ShareHub Hotlist 2019 Review – Week 06

Another almost motionless week for TheShareHub picks. Commodities are stuck in the middle of a market reluctant to take on risk while easy pickings are available. Trump v China appears to be coming to a close, although one imagines that it will likely require 6 monthly or 12 monthly reviews. The outcome is almost baked in already with the DOW just 4% shy of all time highs. It wasn’t that long ago the index was trading at 22000, some 3500pts lower. Around the corner, Brexit fast approaches. It is tempting to ignore this debacle but unfortunately it is a headwind that needs addressing. Mrs May needs to get her skates on as she’s fast becoming known as Mrs Delay. We are at the sharp end now yet ask any politician what happens post 12am on March 29th and not many will be able to tell you. Of course there will be a transition period, a period of ripping up old rules/regs and a period of creating new ones. Based on Parliaments performance to date, one imagines that to be just as chaotic as Brexit itself. So get used it. Uncertainty will be around for much longer than many would like you to think. There is no quick solution. It’s going to take years. Moving on to the hall of shame… this week it’s Sergio and Tusk that take the headlines. Sergio sought out the devil in the greens and after hacking a few to bits with his shoe spikes, gave up on his hunt. He was later disqualified. Golf seems to be one of those sports that just turns a blind eye to such abuse, unless you’re a local club player and the penalty would be more than a few drop shots. Cancelled membership and booted out the door is the norm and quite right too. Perhaps a ‘ban’ for misbehaving professional golfers might be an idea? Mr Tusk may have stepped over the line with his headline catcher but as many have highighted… he has a point. When David Cameron delivered a referendum, the British Public assumed he and his party had done due diligence on how to exit and identified the main issues or hurdles ahead. The Irish border was, has always been and still is the elephant in the room. It’s now approaching 2.5 years and the solution has been left to the last 30 to 40 days? Of course, it takes two to tango and what Mr Tusk seems to be missing is that he and the EU are just as culpable. From day one, the EU made it clear that they would make any exit process feel like HELL. They would make it as difficult as possible. They had to. Why? Because they had to teach the UK a lesson. They had to set an example to other potential ‘leavers’ within the EU. They had to send a message. So in answer to Mr Tusk’s… ‘a place reserved in hell’… for certain individuals, that will be the seat next to yours then Mr Tusk?

Week 06 Review:

The Newspaper picks continue to do well as the FTSE focussed stocks ride the wave of US/China trade talk positivity. Brexit… what Brexit! Commodity stocks continue to tip toe around as global growth worries cancel out higher Oil/metals prices. A weaker dollar would help too but that seems artificially assisted these days. The Saudi’s appear to be keen in seeing WTI above $60pb and it would not take much to get the price there based on recent cuts and Venezuela issues. It should be just a matter of time before PoO rises back to 2018 ave levels circa $71pb for Brent. This bodes well for the likes of Tullow, Premier Oil and Enquest. These big producers have big debt too but the cash being thrown off at $70pb+ is huge. As debt reductions kick in, share prices should rise strongly assuming production levels and oil prices remain firm.

TheShareHub’s first heads up of the year – Echo Energy delivered the first duster of the year. Disappointing but the company has an active plan going forwards, solid production of circa 850bopd and around $20m in cash (assuming some spend over last 6 months). A poor result was already priced in at 8.6p (price down from 12p placing), so the fall to 4.3p yesterday looked utter madness, but that’s AIM for you. As many ShareHUB followers know, Amerisur Resources struck black gold with the Indico-1 well in CPO-5 block, Llanos basin Colombia last year. Early in Jan 2019, the well flowed at 5100bopd. This was put immediately on short term testing and will then go onto long testing with all production being sold at the well head. It’s quick payback and instantly delivers reserves. And the markets reward… about 1p to 2p a share at present based on 16.8p. That’s around £20m improvement in market cap. That values the added reserves (approx NET 6.2mmboe) at around £3m per 1mmboe. The industry standard is nearer £10pb or £12pb for light oil offshore with infrastructure. After all costs, AMER’s profit on a well like Indico-1 is around $10m per year. (Note: Other issues like security and development performance also come into play when valuing reserves.) Clearly undervalued and with another 5 to 6 wells due in the basin this year, Amerisur shares should be in hot demand. Of course, risks remain and success with the drill bit needs to translate into higher production and stronger cash flows. The latter is perhaps Amerisur’s weakness of late. Exit rates of 7000bopd seen in 2017 have slowly reduced to rates of around 5400bopd and that’s including the recent approx 1500bopd contribution from Indico-1. That said, assuming all goes well in 2019, Amerisur could be entering 2020 with over 10kbopd. Plenty of success required to get there but fully funded, debt free and cash generative even at oil prices below $25pb, Amerisur looks ready to finally rock and roll.

Elsewhere, PetroMatad looks odds on to become The ShareHUB’s first multibagger of the year. An active drill plan in 2019 should keep investors happy and the share price lively.

Wishbone and W Resources are both suffering from warrant overdoses. Get past these and the share prices should benefit if or when the good news flows in. Both are approaching key target operational milestones for their mines and the next stages should be a significant step up.

Columbus Energy is suffering from the traditional ‘no news’ AIM drift. Whilst management have already said that 2019 is the YEAR they have been waiting for, progress and communication to shareholders has been slow. As highlighted last week, news should be forthcoming as plans to drill in the SWP region likely requires lengthly planning, permits and rig acquisitions. With the share price drifting from 6p to 2.4p, the pain for long termers has been severe. Dilution has not helped through several placings but debt is now under control and almost reduced to zero. CERP are now in a strong position to push on which begs the question why the sp is at such lows. Management need to outline clearly the plans for 2019 and give shareholders some dates to look forward to. The share price should rerate back to 4p levels assuming all plans look good.

Upcoming news? Watch out for news from Premier Oil on Zama-2 DST results (est. next few days or week) and Amerisur Resources Calao-1x well est. to TD in about 2 weeks time.

TheIndependent Top picks 2019 – week 06
Guardian Top picks 2019 – week 06
TheShareHUB Top picks 2019 – week 06

Heads Up – Echo Energy

The first HEADS UP of 2019 goes to ECHO ENERGY. (First published on Jan 30th 2019, exclusively to ShareHub subscribers).

Echo Energy, is a Latin American focused upstream oil and gas company, with an active operational programme in 2019.

On Jan 8th 2019, the company issued an update on operations

“Further to the Company’s announcement of 11 December 2018, the Company confirms that the equipment required for the stimulation of the EMS-1001 well, drilled in June 2018 on the Company’s Fracción C licence, onshore Argentina, has now arrived on site and that stimulation operations have commenced.” END.

Assuming progress has gone ahead as planned, results from the early stage work should be coming through shortly. Investors looking for high risk vs high reward but with a decent platform to fall back on such as core production streams and cash in the bank… look no further…

The company has a two well Stimulation Programme lined up meaning that if EMS-1001 disappoints, they have ELM-1004 to follow straight after.

During 2018, the Company drilled four wells across the Company’s onshore licences in Argentina (Fracción C licence).  The first (ELM 1004) and third (EMS-1001) of these wells were initially successful with the Company announcing on 21 June 2018 that the third well in the sequence was considered potentially material following interpretation from the wireline logs. 

Current Production

In 2018, the Company successfully completed four well interventions (CSo-96, CSo-104, CSo-21, and CSo-80) in the Cañadon Salto Field, onshore Argentina (Fracción D licence).  On 22 October 2018 the Company announced that these wells had achieved stable production levels. Production from these wells has contributed to a total Company average net production in the year to 12 November, of 876 barrels of oil equivalent per day.

Following the success of these workovers and the associated production uplift, the Company has identified a number of additional candidates for well interventions and expects these operations to commence this quarter (Q1). 

The Company is also evaluating the potential for gas development projects within the Fracción D licence, with a view to monetising existing undeveloped 2C resources.

Key Asset: Tapi Aike

The Company’s primary objective in acquiring its Argentinean business was to secure access to the high impact Tapi Aike exploration acreage.  

Tapi Aike – Seismic Acquisition.
3D seismic’s over 1200km2 on the Company’s high impact Tapi Aike exploration should be underway soon as per last years update and cited to take approximately 4 months.

The Company believes that the Tapi Aike licence offers a compelling multi Tcf exploration proposition and, following completion of the upcoming seismic acquisition programme and subsequent data interpretation, the Company currently expects to define an initial 4 well exploration drilling programme with each well estimated to cost between US$2 million and US$5 million net to Echo.

Cash: Cash balances of £26.1 million as at 30 June 2018
Debt: Approx £12m via Bond 8% per annum. Warrants attached exercise price of at 15.1875p. Bonds due May 2022.
Market cap: £41.3m
Current Share Price: 8.65p

The cash pile will have reduced from June 2018 but with ops running low for the last 6 months due to delays, the cash pile should not have reduced dramatically. With close to 1000bopd production, the Bond 8% interest should be comfortable to manage along with capex. Should well stimulation plans go to plan, production could rise significantly and potentially enhances plans for Tapi Aike.

The share price looks cheap based on cash balance and production levels. Throw in the active well plan and the risk vs reward is compelling. Not for the faint hearted and key risks remain. As with all stocks, research thoroughly and do not invest more than you can afford to lose. Please read the risk warnings in the sidebar.

Target Price: 25p (Multibagger potential)

ShareHub Hotlist 2019 Review – Week 05

A tough week for TheShareHub top ten picks for 2019. Commodity prices are up over 20% in most cases from Oil to Gold. So question is… why are commodity focussed equities slow to react? In the Oil&Gas sector, the market is still unsure of how OPEC and NON OPEC are going to get along. Trump’s sanctions on Venezuela came as a bit of a surprise and undoubtedly have led to stronger oil prices over the last week or two. Russian oil cuts have yet to be felt after the Russian Oil minister admitted that it takes time to reduce production safely. Funnily enough, it doesn’t actually take them much time to boost production when allowed. Cynicism aside, the Russian’s are not part of OPEC and as such do not need to comply with cuts. A ‘deal’ between the Saudi’s and Russian’s is very much ‘open’ to intepretation and it’s because of these vagaries that the market is so against pricing ‘in’ a full supply/demand rebalance. Furthermore, Iraq and Iran are still very much the wild cards. Trump promised heavy Iranian oil cuts via sanctions some 6 months ago and ended up delivering very little on that promise. That said, the recent Venezuelan sanctions are helping and the data over the next few weeks should begin to turn quite bullish for PoO. That bodes well for the likes of Enquest, Premier Oil and Tullow. All big debt holders, and all needing top dollar a barrel to ensure meaningful debt repayments can be made whilst still continuing to grow and support production levels. That’s the biggest problem for Enquest and Premier Oil near term. Many producing fields are heading towards plateau rates and many are now very much on the decline. Expensive workovers, pipeline repairs and so on…all await around the corner. That’s E&P for you.

Week 05 Review: The FTSE100’s strong recovery has benefitted the two newspaper top picks which both lead the way. Barrick Gold has been dropped from the Independent picks and funds redistributed amongst the other 11 stocks. Based on the Rangold Resources tip, TheIndependent picks would be around 15% down on that stock bringing their total growth thus far to 5.5%. The Guardian top picks are not far behind. TheShareHUB picks are carrying the wooden spoon for the moment which is quite a slide from the opening 11.5% gain in Week 2. It’s likely to be a bit of a roller coaster in 2019 so get used to wild swings.

Drops in AMER, MATD and SXX look a bit over done but there’s nothing wrong with a bit of consolidation. Stocks often go on to test higher highs once support levels have been tested and short term trading interest has departed. For many smallcap stocks, the lack of institutional interest is frustrating especially as some assets are reasonably derisked compared to a decade ago. The wash out that followed OPEC’s ‘flood the market’ decision in late 2014 has left a long tainted mark on the sector. Ironically, many of the mid tier and lower tier E&P’s have become more streamlined. Debt reduced or renegotiated and overheads/costs reduced. Many are leaner and meaner than they were in 2010. Yet the II’s still resist the temptation to get involved meaningfully. Add to this the impact of new margin rates and equity trading restrictions on normal PI’s and you have a market that looks and feels more more like a ghost town. Volumes are down for the above reasons and brokers/spreadbetting firms are having to work twice as hard to gain the interest seen some years ago. M&A has been disappointing too. Ophir’s recent sale at 55p was a blow for the sector. Faroe’s sale valued a little higher yet still well below the expected fair value price. It’s a buyers market at present so expect a few more cheeky bids to come in over the next few months. If you don’t ask then you don’t get. Fighting off predatory offers requires a strong institutional investor base that are onboard with valuation benchmarks. Amerisur’s John Wardle is currently in London to bolster II interest in the stock after a number of transformational events have left the share price looking healthier but a long way from where it should be. If he can get some large II’s stakebuiding at 17p to 20p levels, then any cheeky takeover approach at 25p becomes less likely. II’s generally want double bubble for their risk vs reward when dealing with the smaller cap stocks. They like to have maximum upside and limited downside. At 17p today, AMER certainly offers that scenario assuming the drill bit performs of course. Fortunately, AMER has approx 6 to 7 wells due to be drilled this year with one underway right now with an expected TD date of end of Feb. So a duster is not the end of the world by any means.

All quiet over at CERP.L. If the company is to get plans for an SWP drilling phase underway in Q2/3 2019, then action will need to be seen regarding drill targets/permits/rigs and potental partners brought in. With bread and butter production of 850bopd to 1000bopd in place, CERP can afford to take their time and build up the cash balance. But leave it too late and they could miss the drilling season slot in Trinidad. News might not be too far away for CERP investors who have had to be painfully patient over the last 6 months+. But as the CEO’s says… 2019 is the year they have been waiting for. Well, Mr Koot… it’s time to deliver. Assuming he does, then the share price shoud recover very quickly.

The first ‘Heads up’ of the year (Echo Energy heads up price 8.65p) went out to ShareHUB subscribers last week, with a target price of 25p upon well works/stimulation success. No guarantees of course and risks remain. The full article will be posted on TheShareHUB website for all non-subscribers later this week.

As mentioned before, if you Subscribe to TheShareHUB updates service, please check your SPAM folders for the confirmation email which contains a verification link response. The link lasts for 48hrs before it lapses.

Roll on week 06…

TheIndependent top picks 2019 – week 05
TheGuardian top picks 2019 – week 05
TheShareHUB top picks 2019 – week 05

ShareHub Hotlist 2019 Review – Week 04

Better headlines from across the pond on China/US trade talks have helped the markets to return to some calm in 2019. That said, it should be noted that as January closes out, tomorrow… the DOW Jones is on target for a near 10% gain. It’s put on 2000pts since the year began and not much media hype to accompany it. In December, when the index fell 2000pts, the media channels were big bears. Many will know by now that the markets and the media are entwined. If the big banks and large hedge funds want negative stories in the press, then that’s what tends to get printed. Nothing new here, it’s been going on for centuries. Stock tips (often poor ones) would be dropped around the floor in places like the coffeehouse back in the 17th/18th century. Today, with multi-media channels galore, it’s just as easy to drop a story out there as it was to drop a piece of paper on the floor. The difference is of course… the audience. A story by Reuters or any news agency hits millions of users/readers. The stories get edited or tweaked and then sold on and recirculated to more millions and so on. The chances of misinformation are higher today than ever before. Why? Because there is no real penalty for poor journalism. Just an apology or subsequent edit required. This isn’t just the press, it involves the market too. Analysts, brokers, banks, hedge funds. All issue notes to the market and these are often acted upon by investors. Take Enquest – the North Sea E&P as an example. RBC Capital issued a broker note recently, dropping their target from 55p to 15p. Now that’s a serious downgrade. The problem is, it was based on some poor research. In fact, it was based on incorrect information. Misinformation by RBC. A day later RBC Capital issued a second note correcting their error…

“We published a note earlier incorrectly saying that there was a risk to the company’s covenants, which we had wrongly identified to be 1.1x RCF/EBITDA,” analyst Victoria McCulloch said in the new second note.

“However, the two upcoming covenant tests (31 March, 30 June) require EnQuest to have a net RCF/ EBITDA of 1.5x or less, using a trailing 12-month EBITDA.”

McCulloch added: “There is no risk of covenant breach under the updated RBC oil price deck.” END.

Covenant breaches are big news and major risk warnings for Investors. It’s as bearish as it gets. Which might explain why RBC dropped ENQ’s target price from 55p to 15p. However, after realising their error and that no covenant breach was likely, the company did not alter their target price. Why not? Probably because it doesn’t suit their position or clients positions aka debt holders, hedge funds and many others. all of which have (or may have) an interest in seeing Enquest’s equity price lowered.

A couple of years ago I highlighted the vast gap between broker notes and reality. In 2016, the commodity market was in a poor area. Kaz Minerals was trading at 90p a share. There was not a broker note around that had a bullish view. In fact, a year later after Kaz minerals had five bagged, jumping to 500p, HSBC promptly downgraded Kaz. The bank’s rating moves to ‘reduce’ from ‘hold’ and the price target drops from 440p to 400p, suggesting a fall of circa 20% from the then current price of 510p.

HSBC Said, “We had assumed copper production at 276,000 tonnes for FY17e, but management guidance is between 225-260kt; our updated forecast is at the top of this range at 254,000 tonnes.” END. Date Feb 2017. Roll on May 2018 and Kaz Minerals has double bagged from 515p to 1030p+. HSBC’s guidance / broker notes barely budged from 450p for the entire year before finally capitulating to their woeful error and setting a target at 760p.

Just where do these banks get these analysts? And why are they paid 6 figure salaries? In a 2 year period, Kaz Minerals had jumped from 90p to 1030p based on nothing more than a recovery in copper prices and stable production. Would it be fair to ask HSBC to disclose all known internal business investments in Kaz Minerals between 2016 and 2018? If they were shown to be buying stock, would that be grounds for fines? This is the problem that investors have. You simply cannot trust the motive behind these notes. Goldman Sachs have also become known within investor forums as saying one thing and then doing the opposite. If they say ‘sell oil’, then that really means ‘buy oil’.

In summary, there’s not alot out there today that can be trusted, certainly in media terms. Misinformation is rife and unfortunately this is just another hurdle that investors have to jump and contend with from time to time. It’s not right and laws should be introduced to ensure that if banks/brokers issue notes, then they cannot trade in the opposite direction… until of course, a new note is issued. The problem is, the manipulation goes further as it reaches other associated funds/investments like etfs and so on. The answer is to be wary of everything you read. Treat broker notes with a keen eye. And yes, when a large bank says sell… that might actually mean buy. Easy isn’t it?

Week 4 Results – TheShareHub picks remain top although the Guardian and Independent picks have done well to close the gap helped by the recent wobble within commodity stocks. It’s a curious one as with PoO, the price is actually up 20% off lows from last month yet some stocks are still trading like PoO was in the low $50’s (Brent). A period of consolidation among some equity stocks is not unusual after a strong start to the year but some of these pullbacks look overdone. Amerisur Resources is a prime example. Exploration success, boosts to reserves and production from CPO-5 all contributed to the share price move from 15p to 20p. However, today the share price is 17p having given back 3p. That looks overdone and a return back to 20p should be expected in the coming weeks especially when the company is set to drill another 4 to 6 high impact wells in 2019. A market that looks forward rather than back would be welcome and a refreshing change from the day trading algo bot drivel that is prevalent today. News events will continue to drive AMER’s share price and assuming they deliver good results, the share price has plenty to catch upon already, nevermind what is waiting around the corner. Elsewhere across TheShareHub top ten picks, PMO delivered a great result from Zama-2. Further appraisal work is required including flow tests and news should be coming on those soon. Unfortunately the market ignored the Zama-2 news and instead prefered to concentrate on PMO’s rumoured bid for Chevron North Sea assets. Another stock suffering of late is Petra Diamonds. A poor update was met with the usual market heavy handed approach. Down from 45p to 33p is a sizable correction and one that dents sentiment. PDL must work hard now to deliver on debt reduction and production growth, both of which should be possible in the quarters ahead.

News today of Ophir’s accepted bid of 55p is disappointing for the sector as a whole. It undervalues Ophir by a country mile. The company sold 20% of its Tanzania block a few years ago for $1.3bln. It still holds 20% which even if it was valued at $500m today leaves the rest of the folio valued at zero. Ophir made many errors in their exploration campaigns and also with the Salamander acquisition. But all said and done, 55p a share is an absolute steal for Medco. So that’s Ophir, Faroe and Ithaca all gone in the last couple of years. Who’s next! Tullow? Premier Oil? Enquest? Amerisur? Whoever it is… lets hope the offer prices are much much higher.

Finally, a quick note on TheShareHub free subscription service. Due to GDPR regs, the subscription service was updated in 2018 and unfortunately has caused some issues. If you were previously subscribed and are no longer receiving updates, please email using the contact page and your details will be updated. All subscribers are required to opt in via a ‘second’ confirmation email so please watch out for this in your spam boxes. As the year progresses TheShareHub intends to send out ‘heads up’ notes to subscribers on a number of stocks of interest. If you would like to receive this service then please sign up using the facility in the sidebar.

Week 4 below, The Independent folio has not been included due to issues over Barack Gold relisting/pricing. The Independent’s picks are up 4% as of week 4. Guardian picks up 3.3% and ShareHub sitting pretty again with 4.68% gain. Long way to go. Roll on Feb.

ShareHub top picks 2019 – week 04
Guardian top picks 2019 – week 04

ShareHub Hotlist 2019 Review – Week 01

A strong start to the year for TheShareHub 2019 picks. Further good news from Amerisur Resources helped the picks get off on a positive note. With news due from majority of the picks, catalysts should be coming thick and fast. Premier Oil are heading towards Target Depth on their second Zama well in Mexico. PetroMatad are due to update the market on 2019 plans on Friday Jan 11th. Columbus Energy are long overdue an update on production and forward plan. And Petra Diamonds have set Jan 28th as their trading update. January certainly looks like being a busy month.

Across the markets, Global risks remain with China/US trade talks kicking off on Jan 7th and North Korea Nuclear discussions ongoing. And there’s the big Brexit deal vote set for January 15th. Although the ways things are going there could be several reinventions of this vote if it doesn’t go the PM’s way. By this I mean, a no vote would lead to … well, apart from some mini chaos, probably a revised deal and then another vote. You can see how this can trundle along for another few weeks before all concerned kick the can down the road and extend March 29th deadline to June 30th. Afterall, what’s another 3 months? And another 3 months after that and so on. That’s how the last 2 years has been managed by the UK gov and EU partners. None really want this and most would prefer a second referendum. But after seeing how childish and arrogant the EU have been, I have a feeling that a second referendum will deliver the same outcome. And after that, there’s absolutely no way back for all involved… which is probably why it is being avoided right now.

What does this mean for global markets and equities? Well, it’s likely to be a bt like 2018. Choppy and unpredictable especially with slowing growth thrown into the mix. Will there be a huge sell off? I don’t think markets are ready for another crash. Banks still look fragile, QE is being withdrawn at a time when most are suggesting it should be retained or even raised. At the end of the day, it all comes down to the Algo’s and bots. And that’s the worry. The market has become saturated with these algo’s and one of these days, it’s going to go terribly wrong. But don’t worry, there’s an Algo out there already prepared for that.

One sector that may do well from a weakening dollar would of course be commodities. Miners and O&G stocks could at last see signs of another bull run. Seems at odds with a slowing global economy, but it’s almost a decade since QE kicked off and risk off trading commenced. Easy money was made so risky commodity stocks became ignored. But as QE dries up and the broader blue chip indices begin to let off some steam, Commodity stocks (many of which are just off all time lows) could be back in favour. OPEC are showing signs that they will support the Oil Price regardless of Global issues. Many investment funds are beginning to look to solid metals as a safety zone. Gold has risen from 1150 to test 1300 levels recently. If markets wobble further, Gold could hit 1400 before the year is out.

Lots of if’s and but’s. But in this market it’s impossible to be 100% sure of anything. So be prepared in 2019 for all eventualities. Keep on your toes, spread risk and always invest sums that you can afford to lose. Do not over leverage. Be smart and do thorough research. Be patient. There’s always next year and the year after. Sometimes the best investment is no investment at all.

For those that are new to TheShareHub Hotlist picks. The idea is simple. You take £10k and invest it in more than 6 stocks. Ideally 10. You then leave them to do their thing over 12 months and tally up the net gain. Two Newspaper top pick 2019 lists go head to head with TheShareHub top picks in an effort to win the Hotlist cup. Gains from Dividends are excluded and stocks are not traded. The stocks are set in stone for 12 months and that’s that. This is not necessarily the best strategy in a volatile market and should not be followed verbatim. If you invest in TheShareHub picks, then you should manage risk accordingly to suit your personal situation. See risk warnings in side panel.

During the year, other stock tips are provided via ‘heads up’ posts. Some turn out well and others fail. So all require thorough research and investigation by your good selves. Best of luck to all investors in 2019. If you want to sign up for post notifications direct to your email inbox then please subscribe via the sidebar. Check spam folders for verification/confirmation emails.

Week 1 Status:
TheShareHub (2018 Hotlist cup holder) zooms into an early lead with a 5.6% gain. The Guardan picks begin where they left off in 2018 … in the red and the new boys ‘The Independent’ are up and running with a small gain via their whopping 12 x picks. That said, one bright spark added Randgold Resources which as many know have merged with Barrick Gold, now listed on the NYSE/TSX listing. So that single line stock will need to be adjusted.

ShareHub top picks 2019 – week 1
The Independent top picks 2019 – week 1
Guardian top picks 2019 – week 1

ShareHub Hotlist 2018 Final Results

TheShareHub top ten picks wins the Hotlist cup for 2018 by a country mile. Despite a late dash for the blue finish line, the top ten picks came in with a minor loss of 2.23% which feels like a result in a very volatile market – a backdrop which saw many of the newspaper expert picks slaughtered on mass.

The DailyMail won the cup in 2017 with a very respectful 20% gain but in 2018, the cup holders limped in with a loss of just under 17% (excluding dividends). The Guardian top picks suffered early losses through Footasylum and never really recovered. Ending the year with a whopping 27%+ loss excluding any dividends.

TheShareHub brought in fresh blood with the 2018 picks and this proved to be a smart move. On a comparable basis, had the ShareHub top ten picks of 2017 simply rolled over into 2018, the end result would have been a brutal 18% loss. Just goes to show that Portfolio rotation and getting rid of some dead wood, is or can be, a winning strategy.

Week 52/Final Results Below, along with a short summary on TheShareHub top ten.

ShareHub final Results – week 52
Daily Mail final Results – week 52
Guardian final Results – week 52

Summary of ShareHub Hotlist 2018: (in no particular order)

  1. Amerisur Resources – A strong finish to the year saw AMER close out the year like a bull in a china shop. A large distressed private investor had been actively selling down over 100m shares throughout the year which took its toll. The seller is now cleared and AMER is getting back to doing what it does best… delivering great news flow with the drill bit. A poor share price performance year for AMER, but operationally, it was an absolute success. The market is slowly waking up to the disconnect between recent success and an oversold share price.
  2. Columbus Energy – In transition phase and spent majority of 2018 getting the house in order. Production steady but growth has been limited due to legacy issues. With new acquisitions bedded in and exciting exploration planned in 2019, 2018 should be a year to forget and 2019 a year to look forward to. Schroders and other large investors have been filling their boots so 2019 could see strong gains.
  3. Cora Gold – Disappointing year largely due to managements sleepy approach to funding. Success with the drill bit needed to be turned into an early fundraiser as 2019 plans were always going to require more funding. They left it too late which is the one reason for the share price’s decline. Problems at Hummingbird’s Yanfolila Mine have not helped much either. Without Hummingbird doing well, Cora have an uphill struggle ahead as large financial packages for small mine developments is nigh impossible in current market space. Farming out or doing a deal with HUM would be best way forwards for all involved. Dropped from the ShareHub picks for 2019.
  4. Hummingbird – First multibagger of the year for ShareHub top ten picks in 2017. Unfortunately, the rainy season and some poor management decisions by CEO Dan Betts put an end to HUM’s golden boy glow. Instead, investors were left scratching their heads at what seemed like a management team asleep at the wheel. Poor year for HUM and 2019 looks far from a stroll in the park for them. Tough challenges ahead remain but a deal with Cora could see value added fast. Extending the mine life and stability issues are paramount.
  5. Petrofac – Had a very solid year with strong debt reduction and new order book builds. SFO investigation still a concern and keeping some investors away. Crash in Oil prices reduced a very good year to a 6% loss in the last few weeks. Should recover with Oil Prices but SFO case firmly on investors minds going into 2019. A successful outcome should see the stock rerate. Dropped from TheShareHub picks for 2019.
  6. Premier Oil – One of those head scratching moments. Trading at 146p a few months ago yet closed out the year on its knes at 66p. Makes no sense. Company has made great progress across bulk of folio with production rising and exploration kicking off again at Zama, Mexico. Debt is a concern in lower PoO environments, but equally large exploration finds like Zama and Sealion assets need to be factored into values to. At present the market is discounting PMO based on lower oil price projections yet is not accounting for the $70pb hedges in place. The stock should be double the price and like Ophir Energy recently, a takeover offer from India or Asia could be forthcoming.
  7. Providence Resources – A decent year for getting farm out deals agreed but the long awaited Barryroe appraisal/exploration phase has been delayed and that’s a significant blow to investors that do not like cash tied up for months and months with little growth or movement. Great prospects and a decent hold longer term. Useful 31% gain in 2018 but dropped for 2019 on Barryroe delays.
  8. Serica Energy – BP have become Serica’s sugar daddy of late. Gifted some incredible assets at bargain prices. The question now for investors is how well will these assets produce? Iranian issues on one shared licence appear to be resolved but after a very solid 50% gain in 2018, it’s time for some fresh blood. Dropped.
  9. Solgold – Another head scratcher. Share price drifted down from high 30’s to test 20p against a backdrop of great exploration assay news. BHP taking a large slice of stock from a previous seller soon woke the market up and the share finished the year up 25%. Not a bad performance but with several large mining companies swarming around the honey pot, the real event should be coming in 2019 with an agreed buyout on one or all of the company’s assets.
  10. W Resources – A great year with 40% gain. Many operational boxes ticked and whilst there were some annoying fundraising events, the stock looks well set to produce cash flows from early production in 2019. Looks like a solid year ahead for WRES.

That concludes the 2018 stock review. Disappointing after the early surge which saw the top ten picks up 18% for the year. TheShareHub top ten performance in 2016 was an enormous 130% and it was always a tall order to match. That said, a minor loss of 2.23% feels like a victory in this market and considerably better than the 9% loss in 2017.

More depth and coverage to follow on the new 2019 ShareHub top ten picks over the coming days.