Well a 56.75% price decline since buying into this stock is clearly unacceptable.
It’s not so much the price decline which is unacceptable (although I admit it is certainly not one of my best picks) it’s the way I bought this stock purely based upon the stated book value.
Now buying stocks based purely on their stated book value is a viable long term strategy that only works when you:
- Buy them on a group basis (12-25 stocks at a time)
- Ensure that the group is sufficiently diversified
- Wait at least 18 – 24 months for a realisation of current value to intrinsic value
The main problem with my investment into the dog Rapidcloud (LSE: RCI) is that I’m not actively pursuing a ‘buy and hold’ strategy of this type.
In fact I’ve taken a more hands on approach to my portfolio of late.
Not only that but drilling into the activities of Rapidcloud the management of this company like to massage their figures.
Another thing that is frustrating me about this stock is that prelims are due at the end of May and I’ve got far better ideas to invest my cash into than a story like this.
When I covered Rapidcloud last time I mentioned that their 16 March RNS was simply an accounting gimmick that allowed management to declare revenue growth of 60% without actually booking any new revenue.
This is just unacceptable and I’m getting out of this dog on the open today in order to use what’s left of the proceeds to invest in a better idea.
PS: I have noted in my diary when their prelims are due to be published just so I can see what further BS this company will spout.
8.49 am: out at 30.09.