2014 Hotlist Results – Week 4

Week 4 of 2014

An ugly week and perhaps long overdue. Economic data via the US and Asia has been less than supportive of a sustainable recovery. Asia has certainly had a great run but like all fast sharp upward curves, there comes a point where gravity comes into play. Some corrective action and disappearance of market ‘froth’ is a good thing long term. Short term it’s painful but it has been a very healthy 2 year rally. It may not be over just yet – but reasons to go higher are diminishing and reasons to go lower increasing. With currency wars already underway, interest rate hikes look inevitable. Hence – the cocktail of QE3 taper and corrective market conditions does not bode well for equities especially when fundamental earnings numbers are coming in on the low side. The next few weeks could set the stall out for the rest of 2014.

The Dow closed week 4 down a hefty 580 points at 15879. The FTSE closed week 4 at 6664 down 165pts. Last week the FTSE 100 was flirting with all time highs. For now, those highs remain elusive.

A virtual portfolio has been set up using the 2013 final trading day close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. Two newspaper top ten picks for 2014 have been included to help monitor/compare against.

Week 04 stock picks summary:

Some long overdue bubble bluechips took the pin prick test in week 4 and some survive but many tumbled. The blue chips have been living a charmed QE3 life for the last two years and with the weening phase very much in its infancy – the signs of 2014 without stabilises looks rocky.

The Telegraph remains top of the league and is the only list to have no 2014 losers – yet! The independent picks are in the blue only by virtue of Fusionex, which got off to a flyer knocking out a 50% return in under a few days of 2014.

TheShareHub Hotlist overtakes the Independent for probably the first time in almost 2 years. Like the latter, the performance was driven by one stock which ironically was 2013’s worst performer – Antrim Energy. The near 50% bounce suggests there is life in the old dog yet and predators might be circling as production begins to ramp up after operational improvements. Furthermore, the company is expected to file a new FDP on the 11mmboe FYNE licence by end of Jan 2014.

Other stocks did not fair as well. GKP suffered after talks between Baghdad and Kurds broke down resulting in a rather all too familiar stand off. With elections due in April, the horse trading could continue for sometime yet which will be of no help to GKP as they are desperate to seal 2014 operational funds via RBL. Most banks will only lend on 1P reserves and rarely give anything for 2P. The challenge for GKP is book reserves with a sizable 1P base. In a field that is very much in early production with limited well performance data, this might not be very easy. In time – it should not be a problem. But GKP do not have buckets of time. They have a target of 20 wells to drill by around End of 2015 based on sustained oil exports.

In today’s market, even north sea oilers are finding funding options limited as banks continue to hoard cash and play safe. Hence – Kurdistan which is part of one of the most corrupt regions in the world (Iraq) is certainly not going to appeal to alot of risk assessment departments in many banks around the world. That said – one bank might be interested and that’s Turkey’s Halk Bank. It has already been muted to handle the Kurd oil revenue from exports but was also recently dragged over the coals on corruption charges which might see it handcuffed short term on making any sizable loans – especially to international companies in Kurdistan.

Weakness across all Kurdistan focused stocks was visible with Afren and Genel also suffering. Of course, any news that looks a little more cheery and shows some progress between Baghdad and the Kurds (inc Turkey) could see all stocks bounce back sharply. For now, the market sees more risks ahead than rewards.

Current standings / Week 04 Results

1. The Telegraph’s Top Ten 2014 +4.77% (Weekly loss of 4.54%)
2. TheShareHub’s 2014 Hotlist +4.30% (Weekly gain of 0.04%)
3. The Independent’s Top Ten 2014 +3.66% (Weekly loss of 3.29%)
4. TheShareHub’s 2014 B-List 2.76% (Weekly loss of 4.85%)

Click on Portfolio image to enlargeTelegraph top ten week 4 TheShareHub Hotlist week 4 Independent Week 4 ShareHub B-list week 4


2014 Hotlist Results – Week 3

Week 3 of 2014

Not much to add to last weeks rather dull affair. The markets are clearly in a wait and see mode as earnings season kicks off and for a small period – the market takes a fundamental view. Volumes have been weak and with the US holiday on Monday, it’s very likely that Week 4 will get off to a soft start too. Catalysts from asia have been mixed as have those from the US economic story. At present – it really is a wait and see period.  The Dow closed week 3 up just 22 points at 16459. The FTSE closed week 3 at 6829 up 89pts. Remarkably just shy of hitting a 14 year high. Debt crisis? What debt crisis!? The power of stimulus measures is clear for all to see.

A virtual portfolio has been set up using the 2013 final trading day close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. Two newspaper top ten picks for 2014 have been included to help monitor/compare against.

Week 03 stock picks summary:

The Telegraph’s stock picks are flying – up 9.31% already. Solid gains across the majority of the folio is working well and no red numbers from any of the picks is a bonus. The independent picks which have seen 50%+ gains for last two years certainly has a habit of picking some fast movers. Fusionex closed friday up 50% for 2014. Quite remarkable and accounts for over 80% of the Independent’s folio gain. The TSH Hotlist has some good performers but is hampered by the continued under performance form Kazakhmys. The former FTSE100 player has now slipped out of the FTSE 250 as the market continues to disbelieve the miners recovery story.

Good performances by Bowleven and Lekoil suggest that investors are beginning to look at asset rich companies with heavily discounted share prices. Statoil are due to update the market on their new business strategy (last week in Jan or early Feb) which could get chatter going again regarding acquisitions. The commodity sector severely needs some impetus and M&A would be just the ticket.

Standings remain unchanged and it’s all blue thus far.

Current standings / Week 03 Results

1. The Telegraph’s Top Ten 2014 +9.31% (Weekly gain of 3.91%)
2. The Independent’s Top Ten 2014 +6.95% (Weekly gain of 3.66%)
3. TheShareHub’s 2014 Hotlist +4.26% (Weekly gain of 1.39%)
4. TheShareHub’s 2014 B-List +2.17% (Weekly gain of 0.64%)

Click on Portfolio image to enlargeTelegraph picks 2014 week 3 Independent Week 3 2014 TSH Hotlist week 3 2014 TSH B-list week 3 2014


2014 Hotlist Results – Week 2

Week 2 of 2014

The markets got back to business in week 2 although struggled for some direction until later in the week when US jobs number came in and farm roll data. These certainly didn’t set the market alight and suggested that the recovery is still taking hold. This perhaps supports a more measured approach by the Fed reserve and the market will be keen to see how this effects their plans on QE3 tapering which is now underway. The Dow closed week 2 down just 33 points at 16437. The FTSE closed week 2 at 6740 up 9pts.

A virtual portfolio has been set up using the 2013 final trading day close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. Two newspaper top ten picks for 2014 have been included to help monitor/compare against.

Week 02 stock picks summary:

Resource stocks and commodity small caps got a small boost after news filtered through that Statoil the Norwegian Super Major is on the hunt for acquisitions.  The primary beneficiary of this news was Tullow which was touted as being under the predators eyes although neither company wished to comment. That all said, regardless of whether Statoil make a move for Tullow, the point of under valued resource stocks and heavily discounted reserves begins to come to the forefront again.

Stocks like GKP, XEL and BLVN all seemed to see added buying interest in a week that had started slowly. GKP, BLVN and XEL all have sizable resources under their belts but all are too small to bring them to market by themselves. Statoil has a clear interest in XEL due to the recent well data from XEL’s licence and also due to the Bressay field next door to Bentley. An acquisition of XEL would add 250mmboe to Statoil’s reserves and boost the economic numbers on their planned Bressary field due to combined infrastructure plans. With BLVN, Statoil could gain a foothold in Cameroon with potential to gain reserves and upside exploration from Block 5 and also the Bomono licence. With GKP, Statoil would at last gain access to Kurdistan which it has already shown a keen interest in. Statoil are heavy oil specialists and GKP’s shaikan asset said to contain around 16bln barrels of oil (p50) is heavy standard or approx in the 15api to 25api ranges. Hence all three companies could be in Statoil’s sights.

After 3 years of declines the commodity sector is certainly looking cheap with reserves priced at such a discount that it is now better to buy the reserves off the stock market via acquisition than to explore and produce them from scratch.

The stock picks league is beginning to take shape with two weeks gone. The Telegraph leads the way with an impressive 5.41% followed by the Independent which was largely driven by Fusionex (29%+). On the whole – it has been a good start to the year with blue all round.

The Sharehub’s Hotlist performed better than the more conservative Blue chip B-list which is a first in a long time. It’s too early to say if the ‘worm’ has turned but if it has, its been a long time coming and very welcome to many investors out there. With Osborne’s free stamp duty waiver on AIM listed stocks from April 2014, the small caps may see some added interest as purchasing stocks becomes 0.5% cheaper.

Current standings / Week 02 Results

1. The Telegraph’s Top Ten 2014 +5.41% (Weekly gain of 2.37%)
2. The Independent’s Top Ten 2014 +3.29% (Weekly gain of 2.81%)
3. TheShareHub’s 2014 Hotlist +2.87% (Weekly gain of 3.05%)
4. TheShareHub’s 2014 B-List +1.53% (Weekly gain of 1.01%)

Click on Portfolio image to enlargeTelegraph 2014 week 2 Independent 2014 week 2 TSH Hotlist week 2 2014 TSH B-list 2014 week 2


Baobab Resources – Initiating Coverage

OLYMPUS DIGITAL CAMERAA new stock to thesharehub Hotlist for 2014, Baobab shares some regional interest with the recently reviewed Beacon Hill Resources.

Baobab found 2013 hard going after making a promising start with the sp hitting 35p. The stock has not managed to muster enough news worthy progress to break out and pass above 16p with conviction. The asset value is there for sure but the infrastructure requires some patience. Unlike, Beacon Hill, Baobab are yet to agree terms for the Sena Rail line. This is important and should prove a good catalyst for sp growth once finalised. Mozambique is not short of super majors and the region is nicely positioned for exports. But rail links need to be improved as do the loading facilities and various other hub’s. Recently, Beacon Hill announced that they too will be looking at progressing development plans for Pig Iron. The timing suggests that Beacon Hill feel the time is right to expand beyond their current Coking coal business at Minas. Cost savings have been cited due to the recent rail stock acquired and Sena rail line capacity. Hence, Beacon Hill can make some cuts in overheads by exporting both Coking coal and Pig Iron commodities.

Baobab have other near term catalysts which could see/help the sp back towards the 20p levels.

The following comes from their last Tete ops update.

•       Drilling has been prioritised to convert the upper portions of the Tenge resource block, representing a minimum 10 years of operation, to a JORC compliant Measured category. Preliminary analytical results are expected in January 2014 with a revised resource estimation to be completed by the end of Q1 2014.

•       Bulk samples collected from the trenches, along with bulk coal and carbonate samples, are being processed at the Mintek laboratories in South Africa before despatch to pilot plant facilities in the USA and Japan for reduction test work.

•       Un-fluxed bench scale smelting test work carried out by CSIRO earlier in the year confirmed that a low impurity pig iron product could be produced using Baobab’s iron ore and local Mozambique thermal coal (refer to RNS dated 4 March 2013 for details). Further fluxed smelting test work is on-going and will provide the first empirical data on the composition of the vanadium and titanium slag by-products. Results are expected in early 2014.

•       Discussions with public and private sector entities regarding port and rail allocation are making solid progress and are expected to be formalised shortly by way of Memorandum of Understanding (‘MoU’) documentation prior to the drafting of term sheets in which access conditions and tariff rates will be established.

•       Mining title and industrial licence applications are being prepared for submission in January 2014. The environmental impact assessment (‘EIA’) and associated resettlement plan and community and enterprise development programme are making good progress under the guidance of Ms Elisa Vicente, Baobab’s newly appointed Environment, Health and Social Manager.

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Baobab also has interests in another project which is shared with ASX listed Metals of Africa (ASX: MTA).

Details of the project can be found using this link from the companies website.

As the above bullet points highlight, Baobab is due to update the market on several aspects of progress over the next 2 to 3 weeks. Ultimately this will contribute and lead up to a definitive feasibility study which is keenly awaited by investors and the market. The infrastructure story in Mozambique is improving each day and will provide further share price support/catalysts throughout the year.

TheShareHub believes that despite the obvious hurdles ahead, the regional developments in Mozambique now provide a clear route to market based on Rail capacity. This will become more relevant as completion nears towards the end of 2014.

Like Beacon Hill, Baobab has suffered with the markets lack of patience and interest in smaller commodity players. Funding is always tough for the minnows as no meaningful cash revenue is there at present.

But at today’s price of 13.875p, Baobab has many of the risks and discounts more than priced in. If anything, further funding/draw downs appears priced in too. With plenty of catalysts around in 2014, Baobab should be able to convince investors and the market that they will commercialise their assets sooner than the market expects.

TheSharehub has a near term target of 26.5p (2 bagger) and 12 month target of 45p (3 bagger) for 2014.

As with any investment, seek professional advice if unsure about any investment decision.


2014 Hotlist Results – Week 1

Week 1 of 2014

A short week and low volumes all round as the market returned in 2014 for just 2 trading days. Next week will kick off 2014 proper and with most analysts/pundits forecasting the FTSE100 to close at over 7100, it seems most expect another solid year albeit less than the 14% gained in 2013.

The Dow closed the first week of 2014 down 107 points at 16470. The FTSE closed week 1 at 6731 down 18pts.

A virtual portfolio has been set up using the 2013 final trading day close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. Two newspaper top ten picks for 2014 have been included to help monitor/compare against.

Week 01 stock picks summary:

This year sees an extra newspaper top ten pick list added to the stock picks league. In 2013, both the Independent and the Telegraph stunned the market with 55%+ gains. Terrific performance and made that much greater by the fact that these top ten picks could not be traded. As many know, fund managers will chop and change their stocks throughout the year with the opportunity to get rid of poor performers and to top slice on any out performers. Yet the top ten picks table does not have such freedom. The ten stocks you start with in 2014 are indeed the ten stocks you end with. This is not an investment strategy that many advocate as the ‘buy and hold’ mentality has recently been replaced by a ‘sell on news’ sentiment. But as the Telegraph and Independent picks demonstrate, if the market background is right then buying and holding is very worth while indeed. However, that said, if investors had retained the same stock picks that the Independent picked in 2012 (which gained 48%) and rolled them into 2013 without change, then the profits for 2013 would have been around 19%. Not bad, but a far cry from the 55% delivered with their new picks for 2013.

The standings for week 1 are below are show some decent gains for the Telegraph picks even though trading was light and there was just 16 hours of trading in the week. Ophir got off to a poor start with a duster in Tanzania. The well was a wildcat and exploration success on the low side of CoS. The company is in good shape with a large cash balance subject to completion of the 20% Tanzanian asset sale. With an active drilling program ahead, investors should feel quite bullish despite the poor start.

Gulf Keystone started well after news came out from Kurd sources that GKP’s Shaikan oil has been sold to the international market. The Tanker is due to load up w/c Jan 6th and will mark an historic moment in GKP’s history as well as the KRG’s. It’s quite an achievement and considering the markets big brokers have cited huge discounts to NAV based on risks associated with lack of export routes and commerciality etc – it will be interesting to see whether Peter Hitchens at HSBC brings out a revised broker note and the same for Westhouse Securities. Both brokers seemed only too happy to flag up the risks and discount the stock down to low sp targets. That’s all fine and credible but only if you acknowledge the improvements as well and upgrade or reduce the discounts used in the past when key milestones are past. That said, GKP’s BoD’s could help the market understand the business progress better with more regular updates. The last operational update of detail was with the Interim results back in September and the company was tight lipped then citing indicative production numbers that were based on ‘capability’ rather than actual bopd averages.

After almost 4 months now, most investors would expect the company to provide an update in the coming days/weeks but certainly before January is out. Gulf Keystone was the best performing stock out of the 40 stock picks for week 1 with a 5.32% rise.

Current standings / Week 01 Results

1. The Telegraph’s Top Ten 2014 +2.74% (Weekly gain of 2.74%)
2. TheShareHub’s 2014 B-List +0.52% (Weekly gain of 0.52%)
3. The Independent’s Top Ten 2014 +0.48% (Weekly gain of 0.48%)
4. TheShareHub’s 2014 Hotlist -0.18% (Weekly loss of 0.18%)

Click on Portfolio image to enlargeTelegraph Week 1TSH B-list week 1Independent Week 1TSH Hotlist week 1


Here are the Hotlist picks for 2014

 

revealIt’s been a trying year for commodity focussed investors. In fact, it’s fair to say its been a trying 3 years. Never before have I seen so many heavy discounts to NAV. With some booked oil reserves trading at sub $1.50pb, you know something is out of kilter. Either oil/commodity prices are destined for a huge retrace to 2009 levels (oil was circa $35pb) back in those dark days or the market has created a monster of all gaps that need correcting.

M&A is the usual end product and that has been elusive in 2013. It’s now cheaper to buy reserves via the stock market than it is to explore and produce your own oil. That’s something that the market nor the majors can ignore for too much longer.

So the question is… after 3 years of declines in commodity stocks and in particular high risk high growth plays, will the market eventually decide that 2014 is the time to switch back?

Without further ado – the following are the ShareHub stock picks for 2014. As before, a more conservative B-list has been created which will act as a firm contender to the usual middle ground newspaper stock picks. The ShareHub Hotlist remains a major high risk high growth opportunity play which can carry as many casualties as success stories.

The same system applies in 2014 as 2013 and full results of 2013 stock picks will be revealed tomorrow. As with past years, some previous picks have made their way through to the new year. Stocks that have been left out are by no means unwanted. But there are only 10 spots available and injecting some new interest and variation is refreshing for all investors folio’s.

Here are the ShareHub picks for 2014. Targets and coverage will follow. Make sure you research and do your risk assessment in full before making any investment decisions and consult an FCA regulated advisor if in any doubt on your strategy/investments.

The SHARE HUB 2014 B-list in no particular order (tickers/codes as follows)

1. FUM (Future Medical)
2. TIG (Innovation Group)
3. BARC (Barclays)
4. QED (Quintain Estates)
5. OPHR (Ophir)
6. GENL (Genel)
7. IMG (Imagination Tech)
8. MONI (Monitise)
9. AFR (Afren)
10. LLOY (Lloyds)

As before, an hypothetical £10,000 has been invested using £1k across ten individual stock picks. These stock picks are fixed for the year and cannot be traded or swapped.

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The SHARE HUB 2014 Hot-list in no particular order (tickers/codes as follows)

1. KAZ (Kazakhmys)
2. GKP (Gulf Keystone)
3. XEL (Xcite Energy)
4. BLVN (Bowleven)
5. LEK (Lekoil)
6. AEY (Antrim Energy)
7. BHR (Beacon Hill)
8. SXX (Sirius Minerals)
9. TRIN (Trinity – previously known as Bayfield)
10. BAO (Baobab Resources)

As before, an hypothetical £10,000 has been invested using £1k across ten individual stock picks. These stock picks are fixed for the year and cannot be traded or swapped.

More analysis will follow on all stocks.

TheShareHub wishes all investors a very prosperous 2014 and the best of luck to all.