This week was a lot better, with the portfolio bouncing a little since the falls last week. It was not very eventful with just a couple of trades.I sold out of Burford Capital for a 12% loss after a slow but extended fall in the share price. I am not sure there is good reason for this and the last results Burford put out were really excellent, buoyed in particular by a large gain from the Petersen (Argentina expropriation) case. Rumour on the grapevine is that the selling may be due to Woodford being forced to reduce his very large position here to service the outflows from his fund following his recent poor performance. I have no idea how true this is but I’m out for now and will look for an opportunity to buy back when the price is looking a bit more perky.
The only other thing that happened was I made a spectacularly ill-timed trade in Boohoo.com, when I tried to buy what looked like was going to be a short-lived dip following what I thought were excellent interim results. Revenue forecasts were substantially upgraded but profits less so and this clearly didn’t meet market expectations. The share price continued to plummet after I bought and I ended up selling with a 17% loss (but on a very small size holding). I’ve never seen quite such a negative reaction to upgraded forecasts before. The experience has taught me to be more cautious in buying in after an upgrade when the company is valued very highly and the initial price reaction is negative.
Fundamentally, the business seems to be firing on all cylinders and the valuation is looking more reasonable following the fall (in my view it wasn’t really overvalued even before the fall, given its prospects). However, I’m going to wait for the share price to stabilise before buying back in. There appear to be a lot of speculators buying and selling Boohoo at the moment and clearly some institutions are selling out too, so it’s possible the price might be quite volatile for a while.