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Our 2022 Picks: How did we get on in August?


August is always a little bit of a quiet month and there has definitely been an impression that the market was taking the month out to spend on the beach. Investors were sitting on their hands, waiting to see what would happen next in Ukraine, with the pandemic in China and with inflation in the G7. There were also some significant forex trends to take account of, especially in the USD and JPY markets.

Having cleaned house over June and July, with some shares hitting their trailing stops, we have shifted slightly away from what was starting to look like a very focused long energy trade. The gas market has continued to reward traders over August, despite some hellish volatility.

Croda [LON:CRDA]

Croda was added in early August as we could see some developing momentum characteristics. It was exhibiting some good technical prospects – e.g. priced outside of the 50 day MA. The news flow looked good for this chemicals giant, with USD 75m investment from the US government in its Pennsylvania factory, where it is manufacturing lipid nanoparticles. These are part of the Pfizer shot for Covid. Part of the story here has to be Croda’s life after Covid strategy, and the company came out with some reassuring results which have contributed to an excellent balance sheet. Cash is up, which means we could see some nice dividends coming through as well.

Medigene AG [ETR:MDG1]

To Germany and the biotech sector, which keeps cropping up on our screens when we run them over the German market. There are several interesting looking German biotechs out there right now. Medigene looked really cheap to us with a PE of 6.2 and scope to get back to recent highs. The two analysts tracking Medigene stock looked pretty bullish too. Medigene develops personalised T cell-based therapies and dendritic cell vaccines, among other areas. It works with other partners – e.g. with Université de Montréal and Hongsheng Sciences and has scope to benefit from milestone payments and royalties from these partners.

Implenia [SIX:IMPN]

Implenia is a CHF 500m Swiss construction specialist, listed in Switzerland but with projects outside the country as well. It stacks up well in comparative terms against other firms in the listed construction space in Switzerland. It came out with a really good set of numbers which saw EBITDA up 29.6% and a return on equity of 38%. The stock is well off the pre-pandemic levels but with plenty of scope to get back on track in our view. We got in at CHF 26.8, with a 52 week high for the stock at CHF 29.5. But it was up at CHF 45 before the pandemic hit. We’ve added this to our Buy & Hold strategy. Icing on the cake if you are a sterling investor is that GBP /CHF trade over the last few weeks.

Twitter [NYSE:TWTR] Short

We reckon Twitter has further to drop, hence our short trade on the stock initiated last month. First we remain unconvinced that the market has been told the whole story for the reason for Elon Musk’s exit from his acquisition deal. Secondly, we saw former head of security Peter Zatko starting to raise some disturbing questions around privacy and the number of bots and fake accounts active on the platform. We said at the time we expected Zatko would start singing to Congress and the Department of Justice: we now hear Zatko has been paid off by Twitter to the tune of $7m. This does not sound like a company that has nothing to hide. The Musk case will continue to be followed closely.

Sogeclair [Euronext: SOG]

We felt we were still a little light on the defence sector, although some of our trades in this space have gone well – e.g. Raytheon Technologies. Sogeclair is entering our venture portfolio as it is a relatively small company with only around EUR 70m market cap, but it has scope for either growth or indeed acquisition by a larger player. It is not just a defence sector firm, however, with plenty of clients in the civil engineering space. It has customers all over the world, and one of the areas in which it is strong is onboard simulation systems, and the manufacture of complex metallic and compositive aerostructures.

Tactical trading portfolio

These are shorter term equity and commodity trades which we can see playing out within one to three months. We will sometimes keep these on longer if the trade is still quite range bound but we are anticipating further upside. These trades have the tightest risk parameters.

Company/Instrument Start price Current price* Percentage change
Raytheon Technologies 73.39 89.75 +22.4%
Sosander 15.80 1825 +15.9%
Lloyds Bank 40.40 43.88 +8.6%
Glencore 272.00 473.3 +74.0%
Hugo Boss 52.00 54.4 +4.6%
BP 337.95 441.5 +30.6%
SPDR Gold Shares ETF 173.00 159.27 -7.9%
BHP 2389 2359.5 -1.2%
Kingfisher (Short) 244.30 258.60 +5.9%
Croda 7174 6726 -7.8%
Twitter (Short) 40.46 38.75 -4.2%

*Prices as of close of play on 31st August 2022

Longer term buy and hold portfolio

These are positions where we see a longer term growth scenario, usually in the small to mid cap space, but sometimes larger companies. We will typically be keeping these stocks on the list for at least six months and often longer. Consequently our risk tolerance is higher for these positions than for the trading list.

Company/Instrument Start price Current price* Percentage change
Yellow Cake 211.50 420.6 +98.9%
MTI Wireless 47.00 58 +23.4%
Nordnet 152.20 128.25 -15.7%
First Rand 5229 6417 +22.7%
Turkish Airlines 13.86 73.1 +427.4%
Live Nation 81.78 92.03 +12.5%
Airtel Africa 109.6 132.3 +20.7%
Riverstone Energy 566 660 +16.6%
VinaCapital Vietnam Opportunity 498 507.0 +1.8%
Kenmare Resources 503.0 444.5 -11.6%
Genesco 62 56.58 -8.7%
BlackRock World Mining 699 667.73 -4.5%
Anglo American 3355 2783 -17.0%
Implenia 26.8 29 8.2%

*Prices as of close of play on 31st August 2022

Venture portfolio

These are companies which we see as having long term and considerable growth prospects. Due to their size and the nature of the business they are in, we feel that our normal risk management constraints should not be applied to these stocks.

Company/Instrument Start price Current price* Percentage change
Nano One 1.13 3.32 +193.8%
Taat Global Alternatives  1.26 0.83 -34.1%
Kodiak Copper 0.24 0.91 +279.2%
Euro Manganese 0.44 0.35 -20.5%
Thunderbird Entertainment 1.05 3.2 +204.8%
Pineapple Power 3.25 2.65 -18.5%
Red Moon Resources 0.82 3.28 +300.0%
Cloudbreak Discovery 4.50 1.33 -70.4%
EnWave Corp 1.01 0.58 -42.6%
Net Zero Infrastructure 0.045 0.0220 -51.1% Shares suspended, here’s why
Electric Guitar 3.22 2.85 -11.5
CleanTech Lithium 35.2 35.9 +2.0%
Canadian Overseas Petroleum 32.5 12.9 -60.3%
Torq Resources 0.75 0.80 +6.7%
DeepMarkit Corp 0.80 0.10 -87.5%
Network Media Group 0.10 0.10 0%
Fortitude Gold 6.7 6.03 -10.0%
Europa Oil & Gas 0.025 0.0305 +22%
FPX Nickel 0.5 0.46 -8%
Medigene AG 2.4 2.35 -2.1%
Sogeclair 22.9 22.08 -3.6%

*Prices as of close of play on 31st August 2022

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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