Subscribers will know that when Codan announced their original profit downgrade, I took the opportunity to buy shares from panic sellers. At the time, I described the position as a "research position" and subsequently, I did my research. One disturbing piece of information that I found was that the Chinese may have had access to Codan's secure radio codes.

I then updated subscribers to let them know that I sold my Codan shares for a small profit. In that update, I said, that if panic returns, I might be interested once again. Well, panic did return, but this time, I wasn't interested.

I wasn't interested because originally, I thought Codan was a top notch company that had faced a temporary setback. I also implicitly valued the Radio Communications business as if it were growing. Despite a recent acquisition, it is not. The company reported falling revenue for its communications business in 2013. Revenue from that segment has fallen every single year since 2010. So that's one major problem with the original Codan thesis.

Secondly, follow up research I did on Codan identified the catalysts for the Minelab business. I said: "the dates to watch are 28 July and 24 September 2013. These are the election dates of Mali and Guinea respectively."

Well as it turns out, the July elections in Mali were a complete joke, and French solidiers are still in the country trying to keep the peace. The president has just "won" another election - with very low voter turnout. The BBC reports that "despite some success, Islamist groups have stepped up their operations." So it is extremely suprising that anyone thought that gold detector sales to Mali would pick up.

Meanwhile, the situation in Guinea is not much better. The internet would have informed investors that their elections were a farce, as I predicted. The incumbents won the allegedly rigged elections, the results of which are still disputed. To quote AFP:

Dozens of police patrolled the streets of the Guinean capital Conakry on Tuesday after two days of pre-election violence that left a policeman dead and more than 70 people wounded.

The officers were deployed on the main thoroughfares running through opposition areas of the city with four days to go until long-delayed nationwide polls as youths looked on, sitting under trees lining the roads.

"We are quietly observing the situation. If the police provoke us or ask us to leave the side of the road, all hell will break loose again," one youth told AFP.

Opposition protesters shot dead a trainee policeman and wounded two other officers, according to the government, as violence broke out Monday in Conakry.

How stupid that Tony Abbott and the other hysterics describe the carbon tax as adding to sovereign risk. Codan shareholders are now experiencing the bitter taste of sovereign risk gone wrong. The inhabitants of those violent lands are experiencing something much worse, though, so keep it in perspective.

All this information has indicated for some time that there would be no imminent recovery of metal detector sales to Africa. So it was all the more important that the Radio Communications business pick up the slack. Alas, it seems that radio comms business is shrinking.

Sure there is a point at which I would buy Codan shares, but the share price would have to be a lot lower than $1. I don't want to be in the position where I am waiting for Mali or Guinea to reach peace. No doubt someone bought shares at 65c and is currently offloading them at $1; I know at least a one reader who would have been tempted. But I didn't want to play that game (again), as I'm trying to be an investor not an opportunist. Even at current prices, there are  better places for your capital, in  my opinion.

I won't consider buying shares in the company until it starts to seriously develop new markets (such as Latin America, Central America, and Asia). I'd also like to see inventory reduced by about 75%.

The Author has no financial interest in Codan. Nothing on this website is advice, ever. This post is for entertainment (and for my own reference!)

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