Birds of a feather, let us flock together, share your portfolio ideas

[danbradster]

Bought CUP: only 33% dividend payout ratio, but still a solid 6% fully franked dividend yield. Most businesses in their portfolio are >10 years old and in the safe (I guess) financial sevices industry.

RFG: Had good news since buying it and the SP is still low. They are buying out one of their NZ coffee suppliers for $3.2m, which will be earnings accretive. 50% dividend payout ratio and 6.5% fully franked dividend yield.

PLA: Had bad news, then the news was fixed within 2 days. SP is 20% lower because of it. Can't say the company feels like one of my safer ones though... Still, this could be good value.

LYC: Seems to be progressing well.

AOH: Had a nice resource upgrade, time is running out on Xstrata's option over their roseby resource. Comes due in 10-11 months, I think.

III: Did their capital raising, they are very quickly working to get the tungsten plant online.

MRE: Looking damn cheap and ripe for a Glencore takeover. Glencore is buying on market..... If I can come up with some money, I might but more of this. Now my money is going into advertising rather than shares though.

 

[suhm]

Absolutely smashed in the open this morning down 7%, a bit sickening to be honest, should have packed up my bags and sat out this market, hindsight is always 20/20.

Low volumes though for the large downard movement, no one wants to buy and I don't blame them, who knows where this is ending up. Indicator of the low volume, a $6k sell order dropped the sp of one of my stocks by 15% and market cap by 17mil.

I think I will wait for a bit more stability in the market before topping up, some of the large caps are starting to look interesting, but the US probably needs to drop a bit more before there is an upswing.

 

[danbradster]

8.4% for me. I only wish I had more cash available for buying. The volume thing is definitely true.

One of my safe ones is down 12% on $30k volume. They're in the personal accounting industry...which should be resilient in a GFC. I am attempting to buy more of this, but there's low volume.

 

[suhm]

I've been looking at shorting the index as there are less problems with gap ups which can be problematic when shorting individual shares to net off the beta for my long positions when i'm market neutral or negative but sadly hadn't really gotten comfortable with the process as yet or how the products work and the variables involved.

It didn't really feel like capitulation selling today more like ppl offloading to trim holdings after seeing the carnage overnight, there should be some margin calls come monday with many 10-25% downard moves today in individual stocks and also given the downtrend the past coulpe of weeks.

It pretty much has gone through the previous support levels so wouldn't be surprised if we saw another -20-25% back to GFC levels at that sort of stage the banks would be at P/B ratio of 0.5-0.6 so I would probably be tempted to buy some.

I seem to have timing somewhat right in that I reduce my net position as the index has been moving down the channel and increase it when it is going up but I prefer to hedge my bets a bit.

 

[suhm]

Sold out of sts at the open at 0.675 in at 0.745, willing to take the loss as catalyst is not for 6-12 months and these small stocks can just implode without respect to value, I think FGE went down to a forward PE of 1, was interested in getting some extra IDM as it had gone down to 0.155 from 0.19 but only volume was at 0.17 and thought the index has more to go down.

I've also been trying to exit DRXO, Baoti doesn't seem to be coming to the ball but there isn't enough volume without me dragging the issue down and with the heads tanking the options are looking expensive.

A bit shocked coming back to work to see the red erased, don't think I've seen this amount of volatility before, even in the last downturn. IDM for example was -18% down and then ended up 16%. I've seen a 34% range before but from down to up in the same day, I mean . I'm not really able to trade that and you don't really see that in a secular bull market.

I have a feeling this up move was short covering after sales to hit margin calls, but does also feel closer to capitulation selling than the other days, I see this grinding down further at a slower pace baring something else out of left field.

 

[drworm]

Very interesting thread suhm, thanks for sharing.

Quite a few of the stocks mentioned (FGE, CCV, MMS) I have also owned in the past, and being quite a concentrated investor this comes as somewhat of a surprise. I guess our thinking might be alike in some respects.

I'm still holding STS and have been for nearly a year now, confident a catalyst is only 6 month away.

A couple of ideas that might be worth your time:

CCP - Debt collections. Ran into trouble overextending itself a few years ago, but rebounding hard. Once highly leveraged, now probably only a year away from being debt-free with no cap raising in that period. P/E a bit over 8 for FY11, decent ROE, conservative depreciation policy, decent divi, predictable and has a habit of exceeding their own guidances.

MCE - Manufactures floaties for offshore oil and gas. Growing, fantastic ROE, P/E around 10 for FY11.

 

[suhm]

Cheers, I have looked at those but were on the expensive side at the time, they would be core type holdings I have when markets are going up, the other plays are more news event based holdings. IT seems like its geting to the point where I will buy those back again.

 

[suhm]

Update on holdings

BTA- Share price creeping up again, bird flu is in the news again. It's a bit silly, it goes up on hysteria but down on the BARDA grant.

DRA- AUSD POG going through the roof, but they will struggle to make much money this year whilst they dig the decline in svartiladen and are exploring like crazy at kusamo, 32m at 45g/t is not to shabby. They will need to build a mill there so that will use up their free cashflow and cash reserves. THey also entered into a silly hedging program which is now out of the money

DRX/DRXO- Should have sold out of the options when they were getting expensive and bought DRX. Still waiting for Baoti to come to the party.

EXS- This thing doesn't seem like it will move until they pay out its cash. At the moment probably has -ve EV for its White dam gold mine but has poor reserves there and large exploration ground.

HOG- Sorichyka choke was increased because flow rates are declining due to decreased pressure. Hopefully not an ominous sign for the future. Waiting for the chets well to hit terminal depth.

IDM- Starting production of chromite, zircon and other heavy minerals. Zircon prices looking at illuka are going up but not sure of the pricing for its spherichrome.

ROS- This trading halt has been going on forever. Not sure what is going here. Hyperactive since it was listed but haven't heard a peep out of them for awhile. Picked up a silver project with massive grades and an option on a copper project.

TAP - 2 for 2 this year at zola and ficune 1 finding gas and oil respectively which should come online in the next few years. Low reserves otherwise but will be booking manora reserves soon. Not much production until 2 yrs time with nearside upside from WA-351P drilling and resolution of its lawsuit because of the gas explosion operated by APACHE. They actually found some hydrocarbons for once and the SP has gone down. Not sure what will cause this to go up.

UOS- Share price about 1/2 of NTA and 1/3 of NTA is cash. The rest is property held for sale and rental properties but the REIT that makes up a large proportion of its NTA sp has gone down.

 

[suhm]

New position BSA at 0.20. Does maintenance contracting work, large amount of revenue for its market cap about 9x. PE of about 5, was net cash but currently no net debt as it bought a new company and price to cashflow of <2. Growth prospects uncertain though and its an uncertain market.

 

[robusta]

New position BSA at 0.20. Does maintenance contracting work, large amount of revenue for its market cap about 9x. PE of about 5, was net cash but currently no net debt as it bought a new company and price to cashflow of <2. Growth prospects uncertain though and its an uncertain market.

Good looking company suhm, I will definately put it on my watch list. I like the fact you can buy well below book value, is there much goodwill on the books?

 

[suhm]

There is a fair bit of goodwill, actually more than its current mc of it on the balance sheet. Franking credits are another kicker though, it has 1/3 of its market cap worth of it in the kitty and seems to be willing to use spare cash generated to pay out dividends now that it has paid off its debt.

I still see the market going down maybe another 20% and I'm already in the red with BSA and probably expect it to continue doing so because 2 big holders are selling out, the current price range seemed like a temporary plateau though and was one of the better priced oppurtunities i have found.

 

[suhm]

Update on positions

BSA- Not much action here just trending sideways.

BTA- Still believe in its products for the long term and any flu outbreak would see this soar. A bit disappointing to see that there was no sales of Inavir in the last quarter which doesn't exactly bode well and is well below what DS is budgeting for Inavir sales forecasts.

DRA- Decent exploration results but unsure of the environmental impact of their expansion project as there appears to be cobalt, uranium and rare earths in the area which could complicate processing

DRX/DRXO an entry at this sort of level would have made a decent punt on increasing viability of the project with increasing zircon prices and increase in the NPV but Baoti still not coming to the party.

EXS- Soul Patt has taken up the overhang from overseas investors and now trending up cum dividend sp 70c and 28c franked div and 10c cap return should see some dividend strippers come in. Will sell half in my higher taxed holding environement depending on sp at the time and hold the other half ex div.

HOG- Seriously must win the award for slowest drillers on the ASX. TD will probably be reached in Decemeber now and the cost of their gas plant is now 7m instead of 2m. Gotta be disappointed with management for getting their budget off by that much when even I thought the initial estimate was to low and my knowledge of how to build gas plants is 0.

IDM- Seems they are having problems with the start up of their processing plant as the grades of heavy minerals are much higher than expected. Its a good problem to have in the future if they can overcome these problems but it is delaying cashflow at present, will probably look to buy more when i get the proceeds from EXS and when the commissioning looks like it has resolved the production problems.

ROS- Blue sky stories always seem to tempt me and I seem to get burnt every time, exception would be PBT but if I held that one I would have been at square one anyway. Small position but still hurts. Only has enough cash left for 1 quarter after raising 5 mil in a cap raise this year, blown it all by overreaching.

TAP - Exploration success doesnt seem to have been the catalyst for a price rise i guess legal uncertainty is still weighing on it. That will continue for years so hopefully they are able to flog off their Zola discovery which is what the press seems to be reporting and then I can exit on the upswing.

UOS- Not much action here either still decent value but catalyst for an upswing are unknown, doing a capital return and with the DRP and share bubyback the majority holders the family that runs it is slowly creeping into the position to compulsorily acquire the rest of the shares.

 

[suhm]

Extra IDM bought today at 0.15, not much stock available. Rationale is the large price increase for high iron annouced by Illuka >$1000 USD a tonne. Operating costs are basically covered by the zircon output leaving other minerals as gross margin.
A lot of the initial production of spherichrome is contracted at $500USD a tonne so profit won't be great initially but that pricing was when zircon was $700USD and it is billed as a zircon replacement in foundry applications and you are now looking at prices >$2000USD.
The high iron output is more for foundry rather than pigment as the presentation says but price increases of 80-90% bode well for pricing for IDM.
Still looking at recycling my EXS payments into this or HOG if the find oil in chets but market outlook in general still uncertain so portfolio is still pretty much risk off to watch and wait.

 

[skc]

Extra IDM bought today at 0.15, not much stock available. Rationale is the large price increase for high iron annouced by Illuka >$1000 USD a tonne. Operating costs are basically covered by the zircon output leaving other minerals as gross margin.
A lot of the initial production of spherichrome is contracted at $500USD a tonne so profit won't be great initially but that pricing was when zircon was $700USD and it is billed as a zircon replacement in foundry applications and you are now looking at prices >$2000USD.
The high iron output is more for foundry rather than pigment as the presentation says but price increases of 80-90% bode well for pricing for IDM.

How do you view their cash situation? On my back of envelope numbers, if cash revenue is not coming in they will have to do a capital raising soon...

 

[suhm]

Hehe, problem with this one is that if you buy you will move the market, I was the only person to buy yesterday and today's purchase was for even less shares and it moved the market by 13%, so not all that much interest from institutions, macquarie and sentinent between them hold nearly half the company, with resource finance and management its nearly 2/3. The free float is minimal.

I have most of my fill but had wanted to wait for cashflow numbers to come through and spherichrome pricing for unallocated tonnage to see what sort of revenue figures they would have. A few to many blanks at the moment. The Illuka announcement made me pull the trigger early.

The last cap raise was done at a minimal discount to the sp as macquarie and sentinent took up their full subscription. I actually tried to get an oversubscription at the time but was refused as they said the underwriter wished to take up oversubscriptions. Go figure, thought the company was supposed to look after shareholders first so there is unlikely to be a large discount if a cap raise is done.

I think they should get over the line without a cap raise as they have stockpiled product so that they can ensure consistent supply to their customers and thus far have not had any revenue. They might not though if there is a hiccup or customers are late in paying debts, they could get trade finance in the interim though.

 

[skc]

Hehe, problem with this one is that if you buy you will move the market, I was the only person to buy yesterday and today's purchase was for even less shares and it moved the market by 13%, so not all that much interest from institutions, macquarie and sentinent between them hold nearly half the company, with resource finance and management its nearly 2/3. The free float is minimal.

I have most of my fill but had wanted to wait for cashflow numbers to come through and spherichrome pricing for unallocated tonnage to see what sort of revenue figures they would have. A few to many blanks at the moment. The Illuka announcement made me pull the trigger early.

The last cap raise was done at a minimal discount to the sp as macquarie and sentinent took up their full subscription. I actually tried to get an oversubscription at the time but was refused as they said the underwriter wished to take up oversubscriptions. Go figure, thought the company was supposed to look after shareholders first so there is unlikely to be a large discount if a cap raise is done.

I think they should get over the line without a cap raise as they have stockpiled product so that they can ensure consistent supply to their customers and thus far have not had any revenue. They might not though if there is a hiccup or customers are late in paying debts, they could get trade finance in the interim though.

This is the most critical quarter for the future of the company imo. Because the SpheriChrom is a new product, it is going to be disruptive to the foundary operators. If they get some larger ones on board as early adopters others are more likely to follow suit. Then there's operational issues with commissioning which is quite difficult for outsiders to judge how that is coming along.

Sort out commissioning, get some traction on sales and deliver a quarter of positive cashflow and they have a great business.

Otherwise, they will need to fund the gap for another quarter or two. Hopefully that means a $3-5m placement with the two large holders without too much discount.

Too illiquid for me in the current climate - can't buy meaningful position and certainly can't sell them either. But the liquidity will return if the good news eventuate...

Watching with interest.

 

[suhm]

No kidding about the lack of liquidity, IDM down today 8.8% on the back of a $1600 trade.

Very good info out from a trade journal, alerted to it by a poster on the other forum.
http://www.foundrymag.com/Classes/Article/ArticleDraw.aspx?CID=88253&Re

Full production not expected until Feburary as they need extra equipment to help with the seperation of the product.

Not sure if it was paid for yet as there was capital expenditure in the last quarterly but not sure what equipment that relates to. I also don't quite remember the timeline from when the commissioning started and the previous cap raise occured and whether it had any relation to that.

Chances of a cap raise are much higher if this equipment has not already been sourced and paid for in a previous quarterly.

I will probably sit back and wait for the next quarterly to see revenue numbers and unless there is some silly flash crash and I can pick some at circa 10c at which point I would probably pick up another chunk to add to the rest.

If there is a cap raise that should see me at a full allocation, hopefully it would be a spp as then I could get a much larger percentage, but would not be a good look given they could have easily raised enough in their previous cap raise but refused further dilution which means their budgeting skills are defective as they would have eaten through their budgeted figures and the contigency in the budget allocation.

 

[suhm]

New position MXI, in at 0.39.

Rationale new 52 week high on the back of a profit upgrade to 5-6m for the first half with a market cap of around 65m. Orders up strongly in the first half and cashflow greater than profit. Will comment more definitively later.

 

[skc]

New position MXI, in at 0.39.

Rationale new 52 week high on the back of a profit upgrade to 5-6m for the first half with a market cap of around 65m. Orders up strongly in the first half and cashflow greater than profit. Will comment more definitively later.

Got in at 37c

The chart's looking pretty good. It's a turn around story but their half-on-half variations can be pretty dramatic. Will look to offload half at mid-high 40s.

 

[suhm]

lol the benefits of trading being your primary job.