Speculative Stock Portfolio

[tech/a]

So
How are you going to Manage the trade.
Meaning day to day from entry now to exit.

What will you do if the price falls slowly or fast
The price rises---slowly or fast

How did you determine position size?
Are you running a stop--if so how will you manage that

Just for interest I'm running a marked up chart on these 2 (my notes)
And make comments on the chart daily as in management.
Once you close one or both I'll post it if you like.

 

[aus_trader]

So
How are you going to Manage the trade.
Meaning day to day from entry now to exit.

What will you do if the price falls slowly or fast
The price rises---slowly or fast

How did you determine position size?
Are you running a stop--if so how will you manage that

Just for interest I'm running a marked up chart on these 2 (my notes)
And make comments on the chart daily as in management.
Once you close one or both I'll post it if you like.

Thank you tech/a, it'll be interesting to see your thoughts on a chart once the position closes.

Not sure about the speed (slow or fast) but if the price does keep on falling I do intend to get out, after all the reason for buying is with the expectation that the price will go up. So yes I'll monitor each position and manage going forward...

 

[dj_420]

Got a chance to put the new guidelines / rules into practice today with two stocks added to portfolio in the Resource / Mining sector.

By the way, thank you everyone for your contributions for keeping me on the right track and as Boggo mentioned earlier, I don't take any suggestions / advice as criticism.

1. Staying away from the hottie to pick up the ugly duckling...

The first stock is in the resource sector with Lithium exposure. This commodity has been getting a fair amount of attention and media coverage due to Lithium Ion batteries used in so many devices such as mobile phones and power tools and with the latest demand coming from electric vehicles.

I came across a few stocks with exposure to Lithium and was weighing between two of them: Lithium Australia FPO (LIT) and Neometals Ltd (NMT). So here is where the rubber meets the road as to following the adaptations to the rules as mentioned above. Without new rules or further investigation LIT would have been the choice. It's the hot pick (rumor has it, share price doubled in the last 3 trading days from 7.5c to 16c currently). Also got the looks... I mean the name, the lower price and everyone's attention with huge volume traded. But rules are rules so I am going with the higher priced stock NMT at 30c. Details of the story below...

Bit more of the in-depth analysis for the above choice. Looking beyond the surface shows LIT is a bit complicated with the recent bid for Lepidico Ltd (LPD) so not sure how involved... I mean how much of LPD has been acquired so far... Also given the share price has rocketed up in the last few days, I am not comfortable buying at current levels. With NMT, it's been a quiet achiever in my opinion. Has negotiated off-take negotiations at Mt Marion Lithium with Ganfeng Lithium Co. and started production recently. Has ~ $53m cash and ~$16m investments and receivables so that should address the debt/cash burn concerns in the rules. Has good liquidity to get in/out for small parcels of shares like mine. It's not a single commodity play either as it has diversification with a Titanium resource in development phase as well. Also the founders still have a significant stake and directorships in the company. That's the "Reed" family and NMT was called "Reed Resources" back in the day. Got surprised to see that it has paid dividends two times last year too, which is unusual for a small resource company.

2. Getting some exposure to Gas / LNG

With a fair bit of media coverage about the East Coast gas supply shortages and Liquified Natural Gas (LNG) getting a bit of attention of late, I've been on the lookout for companies with exposure to this sector. The easier way for me would be to buy a Oil/Gas giant like WPL or STO and see if there is any upside there... Well, this is supposed to be my speculative portfolio not some blue chip portfolio. Looked at a lot of oil/gas hopefuls and most of what I came across don't have anything big. Just drilling holes looking for the next oil/gas play and burning through cash. Today I came across Liquified Natural FPO (LNG) which has gapped up on big volume last Wednesday 5th of July. So just wanted to find out if there was a story to this. It happens to be due to securing funding for it's Magnolia LNG project, a whopping 1.5 billion! Which bank can I get that from ?

There is a cash pot of ~$50m in the bank according to last reported figures, so that addresses cash at hand / debt issues. Especially with the funding news liquidity seems to be plentiful so I should not have any problem exiting at or very close to market prices if I need to.

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Would be interesting to follow but having worked in the industry for so long the gems are so few and far between it really is a lottery trying to pick a good mining/exploration stock. What is easier is to follow commodity trends and identify well run companies that are involved in your pick of the commodities.

One of the stats I saw way back when, was that out of 1,000 greenfields exploration projects, 1 will be a successful project and be able to transition to mining.

The majority of those speculative miners/explorers just mine the pockets of mum and dad investors. Having worked in the industry and knowing how these companies operate makes me want to run for the hills!

 

[Quant]

One of the stats I saw way back when, was that out of 1,000 greenfields exploration projects, 1 will be a successful project and be able to transition to mining.

The majority of those speculative miners/explorers just mine the pockets of mum and dad investors. Having worked in the industry and knowing how these companies operate makes me want to run for the hills!

Well the old saying goes something like this " A mine is just a hole with a Liar on top "

 

[dj_420]

A lot of explorers will pick up ground that has 'potential' for a particular commodity, spruik it to market, watch the sp run and then do a cap raise.

Directors can then pay themselves a very healthy salary without doing much on-ground work and then rinse and repeat in the future.

You really need to look at the track records of these companies. If they have been involved in every different metal over the past decade and have a long history of raising money without doing exploration then personally I would avoid.

There are genuine ones, but there are also companies that have less than stellar performance and/or management.

 

[aus_trader]

The majority of those speculative miners/explorers just mine the pockets of mum and dad investors. Having worked in the industry and knowing how these companies operate makes me want to run for the hills!

Totally get this, I've been burnt a quite few times during the mining boom chasing exploration companies who has promised to be the next big miner and not becoming one. I've held on for years with hopes of a turnaround in fortunes but too many times have seen them disappear bankrupt along with my investment.

So it's been a boom for Australia and some of the lucky few. Not for me, let me explain. I'll be honest and say although I have made a few gains on picking the right explorer that has become a miner therefore good gains along the way, most of the picks have been duds with huge promises that has not delivered. Overall I am down if I consider all of my exploration/mining/mining services picks. So looking back now and re-evaluating now, I would have been better off if I stayed away from the mining sector altogether right through the boom. I don't beat myself up though; the country was going through a once in a lifetime mining boom and it's easy to get attracted to try and have a small slice of it.

With the help of contributors like yourself I have changed my strategies and even with the mining picks in this portfolio I have picked the higher priced / slightly bigger capped (still small caps) / more liquid juniors and will monitor them pedantically. If things aren't going according to plan, I will sell out of the positions given they have the liquidity to get out.

 

[dj_420]

Totally get this, I've been burnt a quite few times during the mining boom chasing exploration companies who has promised to be the next big miner and not becoming one. I've held on for years with hopes of a turnaround in fortunes but too many times have seen them disappear bankrupt along with my investment.

So it's been a boom for Australia and some of the lucky few. Not for me, let me explain. I'll be honest and say although I have made a few gains on picking the right explorer that has become a miner therefore good gains along the way, most of the picks have been duds with huge promises that has not delivered. Overall I am down if I consider all of my exploration/mining/mining services picks. So looking back now and re-evaluating now, I would have been better off if I stayed away from the mining sector altogether right through the boom. I don't beat myself up though; the country was going through a once in a lifetime mining boom and it's easy to get attracted to try and have a small slice of it.

With the help of contributors like yourself I have changed my strategies and even with the mining picks in this portfolio I have picked the higher priced / slightly bigger capped (still small caps) / more liquid juniors and will monitor them pedantically. If things aren't going according to plan, I will sell out of the positions given they have the liquidity to get out.

My biggest advice would be to look at track records of management and the exploration team. Quality exploration outfits will normally in turn select good projects and ground to explore.

It hard, we did really well out of juniors back pre GFC, but since then the times I've dabbled and haven't had a repeat of those returns. Essentially what I was doing was a sector rotation breakout strategy.

I also now have a tendency to avoid the mining/oil and gas sectors.

 

[aus_trader]

Thanks mate, I'll try to keep that in mind about who's managing the company, as I did check with NMT to see that the directors included original Reed Resources members with skin in the game.

Looking back, I also had better success pre-GFC from mining/exploration plays. After GFC, the losses outweighed any rare gains. I think we are well past the days of picking any old mining/exploration stock with big promises by the management that goes up hundreds of percent. Any selections have to be extremely well researched and a lot of due diligence has to be carried out about the prospects, facts and figures of they have and as you mentioned who is managing it.

 

[aus_trader]

Some news came out today for Clean Teq (CLQ) with it's Nickel/Cobolt project where technology is used to extract these metals. Company has been producing samples and proving the technology at small scale. With today's announcement of buying "Autoclaves" mining/extracting equipment company looks to be paving the way towards larger production of these metals. Bought for $6.5m which according to company is a "Substantial capital saving". So they are being prudent with spending from their $88m cash reserve.

 

[aus_trader]

Been sifting through a lot of hay lately...

..To find that needle in a haystack to add another position to this portfolio. Few stories here and there but bit risky at this stage with prices jumping around all over the place and trading at cents...

The more established companies are a different story and well run companies can attract a premium to it's trading price as can be seen with the hefty premium offered to Programmed Maintenance (PRG) take-over.

So added NRW Holdings Limited (NWH) to my longer term stock portfolio. Details in that thread...

 

[aus_trader]

Bought the Oil and gas prospect 'Buru Energy (BRU)' today due to big price drop after it announced a capital raise via 1 or 5 Rights Issue. I thought the share price has probably been unfairly hammered for a capital raising that is not too big (1 for 5) and company says the two major shareholders will support it.

BRU started producing oil at the Ungani project recently and says it has a operating margin of $25 to $30 per barrel and may improve further if oil price nudges higher... Also has some gas prospects in it's project pipeline.

 

[aus_trader]

Something different to the mining and energy related stocks, which is what I've been looking at mainly recently...

Been going through lots of stocks in the higher priced speculative end of the market but rarely any of the stories caught my attention. So I've been also looking at stocks in the ultra speculative space trading for just a couple of cents. Most are so thinly traded and bid/ask spread is huge for me to consider, even if it had a little interesting prospect...

One caught my eye due to news release in the last few days and it's background story was interesting. The company is Ultracharge Ltd (UTR) and it is in the process of developing a new type of Anode for Lithium-Ion batteries that is meant to improve on the current technology. According to company's info this allows fast charging and improves the batteries life. In my opinion this could be just type of technology that can play an important role with expansion of Li-Ion battery use into the future such as in power tools and electric vehicles.

I made the exception to buy this stock despite trading for pennies because there seems to be good volume traded on it and bid/ask is very close, so getting in and out should be OK. The recent news that caught my eye was another technology they are involving into with "new battery storage technology".

 

[tech/a]

Personally I think you'll have a great deal of difficulty turning a profit attempting to analyse smalls in this speculative portfolio.

I know your fundamentally based
But finding momentum
Hopping on board and getting off it when it stops
I have found to be successful.

You have to get what you can when the market gives it to you
And not sit there waiting for it.
Particularly if it's going South.

Just sayin.

 

[Wysiwyg]

In the past have tried all sorts of systems, methods, indicators on all sorts of instruments such as stocks, Forex, indexes, commodities etc etc. I was so deep in this stuff that towards the end I was coding my own indicators, automated robots, black box systems and hosting the automated bots (robots that is) on VPS (Virtual Private Servers) all over the net such that I (my robots) would never miss a trade even if the whole country had a blackout. Sorry about the brag but chances are if there is another gizmo, I probably would have tried it out already, but it does not mean I wouldn't have a look at it. The one thing I learnt from all of this full on in-depth obsession for years and years is that all systems can work for a while if the market obeys by the rules that the system is based on. But the market is free to do what it wants!

This doesn't make sense. You trade like a newbie yet have all those experiences above to learn from.

 

[aus_trader]

Personally I think you'll have a great deal of difficulty turning a profit attempting to analyse smalls in this speculative portfolio.

I know your fundamentally based
But finding momentum
Hopping on board and getting off it when it stops
I have found to be successful.

You have to get what you can when the market gives it to you
And not sit there waiting for it.
Particularly if it's going South.

Just sayin.

I think you might be on the money on this one. Some of the momentum stocks you've mentioned have run up hard and would've returned exceptional results in a very short time too.

In my case it's a different, although I am not a buy and hold (forever) type investor/trader, I do have to be somewhat patient for the potential to realise over time.

 

[aus_trader]

This doesn't make sense. You trade like a newbie yet have all those experiences above to learn from.

Yes I have tried all sorts of short term strategies, automation, day trading etc etc. Experience was valuable sweating it out day and night but I didn't make the money to show for it. Made a bit but probably peanuts for the hours I was putting in. Even with robots it's not set and forget and count how much money it's made. They can quickly rack up losses when market conditions change and sometimes there is headaches with technical glitches and broker cheats (mysteriously widening spreads etc) to deal with.

Anyway that was in the past and I don't have the time for that stuff nowadays. I do a bit of stock research when I get free time and I enjoy that.

So that's a bit of background. Do you have any suggestions?

 

[Wysiwyg]

Do you have any suggestions?

For one, assess your entry price. For example (and I don't know it all by using hindsight) your entry price for LNG. That stock caught my attention too and the 'impulsive' trading action would be to buy on the news. Low success entry point in my experience. Same with the impulsive action of buying bad news thinking of catching a bounce or 'believe' the price is cheap. They are high risk examples and can be traded but you must be willing to kill the trade immediately it goes against you. With LNG you waited till the 11th before buying and it appears you believed from the previous trading day rise there was goiung to be continuation to the spike highs. You bought intraday mid range and look at what traders did on that day. They sold which is indicated by the price spiking higher to previous resistance points (69c - 70 c) and closed way lower on above average volume. The ensuing price action "confirmed" traders were no longer bullish and you still hold.

We can't get it right every time but don't buy when the bulls are selling and look for signs before.
Hope that is understandable.

 

[aus_trader]

For one, assess your entry price. For example (and I don't know it all by using hindsight) your entry price for LNG. That stock caught my attention too and the 'impulsive' trading action would be to buy on the news. Low success entry point in my experience. Same with the impulsive action of buying bad news thinking of catching a bounce or 'believe' the price is cheap. They are high risk examples and can be traded but you must be willing to kill the trade immediately it goes against you. With LNG you waited till the 11th before buying and it appears you believed from the previous trading day rise there was goiung to be continuation to the spike highs. You bought intraday mid range and look at what traders did on that day. They sold which is indicated by the price spiking higher to previous resistance points (69c - 70 c) and closed way lower on above average volume. The ensuing price action "confirmed" traders were no longer bullish and you still hold.

We can't get it right every time but don't buy when the bulls are selling and look for signs before.
Hope that is understandable.

Good Technical Analysis I must say.
LNG has slowly drifted south and closed the gap that was made on the news. I will give it a little more room/time before considering to remove from portfolio. At some point it may rally if all goes to plan and they complete the Magnolia project so I'll keep watch even if I sell at a loss.

 

[aus_trader]

Today added a stock that is higher priced with good volumes being traded. It's a gold miner with a bang. I've been following it's progress for a long time and for a short period I've been trying to buy it at a slightly better price by bidding slightly below market price but it kept getting bid up higher, so I missed out...

So today I decided to get out on market street gunz blazing (like Ma Barker and her sons) and raid the market for some Alkane Resources Limited (ALK) shares. No bargain hunting to save a few cents today, paid high price offered as ALK was making higher highs.

A little background story on the stock as I've followed it's progress over the years. At one stage it had a very good portfolio of gold projects including a multi-million Oz gold deposit near Orange, NSW from memory. Don't remember the name of the project but ALK sold this mother of a project (for a small cap mining hopeful) and just kept little Tommy... That was my take on it and since then I've had a look at it's progress every now and then but I didn't have much interest in buying the stock until just recently. Just recently they have started producing Gold! They have slowly developed what I called little Tommy, well it's actually called Tomingley Gold Project and now generating good cash-flow from it.

So what about the bang? While Tommy's producing the cash Alkane's other major project is what it calls the "Dubbo Project". Located in Dubbo (NSW), this project is what they called a poly-metallic with a whole bunch of rare metals/commodities including Rare Earths (RE). Rare Earths stocks seem to be hotting up at the moment with share prices heading higher with juniors like Arafura Resources (ARU) and Northern Minerals (NTU). ALK has done a lot of the hard work on this project such as proving up the resource, demonstrating the extraction via a PILOT plant and says currently trying to negotiate off-take partnerships.

 

[aus_trader]

I bought a parcel of Crowd Mobile Ltd (CM8) on Friday and just didn't get time to update the portfolio as I had a pretty full on weekend. Will try and do a quick update on that during the week...