# Relative value trading



## nioka (10 June 2015)

Every now and then you can find two stocks that should have consistent relative value yet they do not. In the past I have had success with trading this way and I consistently look for these to appear. There is one at the moment, or rather two, that fit the bill and are worth an investigation. These are EDE and TAS.

TAS is a major shareholder in EDE and at times the value of the EDE shares held by TAS exceeds the market cap of TAS. At times like this it is worth selling EDE and buying TAS. When the ratio changes it is possible to then sell the TAS and buy back into EDE with more EDE shares than originally held.

Remember it is market cap not share price that is the governing factor. It is also necessary to take brokerage and capital gains tax into account. Another factor to watch is the taxation angle where trading this way causes problems in how the tax department views these trades and an individuals income tax position.

Start by comparing the SP graphs. They show an amazing opportunity. Research the companies activities as well.


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## nioka (15 July 2015)

In the past month the trading opportunities between EDE and TAS have been consistent and profitable as I suggested they may be. Anyone following the progress there?


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## VSntchr (16 July 2015)

Not sure if anyone is going to have much luck finding borrow on a penny dreadful resource stock? I assume that's what creating the opportunity - the inability for traders to short. If you held parcels of both it would provide a good indication of when to sell and perhaps buy more of the other..but as for an arb trade, without borrow its pretty inefficient.


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## nioka (16 July 2015)

VSntchr said:


> Not sure if anyone is going to have much luck finding borrow on a penny dreadful resource stock? I assume that's what creating the opportunity - the inability for traders to short. If you held parcels of both it would provide a good indication of when to sell and perhaps buy more of the other..but as for an arb trade, without borrow its pretty inefficient.




Not one to borrow on. One to invest if you have faith in carbon nanotubes. A good way to build from a small investment is to trade between the two as their relative values vary. To show my point I will invest $1000 in one and without any more capital I will see where that will end up. I will post the trades as they occur. They will not be daily, nor will they be spectacular, hopefully they will prove worthwhile. Remember slowly, slowly catchee monkey.


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## sinner (16 July 2015)

nioka said:


> Not one to borrow on. One to invest if you have faith in carbon nanotubes. A good way to build from a small investment is to trade between the two as their relative values vary. To show my point I will invest $1000 in one and without any more capital I will see where that will end up. I will post the trades as they occur. They will not be daily, nor will they be spectacular, hopefully they will prove worthwhile. Remember slowly, slowly catchee monkey.




I think VS is merely pointing out that the reason the opportunity exists is because there is no borrow to short available to traders to arbitrage this opportunity away.

That's no reason for you to not take advantage though! In fact you are theoretically adding economic value in the same way a shorter would. 

I have seen you do this once before with impressive results, so people who want to learn about this should pay attention!


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## ThingyMajiggy (16 July 2015)

Interested, yet have no idea what you're talking about, where can I read up on relative value, or can you explain what you mean and how you go about it? How do you know how much EDE TAS has at any moment? 

Please do show the $1000 investing, keen to learn more about this type of thing!


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## VSntchr (16 July 2015)

nioka said:


> Not one to borrow on. One to invest if you have faith in carbon nanotubes. A good way to build from a small investment is to trade between the two as their relative values vary. To show my point I will invest $1000 in one and without any more capital I will see where that will end up. I will post the trades as they occur. They will not be daily, nor will they be spectacular, hopefully they will prove worthwhile. Remember slowly, slowly catchee monkey.



Yep. I was semi-with you on that one. I was just coming from a more market-neutral arb point of view. If you have a reason to be in the stock(s), then this idea appeals to me also.
I'll be watching


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## nioka (16 July 2015)

ThingyMajiggy said:


> Interested, yet have no idea what you're talking about, where can I read up on relative value, or can you explain what you mean and how you go about it? How do you know how much EDE TAS has at any moment?
> 
> Please do show the $1000 investing, keen to learn more about this type of thing!




Start by comparing the two on a graph. You will see that their value changes from time to time but not in unison. Examine the fundamentals of each and decide a comparative value for each. Buy one, any one and sell it when it is way ahead and the other behind. then invest in the other one. Take brokerage into account. Each time you return to the original share you should have increased the number. Remember profits are taxable. Get to know the fundamentals of the stocks first. Good luck  actually luck shouldn't be in the equation.


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## ThingyMajiggy (16 July 2015)

nioka said:


> Examine the fundamentals of each and decide a comparative value for each. Buy one, any one and sell it when it is way ahead and the other behind. then invest in the other one. Take brokerage into account. Each time you return to the original share you should have increased the number. Remember profits are taxable. Get to know the fundamentals of the stocks first.




I know nothing about fundamentals so I'm way out of my depth here, so unsure about deciding on a comparative value for each, but keen to learn, been meaning to learn more about fundamentals etc. 

Maybe I'll just shut up and watch/read how you go with the $1000, might make more sense to me then


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## nioka (16 July 2015)

ThingyMajiggy said:


> I know nothing about fundamentals so I'm way out of my depth here, so unsure about deciding on a comparative value for each, but keen to learn, been meaning to learn more about fundamentals etc.
> 
> Maybe I'll just shut up and watch/read how you go with the $1000, might make more sense to me then




Leave out the word "fundamentals" substitute "companies". Get to know the companies, the inter-relationships, the financials, previous and present activities and examine how the directors relate to shareholders interests.


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## skc (16 July 2015)

There's a classic example in the market at the moment. CSE and SYR.

CSE holds ~11m shares in SYR. SYR shares are worth around $4, so CSE's holding is worth some $44m.

But CSE's market cap is only ~$25m. An opportunity perhaps?

Upon further research, however, you will find that CSE paid $300k for its SYR holding. So if the value inside CSE is ever "released", a CGT event is realised and the after tax value of the holding becomes more like $33m (plus any franking).

Also, CSE's balance sheet contains some $10m in provisions under non-current liabilities. Without knowing details about what this entails, the current market cap appears justified.


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## nioka (17 July 2015)

skc said:


> There's a classic example in the market at the moment. CSE and SYR.
> 
> CSE holds ~11m shares in SYR. SYR shares are worth around $4, so CSE's holding is worth some $44m.
> 
> ...




At first glance there seems to be an imbalance there. As a trading proposition they do not look to be a good one because a comparison of the SP graphs show that one follows the other on a regular basis so the relative value is consistent. 

There may be a good reason holders of SYR to change to CSE on a value basis but when the shares have consistent relative value there may be some factor that makes that a risk. I'll keep looking for this.


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## nioka (21 July 2015)

My attempts to get started with a buy of 50,000 TAS at 2.4c was only partly filled with11,772. I have then changed to purchasing 15,000 EDE  @ 43c to invest the balance. Total cost $1013. At this time I am up $85. I will watch to sell the EDE and buy TAS if the differential allows benefit.


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## nioka (23 July 2015)

Todays position:

Sell order in for 15,000 EDE @ 5.5c
  "      "     "   "  11,772 TAS @ 4.0c
Buy order still there for the balance TAS order 38,228 @ 2.4c

Holding 15,000 EDE + 11.772 TAS  value $1140 Net profit $127


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## nioka (24 July 2015)

Todays action.

Sold 11,772 TAS @ 40c
 Bought 11,000 EDE @ 49c

Position. Holding 26,000 EDE current value $1326.

Sell order in for 26,000 EDE at 5.5c.

Buy order still there for TAS as before. 38228 at 24c. Will probably not get filled at this price.


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## nioka (24 July 2015)

TAS has raced ahead of EDE today. According to my ratios it is a good time to switch from TAS to EDE.


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## nioka (27 July 2015)

Both EDE and TAS have had a rocket behind them today. In trying to trade EDE for TAS I have sold the EDE, at a substantial profit, but could not buy back in with EDE or TAS and retain all the profit. I have buys in for both and will watch what happens in the next day or two. I will buy back and may loose some ground in doing so. On todays pricing it is still a proposition, in my eyes, to sell TAS and buy EDE.

Anyone holding either has done very well over the last week.


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## nioka (10 August 2015)

There has been little opportunity to trade between the two because of the increasing price of both making it risky to sell one and not get value with the other when buying back in. However because the prices have increased for both then either one has been worth holding. 

However I did sell the EDE today (but missed out on a buy of TAS) and have a cash balance on this arrangement of $2294. This amount will be reinvested in either TAS or EDE in coming days depending on the SP of either. Current profit is 100% on the original investment in 25 days.


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## nioka (12 August 2015)

Bought today: TAS.33,250. This uses all the cash balance from previous sale.


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## nioka (24 August 2015)

The market volatility over the past week and particularly today when at one stage EDE was down 10% and TAS was down 20% has enabled trading between the two to the extent that the holding of TAS is now 48,200. Not much change in value but holding more shares.

Some risk as todays falls may not just be the jittery market but could reflect some bad news regarding the concrete trials in the USA. News is due and if the news is good then the SP should get a real boost in a day or two regardless of the general market direction.


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## nioka (26 August 2015)

Another chance to trade TAS for EDE today with TAS up 22% and EDE only up 7%


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## nioka (26 August 2015)

Sold TAS at 5.8c, bought EDE at 7.4c. Now hold 37,250 EDE.

Due to the market and the falling price there has been only a holding position as regards overall value during this latest trading but there has been a fair increase in the number of shares held.

Anyone following????


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## ThingyMajiggy (26 August 2015)

nioka said:


> Sold TAS at 5.8c, bought EDE at 7.4c. Now hold 37,250 EDE.
> 
> Due to the market and the falling price there has been only a holding position as regards overall value during this latest trading but there has been a fair increase in the number of shares held.
> 
> Anyone following????




How's the return going on the original $1k starting amount?


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## nioka (26 August 2015)

ThingyMajiggy said:


> How's the return going on the original $1k starting amount?




37250 X 7.4c = $2756   Slightly better than the general market


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## sinner (26 August 2015)

nioka said:


> Anyone following????




Quietly.


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## ThingyMajiggy (26 August 2015)

nioka said:


> 37250 X 7.4c = $2756   Slightly better than the general market




Nicely done


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## nioka (26 August 2015)

I should have added; It is not just today's value. What is important is the increase in the number of the shares held. This increases the potential gain if the company eventually succeeds and gets to profitable production. Remember in this case we have EDE with immediate hot prospects and EDE is close to half owned by TAS while, in theory at least, the value of the EDE shares that TAS owns exceeds the Market cap of TAS.


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## skc (26 August 2015)

nioka said:


> 37250 X 7.4c = $2756   Slightly better than the general market




You shouldn't compare to the general market... a better comparison is to just holding either one of these shares.



nioka said:


> My attempts to get started with a buy of 50,000 TAS at 2.4c was only partly filled with11,772. I have then changed to purchasing 15,000 EDE  @ 43c to invest the balance. Total cost $1013. At this time I am up $85. I will watch to sell the EDE and buy TAS if the differential allows benefit.




When you started you could have bought $1000 worth of EDE @ 4.3c or TAS @ 2.4c.

With EDE your stake would now be worth 7.9/4.3 x $1k = $1,837. Profit = $837.

With TAS your stake would now be worth 5.5/2.4 x $1k = $2,292. Profit = $1,292.

So your switching (profit $1,756) has outperformed holding either one on its own... by a lot. Good stuff.


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## nioka (26 August 2015)

SKC,

The aim is to increase the holding. As the market fluctuates there are times when the value of the holding can fall, often does. In the past my best results have been when the market was at the bottom, at the peak of the last big financial crisis. Both shares are off their recent peak and the holding two weeks ago was worth more than the new holding today. At this stage I just aim at increasing the number of shares held and disregard the actual overall value. If the SP falls, halves, but I can double the number of shares then I do not lose. On the other hand if the SP doubles and I have double the number of shares then I'm smiling.


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## nioka (26 August 2015)

I should add that logic also has to be ignored at times. With the MC of EDE at around $70m and TAS at only just over $15m it is not logical to trade TAS for EDE. My next trade naturally will be to do just that but the gap will have to be reduced a little.


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## nioka (31 October 2015)

I haven't reported for awhile. The position this week is that the holding now is 85,000 EDE valued today at $5865. There have been some great opportunities to trade between the two as there have been wide fluctuations in the relative values. With TAS narrowing the gap this week it may be some time before an opportunity to switch back to TAS from the EDE holding.


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## nioka (2 April 2016)

I haven't reported on this subject for some time. Here is an update. 

Because of the success with EDE and edencrete there has been plenty of opportunity to trade between EDE, EDEO and TAS. In short the shares held now are 299372 TAS valued on Friday at $22153. Not a bad return on $1000.  

Anyone sharing the joy?


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## nioka (4 April 2016)

nioka said:


> I haven't reported on this subject for some time. Here is an update.
> 
> Because of the success with EDE and edencrete there has been plenty of opportunity to trade between EDE, EDEO and TAS. In short the shares held now are 299372 TAS valued on Friday at $22153. Not a bad return on $1000.
> 
> Anyone sharing the joy?




More joy today with TAS up another 12%


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## skc (4 April 2016)

nioka said:


> My attempts to get started with a buy of 50,000 TAS at 2.4c was only partly filled with11,772. I have then changed to purchasing 15,000 EDE  @ 43c to invest the balance. Total cost $1013. At this time I am up $85. I will watch to sell the EDE and buy TAS if the differential allows benefit.






nioka said:


> I haven't reported on this subject for some time. Here is an update.
> 
> Because of the success with EDE and edencrete there has been plenty of opportunity to trade between EDE, EDEO and TAS. In short the shares held now are 299372 TAS valued on Friday at $22153. Not a bad return on $1000.
> 
> Anyone sharing the joy?




So you started with 11772 TAS and 15000 EDE which at today's prices are worth $977 and $1800, or ~$2,800 in total. Or about 33750 TAS shares @ 8.3c if they are simply all TAS.

But with switching you managed to grow your number of shares in TAS to ~300k.

That's pretty amazing. I guess the 6 months downtrend to Jan would have tested holders faith in the stock and offered plenty of switching opportunities. 

Are you able to offer a table showing the historical switching?


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## Sdajii (4 April 2016)

Very impressive, nioka. I remember a few years ago when you had similar success doing the same thing with AUT and EKA. My own strategy back then at least for the most part was simply to buy the undervalued stock and sit on it. I did well buy you did better. 

Thank you very much for posting your actions and sharing the story, and congratulations!


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## nioka (4 April 2016)

nioka said:


> More joy today with TAS up another 12%




And Again. TAS up another 20% today.


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## nioka (4 April 2016)

skc said:


> So you started with 11772 TAS and 15000 EDE which at today's prices are worth $977 and $1800, or ~$2,800 in total. Or about 33750 TAS shares @ 8.3c if they are simply all TAS.
> 
> But with switching you managed to grow your number of shares in TAS to ~300k.
> 
> ...




The down trend earlier in the year offered many more trading opportunities as the recent uptrend. It is the uptrend that has put the value in the shares. It is, as the title suggests, trading relative values and ignoring the SP. I have used the formula where 1 EDE is worth 1.4 TAS and value EDEO at 1 EDE - 3c (conversion price) + 10% (value of leverage, based on the fact that you get more skin in the game for the same outlay). I will make trades if, after brokerage, I end up with more shares than I had before the trades. It works about 80% of the time.

There have been hundreds of trades, sometimes 4 or 5 daily. I don't have the time to go back and catalogue them. The more volatility the more opportunity. EDE is always the first to react and the other two usually follow. If EDE goes up I can often sell EDE and buy one of the other before they react and later sell them, buy back the EDE and end up with more. As the numbers have increased I have been able to trade larger numbers but I try and trade between 30,000 and 50,000 at a time. More than that can affect the price as there is not great volume available as a general rule.

Years ago I posted similar trading with three oil explorers that had different percentage holdings in the same oil prospecting lease in the USA. I traded to a point where I was in the top 20 shareholder list. I was doubted by some on ASF who couldn't believe the result. I ended up posting the holding records. I wont go through that again. 

Today I bought 50,000 TAS at open for 7.8c, they closed at 9.0c. I decided to hold. I bought 50,000 EDEO at open for 8c, they closed at 9.4c. I decided to hold these also. With trading moving settlement from t+3 to t+2. There is not as much time to settle so I may just hold these without making a trade in this instance.

I'm busy looking for another group of penny stocks with similar characteristics to start again with another $1000 kitty. Any suggestions?:1zhelp:

Note that I do post on another forum with a different monicker.


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## nioka (8 April 2016)

nioka said:


> The down trend earlier in the year offered many more trading opportunities as the recent uptrend. It is the uptrend that has put the value in the shares. It is, as the title suggests, trading relative values and ignoring the SP. I have used the formula where 1 EDE is worth 1.4 TAS and value EDEO at 1 EDE - 3c (conversion price) + 10% (value of leverage, based on the fact that you get more skin in the game for the same outlay). I will make trades if, after brokerage, I end up with more shares than I had before the trades. It works about 80% of the time.
> 
> There have been hundreds of trades, sometimes 4 or 5 daily. I don't have the time to go back and catalogue them. The more volatility the more opportunity. EDE is always the first to react and the other two usually follow. If EDE goes up I can often sell EDE and buy one of the other before they react and later sell them, buy back the EDE and end up with more. As the numbers have increased I have been able to trade larger numbers but I try and trade between 30,000 and 50,000 at a time. More than that can affect the price as there is not great volume available as a general rule.
> 
> ...



Those shares today are worth $35,924.64. And room to improve in the very short term.


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## nioka (14 April 2016)

nioka said:


> Those shares today are worth $35,924.64. And room to improve in the very short term.




Good news for EDE and TAS today. Those shares today are worth $47,899.52


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## nioka (15 April 2016)

A calculation done today shows that had I held the original purchase the shares would be worth $5643. Still a good return but through trading one against the other they are today worth $53,886. Trading allows this snowball effect.

All aided by splendid results by EDE with edencrete.as discussed on the EDE thread.

Opportunities like this are few and far between. Over the years I have only found three. All discussed on this forum. The first was EKA. AUT and VPE. The three of them had varying percentages in the same oil prospect. I traded them to a point where I was a top 20 shareholder. Then there was CER and CNP where one was the trading company and the other owned the bricks and mortar. Now there is the EDE and TAS combo and here the fat lady is yet to sing.


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## skc (15 April 2016)

nioka said:


> A calculation done today shows that had I held the original purchase the shares would be worth $5643. Still a good return but through trading one against the other they are today worth $53,886. Trading allows this snowball effect.
> 
> All aided by splendid results by EDE with edencrete.as discussed on the EDE thread.
> 
> Opportunities like this are few and far between. Over the years I have only found three. All discussed on this forum. The first was EKA. AUT and VPE. The three of them had varying percentages in the same oil prospect. I traded them to a point where I was a top 20 shareholder. Then there was CER and CNP where one was the trading company and the other owned the bricks and mortar. Now there is the EDE and TAS combo and here the fat lady is yet to sing.




Hats off to you.  :bowdown:

When I read your initial few posts I didn't doubt there will be opportunities to trade between the two. I just didn't think that 1/ you would be so prolific to increase holding by 10x and 2/ the shares would actually go up 5x.

P.S. GMM and GXY is a pair potentially for your next project.


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## nioka (16 April 2016)

skc said:


> Hats off to you.  :bowdown:
> 
> When I read your initial few posts I didn't doubt there will be opportunities to trade between the two. I just didn't think that 1/ you would be so prolific to increase holding by 10x and 2/ the shares would actually go up 5x.
> 
> P.S. GMM and GXY is a pair potentially for your next project.




Thanks for those two. However Thanks but no thanks. While they have similar interests those interests are not tied together. I realise that when one goes up or down the other may go with a delay or go in different directions.

What I look for is where the interests are tied together with fixed proportions, preferably with the same board and management. I like to see a good chance of success with their endeavours too.


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## ThingyMajiggy (16 April 2016)

nioka said:


> A calculation done today shows that had I held the original purchase the shares would be worth $5643. Still a good return but through trading one against the other they are today worth $53,886. Trading allows this snowball effect.
> 
> All aided by splendid results by EDE with edencrete.as discussed on the EDE thread.
> 
> Opportunities like this are few and far between. Over the years I have only found three. All discussed on this forum. The first was EKA. AUT and VPE. The three of them had varying percentages in the same oil prospect. I traded them to a point where I was a top 20 shareholder. Then there was CER and CNP where one was the trading company and the other owned the bricks and mortar. Now there is the EDE and TAS combo and here the fat lady is yet to sing.




Wow, teach meeee!  

That is incredible nioka. Very well done. I must admit I still don't fully understand what it is you were/are doing, as far as I understand in this case EDE would react first, so you would buy TAS(already have a position in EDE) which would then react/follow EDE, you then sell TAS and buy more EDE with those profits from TAS? 

But seriously impressive, would love to learn more from you about this, been interested since you started this thread and have always been interested in relative value trading, how you guys do it, find the opportunities etc. Would love to have a go with 1k myself, but haven't got the slightest idea where to start, having traded futures mostly all my trading life. 

What do you use for executing trades and doing research etc? 

Amazing job nioka


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## nioka (16 April 2016)

ThingyMajiggy said:


> Wow, teach meeee!
> 
> That is incredible nioka. Very well done. I must admit I still don't fully understand what it is you were/are doing, as far as I understand in this case EDE would react first, so you would buy TAS(already have a position in EDE) which would then react/follow EDE, you then sell TAS and buy more EDE with those profits from TAS?
> 
> ...




Its easy to operate. All you need to do is establish a relative value and swap one for the other when the values are out of whack. The hard part is finding two or three stocks that qualify. Over the years I have only found three. All these I have shown and discussed on stock forums. I cant find another just now but it still applies to EDE and TAS with TASO and EDEO thrown in for good measure.

I work on a ratio of 1.4 TAS = 1 EDE and buy the best according to that formula. when quotes a favourable I sell that one and buy the other. Take brokerage into account and each trade should leave you with more shares. It doesn't matter if the market is up or down. All you need to work out is "will I end up with more shares" but keeping in mind that for each EDE held you would need to 1.4 times as many TAS.


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## Sdajii (16 April 2016)

Congratulations again on your amazing results.

Do you actively search for these sister companies or have you just found the three opportunities serendipitously? You have been very public about what you have done, so I take it you are not concerned about other people copying you? Do you think if someone else was to try to do what you're doing with the same pair of companies it would make the opportunities to exchange less frequent or smaller? I would have thought you would want to keep it under your hat.

I love the idea and wish I had done the same with EKA/AUT. I was trading both at the time and did pretty well, but for the most part I was buying and holding more and more EKA because it was always so undervalued relative to AUT. What I should have done is to just accept the irrationality of the market and run with their valuation. Using my own valuation meant I would never swap EKA for AUT because the market always put EKA as being cheaper.


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## ThingyMajiggy (17 April 2016)

nioka said:


> Its easy to operate. All you need to do is establish a relative value and swap one for the other when the values are out of whack. The hard part is finding two or three stocks that qualify. Over the years I have only found three. All these I have shown and discussed on stock forums. I cant find another just now but it still applies to EDE and TAS with TASO and EDEO thrown in for good measure.
> 
> I work on a ratio of 1.4 TAS = 1 EDE and buy the best according to that formula. when quotes a favourable I sell that one and buy the other. Take brokerage into account and each trade should leave you with more shares. It doesn't matter if the market is up or down. All you need to work out is "will I end up with more shares" but keeping in mind that for each EDE held you would need to 1.4 times as many TAS.




Just find the relative value and swap one for another, just find a couple companies that are that closely related and then just simply figure out a ratio that works and just think will I end up with more shares.........yeah nah I'm too stupid for all that, you make it sound so easy/simple  I wouldn't have the faintest where to start, especially with which companies then all the ratio stuff.   

What else do you do then if you've only found a couple of these gem setups in recent years, what/how do you trade in the meantime? Or has this itself brought you enough success etc. that you haven't bothered doing much else?


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## nioka (17 April 2016)

ThingyMajiggy said:


> Just find the relative value and swap one for another, just find a couple companies that are that closely related and then just simply figure out a ratio that works and just think will I end up with more shares.........yeah nah I'm too stupid for all that, you make it sound so easy/simple  I wouldn't have the faintest where to start, especially with which companies then all the ratio stuff.
> 
> What else do you do then if you've only found a couple of these gem setups in recent years, what/how do you trade in the meantime? Or has this itself brought you enough success etc. that you haven't bothered doing much else?




I do have other investments but these are the jewels. They are also a challenge. Normally I am not a trader. I am not a fan of the ASX in general where the odds are stacked against the small investor and there is so much blatant manipulation of share prices. I prefer to invest in unlisted companies, small ones where I can make an investment and have some say in how the business operates. On the ASX I tend to invest in spec stocks.

On listed companies I try and find companies that do something different, something new and innovative. Eden Energy fitted that bill and I bought Eden shares as a spec investment. There I found the relationship with TAS and worked out how to trade them. I am still trading them back and forth. 

With EDE and TAS I have noticed that EDE is the first mover either up or down and TAS follows, sometimes a day or two later. Last week was a good example. I check in a few times a day with quotes and my orders. I'll have buy orders in below the rate of one and sell orders in higher than the quoted rate on the other. I use the relative value of 1.4 TAS =1 EDE. That doesn't go down well with the TAS diehards that suggest it is the wrong way around and in theory they are right. History shows that for months now they trade on my ratios. If the ratios change I'll adapt and still trade because there probably will be a lag in the adjustment of TAS to action by EDE. The beauty is that regardless of which one you hold you are still invested in the same product and enterprise.

Check them out. Work out how many TAS are worth the same as 10000 EDE day by day or better still hour by hour. Right now 10,000 EDE would cost $2,500 for that you could buy 13,888 TAS. So close to my 1.4 to one ratio that they are roughly equal value. Watch how that changes. Check out the quotes when they are trading and watch for changes.

It really is easy. This has been going on for months and probably will continue on for some time. A bonus comes if EDE has hit a jackpot with edencrete. Both TAS and EDE will benefit.


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## nioka (17 April 2016)

Sdajii said:


> Congratulations again on your amazing results.
> 
> Do you actively search for these sister companies or have you just found the three opportunities serendipitously? You have been very public about what you have done, so I take it you are not concerned about other people copying you? Do you think if someone else was to try to do what you're doing with the same pair of companies it would make the opportunities to exchange less frequent or smaller? I would have thought you would want to keep it under your hat.
> 
> I love the idea and wish I had done the same with EKA/AUT. I was trading both at the time and did pretty well, but for the most part I was buying and holding more and more EKA because it was always so undervalued relative to AUT. What I should have done is to just accept the irrationality of the market and run with their valuation. Using my own valuation meant I would never swap EKA for AUT because the market always put EKA as being cheaper.




When you talk about EKA being undervalued at that time it reminds me of the same factor as there is now with TAS and EDE. TAS holders are so sure that TAS is worth more than EDE that they hold on to TAS for fear that it will catch up and they will be in EDE at that time and miss out. EKA holders were that way inclined. I just traded as values changed. We were also lucky that a certain ASF poster regularly gave this forum news from America ahead of the company announcements. At the time AUT did have additional other interests that added to its value and I gave it a premium when I calculated relative value. The reverse applies to TAS where I believe its other interests are more a liability than an asset.

I do talk openly about what I am doing both on this forum and others. I am not greedy or want it all to myself. I am 83 with one foot in the grave and the other on a banana skin and happy to share. All I give is information. What anyone does with it is their worry. I don't think my forum posts have much effect on the stock market.


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## skc (17 April 2016)

nioka said:


> I do talk openly about what I am doing both on this forum and others. I am not greedy or want it all to myself. *I am 83 *with one foot in the grave and the other on a banana skin and happy to share. All I give is information. What anyone does with it is their worry. I don't think my forum posts have much effect on the stock market.




Never thought that. I hope you keep both feet on the ground for quite a few more years yet.

P.S.  I'd like to stress to the casual reader that, swapping is the "relatively" easy part. The hard part is finding a stock that will go up. There are 4 companies (BPH, MMR, GBA and BUY) that hold various direct/indirect shares in a license to to drill the Sydney Basis for oil and gas. So their movements were mostly in sync and you could have swapped them around all year in 2009/2010. But then they hit a duster (look at their share price around Jan 2011) and shares fell 50//60% upon re-open. They have never really recovered. So whilst holding 10x more number of shares via swapping is advantageous to holding just your original holding, 10x more shares @ 5% of the original price is not going to make anyone a fortune. There seems to be some activities brewing amongst them again so may be there's a chance to use nioka's methodology at least for the short term.


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## nioka (2 May 2016)

For the doubters that the results from the stocks traded in this demonstration were real there is more detail in the April stock picking comp results where both the top 2 stocks more than doubled their value during the month and during that time there were still opportunities to trade between the two to increase the overall holding.

The opportunity to continue is still there. I will continue to trade them on behalf of a family member. She starts today with $2000 in the kitty.


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## nioka (2 May 2016)

skc said:


> Never thought that. I hope you keep both feet on the ground for quite a few more years yet.
> 
> P.S.  I'd like to stress to the casual reader that, swapping is the "relatively" easy part. The hard part is finding a stock that will go up. There are 4 companies (BPH, MMR, GBA and BUY) that hold various direct/indirect shares in a license to to drill the Sydney Basis for oil and gas. So their movements were mostly in sync and you could have swapped them around all year in 2009/2010. But then they hit a duster (look at their share price around Jan 2011) and shares fell 50//60% upon re-open. They have never really recovered. So whilst holding 10x more number of shares via swapping is advantageous to holding just your original holding, 10x more shares @ 5% of the original price is not going to make anyone a fortune. There seems to be some activities brewing amongst them again so may be there's a chance to use nioka's methodology at least for the short term.




That is where choosing the stocks to trade is important. With oil drilling you can wait until the oil is found otherwise all you are doing is expanding a risk. Never the less it does give you a greater exposure in the event of a strike if you are taking a gamble on oil search. It does also give you the opportunity to trade for freebies, cream off some profit to recoup the original outlay and then you have nothing to lose. Never be too greedy. Greed often leads to disaster.


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## nioka (7 July 2016)

There is some volatility in the SP of both TAS and EDE which continue to provide good trading opportunities in and between the two. "Swap trading" between these two for freebies is possible even on a falling market. EDE is usually a leader in a change of SP and TAS usually follows. 

Adding to the equation is the exciting prospects that the development of Edencrete appears on track to be a winner for the stocks.


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## peter2 (20 October 2016)

Have you continued this project Nioka?  
I'm interested to learn if there has been any further progress as the prices of TAS/EDE have gone sideways.


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## nioka (20 October 2016)

peter2 said:


> Have you continued this project Nioka?
> I'm interested to learn if there has been any further progress as the prices of TAS/EDE have gone sideways.




Yes. I am still trading and have made a couple of trades this week. During the day today there was volatility and volume that allowed a couple of interesting and profitable swap trades. Not as easy as it was when I first set this up as an example of what could be done while at the same time being a holder in the Technology.


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