FGE - Forge Group

[McLovin]

I'm out. That was pretty easy money. Off to do my Christmas shopping. It's a dog company in a dog industry, I think if you're going buy and hold on this you're kidding yourself.

Nice work, skc.

 

[VSntchr]

What a day!
By far the craziest opening hour I have ever seen for a stock.

Once it found a bottom and a top it really didn't offer to much action.
Now we have tomorrow to look forward too, wonder which way it will drift...

As craft said, the substantial holder notices should be interesting also..

 

[skc]

I wasn't insinuating you were just trading it off the cuff and I sincerely hope you capitalise on the volatility. I have no issue with trading it short term. Just expressing my opinion that I don't like managements actions from my long term perspective.

I hope people don't buy for a long term hold simply based on the presumption that it must be a bargain because of the size of the fall.

Actually my response wasn't directed at you either. It was just in response to the various others who traded/watched the saga today.

If I was in I would want out - the only question is price - that's why I think there could be selling to come. But the turnover is huge - Interesting to see over the next few days who's in, who's out and how much is just getting shaken all about.

That's what I meant... I imgaine you'd have a cooler head than to dump at any price on the open.

100m shares traded today so if someone wanted to get out today they could have done so easily.

Anyway... leaving a pretty small position for the next few days and see if I can get a little bit more out of it.

 

[TheUnknown]

Wow what a decline...is anyone buying up and waiting?

 

[TheUnknown]

Thinking of buying 20k worth

 

[robusta]

Thinking of buying 20k worth

I got in for 2k worth in my personal account and topped up the existing super position by almost 3x that amount lol missed all the early action but I am prepared to hold to see how this works out. As skc said at about 1.5 x EBITDA probably worth the punt. Got in at $0.66

 

[TheUnknown]

I got in for 2k worth in my personal account and topped up the existing super position by almost 3x that amount lol missed all the early action but I am prepared to hold to see how this works out. As skc said at about 1.5 x EBITDA probably worth the punt. Got in at $0.66

Buying some first thing tommorow

 

[Baker1494]

Thinking of buying 20k worth

Will be interesting to see how it unfolds. Got in this morning at 0.3-0.33c, went in though expecting to lose it all. My thoughts are they will go looking for more capital from shareholders (possibly at a can't say no price). Will be an interesting couple of months. Defiantely interested to see how it opens tomorrow morning.

 

[tinhat]

Bought at 0.68 at lunch time and break even stop loss triggered at 3ish. It doesn't get more exciting than this. Good luck to those that hold. Congrats to those that grabbed the bottom.

 

[robusta]

The share price has been hammered today due to the extraordinary long trading halt after the losses incurred by the CTEC business. When FGE bought CTEC in January 2012 at a really low multiple, somewhere around 3-4 x EBIT it seemed too good to be true. I wonder how long the sellers knew this time bomb was ticking away... You know what they say. "if it seems too good to be true it probably is."

 

[skc]

I got in for 2k worth in my personal account and topped up the existing super position by almost 3x that amount lol missed all the early action but I am prepared to hold to see how this works out. As skc said at about 1.5 x EBITDA probably worth the punt. Got in at $0.66

Buying some first thing tommorow

Please... don't take anything I say without researching it for yourself.

And don't forget how different the reward:risk equation is between what I am doing to what you may be doing (if you know what you are doing). I bought in low and already free carried, I watch every tick intently and it will take me no time to sell and accept a loss that's within my risk parameter. So everything I said relates only to what I am doing.

Robusta - I would definitely think very carefuly about "prepared to hold and see how this works out"... make sure you have a plan that's better than this and watch your risks/total exposure. You should stick to your knitting and invest using your own criteria (I am sure FGE in its current state fails every single one of those criteria).

 

[craft]

but your average insto fund manager just seems to like dumping things with a passion, often unnecessarily.

Just thinking out loud on this point and trying to put myself in their shoes.

First thing obviously is size of holding – your thinking would not be parcel at X price but average price of overall position. So algo’s spreading the order would be go. The question is do you set the Algo based on time, volume or price.

Time and/or volume allows you to get a market average and if you don’t have a strong belief in an absolute valuation it might be your preferred choice if developments now mean you want out.

What might your view on absolute valuation be given developments? Well this is what I would be considering.

Obviously debt outranks equity in a wind up.

The debt financier is firmly in control.

I’m probably at an information disadvantage to the financier.

The warrant priced at 1 cent over 13% of the company issued to secure the debt. If the debt is so costly either the management are incompetent or the default risk is very high.

The warrant has a cash equivalent term which is basically an execution clause as the company could never meet the call. The bank could utilise this at any stage to maximise their windup distribution, but would not be in their interest to use it a point that left equity with anything.

The probability of default is X%.

Business as usual X$ – earnings risk now that ability to deliver is in question makes this a wild guess at best on tendering outcomes, not to mention the uncertainty over managements capability to deliver already won contracts on budget.

Takeover to get access to the order book – probability X%. You would have to have really good industry knowledge to make an assumption on this probability as it depends on the contract terms. Those that missed the contracts in the bidding process may have no interest taking them on based on FGE’s winning bids

So a reasonable view on an absolute valuation could easily be (and probably should be) – NFI. Therefore a time or volume based algo might make sense if you want out.

VWAP for today would be near 60cents. A volume based algo might have unwound some sizable positions – time based ones would obviously depend on the time frame you pick.

What if a lot of the stock is currently in traders or bargain hunters hands what will they do if the price starts dropping below their entry? Maybe having an algo active at any price is dumb but maybe waiting for a technical signal to time a big exit is worse.

The complications of size that fund managers face can be a nimble retail trader’s edge. The emphasis at the moment IMO should be on nimble.

 

[KnowThePast]

Please... don't take anything I say without researching it for yourself.

And don't forget how different the reward:risk equation is between what I am doing to what you may be doing (if you know what you are doing). I bought in low and already free carried, I watch every tick intently and it will take me no time to sell and accept a loss that's within my risk parameter. So everything I said relates only to what I am doing.

Robusta - I would definitely think very carefuly about "prepared to hold and see how this works out"... make sure you have a plan that's better than this and watch your risks/total exposure. You should stick to your knitting and invest using your own criteria (I am sure FGE in its current state fails every single one of those criteria).

Excellent points - as a fundamental investor, I just don't see much value in FGE long term. Not without massive assumptions that their problems are completely limited to just 2 contracts, and that further MS contraction won't put unbearable burden on the balance sheet, which will now be a lot less healthy.

With millions of shares been sold at ANY price, I thought that the potential for a corrective upswing was near 100%, so I gambled a day trade on it with money I was prepared to lose. A special opportunity in a special situation.

Put yourself in a position of manager/owner of the business. What would it take for you to be completely unaware that some of your largest projects are so badly overrun? With thousands of people involved in the project and the majority of them probably aware that something is not quite right, how can the information not trickle up at some point? And I have to assume that management was unaware, or they would have started to prepare a rescue plan sooner. If they were aware, but didn't start planning early enough, than it's even worse.

As a (generally) long term holder, I just don't see enough value to justify the risks here.

 

[skc]

Just thinking out loud on this point and trying to put myself in their shoes.

First thing obviously is size of holding – your thinking would not be parcel at X price but average price of overall position. So algo’s spreading the order would be go. The question is do you set the Algo based on time, volume or price.

The complications of size that fund managers face can be a nimble retail trader’s edge. The emphasis at the moment IMO should be on nimble.

All very true. I don't know what I'd do if I am an insto with 5m FGE shares. I doubt I'd do it all at the open, but only 1m or so shares changed hands at 30c so that could have easily been me.

The fund manager's size is definitely my edge. In fact, that's pretty much how my pairs trading works... simply exploiting the waves left by insto managers.

 

[So_Cynical]

I'm really slipping, i didn't even know FGE was in a halt

Anyway i imagine there will be some crazy volatility ahead with the amount of new stock holders on the books as of today, most new holders will be punters of one kind or another and will be keen to turn the stock over.

Some fresh opportunity's across the sector i would think, fear is contagious.

 

[Valued]

I will be refreshing commsec intently tomorrow morning and will definitely consider selling. I am going to lose money on FGE because I invested before the halt. I did catch up a little bit though by taking a gamble with the 0.30c buy in. It seemed just too cheap. Unfortunately, with only 40% of my initial investment put in this morning since I did not have the liquid cash without taking on a credit risk or putting my business plans next year at risk, it doesn't make up for the loss. It makes the loss bearable though The trade alone though this morning was of course highly profitable going up over 100% in one day.

I am not sure if I want to hold until Monday because I don't like giving people time to think about their choices. I will hold if the stock climbs tomorrow though. Some people might be a bit more optimistic about the company and want to cash in on the bargain price. Everything I said about Roy Hill above still holds true. It might be better though to wait for the good news to come in rather than holding now hoping to get in on the ground level of the company rebuilding.

One thing that is leaning towards me selling is I am at a lost at calculating FGE's value right now.

 

[Valued]

I'm really slipping, i didn't even know FGE was in a halt

Anyway i imagine there will be some crazy volatility ahead with the amount of new stock holders on the books as of today, most new holders will be punters of one kind or another and will be keen to turn the stock over.

Some fresh opportunity's across the sector i would think, fear is contagious.

If you didn't know it was in a halt, I hope you don't own FGE since you just lost the large majority of your investment.

 

[McLovin]

The complications of size that fund managers face can be a nimble retail trader’s edge. The emphasis at the moment IMO should be on nimble.

The other thing to remember is that for a fund manager with a few billion dollars their holding in FGE would have been little more than a rounding error. If you're time poor and running a portfolio of 50-100 shares, you're more likely to just cut and run than spend time on a position that might represent 0.1% of your portfolio. AMP owns 7% of FGE, that was about $28m. By contrast AMP has about $80b in FUM. While that's no doubt spread across lots of products/asset classes, I'm sure no one was skipping lunch because of FGE down on Alfred Street.

 

[skc]

The other thing to remember is that for a fund manager with a few billion dollars their holding in FGE would have been little more than a rounding error. If you're time poor and running a portfolio of 50-100 shares, you're more likely to just cut and run than spend time on a position that might represent 0.1% of your portfolio. AMP owns 7% of FGE, that was about $28m. By contrast AMP has about $80b in FUM. While that's no doubt spread across lots of products/asset classes, I'm sure no one was skipping lunch because of FGE down on Alfred Street.

Sure but someone's got to be accountable somewhere along the line... I guess that explains a lot about why big instos struggle to outperform.

Anyhow... all out today at 83. The last 17c to get to $1 is going to be hard work - if it ever gets there.

Going to donate 10% of the winnings to charity this xmas.

 

[Intrinsic Value]

Sure but someone's got to be accountable somewhere along the line... I guess that explains a lot about why big instos struggle to outperform.

Anyhow... all out today at 83. The last 17c to get to $1 is going to be hard work - if it ever gets there.

Going to donate 10% of the winnings to charity this xmas.

I am out at 83c too. Nice little profit which more than makes up for the loss on the 3 thousand I held before the trading halt.

I have kept 5 thousand as a bit of a punt.