Karoon is strong again and is up at 725 while the rest of my stocks are steady with the exception of Avoca. I didn't read the fine print and hadn't kept up with the sceptical market response to their proposed merger of equals with a Canadian gold stock with interests in Turkey. The selling which had accelerated yesterday was getting a head of steam by the open and whether to cut on the open or not was an interesting decision to make, given that the open was at 298 and my significant support level at 310. I had a look at the merger document and the timetable for the board meetings to approve the merger is for mid December. That gives the market three months to produce an alternative takeover bid in a sector that's ripe for consolidation. The prospective p/e is also around 9 here so I decided to buy a few more and trade them around. With some minor jobbing it means that my second small tranche of Avoca is long at 295 compared with yesterday's purchase at 320. I think there's a good chance that we'll get a minor rally to 306-310 and I'm hoping to get out there. The valuation support means that I'm not overly concerned if it just drifts off - I don't think I'll come to too much harm.
I used to feel that it was important to cut with iron discipline but I now think context is important. An overpriced stock, valued on takeover potential, which announces a no premium merger is one that I would quickly dump but this appears to offer good value and time for another suitor to emerge.
It's not an ideal situation; I don't want to be caught with a stale holding in a drifting stock, but I think I can afford to see the storm out and see what develops next week.
I've been itching to buy Murchison for a week or more but the rally it was having was pretty unconvincing and was unable to breach recent swing lows. Today the stock is finally starting to accelerate and is now through those lows. I've bought a few at 158 and I'd really like to get more on the back foot but as I don't think I would have been the only one looking for a significant change of tone in this stock, it's probably ok to chase the break. Maybe an afternoon sell off will help me to pick up a few more at cheaper levels.
12.21 I bought more Mmx at 159 and they're still firming, up 6% at 161. Avoca is going nowhere though, still at 297.
1.12 That's interesting, Murchison is really going now, up at 172.5 a couple of minutes ago. I've sold a third out at 168.5 average. I wonder is there's a sniff of a bidder or it's just a squeeze after big underperformance versus the rest of the sector recently.
2.03 As the day draws on and there's no sign of an intraday rally in Avo, I'm getting altogether less sanguine about the stock. I think my logic is reasonable in the medium term but if the short term prognosis is less good I may be better off to cut completely and then look to trade a countertrend rally back up next week. Avo is at 290-291 now which is back at the early lows.
2.08 Out of Avo now at 290. Yesterday afternoon's buying was for a small amount but it's still eaten up the day's profit. Not the worst outcome though, the market is down 20 points and all my positions are long.
Sold a handful of Awe at 168, Kar at 725 and Ost at 299 earlier which has helped because they've all fallen back since.
3.11 It's a quiet day and I've found myself just buying back a few Avo at 288. It's actually getting closer to the sort of signal I like, with a minor new low and - so far - not a lot of follow through. It's still a countertrend trade of course.
4.11 All over for the week, finishing at 4560 which is down 22 points today.
Murchison received a speeding ticket from the exchange ie please explain why your stock is up 15% today. They could offer no particular reason and sometimes that's enough to take the wind out of any rally: no mention of corporate interest, for example. In this case, the stock has finished well bid at 174 on the high for the day.
Avo recovered to close at 292.
No comments:
Post a Comment