Quiet Contrarian. Ep52: Trades for January 2024
Buys
Clinuvel Pharmaceuticals Ltd – CUV.ASX – They have a drug to treat severe phototoxicity (Scenesse), to my understanding they basically have a monopoly position in the market; and they are looking for new opportunities to increase sales by applying the drug to the treatment of other conditions (e.g. vitiligo). I bought on recent price weakness, which I think will be temporary and is due to: 1. a news vacuum (as they haven’t given any outlook statements) and 2. Clumsy comments by the CEO in a recent newsletter – it was negative about the state of the pharma industry, and the market punished them for that. I think it’s a good opportunity to get in to a great company at an OK price (still a touch expensive, but I will keep an eye to add to position if the valuation gets more reasonable).
Cogstate Ltd – CGS.ASX – I like what these guys do. Software platform for clinical assessment of brain function, i.e. regular testing for alzheimers. Their platform has the most scientific research backing it’s scoring, and is the highest quality game in town. They are cash flow positive and growing organically. The first Alzheimers drug was recently approved by the FDA, and an available drug will hopefuly lead to more clinician and pharmaceutical interest and increased software sales for testing, screening and research. May still be very early days, and I’m unsure of the efficacy or sales of the new drug, but I’m hoping that this will increase their growth trajectory. Once again, a bit expensive, but bought an initial amount on recent price weakess, and will add if they get cheaper.
Develop Global – DVP.ASX – The Underground mining A-Team! They will come in and fix up your underground mine if you are having problems (look at what they’ve done for BGL). Mostly mining services, run by xNST CEO Bill Beament, who came on board in June 2021, and has grown revenue from $2m to $68m p.a., as he’s turned them into THE people to go to for underground mining. They also have a long term plan to become a miner themselves, and it looks like Beament is looking to run the strategy he had with NST, looking for cheap opportunities for high quality resources. Accumulating properties in bad times to develop and reap benefits in good. Look for him to snap up failing things and accumulate battery mineral properties that he can develop into the future. The company is still expensive, but have come down significantly recently, with the recent shift in favour against battery minerals miners. I have a few concerns because of negative cash flow, but I am willing to eat those, and this is largely a bet on Beament.
Sells
Walt Disney Co. – DIS.NY – Sold on recent price strength, and AUD weakness. Despite losing money on the sell price, it was still marginally profitable due to the weakening of the AUD. This just felt like the right time to get out. The Disney train that has run so well is feeling like it’s going to turn. I think there’s a roughly 20 year cycle in the entertainment industry, where the old directors get replaced by a new generation, and things go through a refresh. Feels like we’re at the cusp of that now, with new studios and talent coming up, old guard is becoming less popular, as people get bored with the dominant shtick (e.g. marvel fatigue). Also, the weakness in the AUD makes this a good time to pull money back into the country. This was the last of my US holdings. I still love Disney and their IP, but I think they’ll do badly for a decade or so.