Portfolio review of the week April 10th 2010

Last night, the Dow Jones Industrials briefly pushed through the 11,000 mark for the first time since September 2008 and finished the week at a 18-month high of 10,997, up 70 points. The Nasdaq Composite Index rose 17 points to 2,454 and the S&P 500 rose 8 to 1,194. In the U.K., the FTSE 100 rose 58 points to finish at 5,771.
It has been a good week for the Contrarian Investor UK portfolio with some excellent profits made and taken in gold miner Norseman Gold (NGL) and the Falkland Islands explorers. After several days of profit taking the portfolio is relatively small and concentrated in GW Pharma but new opportunities are being explored. 


GW Pharma (GWP) - GW pharma continued to drift down this week on small volumes to finished at 109p, down around 4%. At this level it is only a few pence from where it was when the company issued the regulatory update on Sativex spray on March 18th. This update confirmed that there were no major issues outstanding and that UK launch was on track for Q2 2010. As this announcement de-risked the regulatory stage significantly, especially on the issue of efficacy which was the stumbling block at the last submission in 2007, the current share price seems surprisingly low. Less than a month ago investors still had a high risk that the licence application to launch in Europe would fail, now GW pharma are in the situation where all aspects of efficacy, safety and quality has been addressed. I topped up my holding further during the week at 107p and now have a position similar in size to pre-regulatory announcement. Though the share price may drift down further, the upside reward at these levels look good especially with news of licence approval due in May from the UK and Spain.

 

Falklands Islands Drillers (Desire Petroleum DES, Rockhopper Exploration RKH, Falkland Oil and Gas FOGL) - A volatile week in the Falkland Islands oil stocks was exploited with some nice profits made on FOGL and RKH. Rockhopper had a large move up this week as Desire's Ocean Guardian rig now moved to its Sea Lion prospect in the North Falklands basin with spudding likely any day. I have now sold on my positions at solid profit and will wait for any pull back as a further investment opportunity.

Norseman Gold (NGL) - Australian gold miner Norseman had a very strong move up this week from under 50p to finish the week at 62p. Though fundamentals are good for this company, such a large move up in the Contrarian Investor UK portfolio holding with a buy point in the mid-40p range, profits were taken at the end of the week. Thank you Jim Slater for the tip!

BHP Billiton (BHP) - Short placed on the commodity plays BHP Billiton and Kazakhmys (KAZ) earlier in the week were closed at reasonable profits after the price of copper went over the key $8000 a tonne level. The commodity companies remain good trading opportunities given their volatility.

SSL International (SSL) - Rumours surfaced yet again this week that Reckitt Benckiser (RB.) was considering buying SSL which moved the share price up to a high of 885p. I remain unconvinced by this possibility of a Reckitt buy. By Friday these rumours were discounted and the price had dropped back to 856p. Shorts placed at 885p were closed at a good profit.


Coal of Africa (CZA) - Continue to hold CZA with no news this week.