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 Banks still look fragile, QE is being withdrawn at a time when most are suggesting it should be retained or even raised.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.
It’s been a good start to the year for TheShareHub top ten picks albeit, very early days. 2019 is likely to be just as crazy as the end of 2018. It could be worse or it could be better. I simply cannot say one way of the other. But I do believe that Commodities will do better as PoO returns to balance and OPEC makes adjustments to suit a potentially weakening demand. Apple Inc’s disasterous update on iphone sales has been a long time coming. The company announced last year that they would no longer be reporting on specific iphone sales. Easy to see why. Every brand has its time and Apple have done brilliantly over the last decade or more. But in this world, top brands are overtaken pretty fast and can be left for dead. I don’t think that will be the case with Apple, but I do think they are on the decline. Samsung and others are now producing equally stylish and indeed, better performing devices. Apples’ woes are not down to global growth slowing. The drop in sales is a signal that the World has moved on, and other Brands have caught Apple up. There was a time when Nokia and Motorola looked invincible. There was a time when Sony were kings of all walkman’s (for those old enough to remember the good old cassette tapes that got warped and wrinkled over time). Bit like Apple. I wouldn’t say warped but there are some areas of their business and products that is beginning to look distinctly wrinkled. So should we be fearful of Apples’ demise? Nope.
With the markets bobbling about like Dice in a Casino, it would take a fool to try and predict where the DOW or FTSE100 would end up this time next year. Investors should be aware that bull runs fuelled by QE invariably turn into Bear runs when QE is removed. The question on everyones lips going forwards is that if global growth begins to slow, will QE be extended or implemented again by the Fed Reserve? It’s very possible. And in that scenario, equities could see another run at all time highs. US interest rate policy is expected to cool which could help equities in 2019.
Recently, the commodity sector has seen an increased amount of activity within the Merger and Aquisitions space. M&A has been missing for sometime now but cheeky offers are appearing and targeted stocks are disappearing. Last year Ithaca Energy got gobbled up. This year it looks like Faroe Petroleum’s turn. FPM may yet keep DNO at bay, and their offer looks opportunistic when timed against a poor market backdrop. Ophir Energy is another stock that has seen interest with a potential offer to be tabled or not… in the next few days or weeks. Shell might want to have a say in the matter as they have a working interest in Ophir’s highly valued Tanzanian assets. Interesting times ahead and one to watch even if you are not invested as valuations may have knock on effects to other stocks.
Last year, TheShareHub dropped a number of stocks and added some fresh blood. This year, the cull has been less due to many of the 2018 stocks continuing to ooze potential. This year sees the introduction of 4 new stock picks and 6 stocks rolled over. As follows in no particular order:Amerisur Resources – 2019 Entry price 15p. Y/E Target Price 60p. Amerisur Resources has been hammered over the last 2 years by the presence of a persistent High Net Worth individual called Rex Harbour. A sizable amount of stock was dripped into the market on a daily basis which over time dented sentiment and eroded any good news issued by the company. Strategic pipelines were built, costs lowered, prime exploration acreage bought and increased. Cash pile increased. Production doubled. Oil Price doubled. Debt free. Yet Amer’s share price has virtually halved from levels seen 2 years ago. Odd indeed. Today, the company is in a better position than it was when the share price was last at 32p. Recent success with the Indico-1, OXY farm out deal and a plethora of director share purchases… a company brimming with confidence. 2019 is a busy year on all AMER’s assets and by the end of 2019, any potential predator out there will have a very good idea of what value AMER presents. TheShareHub predicts a take out price of 60p. Success across the exploration folio is crucial in attaining this price.
Columbus Energy – 2019 Entry price 2.9p. Y/E Target Price 14p. CERP has assets in Trinidad and Tobago. At last count, the company was producing around 750 bopd. Not much is it? But with a market cap of just £23m, CERP’s cash flows are positive with PoO around $50pb. The company has a proven CEO in Leo Koot. He’s had to spend the bulk of 2018 sorting out spanish issues as well as old legacy stuff left by past poor management. Leo’s idea is a simple one. Get CERP producing over 1000bopd and use the cash flows to explore the companys deep exploration targets. Some of these targets could hold 100’s of millions of barrels. Any drill in the SWP area would present investors with a relatively free ride on high impact returns as CERP would be underpinned by solid production. There are some companies out there that have zero production and yet command market caps 3 x the size of CERP based on exploration opportunities alone. CERP have all the ingredients for the investor looking for risk off exposure to high impact exploration. Target Price 14p, but needs a solid exploration result to hang onto those levels. Company update due very soon.
Roll over from 2018. A disappointing year with operational and management issues. If the company can get back on track and extend mine life at Yanfolia, then a recovery back to 36p looks realistic. The new ball mill does not arrive until last Q3 2019 and the upcoming earnings numbers are not likely to boost confidence. But moving into Q2, HUM should be heading in the right direction and could be boosted by Gold’s new sparkle due to global recession fears and risk off investing. Target price 36p but needs to deliver operational excellence 365 days of the year with no hiccups. Quite a tough task for a small miner.
(new) Petra Diamonds – 2019 Entry price 37.68p. Y/E Target Price 77p. After a year of fighting debt off and Rights issues combined with less than happy local governments, PDL are back on track and should be set to release some very attractive numbers in 2019. Whilst there is the usual hangover from rights issues and debt scenarios, PDL looks undervalued and a potential takeover target. Target price 77p. Requires operational excellence, strong diamond sales and governments to play nicely.
(new) PetraMatad – 2019 Entry price 2.28p. Y/E Target Price 16p. 2018 was a poor year on a number of fronts. Significant funding and dilution to equity put a real dampener on interest ahead of some mouth watering exploration. In the end, both drills delivered nothing commercial and with no back to back drilling due until Q1 2019, the stock has been treated to the usual AIM investment cold shoulder. Next week the company is set to update the market on 2019 plans. The current market cap just about covers the cash in the bank. Fully funded with an exciting exploration plan for 2019 surely deserves a premium added to the share price beyond cash? Target price of 16p is based on exploration success. Should the company impress with next weeks update, then investors may re-enter the stock early ahead of the next exploration well. Very risky stock as pure exploration play.
Premier Oil – 2019 Entry price 66.55p. Y/E Target Price 180p. Debtheavy, but asset rich is the best way to summarise PMO. With production heading to almost 100kbopd levels, the mind boggles at the markets current discounted valuation of 66.5p. Lower PoO will hurt PMO but with assets like Sealion and Zama under their belt, they could make asset sales if the market really got bad. OPEC seem intent on keeping prices ‘fair’ so I do not expect Brent to drop below $70pb for very long once the rebalance has been achieved in Q1 2019. At $56pb, it has plenty of room to head higher without raising eyebrows. Should the second Zama exploration well deliver the same results as the first well, investors might find themselves in a similar boat to Ophir Energy. PMO are far too attractive to potential predators to remain at today’s price levels without having a takeover approach. Ironically, it was Ophir Energy that were apparently sliding the rule over premier oil sometime ago. What goes around… comes around? Target price factors in exploration success and consistent operational excellence with debt reductions along the way.
(new) Sirius Minerals – 2019 Entry price 20.8p. Y/E Target Price 32p. It’s not easy delivering a huge project like Sirius’ Potash mine. Delays are to be expected and often projects run at higher costs. These are the main reasons why SXX has struggled of late. The commercial story still looks a billion dollars and the investment case is strong. Key operational milestones in 2019 require smooth transitions and if all goes well, the market should reward with a rerate. Target Price of 32p is based on all going swimmingly. After a tricky 2018, SXX look back on track.
Solgold – 2019 Entry price 36.75p. Y/E Target Price 75p. If you keep building upon resources and delivering terrific assays, finally someone will come along with the deep pockets required to develop it. The problem for Solgold is not how much resource they have but defining it faster enough to get a fair price. With BHP buying up crucial voting shares and Newmont doing the same, I think a battle for Solgold will inevitably fall to these two. An offer that shareholders cannot refuse could be pitched at 75p or more. Anything less and shareholders may just wait it out.
W Resources – 2019 Entry price 0.54p. Y/E Target Price 1.9p. Too many fundraisers at 0.5p or below has kept a cap on the WRES share price. They need to deliver operational excellence and get to a position whereby they are cash flow positive to reach the dizzy heights of 1.9p. But on a valuation basis, the Target is quite achievable. Tungsten remains in high demand and WRES are perfectly positioned in Spain to deliver globally or on their own doorstep across Europe. If cash flows and production are steady, the share price should climb nicely in 2019 providing the CEO doesn’t pull out another fundraiser again.
(new) Wishbone – 2019 Entry price 0.18p. Y/E Target Price 0.75p. By far the wild card of all picks. Risky and no doubt needing further funding down the line. But for now, after a series of 0.1p equity issues, Wishbone are up and running. Gold prices are important but so is operational excellence. Like HUM, Wishbone will need to keep costs down and get cash flows coming in fast. Production from Honduras is underway after licence approvals late in 2018. Shipping to Dubai should commence in Q1 and if all goes well, Wishbone should be a multibagger contender for 2019.
Regular updates on all TheShareHub top ten picks will be posted throughout the year. As per the norm, 2 x newspaper picks for 2019 have been added and will go head to head for the Hotlist cup. This year, TheGuardian gets another chance to make up for a poor 27% loss last year. And The Independent features with a whopping 12 top tips. Some based on a decent Brexit scenario and some based on a no deal case. Unfortunately, they can’t have their cake and eat it, so all 12 picks are in.
As always… be careful out there. It’s more volatile and unpredictable than ever before.
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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.
Summary of ShareHub Hotlist 2018: (in no particular order)
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Here are the ShareHub top picks for 2019. Many picks from 2018 have made the list again. Some new blood has been added and a slightly bigger weight added to Miners vs Oil&Gas but on the whole it is another commodity heavy list.
Ophir Energy had been inked in as of Dec 30th based purely on the undervalued nature of their non producing assets.
But due to the breaking news of a takeover approach late on Dec 31st, TheShareHub thought it only prudent to remove the stock as starting the year with an almost 50%+ gain (that’s a guess) might not be seen as fair play when going head to head with some of the investment worlds expert stock pickers aka… the newpaper top lists for 2019.
Ophir Energy should go for at least 100p based on the asset worth, which would be a 3 x bagger for some investors. A cracking start to 2019. But no guarantees of course and a low ball at 70p, delivering a single multibagger might equally be successful in this very ‘odd’ market today.
Value often wins out and with Ophir priced just shy of 35p, the market should be embarrassed if offers finally come in at double that price. It just goes to show how deeply discounted the market has become towards commodity stocks. But lets not jump the gun, Ophir has yet to announce an offer price and one may not come at all. But one thing is clear… Ophir and many other commodity stocks out there today are undervalued and it was only a matter of time before M&A kicked ‘properly’ off. With Faroe Petroleum also looking to avoid a cheap takeover approach, other stocks like Premier Oil and Tullow will no doubt be wondering how much longer they have before they too are taken out.
A full appraisal of 2018 with week 51&52 results to follow over the coming days. Do all research and risk assessments on stocks before buying or selling. Read the risk warnings (see side panel). In this market you have more chance of losing your investment funds than increasing them. It’s unpredictable and likely to continue that way, so be careful and very measured in 2019.
More coverage and depth will be added to the 2019 picks over the next few days and throughout the year.
Happy new year to all ShareHub readers and may 2019 be a very rewarding one.
Not a good week. I’ve been saying for sometime that the DOW looked expensive at 26500 and even at 23000 it is not exactly cheap. Unfortunately, markets are so Algo Bot driven these days that if the DOW drops then the numbers of sparrows also fall in outer mongolia. You may need to verify that last point. Just about everything seems linked to the DOW’s movements. It’s like the market lost its brain about a decade ago (it did have one at some point, I promise) and the rest is history. Volatility is now the norm. Get used to it. Index swings of 5% daily is good for business if you trade daily. Long term investors will acknowledge that there are good times and there are bad. But at present, it’s like riding a banana boat on choppy waters. The Hedge Funds and Investment funds are using other peoples money so the pain feels less to them than to a Retail investor who has lost his/her savings. That’s why these markets are dangerous places for the Retail investor. It’s also why record numbers are now deserting the markets. Brokers in UK are seeing the lowest recorded interest from PI’s in decades since Crest certs were swapped for their digital equivalent.
New EU regs have reduced Retail investors ability to place larger bets. That’s not a bad thing at all and at present most should be grateful. But the effect on market volume is clear to see. It’s like a ghost town on some AIM stocks. Neglected by II’s and practically a feeding ground for wonga style or death spiral funding outfits like YA Global and co.
For those that follow the markets closely, many will tell you that the market is a very different place now. It’s changed. And not for the better. Investors are losing faith in a broken valuation tool. If a company’s market cap is determined by Algo Bots rather than fundamental analysis then what hope do we have? The fact is, Algo’s and volatility are here to stay so you best get used to it or exit for good. At the moment, many are doing the latter. There is of course another option. Depart now and come back in a year or two? Pop your head in and if you see the same old rubbish, just walk away. That’s an option open to Retail investors. It’s not an option open to Hedge Funds or II’s. Their job is to churn money over. For the last decade their job has actually been more about taking free cash from QE and turning it over, taking a nice cut and hoping what’s left makes its way back into the economy. Stabilising the Banks balance sheets after Lehmans at the expense of governments / tax payers money was and is the number one goal. That should have been achieved by now. Just in time for the next recession? The FED Reserve seem hell bent on getting US rates higher as fast as they can. The main reason for that is that they need higher rates simply because they need to have some firepower to stimulate the economy when they eventually start cutting them again! The UK and EU are less fortunate. Hiking rates would have been the goal but due to Brexit woes this has been placed largely on hold bar one UK raise. Super Mario might have to dip into his pockets again in 2019 the way the EU economy is going.
Headwinds ahead? Absolutely. And not helped one bit by China v US trading wars. Talks have been booted down the road until late Feb. If Trump is not careful he will be remembered for boosting the stock markets to all time highs and then fumbling it into the next recession and biggest crash since Lehmans.
One measure that suggests we might still be some way from armageddon is GOLD. The go-to safety metal is trading some $100 per oz below this years highs. In theory, if market woes were serious, cash would be heading into Gold and fast. Seasonally, Gold rises into Dec as festive periods bring in shoppers around the globe. So Gold at $1250 is more like Gold at $1150 if you strip out seasonal exuberance. Keep an eye on GOLD as an indicator. If it tips $1400oz, then I suspect we’ll be in full swing of a market correction by then. Assuming we are not there already. There’s a chance markets may recover going into the Santa Rally period as this wednesday’s Fed Reserve interest rate meeting is virtually the last big news event before 2019 kicks in. If the US holds rates then fears might grow that a recession is around the corner. If the US raises rates, then fears could grow that a recession is around the corner. And … if US raises rates, then markets can fear global growth slowing. Damned if they do and damned if they don’t. Which when viewed like that makes the event a bit of a non-event. Status quo or will the Algo’s go all banana boat on us? We’ll know in about 36hrs time.
Week 50 review: All stock picks are limping or walking wounded. Most would prefer calling an end to 2018 right now. For TheShareHub picks, a recovery in PoO is needed if a blue finish is achieved. Still possible considering the Oil price correction of late. OPEC+ have a habit of stabilising things and putting the Hedge Funds in a difficult place. I would expect some headlines from OPEC to arrive very soon if WTI falls to $45pb. The newspaper picks look down and out. A poor year for all those expert/professional analysts who selected them.
With the DOW 30 pinging around like some fruit machine, it is clear for all to see that this market resembles more of a casino then ever before. It’s ludicrous. How can the DOW be down 400pts and then up a net 1200pts a day later. A 5% move on a major indice used to be par for the course a few years ago but that was based on a 12 month trading performance, not 12 hours. And that’s the problem investors face today. It’s an ever changing market but one which seems more and more like a day traders dream. Many stocks are struggling to make recovery moves simply because the short term money is being played in 10% ranges. The small cap commodity sector continues to suffer due to the lack of II investment. Brexit and US/China trade wars are certainly two strong reasons for many longer term investors to remain on the sidelines. There are more unknowns out there today than there were at the start of year which saw the DOW wobble from 26500 all the way down to 23000 levels. The only saving grace near term is that Christmas Santa Rally period is upon us and both of the biggest issues out there have been kicked down the road until late Jan or Feb 2019. Gives all those involved a nice festive period off and perhaps allows the bots a break too?
Last week OPEC finally agreed to deliver solid cuts across production including Non-OPEC Russia. The latter cut by double the market expected rate and when coupled with Canadian cuts, the true number is nearer 1.5mbopd being sliced from supply. PoO had been driven down to $50pb WTI based on Mr Trumps’s 1mbopd prefered cut. It’s quite a surprise to see PoO still trading near $52pb after Friday’s blockbuster reveal. PoO should be trading nearer $60pb based on those cuts but with the market overly weighted to siding with Mr Trump, the chances are most funds are still heavily short Oil. Those kind of positions take a while to unwind in an orderly fashion and sometimes it can take just two days trading before the herd starts to gather speed. PoO has little attraction to the downside based on % returns from $50pb. Anything in the $40’s would surely be short lived as those funds close out fast. Going long at $50pb range would seem to make more sense as the pop that comes from shorts covering is normally quite violent and fast. Keep an eye on PoO over the coming days as the ‘pop’ has yet to happen and is long overdue. Stocks like Tullow and Premier Oil tend to be more sensitive to PoO due to higher production volumes and debt positions which need servicing. That said, Premier Oil updated market last week highlighting impressive 30% Oil hedges on production which has yet to be rewarded. All seems well with PMO but looking at the share price it would be hard to see. Same could be said of Amerisur Resources. An exploration strike on CPO-5 block with Indico-1 well looks huge. Flow rates have yet to be released but if they are anything like the Mariposa-1 well, they could be in excess of 4600bopd. Amerisur is one of many stocks out there that has been hit heavily by the poor sentiment in the Oil&Gas sector. But the difference with AMER and other stocks is that AMER are debt free, cash rich and a low cost producer. With a fully funded active exploration programme in 2019, it’s not likely to disappoint the investor that likes solid fundamentals with some exciting exploration thrown in on top.
Investing or should I say… ‘Trading’ in 2019 is likely to be tougher than 2018. Many are calling a bear market and most see moderate growth at best. Much hangs on US/China trade deals as since these stalled, global growth has also stalled. Fix one and you might fix the other. More on what to do in 2019 next week. For the moment the focus is on 2018 performances and thus far, TheShareHub is out-performing the newspaper experts picks. There’s still a chance TheShareHub picks can tickle over the line into positive ground and if PoO edges back to $65pb on Brent, then it could be another positive year for the picks.
As for Brexit, Tory’s and the EU. All are unfortunately in a position of not wanting to act in the interest of the UK. The Tory’s always seem to capitulate through self interest. Too many wannabies that think they can do better but in all cases more focused on their careers than the man or women on the street. Prime Minister May will surely be voted out this evening. Not through her mistakes but through personal agendas within the Tory party. The best thing for Mrs May is to be voted out. Give the lady a much deserved rest and break from the brat pack. She must be knackered? She deserves great respect. As for the new boy that comes in, well, his days are numbered too so it doesn’t really matter who comes in because Labour will undoubtedly be winning the next election with a huge margin. No stand required – no preference given. Just a view of what will inevitably unfold. The Tory’s picked up after Mr Brown’s mess and now it ooks like Labour will be coming in to manage the Brexit mess. But first, we’ll have a completely unneccessary phase of Tory leadership battle which has nothing to do with Brexit and everything to do with ego’s. What would the world be like without Politicians? Now there’s a thought…