Share Tips Update: Bitcoin, Crude oil, Globalstar

The overall market sentiment remained muted, to say the least, during August. One fund manager I spoke with recently was wondering whether there was any point coming back from the beach until at least mid-September. However, for the tactical investor, some very profitable opportunities continue to spring up unexpectedly.

We have been doing some more work using various original data sources to identify value buying opportunities in this market (e.g. stocks which could reverse quickly on positive news – see US telecoms stock Globalstar below), and spending more time talking to successful value fund managers about their own tactics.

We seem to still be trading in an environment where a small number of news / sentiment-driven data points are moving the whole market, in a startling herd-like manner (e.g. Federal Reserve, Chinese economic data, oil price). Fund managers are telling us they have not seen a market like this in 30 years.

Bitcoin

We closed our long BTC trade in August, taking a profit, but we could see some of the positive sentiment ebbing out of a market that was being driven by news flow from the US, specifically the ongoing tug of war between the SEC, the banks, and now it seems the US Treasury. Longer term, we think digital assets are here to stay, but short term we wanted to take profit on BTC, particularly locking in the gains we saw in June. Currently the cryptocurrency market seems razor focused on developments in Washington, and especially on efforts to get a BTC ETF across the line, but until that happens, BTC seems to be losing its momentum characteristics.

Crude Oil

Similarly, we exited the short crude oil position in August. This has been something of a balancing act between the ongoing problems with China’s economy, versus the efforts of Saudi Arabia and Russia to reverse the decline in crude oil prices. This really began to gather steam in July as oil futures contracts rallied off the lows we saw in June. The short oil trade became untenable in early August, as it breached our 10% trailing stop loss. Oil seems to have developed some momentum on the long side now, with November Brent trading at $92 at time of writing. The market seems convinced that the Saudi-Russia axis can somehow see of the elephant in the room, poor economic numbers out of China, which has everyone running scared.

Globalstar Inc

We bought Globalstar Inc [NYSE:GSAT] at $1.28 on Tuesday 29th August. We have been doing some research into value stocks, following some interesting conversations with several value specialist investment managers. Globalstar jumped out at us from our US screen of stocks. Our data indicated that the stock was ridiculously cheap for what investors were getting. We ran our screen research on the site on Friday 25 August, which indicated Globalstar was a strong buy. We decided we’d get into the stock on 29 August after the UK bank holiday. We therefore sadly missed out on the sudden jump in the stock as the company announced a new CEO in the form of  Paul Jacobs, former CEO of Qualcomm. The stock is not as cheap as it now was, shedding many of the earlier value characteristics which flagged it up for us, but we were still up 12.5% on the trade at the end of August in an easy short term value play. I am confident we can find some more like this using the same methodology over the autumn.

Sell: Bitcoin, Crude Oil, Man Group

So how are our picks getting on?

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.

*Prices as of close of play on 31st August 2023

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.

*Prices as of close of play on 31st August 2023

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.