PCG - PCH Group

[The Barbarian Investor]

Sold out of PCG at 0.55 after buying in at 0.44 Av, however this stock (one of my stockpicking comp entries a while back) has a habit of rising and falling as it continues its upward climb.

I believe in the stock and and my Exit strategy trigger kicked in giving me about a 22% + return which i'm happy with.

i'm alos watching this stock if it falls again for another entry point..

any thoughts on this strategy?

 

[tech/a]

Re: PCG -Strategy?

TBI

Generally my thoughts are that traders exit far to early in most cases.

Looking at the chart its risen consistantly from around 35c and its not showing ANY sign of weakness yet.

Fear of Loss seems to be your reason for exit.

Over the years the change I notice as being the most influential to traders in their trading profit is,developing the ability to

HOLD WINNING TRADES

Jumping in and out attempting to pick perfect timing is futile youll find.
Do you know your average return to risk over a year?

 

[TjamesX]

Re: PCG -Strategy?

I bought this one at 37c for fundamental reasons - did not know much about TA then, or particularly Tech/A's breakout analysis and in hindsight this was a perfect time technically to purchase (Luck was with me!!!)

I have not added to portfolio as initial purchase was reasonably large - but I will not be looking to sell any soon.

PCG's half year report was very impressive, and they have been able to return good money from their capital. The only thing that would 'hold' it back is the uncertainty about future contracts for their scaffolding (PCG's main revenue stream is from hiring scaffolding to construction and mining companies)

However I'm willing to make an assumption that if future capacity is not fully contracted yet - that it will be. The resource boom is here, and resource companies are looking to expand - and generally to do that you need infrastructure (re scaffolding)

Note: PCG also has significant revenue streams from offshore, and so are not completely tied to Australian conditions

 

[TjamesX]

Re: PCG -Strategy?

Longer chart of PCG;

 

[The Barbarian Investor]

Re: PCG -Strategy?

I'd set an exit point and didn't think it would breach 0.60c for a long time.....it hit 0.61c today Dohhh..

Techa
So you think the idea of adjusting your stop losses up (profit stops) as your stock price rises and thereby holding onto your winners is the way to go?

Generally my thoughts are that traders exit far to early in most cases.
??? You've said before to have an Exit strategy, in my case for this share i had set it upon purchasing; in hindsight then, what would be the better move?

Forum
PCG seems to regularly rise and fall on it's upward trend-is this also something to be taken advantage of..?

 

[Fleeta]

Re: PCG -Strategy?

Spot on Tech/a - I jumped on this at 28c and again at 34c and it makes up a reasonably high % of my portfolio - if you believe in the stock, stick with it!!

I reckon it could be a dollar by the end of the year, given its forecast earnings and dividends.

Who cares if it goes up and down a bit - the long term trend with this one is up, its not about timing the market, but time in the market, that will let you rake in the $$. After I bought the second time at 34c, it fell back to 30c - but it doesn't matter cos its now 59c. So buy in at 59c - it may fall back to 50c, but why worry if it hits a dollar at the end of the year.

Just a thought, I guess you can magnify your profits by timing it right, personally I don't think its worth the worry.

 

[The Barbarian Investor]

Re: PCG -Strategy?

Hi Feeta,

What put you onto the stock in the firstplace?

I started looking at it at around 43c and was looking at stocks associated with all the work happening up north of WA, really didn't think it would go beyond 0.60for a while though (just guessing here though) should've just let my profits run and increase my stop losses up in hindsight...

0.63c today

Oh well it's all a learning curve

 

[TjamesX]

Re: PCG -Strategy?

PCG was hammered a bit last week with the market sell off, but not as bad as some other small caps.

Currently around 53-54 cents and with all my spare cash at the moment am considering adding to my already reasonable holding. No news has changed - I still very much like this fundamentally.

Have a look at its half year report

TJ

 

[TjamesX]

Re: PCG -Strategy?

Well what a missed opportunity.......

Just as I was logging onto HSBC to have a look at buy sells and possibly entering - I can't log on, cause I'm working on a linux machine at the moment and the browser isn't supported. Then I watch on stockness monster as the price went from 52 to 43 in 1 minute, triggered by a whole lot of cascading stop losses - only to see the price trade back up to 53 within another 3 minutes.

Im not a day trader, but I'm assuming these opportunities don't happen too often - and I'm sure I wouldn't have actually picked them up at the low price. Interestingly PCG has been stop lossed down very quickly twice in the last couple of weeks....mmmmm I didn't realise many traders would be trading this one.

Waiting and watching

TJ

 

[Fleeta]

Re: PCG -Strategy?

I would have loved to have bought in at 43c...this is one stock with sound fundamentals and long term stability. Check out its order book, very strong...I think undervalued as will yield at least 6% fully franked.

OMG - I sound like Chicken! Stop it Fleeta.

 

[el_ninj0]

Re: PCG -Strategy?

I would have loved to have bought in at 43c...this is one stock with sound fundamentals and long term stability. Check out its order book, very strong...I think undervalued as will yield at least 6% fully franked.

OMG - I sound like Chicken! Stop it Fleeta.

From the chart, it looks like its peaked and is overvalued currently. I think mabey 43-45c is the correct evaluation for this stock, according to a charter.

 

[The Barbarian Investor]

Re: PCG -Strategy?

I would have loved to have bought in at 43c...this is one stock with sound fundamentals and long term stability. Check out its order book, very strong...I think undervalued as will yield at least 6% fully franked.

OMG - I sound like Chicken! Stop it Fleeta.

Agree it's a good share..kicking myself for exiting when i thought it had peaked; but will it really move beyond the .60c mark in the near future??

 

[GreatPig]

Re: PCG -Strategy?

Barbarian Investor,

I wouldn't bang my head against that brick wall too hard if I were you . While in general I agree with Tech, about not selling while there's no sign of weakness, in this case if you'd done that I think you would have been very lucky to get out before it got back to 55 cents anyway.

Regarding its expected price around now from a charting point of view, the base trend I have would indicate a minimum of about 45 cents, but then it's mostly been trading 5 cents or more above the base trend. Thus I'd say around 50 cents would be a comfortable current value if the current trend is going to continue.

Which of course is just my opinion and not any sort of advice, etc. etc. etc.

Cheers,
GP

 

[ghotib]

Re: PCG -Strategy?

Hi GP,

Out of curiosity, why do you draw the trend lines as you do, especially the lower one?

Thanks,

Ghoti

 

[GreatPig]

Re: PCG -Strategy?

Out of curiosity, why do you draw the trend lines as you do, especially the lower one?

Well it's certainly not an exact science . I just look at what seems to form a trend and draw a line along the bottom of it.

Sometimes I let it cut through a small dip in prices if it otherwise fits better. That may not be the textbook way to do it, but to me, a trendline should just be parallel to the main direction of the trend and as close to the bottom of it as possible. I just treat such short price dips as aberrations rather than characteristic of the trend.

In the PCG one below, I've been using the lower purple line (although I don't have any of the stock), but the blue one could potentially be considered better. But given the nature of the prices, with the big bulge in late 2003 - early 2004, there's no well-defined trend direction, so I think any line roughly like I have them is as good an approximation as you can ask for.

Which line is best for you probably depends on exactly what you're using it for. If you want it as a sell signal, then the higher one might be better. For me, I initially use it to help with buy indications for investing, trying to wait for the price to be near that line when I buy (if I'm buying into established trends). I also use it for sell indications with investment stocks, but other factors come into that as well.

OTOH, my mechanical system doesn't use trend lines at all.

Cheers,
GP

 

[GreatPig]

Re: PCG -Strategy?

As a comparison, the best trades for that same period indicated by my mechanical system are shown below. The solid blue and orange lines show the periods when the stock would be held (in this case they are not trailing stop lines, as these particular trades are based on EMA crossovers only).

These plots assume buying in where indicated. If buying in at later times, other sell conditions may be better.

As can be seen at the top of the plot, the gain during that period using these trades (and based on a sale at the last closing price) would be 456.32%. That's for just over 3 years.

Of course this is all hindsight best trading. Not so easy guessing the future.

Cheers,
GP

 

[TjamesX]

Re: PCG -Strategy?

This is one of the 'more risky' holdings I have - but they have been around a while and does make a profit

Fundamentally I do like the company and the industry they're in. Full year results in a few months time will be the test of how well it is going..... BUT

Recently the SP has been nocked around along with a lot of the other small caps - as can be seen in the chart below. I took the opportunity to add to holding at 52c a week or so ago (APP is 43) - which turned out to be a bit premature. There were two stop loss sell downs in the last month (big lines heading south) in the month of 'jitters'. But in general the SP was moved high on high volume and recently has been down on lighter volume.

I have seen some funny things going on with market depth and buy/sells over the last few days, but recently some buyers seem to be surfacing from what was a pretty barron buy side.... where it goes now - no one knows.

Two other factors;
- Investment Funds have been purchasing (last month)
- and one director sold a large holding.... so they sort of cancel each other out in a weird sort of way

One to add to the watchlist

TJ

 

[markrmau]

Re: PCG -Strategy?

As a comparison, the best trades for that same period indicated by my mechanical system are shown below. The solid blue and orange lines show the periods when the stock would be held (in this case they are not trailing stop lines, as these particular trades are based on EMA crossovers only).
GP

Hi GP,

Do you mind telling us what system you use - I understand it is EMA crossovers? What are the EMA parameters? Do you have stats such as winning / losing trades and profitability? Thanks, Mark.

 

[GreatPig]

Re: PCG -Strategy?

Do you mind telling us what system you use

My mechanical system is one I wrote myself in an AmiBroker plugin.

I understand it is EMA crossovers? What are the EMA parameters?

It primarily uses EMA crossovers, ATR stops, and maximum price drop stops, although not always in the normal fashion. It often uses a stop in combination with an EMA, where the stop is ignored until the EMA has negative slope (this helps filter out spikes in noisy stocks).

However, it's designed primarily for up-trending stocks. It doesn't work very well with stocks that fall sharply.

There are no fixed parameters. I optimize them for each individual stock. There's an optimization function built into the plugin, and I have an AmiBroker script that calls the optimizer when I want to run it. It can optimize either a single stock or a whole watchlist at a time (my stock universe is kept in a watchlist) - although doing the whole universe takes over 24 hours, even on a fast P4. All the parameters are then stored in one big file, which is accessed by the plugin when I want to display back-test charts based on those parameters. Also, if I want to manually optimize a stock for a particular situation, I can run the optimizer over just one section of a stock chart, where it will be optimized for just that date range. This can be useful where say recent movement patterns of a stock are somewhat different to past movement patterns.

I also have RSI, PSAR, and Guppy Count-Back built into the plugin. I can manually look at things using them, but don't use them in the automatic optimization process.

Do you have stats such as winning / losing trades and profitability?

The back-test chart shows the profitability using the set parameters over the historic data, but not the ratio of wins to losses (although I could easily get that information too if I wanted it). I can also weight it in favour of fewer total transactions, as sometimes the most profitable figure comes from an excessive number of transactions (but brokerage is allowed for in the profitability calculation).

A few example charts. Firstly, BSL using a combination of ATR stop and EMA crossovers. A nice tidy case due to the low volatility.

Secondly, MGX using an ATR stop controlled by an EMA. A few penetrations of the stop line don't generate sells as the EMA (green line) still has positive slope. At the actual sell point the EMA still has positive slope, but the drop exceeded the maximum allowed price fall. Before the main up-trend, a few very short, unprofitable trades can be seen.

Finally, two charts of FCN showing the same parameters, but the second only including the relatively flat section in the middle. While the whole chart shows a gain of about 1500%, the flatter section alone still manages about 90%.

These are only a few stocks with reasonable gains. Of course there are other stocks where even optimized parameters produce poor returns, since they aren't suited to the use of EMAs (particularly stocks that change price very quickly).

So that's basically how my system works. Not a very quantitative description, I know, but then all parameters are calculated by the software, so I can't give any general figures.

Cheers,
GP

 

[TjamesX]

Re: PCG -Strategy?

Todays announcement shows Hunter Hall (fund) has increased their holdings by about 1.5 mill shares ($700k) since 20th of April.

Which means they must have been just about the only significant buyer over the last few weeks drip feeding sellers as the price has slowly come down????

TJ