Following in the footsteps of giants is by definition a difficult thing to do. Just think of the likes of John F Kennedy, Gandhi, Martin Luther King and, er, David Cameron.
This is also the case away from the political area, especially in terms of investing and particularly fund management. Who would like to take on and attempt to beat Anthony Bolton, Warren Buffett or George Soros? However, in the wake of the “social trading” craze of recent years, where traders can copy the best of their contemporaries, I was reminded that it is actually not that tough to find out what those on the leaderboard are doing.
The top holdings of leading funds are published quite openly and are readily available. For a chartist such as myself this can be quite an eye opener, in terms of looking at stocks which have been judged by the experts to be the best from a fundamental perspective. What I have noted is that it is very often the case that a company which is solid on the balance sheet / fundamentals also has technical characteristics of a very solid nature as well.
In terms of the “giants” there is no one to my mind who is more worth following than Giles Hargreave, via his Marlborough Special Situations Fund. It helps that part of his team at Hargreave Hale is George Finlay, is my father’s stockbroker. The snapshot of the fund’s top holdings in August is shown below, and I am picking out three of the most interesting plays from a technical analysis perspective.
Amerisur Resources (AMER)
First up is Amerisur Resources (AMER), something of a private investor favourite, but a company which has survived what can very often be the curse of the bulletin boards.
What we see here on the daily chart is the way that there has been a rising trend channel in place since May last year, with the resistance line projection from that time suggesting a target as high as 80p over the next 2-3 months. This is despite the way it could be argued I have been on the generous side in terms of the angle of the resistance line, and given the way that there has been a fourth failure so far this year to clear the mid 60p’s zone.
The suggestion would therefore be that cautious traders might wish to wait on a weekly close above the 66p resistance line before going long and the March RSI resistance at 65, even though the overall structure here implies that while the floor of last year’s channel remains unbroken at 60p we are due to head towards 80p on a 2-3 month timeframe.
Restore (RST)
Restore (RST) is of interest given the way that I was fortunate enough to interview the company on TipTV a couple of months back, so I am well informed. Indeed, it was the sheer consistency and predictability of the business model of the offices support services group that stood out. The same can also be said of the daily chart of the company over the past year where we see a very persistent uptrend characterised by new support coming in at and above former resistance.
This kind of action is only seen in the most bullish of situations. What is evident currently is the way that there has been a near term flourish to the upside for the shares, but at least while there is no end of day close back below the initial August peak of 198p the upside here is still seen as being as high as the July 2013 price channel top of 240p as soon as the end of September. Any dips towards the 200p zone are currently regarded as buying opportunities.
Renew Holdings (RNWH)
If anything, the Renew Holdings (RNWH) technical picture is even more robust looking than the situation at Restore. But at the same time it can be said that apart from both stocks featuring in the Marlborough Special Situations top holdings they are also very similar looking charts. This is primarily said on the basis that once again all the way up from the 100p zone last summer we have seen new support come in at and above former resistance.
This, along with the August break through key former 250p zone resistance for 2014, implies we are set for a new and significant leg to the upside. The favoured destination at this point is the top of the 2013 price channel at 360p as soon as the next 1-2 months. The stop loss is an end of day close back below the price channel floor / 20 day moving average at 247p.
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