A fund manager had admitted 2 ASX shares in his portfolio tumbled terribly last month, but revealed why patient investors could potentially buy in cheaply right now.
Cyan Investment Management portfolio manager Dean Fergie told clients in a memo that both Mighty Craft Ltd (ASX: MCL) and Vita Group Limited (ASX: VTG) had shockers in August.
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Vaccinations will lift spirits
Shares for brewing company Mighty Craft lost 15% over the month.
"Mighty Craft has come under reasonable operational and sharemarket pressure due to the extensive lockdowns in VIC and NSW which have severely impacted its venue businesses," Fergie said.
The Melbourne business is a craft-brewer, a spirits distiller, and owns some venues.
"The company owns brands such as Jetty Road, Ballistic and Mismatch Brewers, Kangaroo Island Gin, 78 Whisky, and over a dozen associated venues in NSW, VIC, and SA."
Mighty Craft shares have shaved 35% off their value so far this year.
Fergie told The Motley Fool it's a victim of circumstances and believes fortunes are about to swing around for this ASX share.
"MCL is currently in the eye of the COVID storm with its closed venue businesses but the present tight restrictions are only likely to ease and a strong rebound is likely before Christmas and patrons flood back into venues," he said.
"The timing of the recent capital raise and purchase of Adelaide Hills group, just before the latest COVID outbreak on June 21, was unfortunate timing."
One positive the very contagious Delta variant has brought is a sense of urgency for Australians to receive a coronavirus vaccine.
The rising coverage will also help Mighty Craft, according to Fergie.
"As vaccination rates roll forward it would appear likely that a gradual reopening will occur in the coming months which should see a rebound in the company's operations and its share price."
Patience is a virtue for this ASX share
Vita Group is best known for owning a network of Telstra shops.
But in February, Telstra Corporation Ltd (ASX: TLS) announced it would shift all its franchised retail outlets in-house.
But that's now 6 months ago and Vita Group still has not struck a buyout agreement with the telco.
Vita shares lost 10% over August.
"Investors are getting somewhat impatient with Vita," Fergie told The Motley Fool.
"The market has been expecting a deal to be struck between the two companies to exit the franchise but COVID closures have likely lengthened this process."
The company has turned to other ventures, one of which shone during the recent reporting season.
"Vita Group reported great numbers from its growing beauty clinic division (Artisan) which saw revenue and gross profit rise over 40%."
The other reason for patient investors to hold onto Vita stock is that it's bringing in a nice income.
"VTG is paying a 9% fully franked yield, so investors are certainly being rewarded for their patience."
