Single Equity Loss

Kendall80

My first foray into individual stocks/shares has not gone well. I elected to invest in Afren last week with a view to an upcoming takeover/merger. It dropped 70% today alone and 90% overall.

I think i'll stick to funds!

colsten

Good practical lesson learnt, thanks for posting your negative experience, it does take some guts to do that.

May be there is something to it when people suggest individual shares are way above most people's risk tolerance.

Drp8713

I think diversity is the key. In my first year of investing I went through active or passive, shares or funds etc.

Now i know what im doing (hopefully) I went for 50% shares, 50% Investment Trusts (and one ETC), that way if im the best stock picker in the world great, if not hopefully my diversified set of trusts will mean I dont lose the lot.

I have 4 FTSE 100 shares, 2 AIM shares, two European shares, one US, one Japanese and one Asian. I feel that im suitably diversified accross sectors, geography and market caps, and try not to let any one share get too much above 5% of my portfolio by topping up the smallest/worst performers monthly.

gadgetmind

Kendall80 wrote: »

I think i'll stick to funds!

The old (and deeply smug) adage is "make your first million in collective investments".

Even with a diversified portfolio of 20-30 shares, that Afren experience would be a real kick in the teeth, but this is also why they say "Never try to catch a falling knife."

ChesterDog

When you are starting out, there is a temptation to cherry-pick things that you think could do really well really fast.

If you are unlucky, they do just that.

(Yes, I did mean to say that).

Kendall80

gadgetmind wrote: »

Even with a diversified portfolio of 20-30 shares, that Afren experience would be a real kick in the teeth

I did spend a few months running mock portfolios on trustnet. Value portfolio, low cape, low PE, etf portfolio etc and all went really well. This was to be the first stock of around 12 in total. However, losing 90% in one week has certainly put the brakes on that plan.


I would say that although I did get drawn into averaging down once I still didn't over-commit. I'm sure there are many out there tonight who unfortunately are hurt a lot more by this than I.


My long term plan - ISA with CSD is still going strong despite being a little more red than green today.

Thrugelmir

Kendall80 wrote: »

My first foray into individual stocks/shares has not gone well. I elected to invest in Afren last week with a view to an upcoming takeover/merger. It dropped 70% today alone and 90% overall.

I think i'll stick to funds!

Odd choice for a single share portfolio.

I would suggest starting on a more conservative basis. Before holding speculative stocks.

Reading this from last September. Not something I would consider investing in.

Afren under siege
The market value of Afren (AFR) is down by a third since it suspended chief executive Osman Shahenshah and chief operating officer Shahid Ullah in July. Unfortunately, Afren’s delayed half-year report came a day after news that the beleaguered oil and gas group had suspended associate directors Iain Wright and Galib Virani as part of its ongoing investigation into the unauthorised payments allegedly received by Messrs Shahenshah and Ullah.

If the boardroom drama wasn’t bad enough, Afren also revealed that its interim operating profits had nearly halved to $165m (£99m). The fall-away was primarily due to a reduced share of production from the flagship Ebok field in Nigeria. Afren’s total working-interest production came in at 33,488 barrels of oil per day (bopd) – a 25 per cent reduction on the 2013 interim rate. Afren did receive an extra $4 for every barrel of oil it sold during the period, but comparable operating cash flows were still down by 37 per cent to $354m.

To top it off, the group has also been forced to suspend work on the Barda Rash oil field in Kurdistan in reaction to the parlous security situation in the region. As a result, management has reduced its full-year guidance to between 32,000 and 36,000 bopd - from an initial forecast of 40,000 bopd.

Kendall80

Thrugelmir wrote: »

Odd choice for a single share portfolio.

I would suggest starting on a more conservative basis. Before holding speculative stocks.

Reading this from last September. Not something I would consider investing in.

It was meant to be the first of a collection of individual stocks but I hadn't yet got around to the others. Some such as the Cello group and Cohort were a lot more steady.


Regarding your quote about the board corruption issues if you check the share price at the time you'll see that yes it took a hit. However, it was still more than 10x what it has ended up on today. Many brokers were still rating it a buy and Westhouse securities just 5/6 days ago reiterated a 90p target for the share (which was 25p at that time - 5 now!)


This share does seem to have behaved very oddly. I'm not entirely convinced that there aren't some shenanigans going on!

racing_blue

Kendall80 wrote: »

This was to be the first stock of around 12 in total. However, losing 90% in one week has certainly put the brakes on that plan.

Not so fast sir

I lost 100% of my investment on two occasions (ROK plc and Connaught plc), but that is the limit to the downside.

On the other hand, individual shares have an unlimited upside.

You have been unlucky and been slapped round the chops with the downside in round 1, but this is the game with shares and one Apple or even one Easy Jet can trump a handful of Afrens

Kendall80

racing_blue wrote: »

Not so fast sir

I lost 100% of my investment on two occasions (ROK plc and Connaught plc), but that is the limit to the downside.

On the other hand, individual shares have an unlimited upside.

You have been unlucky and been slapped round the chops with the downside in round 1, but this is the game with shares and one Apple or even one Easy Jet can trump a handful of Afrens

You are of course correct. Few successful stocks and shares investors got where they are without hitting a few bumps in the road. I believe my mistake here was jumping in before I was able to diversify and also not putting in the stop-loss that I planned on. Live and learn.


I shall go back to my dummy/practice portfolios and wait until I've built up enough 'play money' to make more of a go at it.

masonic

Looks oversold, you could still make it back if you get your average down (j/k)

I hope you didn't lose much. It's pretty painful to see a holding decimated like this, but as you say there will be people for whom this will be lifechanging in a very bad way.