Stocks that fell with good announcements

When I topped up ABU at 5.7c, I thought it just cannot go lower. Yes, it can! Why investors sell when there is a good announcement is always puzzling. If I have to predict which stock will do well next year, it has to be ABU. You just have to wait patiently as an investor with a deep pocket appear on its register.

Already the 3 year performance is over 50%pa. Why my readers are uninterested in this stock also puzzles me. I follow its announcements closely.

Another stock with consistent great announcements is IMA. I once reproached the chairman at a mining investment seminar as to why the share price often falls AFTER a good announcement. History is repeating itself.

When you have a good announcement, and the share price goes up but disproportionately low, then I consider it to be a "fall". Here you have CDU.

With RRS, you can understand why despite good oil discoveries, it has been bad. The prime tenements are in Georgia where the first drilling revealed nothing, and in Puntland (in Somalia north) where there is virtually no government.

KMC maintained output of gold and gave some good announcements, but few want it. By my calculation, the PE is 1 but I could be erroneous in my assumptions. At least with LSA, the share price has gone up. It is in the same shoe as KMC.

GUF finds more coal but its share price kept slipping. Gina has now appeared as a shareholder so it should be at its bottom. And coal stocks are subject to takeover speculation. So why did GUF, CLR, CEO fall?

Lots of stocks have been falling, especially gold stocks. Too many to list. I was chasing PRU on Friday but missed because it started to rise. This is a producer with more discoveries added.

My stock for 2012 based on Friday price is ABU. I see it as my equivalent of GIR. It takes multiple lashings on my colleagues' ears before some bought it. Now, that I have gone into a blog, even with multiple visual lashings, only one soul has bought. What has happened to brainy people? Of course, most don't read my postings anymore. I no longer pull my hair as this is my financial diary rather than a selling website. I have made many dud investments too but I only post those that have consistent good announcements or have good prospects.

A Clever Country?

Lucky, yes. Clever? If you look at ABU today, you would think that Australia is a fool's paradise. It is the land of milk, honey and gold (and Fe, coal, copper, tantalum, etc) where lots of foolish investors live in. With the grades that have been announced, the share price has been falling in line with world market sentiment. It is so blatantly obvious that the sellers are thinking with the brown matter in the rectum rather than the grey matter in the skull.

You need patience. Profit is not generated while you are exploring. You have to sell to make a profit. If POG stays over USD$1600 per oz (or even lower), it is still profitable for most miners. If I run ABU, I would take over ERM for its gold processing plant. But ERM is being stalked by Xstrata.

Gina

Gina R has proven to be an astute investor. Lang Hancock would be proud of her... but not her ungrateful children. They want to grab the wealth NOW.

When she buys into stocks that invest in Mongolia, she would not be like me. I do my own research, read my own announcements and do the sums myself before picking on a stock. Her investment in any one stock will be bigger than portfolio. Hence, she will need a pool of financial advisers to scour around before committing herself. While she has been trailing me to Mongolia, I decided today, after GUF came up with another good announcement today, to top up a small parcel of GUF. So, she followed me first... and now I am trailing behind her. Ken Talbot is gone so he can't follow me anymore!

ABU

http://www.asx.com.au/asxpdf/20111222/pdf/423g3nqprjy7n6.pdf

I am in KLIA Pan Pacific Hotel. I saw the above announcement and expected the share price to get a boost after recent fall. I last topped up at 7.3c and thought it was a good buy after a great announcement. Today I collected some at 5.7c after it fell by 0.1c.

This trenching result is probably the best in Australia currently yet sellers are dumping! Price of gold is still above $1600USD per oz. Note that ABU is an explorer only, not producer. And trenching is just surface scratching. But if you look at the grades, there would have been a gold rush to grab the gold as it is on the surface.

In my gasman opinion, this is the best gold stock to buy, based on what they have found, finding and what they will find based on historical mining. Because it has the largest area for exploring in Australia, you can expect a good JORC resource eventually. Of course, nothing is for sure (cf CDU). Stock market investment carries a risk but I like "calculated" gamble. What I cannot believe is this blog is known to a few brainy people, it is so hard to believe that only one reader has invested in it. Even crazier still, the price went down today in line with market sentiment.

Another dead cat bounce

I have no desire to buy today. I try not to buy when there is a dead cat bounce.

The fund managers plunge in when there is one set of good news and jet out when there is half a set of bad news. Certainly, there are good buys at the moment. But you cannot buy on logic for the short term. I cannot work out the sentiment except that it is pervasively negative at the moment; possibly prolonged, too. Some gold stocks have fallen badly but I am not too concerned.

No tips from me. You will just have to read my posting and see if the price has fallen and... buy. Today a few more stocks announced good news but I am at the airport lounge so I am not checking the individual prices. When gold is up, that is when my portfolios shine.

Gina is following after me...

This AM, I read that Gina is following me to Mongolia. She has bought a lot more shares than I can ever have in AKM and GUF. Once it was Ken Talbot, now it is the richest person in Australia trailing me.

It feels so nice to be ahead of her pack of advisors :-)

GUF has fallen 40% since I bought but AKM is still more than double my buy price. I expect both to rise more before long unless the world sentiment is decrepit.

http://www.theaustralian.com.au/business/mining-energy/rinehart-takes-baby-steppes-in-mongolia/story-e6frg9df-1226227100334

POG

I am watching the POG very closely. If it continues to crumble, then something is very wrong with the financial world. When it fell below USD$1600 per oz, I thought my portfolio is going to tumble very badly. It did. But today, it has found its floor again.

My logic is that desperate investors will sell off their gold while central banks cannot. The latter sell in tons and will profoundly affect the POG. On the same note, the big producers will also cease production if gold mining is not profitable.

Over the year, my wife has been telling me to save to buy a property. That is one reason why I have not done much private investments. Most are via the super fund. It certainly was a good decision... and I had a share in concurring with her. But credit is due mostly to the wife. I want minimal loan from a bank as it would affect our lifestyle.

I notice that ABU has fallen significantly. With so much gold to further uncover, this must be amongst the cheapest successful gold explorers.

Financial world

This Saturday AM, I am off to do an emergency Caesarean section. I notice Proactive Investors website has gone on holiday. That is one of the big differences between the financial and medical world. Xmas is still more than a week away, and this mob is already enjoying their holiday season. And often still get paid, and paid more than medicos. They won't be returning until after the New Year. Nice!

Mining stocks

On a day like today, I expected my portfolios to be whacked hard. And it did. Definitely no alpha to collect.

When stocks are dumped without a reason, that is when I am active. The current sentiment is very tainted by European problems. The whole of Europe, combined, is a huge economy with lots of people. The Chinese would have found that their goods cannot be sold indefinitely on credit.

What is amazing is the price of uranium has hardly moved! POG cannot keep coming down; buyers will appear and there is only that much gold produced. And Central Banks cannot sell too much or its remaining gold will become less worthy.

POG

Now that is a plunge.

This seems the start of the spiral downwards. But how low can it go? European woes has already spread; nothing new. In fact, the USA seems to be recovering.

In the meantime, Uncle Wayne and Aunty Julia are fucking the miners, harder and harder. First the Carbon Tax and then MRRT. Great government!

POG

While it is more than USD$1600 per oz, I am happy with gold stocks. POG cannot raise itself too high; hoarders will sell. It cannot go too low; the production will cease.

I have another takeover stock in play. EXT. This will give me a lot of cash as it has gone up 6-8X in recent past. The most likely suitor will be RIO. I don't want RIO shares, I want cash.

Market expection

The market keeps expecting governments to do more than they do. The Feds kept interest rate where it was and there is no fiscal stimulus, so the DJ plunged after that. I am glad about that. You cannot expect artificial means of fixing the current financial woes. Greeks have to work, well many Europeans have to work harder for less. Yanks have to stop spending on debt. Japs have to fix up their natural disaster woes. China has to revalue its currency. And Australia has to play less sports, and use their brain to value-add their raw materials.

Gold stocks

Gold stocks got knocked a lot today. Yet, it seems investors do not realize that in time of trouble, dumb investors are always forced to sell off their best performer first. When you have a margin call on your loan, you can be very desperate.

Yet, money can be printed, debts do not go away, governments can only do so much if the citizens are lazy or overvaluing themselves and natural disasters occur all the time in different frequency, severity and location. Gold is not easy to find or produce. But there are many hoarders, including central banks.

There are still many profitable producers even at USD$1600 per oz. At the moment, reversals look likely but you can never tell in the current climate. Inshallah!

So my favorite stocks are still gold producers. But market sentiment will override any logic. If I put a very low bid and desperate and idiotic sellers want to sell, I am always happy to oblige.

All down

POG is down; AUD is down; SPI is down.

But nothing is new. And if I hold a lot of stocks but desperate for cash, the first item I would sell off is gold. I don't know if that is the reason why POG has gone below USD$1700 per oz. The only good news is that it is still above USD$1600 per oz where a lot of my producers are still very profitable.

Europeans had got used to an affluent lifestyle based on an assumption that the continent has a superior economy. They still over-rate themselves. Service there is appalling for what you have to pay.

Australia has to be careful too as we riding on China's tailcoat. While the mines are producing what the world want, there is a finite quantity of it. Unfortunately, in Australia, the governments only plan for 3 year term. It is very difficult to invest in China or India; their markets are poorly regulated. All my investments there have turned out to be duds.

Difference between today and yesterday

Just another day has passed. Apart from that, there has been no significant change. Yet why do markets flip flop, I have no idea. In short term life, we seem to be dictated by fund managers.

When I have cash at hand, I love days when markets are dumped. Currently, I am trying to keep a handy supply of cash. Hence I buy only when there is good bargains.

Review of poor performers

When I was entering data regarding my share buys and sells, it is hard to believe some have underperformed so badly. Yet you wonder why, why, why.

A good example is KGD. And SVL is finding more silver, too. These are not stocks to sell. The best time to buy is always when no one is buying.

NST

When it had a good drilling result recently, I took the opportunity to jump into NST. Very often, the excitement causes a flurry of activities, and then it settles down. But the drilling result was too good to ignore. It doesn't matter if it falls (it is very difficult to buy at the trough)... as long as the share price turns upwards again soon after.

NST has risen over my buy price again. This one is a PRODUCER. Looks like the new floor for POG is USD$1700.

Monday is going to be the financial wind wane in response to the European summit. I find it very difficult to predict because logic does not prevail. The SPI is up a lot but that does not mean anything in the longer term. I am still cautious and will mostly look at value only. Gold producers are still my top choice. Banks are great for pensioners who are investors but banks keep getting fucked by politicians. Would a politician ever tell a voter that a profitable bank is a sign of healthy financial system? When a bank's profit is marginal, it is time to take your deposits out before it becomes even more marginal.

IAU

The closing price of IAU on Friday is very close to my buy price now. I bought IAU when the market was dumping everything while POG was leaping upwards. For a while, I was doing well but the recent European turmoil has make it a bigger loss. However, it was predictable that the JORC resource will rise, logically from its drilling results.

When it recently announced a significant jump in its Indonesian project, the market gave it a big jump. Unfortunately, it is not a producer yet. When the sentiment turns negative, then it will fall again, irrespective of any new discoveries. The most significant factor for long term price performance is still consistent and prolonged period of dividend payouts... based on profits, not financial engineering. This is so basic that you don't have to do a tertiary financial/commerce course.

LRF

Have I got blind faith? The NTA is $1.17 at end of Sept 2011 and the share price is 68c. And if you look at the top 5 stocks that this fund owns, it includes Newcrest and AGO.

It actually gives dividends too. I will sit on it... and when cash arrives, I intend to top up. Someone is selling you stocks at nearly half price!

IMA

I can never understand why this stock underperforms. In fact, good news eventually leads to fall in share price. It keeps finding mineral sands but the market is just uninterested in it. If you look at ILU which is galloping again in share price, you will note that IMA is a successful explorer but ILU is a successful producer.

I keep this type of stock on watch... and often regret not buying earlier. How can a stock keep falling if announcement after announcement are good? Inshallah!

SVL

Look at another silver stock and it is the opposite direction. SVL has had good announcements but the market just didn't like this stock so down it went. That means when I have accumulated a bit more cash, I know where to park it. I love stocks that have good news that the market does not want.

IVR

Once, this was like a laughing stock in my portfolio. All the promises and nothing spectacular resulted... until Ag came into play.

For historical reason, Ag is used like gold in China for a long time. It still has a precious metal tag but at USD$32 per oz, it is nowhere like Au or platinum.

Like a lot of stocks that I hold, with optimism, this one didn't disappoint and I have a nice profit now with the upward swing in share price.

EXT

This stock is subject to a takeover by a Chinese company. My EXT has gone up by more than 7x in value. I first bought in 2006. I have not bought anymore because the share price kept going up and up. And then it plateaued for a long time. I did a small top-up at $7.75 in 2009 due to my entitlement rights.

I think RIO will come into play because its Namibian Rossing mine is being depleted of uranium ore for processing and EXT's Husab deposit is only nearby. RIO also holds a big chunk of EXT. The plant to process uranium takes a long time to built and are very expensive. So RIO is actually in the box seat.

Once again, Chinese companies need to learn how the rest of the world perform a takeover. It is pussyfooting again but offering a bare premium to prior market price. The only good thing is whenever a Chinese firm takes a interest, the world suddenly wakes up to realize how cheap some mining stocks are. And we are talking about those with Tier One quality/quantity like EXT.

Europe

There are factions in the EU. And every nation there has self-interest at heart. How they can get together is a miracle. There are several non-Euro nations and majority Euro ones. And of the Euro-denomination ones, there are two camps; one a pauper and the other not pauper.

Yesterday's clear division of Europe should send a signal that things are not right. Logically, the markets should fall. Yet, the fund managers read it differently. POG is up, AUD is up, DJ, Dax and FT are all up. Even the SPI is joining the bounce on Monday.

I am still buying what I think is good value. And it is great for RB to confirm 6 of my choices! The market seems to be ignoring good announcements; ie buying using its rectum instead of its brain. Who knows... in a few years' time, I could be revealed as today's fool!

IAU

If the resource upgrade is 70% up, then you would expect the share price to jump proportionally. Nope! For this kind of stock, the fund managers are totally indifferent to it because it is not a producer yet.

I can't copy the link so you will just have to read the ASX announcement yourself.

Someday, a big miner would come along and scoop it up for pittance, especially if it has done the ground work well, like environmental/government approvals obtained, processing plant in good order and more gold and copper discovered.

NGE

By close of business, it was 5.3c. I bought mine at 4.6c after it jumped 0.5c. Obviously, someone was slower than me but has a deeper pocket.

Nice to know that sometimes, my logic is right! The company announced that there are parties interested in acquiring its tenements. What I don't understand is NGE is so cheap at the moment, why not just take over the stock instead of its tenements?

Shale Gas

Shell has just made a shale gas discovery.... in China. If China becomes self-sufficient in gas, you wonder about the billion dollar investments in WA and Central Australia. China is supposed to have the largest reserve of shale gas.

But like the Yanks, modern drilling technology and fraccing technology will have to be employed to extract the gas. The worry always is what the drilling and chemicals will do to the underground aquifers.

If China starts discovering more shale gas, then it is time to think about jettisoning my shale gas stocks. Just Japan and Korea buying our gas is not enough. I think India will have its own, too. After China and US, the third biggest reserve is supposed to be Argentina.... not Australia.

NGE

Plenty of hypes and I have been a sucker for them, even though the share price has been tumbling. But why should it? Nothing has been fantastic yet but it is a matter of time when you consider nearology. In fact, there have been disappointments in the past when it failed to find oil where it most expected.

Strange today that this announcement was not highlighted!

http://www.asx.com.au/asxpdf/20111207/pdf/4233zzjnp78pr6.pdf

So I went in and topped up my holdings. But I was rather slow so I had to buy after a 0.5c jump. At 4.6c, it is still much much lower than what I have paid for in the past. This stock is very high risk so don't touch it if you are a sissy, pensioner or cannot handle the risk... of abject failure.

AVB

http://www.goldoz.com.au/fileadmin/goldoz/Free_Downloads/Special_GoldOz_Education_mini_report_AVB.pdf

Sometimes, I wonder why some people do free research work. I have made money out of AVB.... and I expect to make a lot more! When this stock was highlighted by me a long time, there was not much interest from most. The share price has gone up and come down again but is on the way up again with more recent good drilling results. This stock has the backing of Vale :-)

Just a little reminder to anyone reading this note. When a big company like BHP, Vale, Rio, Shell, Exxon, Apache, Chevron, BP, BG, Tullows, etc, takes an interest in your little stock, it has already analyzed the exploration details and given it a tick. It has done the main homework for you. Nothing is absolute but it is a big confidence boost.

RFE

Sometimes you pick a stock, expecting it to do well from its own predictions. Yet with others, everything is right but the share price continues to drift downwards. Why? Only Allah would know.

And then there are others which suddenly turn around. Why there is a delayed response, only Allah would understand.

Then they are others with high expectations that turn out to be duds and you lose almost everything instantaneously.

Nothing is certain in the short term but it is easy with long term assessment. However, lots of shareholders are only interested in short term results.... not me.

OYM

http://www.asx.com.au/asxpdf/20111206/pdf/4232xvrnydpf1z.pdf

I don't what is going to happen to the share price. But it would be absolute silly if it does nothing. This is one stock where few seem to notice when the announcements are good. But it sure gets hit if the news is bad! Is this another ABU? That is none of my readers are interested, the market is uninterested and then suddenly, someone notices after repeated good drilling results.

But stay away! I want this stock for myself... the less buyers, the better for me.

PXG

Luck or skill?

I bought a second parcel of PXG on 24/11/2011 at 21.5c. Good announcement and the share price fell back. How absurd!

And then another round of good announcement and this time, because the market sentiment is positive, the share price hits 26.5c. Even at this price, the EV/ozAu is still cheap. And it has ore that are being processed into gold. Next year, it has an agreement with KMC to process their ore.

Why are people not buying gold stock cheaply? Even greater wonder is why are investors selling? I am hoping for more idiotic sellers!

ABU

On a day like today, it is nice to see ABU makes a spurt with its share price. So now, it has moved into my top 10 within my super portfolio.

I have never sold a single ABU share and have been accumulating. Each time I topped up, it was after a good announcement... and few people want it.

For those reading my note, this is my next GIR. It is not the same management structure, but there have been so many good announcements that eventually someone with a deep pocket will notice it. Sad, but only one reader has taken my lead to buy ABU.

Many have been burnt by CDU but repeated good announcements have to be credible especially when it has been scrutinized closedly before by the ASX.

IGR

Producer and explorer. And despite good announcements, its share price has been hovering around level which does not reflect the rise in the price of gold nor what it has been uncovering.

What made me put this posting? Well, when IGR poured its first gold (not that long ago), it offered its shareholders the opportunity to buy 1 oz gold nuggets at USD$1450 an oz. I bought 2 and was looking at them. In around 1 year, they have gone up by USD$300 each.

S&P Indices

http://www.proactiveinvestors.com.au/companies/news/22913/integra-mining-silver-lake-resources-alkane-resources-added-in-sp-indices-quarterly-asx-rebalance-22913.html

I have in recent months, topped up on IGR, SLR and ALK. So it is wonderful to be ahead of S&P. Not only that, the article forgot to add PRU and RMS, too. Even better still, those that were demoted by S&P are not in my portfolio.

With thanks to S&P, I even made more than $650 (real profit because I actually bought and sold) from RMS. I didn't intend to sell but I didn't intend to buy at $1.20 either so I had to sell to generate the cash for the share purchase plan. I didn't know when I bought the day before that S&P Indices were going to be announced the next day.

GBE

I have not confirmed it but several postings in Hotcopper said that the market cap is $32 million and there is over $40 million in cash. I have no idea what the debt is.

But all announcements from this stock has been good. And if the debt is negligible, then this is another one of those cheaper than cheap stocks.

CDU

The best time to top-up is when no one wants to top-up... when they should be topping up! The announcements have been rich and thick. But it used to rich and thick in the past, too. When the JORC resource was announced, it was far below expectation. Will history repeat itself?

I bought a small parcel at $3.24 on the 16/11/2011. And also at $3.36 in 25/7/2011. But the share price has not been performing until very recently as more and more good announcements came out. It is hard to imagine that investors (and the ASX) are being deceived again.

As a consequent of the big jump today, CDU is powering into my top 10 within my super fund portfolio. If ABU keeps announcing good drilling results, it too will displace one of my old blue chips out of the top 10. Only one of my readers have bought ABU but several bought CDU only to be disappointed. But I have not sold a single CDU shares except on one day when it was crumbling too quickly when I bought at low and sold when it went up again quickly. I have bought CDU at between $4 to just over $5 in the past but overall, I am positive at 34% gain.

ALK RMS KMC

There is a god for the ASX. Yesterday, I put in a buy for RMS; the price was meant to be lower than the SPP price but instead I set it at $1.20. Today RMS is included in the S&P ASX 200 list, so it went up by 6.5c and I made a tidy profit! I sold it because I need the cash for the SPP at $1.15.

With the cash for LYC, I went on a buying spree and topped up ALK and KMC. I also put in a bid for PXG.

Lazy investors but well-paid...

Just watch the fund managers today. These bastards are paid lots of money to invest for mums and dads. And all they do is to track the S&P indices for the top 50-200 companies. That means, whatever stocks you own that have been deleted or demoted from each list, the share price will fall (i.e. dumped) and any promotion into the indices means the share price will rise. The fund managers have to rejig their portfolio merely to reflect mediocrity. And lots of people pay them for doing this. Thank you dumbos! Someone has to pay for those bastards' upkeep of their lifestyle.

Of the stocks I bought recently, ALK and RMS should improve but it is not necessarily so because market sentiment is the most important in the short term.