ShareHub Hotlist 2017 – Week 49

Week 49 is best summed up as another sideways trading week as the markets await the Fed Reserve Interest Rate decision later this week. All the headlines of late are all about BitCoin. It’s astonishing how the ‘establishment’ seem to be left behind on this one. It’s not like the market to be wrong footed and BitCoin has done precisely that. Now with access to futures trading, BitCoin has joined the big boys. It’s not going away anytime soon and it’s going to take a while before the usual vampires like Goldman Sachs and co get their teeth into it. It’s an ‘animal’ of many forms at present and the normal market manipulators (big trading banks, you know the types, the ones that fiddle Libor, Forex and well… just about anything) are struggling to decide which part to grab onto. The tail? The head or just a paw or ear? Everyone wants a slice and like anything that is ‘virtual’ or ‘digital’ it’s anyones guess where it is headed. My guess is that there will be a period of trading whereby some individuals find their BitCoins have chocolate in them. One thing is sure, money is flowing in and out and it’s not currently being washed through the normal large US Banks controlling hands. It’s trading via many exchanges via many people across the globe with many being untraceable. Even HMRC are behind in terms of how to class the profits/gains.  With the Bots and Algo’s in a spin it could be a while before some boffin finds a new way to calibrated them.

In the meantime, GOLD which has been around longer than man and traded for centuries and centuries is apparently under pressure due to this new cryptocurrency. Don’t believe a word of it! Utter nonsense. If there is one thing certain in this world, it’s the precious metal that is Gold. At $1250oz, it’s trading significantly lower due to Fed Rate rise fears and also lack of volatility in markets. When the main markets top off (and they will) and volatility returns, GOLD should edge higher. BitCoin has a future, but after such a good run, would you sell equities and put money into Gold at a low entry level or put it into BitCoin at all time unknown highs? Ponder that for all of a second.

December is usually a month to get news out before year end. Companies generally want to get ‘bang for the buck’ with good news releases hence better to announce these when Markets are still sober and not too punch drunk from the festive period. With the calendar showing week 52 as virtually a non starter due to holidays, companies would be wise to get good news out either this week or early next week. Any later, and it could be forgotten or missed. Thus far, some companies are getting news out there now with Hurricane Energy getting their CPR out early doors. Other stocks covered by TheShareHub such as WRES and SOLG have issued news worthy updates which should see the share prices progress higher in 2018. Other news has yet to arrive with CERP and HUM due to update the market on production levels and first Gold pour respectively. Finally, AMER is certainly a puzzle. PoO has doubled in price from lows. AMER’s production has doubled from lows. And the share price has halved from highs down 17p to 17p (previous highs 34p). Crazy stuff but that’s what happens when you have a large investor who seems intent on offloading stock in a very poor volume market. When the selling stops, AMER should move higher with ease as the business progress in 2017 is worth 34p a share and not 17p. That’s a huge valuation gap to fill but when it happens, I suspect it will happen fast. No guarantees of course.

Week 49:

Daily Mail and Telegraph continue to go toe to toe and it’s going to the wire. TheShareHub picks will do well to finish with minor blushes circa 10% down but anything near 20% down is more than a bloody nose. No matter how good the 130% increase was last year, it’s not nice to see a fall at anytime. PoO’s done its part yet Equities have lagged considerably and that has to change at some point in the future as it makes no sense at all. A few quarters of decent earnings and debt reductions will see many of the mid cap sector bellwethers like Tullow, Premier Oil and Enquest do well.

Note: The data on the Telegraph is incorrect but the percentage increase is fine. Since LSE change over to various currency and decimal points, data feeds have been all over the place and some providers like Interactive Investors are still struggling to get data feeds to work properly after 3 to 4 weeks of LSE changes. Not acceptable and clients should seek some kind of compensation from ii and others for not supplying the service that they advertised. If you don’t ask, you don’t get! And if you don’t get… move your business to another provider.

ShareHub Hotlist 2017 – Week 47

The tussle between Daily Mail picks and Telegraph top ten continues with the pair swapping places again. Nothing between these picks and more girations to come no doubt as we enter the final few weeks of the trading year. As mentioned last week, the markets/indices do look a little punch drunk. Question is… do they have some legs left to deliver a Santa Rally? Some analysts are already pen’ing in double digit growth for the indices in 2018. Anything is doable in this casino market but 10%+ would put the DOW at near 27k levels. That’s more than toppy. The Commodity sector is certainly one to watch as the rebound has been slow compared to the blue chips / major indices. Many equities have lagged commodity rises and this is blatantly clear across a number of heavy debted companies like Tullow, Premier Oil and Enquest. It’s down to these companies to prove the market wrong and deliver the doubters with some figures that blow expectations away. A few quarters of strong cash generation and debt falling should be enough to kick start some rerates. Of course, to do this PoO will need to be stable and supported in the $60’s. We’ll find out the Saudi’s, Russian’s and OPEC’s view on Thursday Nov 30th. News may filter out ahead of then but Thursday is the big event. In the past, the market has tended to ‘sell the news’ but the sell off doesn’t usually last long before prices are bouncing back.

Stocks of note over the last week are AMER, SOLG, HUM, HUR, OPHR and FPM. The first two are via the ‘heads up’ coverage. AMER look on track to deliver some very solid production numbers in Dec with Mariposa-1 now contributing to cash flows. The company really is in the best shape I have seen it in over 2 years and with PoO in the $60’s, it’s going to feel more like PoO in the $70’s based on AMER’s OBA pipeline $10pb (approx) savings.

SOLG has drifted along for a few weeks now as the banks complete the distribution of the £40m bought deal to selected clients. The news should be thick and fast over the next 6 months+ which puts SOLG top of the wish list for the sharehub 2018 picks. All will be revealed on Jan 2nd.

Hummingbird Resources are quietly delivering on all their promises with Gold pour on time and budget for end of Dec 2017. The way progress is going, it would not surprise me to see a Gold pour happen a week or two before then. Thereafter, 2018 looks like a year of rerating for the business.

HUR has been drifting for months now as it loses it’s high impact exploration shine and moves into the boring phase of development. That said, it’s not that long now before first oil in 2019 and I would expect the share price to recover as time ticks on and development milestones are passed. One highlight to watch out for in Dec is HUR’s updated CPR. Dr Trice will be keen to get this out after making several improvements in modelling and subsequently on commercial terms.

Ophir Energy is another ‘drifting’ stock. Like HUR, they too have a large development project (Fortuna) although the difference is they are still looking to get sanctioned and fully financed. News last week hints that an indicaton on financing terms will be outlined to market circa Mid Dec. OPHR is languishing at all time lows so there’s plenty of upside and growth to come should they please the market with Fortuna funding terms.

Last up is FPM. Faroe have been tickling along nicely and with PoO in the $60’s, the cash should be rolling in especially as they are essentially cash rich and debt free. That said, the recent bond deal and move to advancing development projects will turn FPM into a more typical ‘debt’ balanced E&P company. I say ‘balanced’ as the debt is moderate and not excessive.

Overall, plenty of news to come in Dec and with a bit of luck and guidance from OPEC, the PoO sensitive stocks should do well. Of course there is always risk to manage and examples that AIM is not the only hotbed of coals out there can be seen via the likes of Centrica, Mothercare and Carillion to name a few. The blue chips and large mid caps have big risks too and it feels like we are entering a prolonged period of ‘change’ from the ‘old’ to the ‘new’ as technology and the fast developing digital world rewrites the way we do things on a daily basis.

ShareHub Hotlist 2017 – Week 46

Much of the same. Drifting along awaiting a number of newsworthy events such as OPEC meeting, UK budget, US tax reform, Brexit, the list goes on. The US market looks like it needs a break after a bullish period which has seen the DOW rise from 19800 to 23800. That’s not far off 20% growth. That’s massive for a Major indice like the DOW. In contrast, the FTSE100 has risen from 7150 to highs of 7560. It’s barely up 5% as I type. Across the commodity sector, in Oil&Gas, PoO has had a great run, up from lows of $42 (wti) to recent highs of $57 in 2017. That said, it is actually up just $3pb from Jan 2017 levels. Looking at some sector bellwethers, SHELL are trading at highs last seen when PoO was in the $100’s. The likes of Tullow Oil and Premier Oil to name just two are trading at levels last seen when PoO was in the $30’s. Astonishing gaps and disconnects in market valuations compared to previous months or years. The mind boggles at what is going on as it has no obvious rhyme or reason. It’s just not normal to see these disparaties without any meaningful moves of late to correct them. Instead, the market just seems to bob along like it’s on autopilot but with no idea of the destination it is headed for. What does this mean for investors? Well, one word would do it and that’s ‘caution’. When markets begin stumbling around looking punch drunk, you need to sharpen up and get ready for what may come next. It could be volatile. One go-to metal when uncertainty is around is GOLD. Recently, the trading on GOLD has been odd to say the least. Over the last few weeks the commodity has seen sharp price spikes of $10 per oz. Again, it’s the unusual nature of these that raises the eyebrows. It would not surprise me one bit to see POG head higher over the next few weeks and considerably higher in 2018. Dollar weakness is causing issues across a number of pegged commodities and with Bitcoin going bonkers, I feel the market will once again turn to the solid and reliable nature of GOLD. Getting a decent GOLD equity/stock into the folio as protection or a decent hedge is never a bad idea. There are plenty of stocks out that that offer exposure to POG upside and not all are the same. Some have high AISC’s and others have very low AISC’s. It’s the latter that often move faster and rerate when POG moves higher as they see greater upside to the cash flows. Hummingbird Resources is TheShareHub’s star performer for 2017 thus far and it comes as no surprise that there should be more upside to come. The company is on budget and on track for first Gold pour from their Yanfolila mine in Mali and should POG head higher, Hummingbird will be generating seriously large cash flows. Certainly one for the folio if you like the risk vs reward that comes from early phase production miners.

Week 46 – A weak one for commodities.

The Telegraph opens up a gap again after being challenged a couple of weeks ago by the Dail Mail picks. It’s still unclear which one of these will take the winners spot at this stage. The ShareHub top ten slipped back to levels last seen when PoO was in the $40’s. Very odd considering PoO is just a few % off 2 year highs. It’s going to take something very special if the wooden spoon is to be avoid this year.

Roll on next week. Note, OPEC meet on Nov 30th.

ShareHub Hotlist 2017 – Week 45

Not long to go before the year end if upon us. Due to Bank Holiday’s, the last week or so of December is virtually all non trading days. Thus, whilst there are 7 calendar weeks to go (approx), it’s actually more like 6 trading weeks left.

The last 2 or 3 weeks of trading across the bulk of sectors/markets feels a bit tentative if anything a little disinterested. Advances have been strong in 2017 so it’s no surprise to see the market easing up. With the bonus season looking very much in the bag there might not be too much of an incentive for the usual santa rally this year. I guess we’ll have to wait and see. For Oil focused investments, OPEC’s Nov 30th meeting is the key event this month so perhaps a little ‘wait-and-see’ trading going on between now and then. PoO has had a good month or two and a period of consolidation or trading sideways within the $60pb levels (Brent) would be beneficial and support a decent launch pad for further rises should OPEC push the current output quota past March 18 and onto Dec 18. An extension of an extra 3 or 6 or 9 months has not been priced in by the market and there is still some doubt about which it will be or whether it will be extended at all. It’s not a shoe-in despite the encourageing noises from Saudi’s and Russians. The Saudi’s have been making quite a few noises across the MENA region with Iran, Lebanon, Yemen, Syria,  Iraq and Qatar all being targeted in some form or another. It’s not unusual to see the Saudi’s throwing their weight around. But recently, the noises seem to be getting louder and louder. Oil investors will need to keep a close eye on the MENA region as any negative developments (such as recent pipeline explosions) can send Crude sharply higher. Considering the potential woes from North korea, the globe is far from ‘settled’ and uncertainty is rife. In situations like these, you would normally see GOLD showing significant strength. Signs of the precious metal in demand were seen last week as prices rose some $20oz before mysteriously getting spiked down on what looks like a huge paper deal late on Friday. These kind of volatile swings suggest that some meddling in GOLD prices is underway and it’s unclear why or whom would want GOLD prices suppressed right now. Fingers have been pointed at the usual manipulators as US banks such as JPM and Goldman Sachs have been ticked off in the past for using heavy handed tactics to suppress prices. The next few weeks will be interesting to watch as I expect GOLD demand to keep building into 2018. Will the mysterious ‘seller’ appear again to keep prices in check?

Week 45 saw the top picks swing around again for 1st position. This time it was the Telegraph that put in a good shift with the Daily Mail showing signs of being puffed out after a very good 3 week run. TheShareHub picks continue to bob along with little movement eitherway which is odd considering the bulk of the picks are sensitive to PoO. The latter has performed well so it’s about time equities began following suit.

The heads up picks/stocks of note of late such as AMER, CERP, SOLG and PANR all had quiet weeks. The majority consolidating and awaiting news. All have exploration / development work underway and all should have good news flows coming soon on key events. PANR is widely expected to announce first gas sales this week which will be a huge and highly significant event for the company.

Also, keep an eye out for an update from Hummingbird Resources. The company are presenting at the Proactive Investors forum on Nov 16th and investors will be keen to know how advanced the company is regarding Yanfolila Gold Mine. First Gold pour is currently cited for before year end. It’s not long now. A very exciting period ahead for the company and investors awaits.

ShareHub Hotlist 2017 – Week 44

A good week for the commodity focused ShareHub top ten picks as Oil prices punched in new 2 year highs. You wouldn’t know it if you looked at bellwethers like Tullow and co. Most are still trading at levels last seen when PoO was in the lower $30’s. There are signs that the market is slowly (yet reluctantly) closing the gap and disconnect between PoO’s advances and some woefully cheap share prices. Part of the reluctance may rest in the ‘markets’ fears over OPEC’s reliability and countries like Iran, Libya, Nigeria and of course Russia. I suspect as each week passes with PoO in the $60’s more share price advances will be seen across the beaten up sector. As a point of reference and something to learn from last years late surge in equities, TheShareHub Top ten picks (again, commodity focused) were up a whopping 69% this time last year. By the time the bell had sounded on Dec 31st to wrap up 2016, TheShareHub top ten picks had almost doubed at 129% up for the year. An astonshing last 8 weeks. Should history repeat itself again, TheShareHub top ten picks for 2017 might still end up in the blue after spending 90% of the time in the red. History shows that when the commodity cycle turns from bearish to bullish, it tends to be fairly swift. Providing OPEC and Russia can keep the wayward countries inline (Note: upcoming meeting on Nov 30th), it’s looking good for PoO in 2018. US shale looks wobbly and the rig count is doing the opposite to what many analysts have predicted. As PoO rises, US rigs continue to drop. This perhaps reflects the nature of US shale in that many wells have a short term life. Production comes in phases and all the signs at present suggest that a lower phase is likely as previous loan / debt faciities expire or fail to get renegotiated. It’s still a period of wait-and-see but for now the market looks to be undercooking PoO’s rebalance which if true could see some sharp corrections higher as markets are clumsy and prices usually overshoot on upside as well as downside points.

Week 44 saw a changing of the guard as the Telegraph was finally toppled by the Daily Mail picks. It’s neck and neck between these two and with commodity sector looking strong both will be looking over the shoulder at the ShareHub picks which had the best weekly performance overall. HUM is still by far the best performer and with just a few weeks left now to first Gold Pour, investors and management will be getting excited about first Gold Sales. Quite an achievement (when it arrives) and I suspect the market will applaud this with a rerate higher. Still a few weeks to go before they get over-the-line. Also – note for the diary…the company are due to present at Proactive investors on Nov 16th.

Across the ‘heads up’ stocks, AMER provided a better than expected update on October production figures. The high point for the OBA production of circa 8kbopd was certainly something that should not be ignored. There are strong signs that the OBA links via Ecuador are improving and bottlenecks reducing. This certainly bodes well for AMER in the future especially with Production on the rise. News on first production (long term testing) via ONGC on Mariposa-1 well should also light up investors eyes with potential to add anywhere between 1000bopd and 1500bopd net to AMER – watch out for news next week on Marisposa-1. Elsewhere, PANR has struggled largely due to delays and lack of detail on ops. News on first gas sales around the 15th Nov will be welcome and much needed. On WRES, investors continue to await news on contracts and the all important funding/loan deal. I can’t see management leaving it to the 11th hour (self imposed deadline of year end 2017) as it won’t look too good on them. Confidence is very important amongst small cap miners and should they achieve all that they promise, the share price should take care of itself. 1p+ (current price 0.4p) is not out of the question so big 7 weeks coming up for all involved. Finally CERP concluded a successful and over-subscribed Open Offer and with PoO in the high $50’s (WTI) it’s looking very promising for the company going into higher oil production. News on being cashflow positive could or should see another rerate higher. News on plans for deeper well exploration targets in 2018 really would be the cream on the cake on what has been a terrific year in terms of business relaunch and turn-around. Just shows what a classy management team can do for a small AIM stock with great assets.

A special mention goes to SOLG. This company deserves a comment based on previous news flows. I don’t think I have seen such good resource figures such as those released by SOLG of late. The numbers really are huge. At some point, the company is going to need a partner to advance these prospects. For the moment, they are doing the right thing by proving up as much as they can in a small timeframe. The next few weeks should be interesting for investors as the company heads towards its maiden JORC statement due before the end of this year. The market could rerate the stock significantly higher once these numbers have been firmed up.

Week 44 as follows:

ShareHub Hotlist 2017 – Week 43

It’s ‘selectively’ good out there at present.

Records are being broken across the major indices with news highs being punched out on a weekly basis of late. Sterling looking strong. Dollar looking weak. And best of all PoO back to highs last seen in 2014. Looking across the bellwethers/bluechips like Shell and BP, both are trading at almost Aug 2014 levels (pre Saudi/OPEC war on US shale). That’s a solid recovery. It suggests the market believes that Shell and co are out of the woods and back to oil market balance levels. Of course, this is not quite true, PoO is still a whopping $46pb below levels seen in Aug 2014 ($100pb). Astonishing really. So here we are today with Shell trading at close to Aug 2014 levels yet PoO is $54pb (WTi) vs $100pb WTi? Doesn’t make much sense does it? Yes costs have come down and companies have realigned to lower PoO environment, but even then surely the market has some questions to answer over such high valuations. As an example of my opening ‘selectively good’ comment, take a look at Premier Oil as an example. In Aug 2014, the share price was just shy of 350p. Today the share price is 66.5p. Yes, the metrics/business profiles are different to Shell and larger players but lets get real here. You can’t price an oil recovery into SHELL and ignore small caps and mid caps. It’s not just Premier Oil that is showing huge disconnects, take a look at Tullow Oil. Share Price in Aug 2014 was 730p. Today it is 183p. If you apply the same system to Feb 2016, then prices reduce further. In fact, prices were at capitulation levels. It was a very dark period for the commodity sector. PoO touched $28pb (wti) and companies like Tullow Oil were struggling. What was the share price for Tullow when PoO was $28pb? I’ll tell you… it was 190p+ which is roughly 5% higher than where the stock is trading today with PoO at almost double the level. Now regardless of rights issues / dilution, it’s a diabolical mismatch to price any stock at capitulation levels when in tandem the market is pricing oil&gas focussed companies like Shell at levels last seen when PoO was $100pb or 3.5 times above the lows of Feb 2016. I urge all investors to look back at historical prices between Aug 2014 and Today. Align with PoO’s progress and other larger bellwethers likes Shell, BP etc. See the disconnect. See the huge valuation gaps. Now undoubtedly QE and ‘selective’ buying of stocks by the ‘city’ and the algo’s bots is directly responsible for this huge one sided correction. The hand-outs via QE do come with some handcuff’s for the trading houses. Don’t over speculate and avoid high risk stocks. That’s fair enough. But what happens when the risk vs reward ratio’s flip and higher risk stocks become lower risk stocks due to valuation vs profit forecasts or brighter commodity backdrop (supply/demand)? With such huge disconnects and valuation gaps across many small caps and midcaps, it’s hard to see how the market can ignore the bargain basement prices. Now, PoO’s recovery is still in doubt and no one is saying the market’s concerns are over. But it’s not Feb 2016 now – those dark days look well gone. We are 3 years down the line and recovery signs / stability are evident for all to see. So in summary, a ‘selective recovery’ has already kicked in for the blue chips pumping Oil & Gas. The mid caps and smaller caps should have their day soon. The biggest signal of all that a broad rerate is underway is if M&A kicks off again. That’s still missing at the moment but I get a feeling might be underway again soon as the bigger players pick off the cheaper minnows. It’s a quick way to load up on resources and cheaper than exploring from scratch. If the big boys are beginning to worry about replenishing reserves, then the faster way to deal with this is via the cheque book. Interesting times for the sector and a long time coming.

Week 43 Results:

Much of the same for the newspaper picks and share hub top ten. A quiet week. The remaining 9 weeks will hopefully see some recovery across sharehub picks and save some blushes. But after last years whopping 130%+ gain, the sharehub picks is still some 100% ahead of the newspaper tips on a 2 year basis. A tad contrived I know… but always worth a mention!