In my last post I mentioned that I am going to be reviewing some of the laggards in the portfolio is to see whether I should be considering cutting losses.

Instead today I have bought a further 380 Aggrekko at 781p. The stock is down 23% since I bought a small stake on 13 September which is not terribly cheering. But reviewing the performance and prospects for the company I see no reason for a change of heart. Over the past 5 years Aggreko has generated average annual EBITDA of US$584m or just 5.2x the current enterprise value.And whilst net debt has risen this year, it is <1.3x EBITDA with plenty of funding headroom in place. There is lots of talk about increased competition in the sector. And perhaps that may indeed erode short term margins, but on the other hand Aggreko has a very strong presence in North America where the prospects for a pickup in oil and gas activity are good – and I am not convinced Karadeniz Energy is likely to find it easy to compete in that market. For me this offers at least the 50% upside potential I am looking for in the Contrarian portfolio. And it certainly ticks the Contrarian box. Analysts seem to hate this stock.

On another note, I have also topped up my holding in micro-cap Horizonte Minerals, buying another 125,000 shares at 2.2p. The share are up just 10% since I bought them in July against the FTSE 350 mining index up more than 20% over the same period so they count as underperformers. But the 3 Oct results from the revised PFS on Araguaia incorporating the Glencore resource are phenomenal. Capex is down to US$354m (from $582m) and cash costs are down to $3.15/lb from $4.16/lb but production is virtually unchanged at 14.5ktpa (prev 15ktpa). That means that the nickel price needed for this project to really work is c$13,000/t down from c$18,000/t previously and able to compete head-on with Indonesian NPI. The placing announced today to fund feasibility study work also buys them plenty of time, so the clock is not ticking for this company even if the nickel market stays tough. Even at a very conservative long term nickel price of US$12,000/t the project has an NPV of US$328m compared to post-placing market cap of $31m. Convincing enough?

The value of Contrarian stands today at £168,571 with £9,689 in cash.