As much as I don’t want to admit it, it sometimes takes me learning the same mistake a few times before I change my behaviour.
I was watching a company for the better part of 6 months. I figured that at under 0.50 is was OK to purchase based on the value of the assets alone. NCAV was around 0.60. Even better, the company was part of a sector that is recovering strongly from the economic slump of the last 3 years. ROC and revenue was trending nice sequentially. And above all the company is headquarted here in Edmonton. Since the Q3 2011 there was ample time to build a position. There was really no excuse on this one.
Why did I miss it? I have had a tougher time than normal finding companies to invest in. Some of my picks are hitting their fair value and I don’t have anything to replace them with. So I either take more risk or hold cash while I research looking for a potential opportunity.
I was thinking this is a sign of market top as valuations have become stretched at best. What does it mean? Likely poor future returns if you invest in a broad version of the market. I DON’T!! I invest in little obscure companies. They have their own catalysts regardless of the market as a whole. This is the reason I actually have a chance to outperform a team of professionals who have access to more information and, more importantly, more time than I do to pour into analyzing companies.
The company is HYD.to. It is up like 30% today. I will be checking my numbers again. This is a rookie mistake and I am embarrassed that I did it. I feel blogging about it will help me from doing it again in the future. I’ll keep you updated if I buy any HYD.
Disclosure: The author is NOT long HYD.to, but wishes he was.