I want to provide a reflection/update on several posts I made regarding shares in Amaysim that I bought in February last year. (Yes I'm a naughty stock picking boy). Back then it was a bog standard mobile retailer, chasing the bottom end of the market (cheap light users, great customer service).
Purchase $1.83, Sold in Jan 2018 $2.00, collected 9c in divvies, made a reasonable gain on 4000 shares, pocket money really.
In the past year they've expanded from mobile to broadband to energy retailing.
Shares went up to $2.23 earlier this week on a rumours of a takeover bid from TPG. Shares fell heavily today on news of a trading update ahead of results release on 28 Feb.
I sold partly because of the competition in mobile is getting crazy intense, and Amaysim are being undercut by Coles and Kogan.
The other reason I sold is that the business model (debt fuelled acquisitions) reminds me increasingly of a company that I had shares in that crashed and burned in the GFC called Transpacific Industries (TPI).
Too many acquisitions, management too optimistic in integrating the businesses and cross selling, too much spin, not enough substance.
The parallels were there and so I sold AYS last month.
Personally it was a great lesson to have learned at a young age (notwithstanding it cost me a bucket of money). If you want to stock pick you really need to DYOR, and draw from your own experience.
If you have any stocks in your portfolio where debt ratios have expanded, where takeovers have stretched balance sheets, and where cashflow is tightening due to competition or margin contraction then you may want to do the same and sell up before interest rates start to bite and credit markets get spooked.
Stick to your guns and trust your gut. If shit doesn't feel right it is ok to sell up. I'll bet many holders of AYS today will deny the obvious and put it in the bottom draw. I used to be one of those people, glad I've changed.