like to take advantage of such situations so I have decided to buy stocks of the company.
I bought 101 shares of the company on the 17th of July 2015. Then I decided to sell the shares on the 22nd of July 2015 (after 5 days). I made +9.34% profit during 5 days. After 5 days when the price dropped, I bought again 101 shares of the company. When the price went up again, I sold the shares making profit +18.71% during 3 months. As we see from the chart, the moment of selling was really good because at the beginning of November 2015 shares price started to drop again.
The way of making money like that is not what I do with companies in WSE public wallet – The Warsaw Stock Exchange Freedom Portfolio.
In that wallet, I buy shares and keep them tight. That is why my subscribers do not have to do many transactions (since the start of running a public portfolio I have sold only one company – I was disappointed with the company’s financial report).
I could keep the shares of the company – we see that the price is higher now. But if I compare what happened with my real wallet from the moment of selling shares of KERNEL company, it turned out that companies in my financial wallet on the WSE went up 19.98% vs. KERNEL’s results (14.44% price change + 1.83% of dividend). It means my companies were better off during that time anyway.
KERNEL is still on my observation list but I would find it hard to decide if this company is worth getting rid of any of the selected companies from a WSE public wallet – The Warsaw Stock Exchange Freedom Portfolio.