April remained on balance quite a positive month for equities although there are ongoing worries in the market now on the likely impact of inflation on US and European stocks.
Investors were positioning themselves in the UK around those companies that they believed would stand to benefit as the UK gradually eased its lockdowns. While the roll out of vaccinations and the return of kids to school created a positive atmosphere in the UK, buying travel stocks and airlines might have been premature. While restrictions are being lifted in the UK, many other countries are still struggling. Holiday makers were dismayed at the size of the UK government’s red list – countries it is not possible to return from without an expensive quarantine. This is going to deter a lot of international travel for the time being.
The Armchair Trader’s April picks
The Panoply (LSE:TPX) was added to our list in April. This on the surface looks like a very boring stock, as it is positioned around the digitisation of government services. But it is mining a very rich seam as governments around the world are always behind the curve when it comes to catching up with the way consumers want to interact in the digital age. Not just that; the sheer amount of internal work that needs to be done at both national and local levels is staggering. Panoply is well positioned to benefit from this.
At a time when UK investors are not allowed to purchase ETPs with underlying portfolios of cryptocurrencies, which seems staggering to us, Cypherpunk (CSE:HODL) is the next best thing. It is a company with a diversified portfolio of both cryptocurrencies and companies with exposure to the market for privacy. It also looks at other digital assets which could be of enormous value in the area of future privacy, like IPv4 addresses. Cypherpunk is also one of the 20 largest public holders of Bitcoin.
Verkkokaupa (HEL:VERK) was deleted from our list on April 30. We added the company on 1 June 2020. We liked it because it pretty much had the Finnish online shopping space sewn up and was in a good position to benefit from periodic lockdowns in Finland, although it has to be said that Finland has not suffered from the pandemic as many countries have. At the time we said Verkkokaupa’s big risk factor was the entry of Amazon into the local market. The arrival of Amazon in Sweden was our signal to get out. Our entry price was €5.56 and we left on 29 April at €8.50.
We went short the NASDAQ on 5 March using ProShares UltraPro Short QQQ with x3 leverage. It is basically a geared short on the NASDAQ using an ETF. We felt at the time that the valuations on the NASDAQ were looking utterly unrealistic and there were increasing murmurings in the bond market that we saw as indicators of more volatility to come in Q2. The entry price was 15.04. The market wrong-footed us on this one and we were forced to exit at 13.54 on 30 March. While the short NASDAQ trade is off the table at the moment, we note that the ETF is creeping up again and is at 12.35 at time of writing.
S4 Capital (LSE:SFOR) is a new addition to the list. We liked it because it is the new venture for advertising guru Sir Martin Sorrell, a man who could write the book on the advertising industry. It mixes technology with his little black book of blue chip clients. S4 Capital posted a 19.4% rise in gross profits last year while also recording a 15% gain in revenue. While the price has come off slightly since the entry point, This company has a VERY substantial book of blue chip clients which it is continuing to add to. While there has been little news flow recently, keep an eye on this one.
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Here’s how our picks are performing
|Company/Instrument||Start price||Current price*||Percentage change|
|Taat Lifestyle & Wellness||1.26||4.0||+218%|
|Christina Lake Cannabis||0.83||0.59||-28.9%|
*Prices as of close of play on 30th April 2021