Four months ago I toyed with adding a troika of high-risk stocks into my portfolio, which was becoming top-heavy with FTSE 100 blue-chip dividend machines.I convinced myself that adding afew potential multi-baggers mighthelpturbo-charge myreturns and make my portfolio more interesting to look at.
I told myself that investing in just one risky stock was dangerous, it was safer toinvest in THREEinstead. If only one fulfilled its potential, itcould more than make up for losses elsewhere, I reasoned. I called it my 3-way high-risk play. While four months is too short a time frame to assess the performance of most stock choices, it makes sense with these three, because a lot of happened to them since then.
Off The Money
When I toyed with investing in Monitise(LSE: MONI)on 20 April, it traded at 13.5p. At the time of writing, you can buy it for 5.25p. So a braver man would have lost 61% of hismoney. This has only continued the 30% slide the stockhad suffered in the weeks before I considered buyingit.
I was tempted because although the company couldnt find a buyer, it could still boast a rollcall of top clients, includingSantander, MasterCard, IBM, VisaEurope andRBS.Unfortunately, Visa Europe, announced last month that it would besteadily cutting its shareholding from todays 5.3%. The newscame faston the heels of a cut inrevenue forecasts, although chief executive Elizabeth Buse said the company was still on the right track to profitability.
Crashing To Earth
As isRare Earth Minerals (LSE: REM), down 25% in four months from 1.19p to todays 0.91p. Over the last year, it is down 42%. Last time I looked at this stock investors werewaiting on the results of its pre-visibility study at Yangibana, a joint venture project in Western Australia with Hastings RareMetals (REM has a 70% stake).
We are still waiting, although a study published earlier this monthconfirmed continuous mineralisation of more than0.9km in Yangibana North, which is promising. REM is still a shot in the dark, as its planned lithium mining operations have yet to grind into gear, but looks more potentially rewardingthan Monitise right now.
To Sirius, With Love
At last a winner! At least fornow. Sirius Minerals(LSE: SXX)is the winner of my three-way play so far, rising 33% from 12.75p to todays 17p.Itenjoyed a one-off boost in July, when the North York Moors National Park Authoritygave it the thumbs up to construct the worlds largest potash mine.
The stocksubsequently suffered a sell-off as traders pocketed their profits because they knew that Sirius has a long haul ahead of it, as managementworksto raise the 1.7bn needed todrill a mile-deep shaft and23-mile long tunnel to transport itshigh-grade polyhalite deposits to Teeside for export.
Good news is trickling in, however, with recent reports that it hasupgraded its take or pay supply agreement with a Fortune 500 US-based agri-business customertosupply of 500,000 tonnes per annum of polyhalite for five years. This is one stock that cannotbe judged over four months, it needs at least four years. Im happy to give it time.
With these three stocks, the risks outweigh the rewards right now. Mind you, the FTSE 100 hasn’t exactly dazzled in recentmonths either.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.