It's that time of year in Australia when everyone gets a little manic. It's not just to do with the impending school holidays and figuring out babysitting schedules, rather it's the last chance to get one's 'house in order'. June 30 represents the End of the Financial Year (EOFY), and in other jurisdictions, it equates to a half year or quarter end. Usual things that happen this time of year include investors taking stock of what is in their portfolio. Some transactions have made good profits, and there are others an investor would prefer not to own. So selling some ‘losers’ can help offset some of the tax effect of gains.

Richard Coppleson (ex Goldman Sachs analyst) produces the Coppo Report. In it (aside from references to his Shark hunting grandfather Sir Victor Coppleson), he explains these seasonal movements, backing it with some quantitative data over the last 30 years. His points are:

Institutions (Insto’s) also take stock of the good, the bad, and the ugly in their portfolios. They tend to start selling in late May and buy back in the last week of June or in July. The trick for them though is that they like to get ahead of the pack, and this is important if they have big positions in illquid or smaller stocks. So share prices fall from late May until the second or third week in June. These stocks can experience a rebound, but that usually fizzles by around the third week of July. Sometimes the spike from the low in June to the “high” in July is enough to put a cap on things, unless the underlying story of the company has gotten better. Coppo cites stocks that fall -15 to -40% can bounce back +13% to 20% over the following few months.

His call for some of the ASX200 and Small Ordinaries stocks that should bounce over the next 4 weeks are: MYX, APO, HVN, CAT, SUL, and JBH.