Artful Investing

This is a celebration blog. Today saw my second-largest holding, Dana Petroleum smash an investment milestone/portfolio millstone and reached a price double the one I paid for my shares. Dana Petroleum shares closed the day at 453p to sell. In just under a year Dana has earnt me over £3500 and this whopping gain has transformed my portfolio gloriously.

Dana now represents 29% of my total portfolio and with the price of oil on the exchanges breaking records faster than a falsetto of transexual East German athletes, the company's future continues to inspire shareholders.

The Dana story is one investors dream of, a company with growing earnings and a growing reputation. This inspires a double-whammy rerating of the stock. The price rises in reaction to higher earnings per share and the rise continues apace as market participants rush to buy, convinced the company has greater prospects for earnings growth than previously reckoned.

Peter Lynch, former fund manager at the gargantuan mutual fund Fidelity Magellan, earned legend in the investment community via his book One Up on Wall Street. Lynch's magnum opus was dedicated to empowering the private investor to sniffing out stocks that could earn return 100, 500 or as much as 1000% of the original stake. What would Lynch advise I do with my Dana shareholding? Page 286 of my edition (first Fireside, 2000) declares:

• Just because the price goes up doesn't mean you're right


• Selling an outstanding fast grower because its share price seems slightly overrated is a losing strategy


• Companies don't grow for no reason, nor does fast growth continue forever

Very humbling. I was about to mention how much of a confidence booster Dana's doubling is. According to Lynch however, one hundred percent later I still might have got this one wrong! But I don't think this selection of Lynch mottos is targeted particularly at investments like Dana. This investment success has come off the back of Dana's ability to increase North Sea production, an increase in market confidence in Dana's Mauritanian acreage and the surge in the price of crude oil. Further advances in Dana's value could arrive from any of these criteria. Later this year Dana will be drilling in both the North Sea and off Mauritania. I'll wait for these results before deciding on the company's fate. Be assured, Dana has been kind in the last year but an investor can't afford to get sentimental, as Lynch says "a stock doesn't know you own it" and remember the old stock market saw "never fall in love with a stock - it won't love you back".

The moment I feel Dana is more likely over-priced than under-priced I'll sell.

The Artful Dodger