I have an intriguing tale of rogues and shopping trolleys for you today. What’s this got to do with penny shares? You’ll see in a moment…
But before I begin, I want to give you a tip-off about an intriguing opportunity I’ll be sending you tomorrow. I won’t go into it in detail today. There’s no time. And anyway, I want you to have a clear desk for this in the morning.
Gulf Keystone strikes lucky in Kurdistan
- Oil and gas explorer Gulf Keystone (ticker: GKP.L) has announced the discovery of a significant resource of low-gravity oil at its Shaikan-1 well in Kurdistan. The company said oil in place at the well was estimated to be between 1 billion and 5.3 billion barrels. Keystone’s share price has been as high as 124p so far this week – an 853% gain since August. The discovery has been independently verified by Dynamic Global Advisors after GKP’s partner at Shaikan, the Hungarian company, MOL, cast doubt over the quality of the find yesterday.
TXO ticks up to a 300% month gain
- Shares in TXO (ticker: TXO) shift up another 0.5p to 4p, marking a 300% rise over the last month. Formerly known as Texas Oil & Gas, this controversial Texan on-shore oil producer has reported likely further oil reserves at its Woodbine field. And in a sure sign of confidence within the company, its directors have also been buying its shares.
For now, let me just tell you that what I’ve been shown turns the way you normally invest completely on its head. Instead of trying to get in on something before the price rise, this clever little ‘rewind trick’ means you steal in afterwards. How do you do that? You’ll have to wait for tomorrow’s issue to find out! It’s incredibly clever – I urge you to have a look at the “rewind report” in detail.
Now back to those shopping trolleys…
Mr De Mauville’s big idea
If you want to find great penny shares you need a little imagination. One man who had this in spades was a stockbroker I once knew by the name of Anton De Mauville.
I knew Anton 20 years ago. He was, shall we say, an old-fashioned stockbroker. He was as big in stature as he was in spirit – always brimming with optimism, not to mention rich food and wine. He was a ‘half-comm’ man – one of that dodgy breed who pocket half of the commission they earn from clients while paying the other half to the stock-broking company that supports them.
And there were plenty of the latter.
In my days as a fund manager, Anton used to visit me from time to time. Whenever he did so, he would tell me how he’d moved on to yet another tiny, obscure stockbroker.
Anton was a rogue, but he was also a charmer. I used to look forward to his company. He always had a hot story that he would recount with the greatest excitement and conviction.
‘This share,’ he would announce with the utmost conviction, ’is going to fly.’
The trouble was none of them did.
In 1988 he introduced me to Kenmare Resources (ticker: KMR). The share price of this company is lower now than it was then! Another company that he enthused about went bust shortly afterwards.
After a few similar experiences I learned to treat Anton’s recommendations with due caution, but still he came back with more. And whenever he came to visit he began by reminding me of his one major success.
He was, he told me, ‘the man who discovered WPP’.
For all his dud recommendations, he was bang on the money with this one. The story of how WPP became the most sought-after stock on the market is a fascinating one in itself. But it’s all the more fascinating because I think I’ve identified a company that is going to make history repeat itself.
First, let me tell you about WPP.
The true value of shopping trolleys
You have probably heard of this company. It is now one of the giants of the global advertising industry. It is run by Martin Sorrell, whose views on the shape of economic recovery have attained an oracular quality.
His latest, by the way, are not that we will have a ‘V’ shaped recovery or a ‘W’, but instead a ‘LUV’ – little recovery in Europe, a U-shaped recovery in the USA and a ‘V’ in Asia.
We shall see whether LUV is in the air in due course. But long before Sorrell became a forecasting sage, he was just a humble ad-man with a big ambition. He wanted to buy other advertising companies and needed a stock market vehicle to do so.
Rather than launching a new company, he simply bought one that was already there. He then bought a succession of businesses. This spree culminated in the $566m acquisition of J Walter Thompson in 1987 and the $864m deal to buy another US giant, Ogilvie, in 1989.
Sorrell became known as the ‘Machiavelli of Madison Avenue’, a feared raider stalking the bluebloods of the US advertising industry. Inevitably he made a few enemies. Inevitably there was scepticism and a view that Sorrell’s overwhelming ambition would be his undoing. But the advertising powerhouse he created is still going strong today.
But here is the thing.
That little company that Sorrell bought control of in 1985 was called Wire & Plastic Products. It made supermarket trolleys. It was a penny-share tiddler. Sorrell was able to buy his controlling stake for a few hundred thousand pounds.
Sorrell abbreviated the name to WPP Then in no time at all, the other shareholders of Wire & Plastic – who had watched for years as the business went nowhere – suddenly found themselves aboard one of the best performing shares of the decade.
As Sorrell built his empire WPP’s share price soared. A humble maker of supermarket trolleys had become the hottest stock on the market!
And now I am wondering if the same thing could be happening AGAIN.
Because there is another trolley company out there and, without the need to transform itself into an advertising business, I think that its shares could soar.
You can find out just how I think penny-share history is about to repeat itself – and how much richer this phenomenon could make you – by clicking here.
I don’t know where Anton De Mauville is these days. But perhaps it’s time for another enterprising stock picker to cause a stir recommending a NEW supermarket trolley bonanza.
Good investing,
Tom Bulford
For The Penny Sleuth
P.P.S. If you want to follow the insights of a small company investor, and uncover the hidden gems of the stock market, find out more about The Penny Sleuth by clicking here.
