ShareHub Hotlist 2018 Review – Week 10

Some serious churning going on across a few stocks of late which may or may not have something to do with the new MiFid II rules that are due to kick in today or in the not-too-distant future. As an example, Ophir had managed to drift down to 50p levels before suddenly bouncing back to test 60p today. A move of 20% which is against a benign market backdrop and ‘treading water’ PoO. Tullow Oil also had an unwarranted dip down to the low 170’s before now trading at 190’s. Finally, Petrofac was pushed down to test 400p not long ago only to test 500p today some days later. These swings are sizable and it’s hard to believe that they are driven by simple market concerns or PoO. This isn’t AIM stuff. These three stocks are FTSE listed and in Tullow and Petrofac, billions in market cap. Swings of 20% or so seem par for the course these days on AIM stocks but FTSE based stocks tend to be traded by ETF trackers and funds which keep these volatile rises in check for a decent period of time. As hinted last week, it will be interesting to see how the market and brokers adjust to MiFid II and how many popular stocks perform in terms of volume and pricing.

Week 10 was another seasaw on the Trump scale as suddenly nuclear war fears over North Korea seem to be replaced by talk of dinner parties and peace deal of the century. Using the usual cynical brush, one can only assume the US defence budget has been given the funding it needs so no need to spread fears of war until the next budget review. Meanwhile, the UK Gov are still currently scratching around and deciding on ‘who-dunnit’ over the attempted Russian spy assassination. UK defence funding or cheerleaders are still out inforce desperate to ensure more billions are put aside to keep blighty safe. The question is… where do all those billions of pounds go on a yearly basis? Since 2011 (roughly) the UK defence budget has been £45billion per year. Yet here we are today some 7 years on and apparently Mr Putin can cut key North Sea cables with ease. Seriously… if you can spend £45bln a year on ???? but not secure your key infrastructure, then someone really needs to have a word with how that money is being spent or miss-spent. Meanwhile, Brexit continues to drift along and nothing of any major importance looks to have been agreed since July 2016. We are almost 2 years on and the EU in particular have not moved one bit from their early intentions of treating the UK like a kid that needs punishing simply to set a warning example to any other EU state/Country pondering such a divorce. The stupidity in this stance should be clear for all to see, but not these EU stalwalts. They would rather shoot themselves in the foot than prove a EU/UK divorce can work. It’s not a simple situation to resolve but in trade terms surely it comes down to a simple discussion over maintaining, french/german/italian/spanish car sales whilst keeping London’s financial centre, the LSE where it is? But after the recent german diesel gate and the past Lehmans / City of London credit bail out debacle… does the man or women on the street really need the LSE or a BMW anymore? As Trump rightly said, he can get another economic advisor tomorrow. There are 10 of the best waiting and ready to choose from. The same could be said for the Bankers. An industry that has for sometime insisted that high salaries are required to maintain high calibre staff. Well… why not put it to the test. My guess is that if you let all the overpaid bankers clear off to Brussels or NY etc, you’ll soon find another tranche of smart intelligent individuals to replace them  easily enough and willing to work for half the salaries (which, note are still in the 6 figure sums range. Afterall, despite all the brains, high salaries and bonuses it all ended up a sorry mess for the city and BoE in 2009.

Back to commodities… Equities continue to trade in an unwanted fashion one week and then in demand the next. As demonstrated above, the 10% to 20% swings in some leading bellwethers suggests that there’s more money to be made by trading rather than investing. Short termism has been rife for a while now but with PoO rebalancing, you would have thought more stability across some Oil focussed companies would be seen. News late last week on the Saudi’s Aramco IPO delay may well prove fruitful for the equity sector as fund managers/investment banks may have to gain exposure in the open market rather than be gifted a slice of Aramco in 2018. Risk caveats mean some investment houses have to keep exposure weights down or at an agreed level. It would not surprise me if one or two out there has a decent cash pile waiting for the Saudi Aramco IPO. That now looks like 2019 at the earliest which as a date by itself suggests the Saudi’s will be keeping PoO stable for another 12months+ at least. Bodes well for the O&G sector.

Week 10 saw a little gap open up for TheShareHub top ten picks vs the newspaper expert picks. There’s still plenty in the tank and news flow looks strong for stocks like HUM, CERP, and SOLG. All three are due sizable news catalysts and assuming it’s good news stuff… they should all do well.

The two heads up stocks in MATD and PDL are a mixed bag. MATD is approaching multibagger status after being tipped on TheShareHub at 7.125p. It’s not hard to see the attraction in this stock with 2 x high impact drills confirmed and 2 more lined up for H2 (TBC). In 2009 or 2010 days, stocks with resource targets like these were fetching market caps 10 x the size of MATD today. Of course, times have changed but even on a basis of applying a 10% CoS, the value should be near 25p a share. PDL is still drifting pending news on the suspended ‘sales diamond parcel’ and subsequent debt discussions. The market wants some clarity on the latter and if it’s good news, the stock should edge back to high 80’s.

All in all… it’s steady eddy stuff at present. No real fireworks just yet. But plenty of catalysts on the horizon for some solid gains across the ShareHub top ten picks.

Week 10 status as below: