When the value of an investment, already in profit, jumps 36 per cent in a week, the Punter is tempted to abandon the tea for a glass of wine.
Sea Farms Group (ASX code SFG), the ambitious prawn farming group, has seen its shares rise strongly since May, almost doubling in August alone. The most obvious reason for the rise is the recent deal with Nippon Suisan Kaisha Ltd, which was finalised at the beginning of August.
Nippon is kicking in just under $25 million cash and promising to buy a significant quantity of SFG's existing black tiger prawn production in Queensland, as well as from its proposed $1.5 billion Project Sea Dragon prawn farm in the Northern Territory.
The Punter is a whisker short of doubling his money on this one, which would normally prompt him to play safe and sell half the holding. However, the Nippon deal − especially the promise to take 20 per cent of Sea Dragon's production − should make it easier for SFG to find the millions it needs to build Sea Dragon. Initial earthworks have already gone out to tender. So the punter is hedging his bets just a little, selling 8,333 SFG for $1,230. He is keeping 80,000 SFG in his portfolio.
Meanwhile, he has bought 6,000 more shares in Roots Sustainable Agricultural Technologies (ROO), the start-up horticulture irrigation and heating specialists. That's despite the fact that the shares have already jumped 25 per cent following the half-year results, and despite the near-certainty that the company will have to raise more cash soon.
The purchase brings the average cost of his ROO down to 36.1c a share.The half-year showed maiden revenues of $US200,000 (approximately $A275,000). It has already achieved commercial sales in China and signed a distribution agreement in South Korea.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
