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

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Investors were navigating some extremely choppy territory in May. We have had conversations with many investors asking us when will it all end? Inflation and the war in Ukraine, along with yet another wave of Covid in China, are playing havoc with markets.

Valuations in some areas of the market – e.g. technology – were highly unrealistic, and the sell off in the likes of Tesla come as no surprise to us. The big question is going to be when the turning point in the market will occur, creating more opportunity on the long side.

We are actually surprised to have only sold three stocks in May (see below), expecting more damage to the short and medium term portfolios than has actually occurred so far. We extended our overweight position in energy and mining in May, and are looking at more buys in the sector in June. We still see some severely undervalued opportunities in the mining sector.

BlackRock World Mining

We added another diversified sector investment trust to our pick list this month. We remain bullish on mining and wanted a reliable performer that could encapsulate a wider global mining theme. BlackRock World Mining is currently the best in the sector in our opinion and has the numbers to back it up. It is currently trading at a premium of 1.98% and was close to its ATH  in recent weeks. It replicates some of our existing long positions in the space – e.g. Glencore (9%) and Anglo American (6.3%), but gives us exposure to some other high quality mining stocks like Vale (5.7% plus a 3.1% debenture) and Freeport-McMoran (4.3%).

Network Media Group

Also added in May was Network Media Group. This is a Canadian entertainment stock, but it is more than just a studio specialising in documentaries on famous personalities. It has launched an additional digital assets business that will be using the growing market for NFTs to leverage its existing network of relationships in Hollywood, professional sports and the music industry. The management team has recognised the potential to open the NFT market to opportunities in this space, and has already announced its first professional sports partnership with Canada’s Hockey Hall of Fame.

Net Zero Infrastructure

There has been some further action on the cash shell front in May.  One of our cash shells – Net Zero Infrastructure – announced it had signed a non-binding letter of intent to acquire Taylor Construction Plant and Solar Highways. This was in line with the SPAC’s objective of buying one or more private assets in the clean energy infrastructure space. TCP supplies and hires out specialist equipment to UK infrastructure and construction contractors. TCP is transitioning its existing business from diesel-powered to zero emission equipment powered from hydrogen and other renewable sources. The deal is still subject to approval, but under the standard terms for cash shells, the shares have to be suspended pending approval of the prospectus by the FCA. More on this when we have it.

Pineapple Power

Special mention also on Pineapple Power this month: we had been asked by some readers whether we are still tracking Pineapple Power. The shares had been suspended while the company was contemplating an RTO last year. That deal has now been shelved and the SPAC is now back on the market and looking for an alternative deal. It is one of only a tiny group of remaining cash shell opportunities on the London main market (another being Electric Guitar). This seems to be generating  enthusiasm among investors, as the share price for Pineapple was doing well in April and May – shares briefly traded at 2.63p in early April but were trading at 6.13p at the end of May.

Sold from the portfolio in May: IG Group Holdings, Interfor, Morgan Sindall Group

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/InstrumentStart priceCurrent price*Percentage change
Raytheon Technologies73.3996.71+31.9%
Sosander15.8022.50+42.9%
Lloyds Bank40.4044.89+11.1%
Glencore272.00522.10+91.9%
Hugo Boss52.0049.98-3.9%
BP337.95434.25+28.5%
SPDR Gold Shares ETF173.00172.13-0.5%
BHP23892515+5.3%
Anglo American33553887+15.9%
IG Group Holdings809.00715.50-11.6%
Interfor37.7333.68-10.7%
Seplat Energy110.00119.00+8.2%
Taylor Wimpey134.2130.1-3.1%

*Prices as of close of play on 31st May 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/InstrumentStart priceCurrent price*Percentage change
Remedy Entertainment14.0029.60+111.4%
Harvia8.8633.6+273.1%
Yellow Cake211.50373.20+76.5%
ITM Power260.00294.70+13.3%
MTI Wireless47.0070.50+50%
QT Group86.4080.51-6.8%
Nordnet152.20158.80+4.3%
First Rand52297241+38.5%
Turkish Airlines13.8649.90+260%
Live Nation81.7894.73+15.8%
Morgan Sindall Group26002080-20%
Marshall Motor Holding273.0535.0+96%
Airtel Africa109.6154.60+41.1%
Riverstone Energy566702+24%
VinaCapital Vietnam Opportunity498487.50-2.1%
Kenmare Resources503.0495-1.6%
Genesco6256.31-9.2%
BlackRock World Mining699722+3.3%

*Prices as of close of play on 31st May 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/InstrumentStart priceCurrent price*Percentage change
Nano One1.133.02+167.3%
Taat Global Alternatives 1.260.86-31.7%
Kodiak Copper0.241.26+425%
Euro Manganese0.440.28-36.4%
Thunderbird Entertainment1.053.45+228.6%
Pineapple Power3.255.75+76.9%
Minnova Corp0.350.07-80%
Red Moon Resources0.822.21+169.5%
Cloudbreak Discovery4.503.3-33.3%
EnWave Corp1.010.68-32.7%
Net Zero Infrastructure0.0450.0220-51.1% shares suspened
Electric Guitar3.223.05-5.3%
CleanTech Lithium35.226.00-26.1%
Canadian Overseas Petroleum32.520.60-36.6%
Torq Resources0.750.66-12%
DeepMarkit Corp0.800.09-88.8%
Network Media Group0.100.08-20%

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

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stocks in Focus

Here are some of the smaller companies we are following most closely. They all represent significant growth stories in our view. Our in-depth reports go into more detail on why we like them.

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