ShareHub Hotlist 2018 Review – Week 11

It’s all a bit soggy out there as markets begin to thaw off a little after a period of volatility. This time of year can be a bit like watching paint dry as investors bank profits or losses or both for tax reasons and get funds prepared for the new ISA season.

Globally – it’s as mad out there as it has ever been. The Brexit ‘brains’ appear to be clapping themselves over a deal to agree a transition which at face value just takes any meaningful UK withdrawal from 2019 to 2020. It’s like taking a kid to the dentist. Neither party really want this and dragging their feet is an understatement. The recent depressed signs across the UK retail sector and housing market combined with some EU economy woes suggests all involved really need to get a jog on. It’s not far off 2 years since the vote to leave and here we are clapping an extension (well that’s what it looks like) to 2020. I have a hunch that the UK will not be operating in any capacity that any other divorcee enjoys until well into 2025 at this rate. Elsewhere, we have the usual finger pointing stuff going on with Putin and May going toe to toe or bearskin to leopard skin more like! The ‘boy who called wolf’ springs to mind when reading UK based headlines vs the Russian repostes. Had the UK gov not ‘misinformed’ (careful choice of words there) the UK people over Iraq and Saddam’s chemical weapons, I think most would be happy to take Mrs May at her word. But here we are again and apparent chemical weapons finger pointing is underway again. Who to believe? Who knows? In this crazy world, anything is possible. Hollywood no longer needs to invent bizaar scripts, they just need to deliver a few true stories from the real world, no artistic licence required.

What does this mean for the casino styled equity markets? Not a lot really. There was a time when the markets would flinch at the slightest bit of global disruption. Today, it feels like the algobots would be buying the dip after news of a mile long meteor destined for the globe. Of course, no such thing is on it’s way (that we know of) but the point is…today, markets seem to do their own thing while the political world and globe in general contend with volatility on a daily basis. This rather complacent mood or sentiment is one solid reason why GOLD is trading like it’s unwanted when in theory it should be in major demand. PoO looks on the brink of rebalancing and OPEC have astounded all the naysayers with compliance levels north of 100%. Yet the black stuff moves like it’s thick sludge. Trapped in a tight range of $60pb to $64pb (wti). When will it break through to the $70’s? Well, if the Saudi’s and US have their way, then slapping sanctions on Iran again would certainly removed a wedge of supply in a flash and stir the pot up across the mena region. The casino will deal with that issue if or when it occurs. Reactive rather than predictive is the new market mantra. Forget proactive… that’s a distant memory.

Across the stock picks, sluggish trade with lower volumes hints the ‘tax planning/isa period is upon us. Come April 6th it should get busy again especially after a few cream eggs have been tucked away.

Week 11 – As it stands thus far, TheShareHub leads the way but it’s red, red, red across the board … for now. Decent news from HUM, SOLG and PMO seems to have been met with the usual ‘sell on news’ trades. Short termism is rife of late and doesn’t look like letting up anytime soon. M&A is still missing in action across the commodity sector and for a proper bounce, we need to see some bullish takeovers happen, if anything just to expose the true valuation gaps around today.

TheShareHub’s 2018 ‘heads up’ picks are doing much better. PDL bounced strongly from 60p lows to test mid 70’s and MATD is building a nice solid launch pad at 12/13p levels seemingly ready for orbit around 22p or beyond… subject to news flow and the usual AIM frenzy fever that comes with high impact exploration drilling campaigns. Risk warnings/caveats apply.

Roll on Easter and don’t forget to put your clocks forward this weekend.

 

ShareHub Hotlist 2018 Review – Week 10

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

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

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

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

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

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

Week 10 status as below:

CERP Q&A available on website

Useful media channel for communicating with shareholders. The share price has drifted of late due to the news voids but should bounce back strongly assuming the business continues to make the production growth progress set out in the core strategy presentation for 2018. Retail investors really should try and get away from short termism and focus on the reasons why they invested in the first place rather than watching the share price on a daily basis. That said, waiting 3 months for news quarter upon quarter certainly would play to the ‘sell on news’ brigade. It would not surprise me to see CERP delivering news in the future which goes beyond the quarterly production updates as the company has quite a lot to get through in 2018 and none of that has been RNS’d yet. It looks like a 10p stock trading at 4.75p at present which presents risk on buyers with a great opportunity. Schroders appear to have eased up on their recent buying which previously would have supported the share price. Roll on next update.

See link below for Q&A.

https://columbus-erp.com/investors/questions-to-the-team/

ShareHub Hotlist 2018 Review – Week 9

Week 9 was certainly not a dull one. Topped with a Trump initiation of Trade warfare and tailed with an embarrassing criminal case against an apparent pump and dump broker called Beaufort Securities. Thrown into the mix was the usual Brexit handbags which quite frankly is becoming more embarrassing than the UK’s response to a white powder called Snow. If a country grinds to halt due to some snow, I’m not sure future trade partners will be too keen on baseing their main offices or factories in good old fashioned blighty if everything grinds to a halt for a week. Add to this the subsequent ‘thaw’ and water companies across the country are out in force repairing pipes that they said they were going to repair some years ago… cough cough… must pay the shareholders some divi’s first before ensuring the UK’s water system is up to speed! It really is a bit of shambles of late. Does anyone actually know what is going on with Brexit in laymans terms? We are not far off the transition date of next year… and I don’t think the British man or women on the street knows any of the agreed or soon to be agreed terms. The irony is the EU have been hammering the retail sector for years with clear labelling for the UK consumer, laws on emissions, laws on noise from appliances… the list goes on. It’s all about giving the consumer clarity. Too right and that’s how it should be. So could someone in the EU provide a nice 5 dot coloured sticker with the agreed terms for Brexit please? Moving on… Trump’s trade war should see other countries retaliate. If Trump feels the US is getting a raw deal on steel imports, how does he feel about Amazon trading across the globe, pinching bricks and mortar retail sales and paying a nominal amount of offshore tax? Is the UK high street getting any relief from Amazon or Trump? Nope. So why is it that US companies like Amazon and Apple can sell their products into the UK yet we don’t slap tariff’s on them? The digital age is very much in its infancy, with gaping voids across the globe in commercial terms. Cyber space should have commercial borders in some form or another. By putting ‘America First’ he may be looking after his own but in reality the rest of the world will simply put ‘America last’.

Rant time over, back to equities. Whilst the markets continue to search for a solid bit of grounding amongst the plethora of global woes as mentioned above, attention turns to the dark dark world of the markets. Now called a Casino by many, the markets reputation is yet again falling apart. Beaufort’s corrupt dealings (alleged) reveal the active involvement of Brokers in small cap stocks. AIM has long been a volatile market but really, this type of manipulation has been going on for years and years. It was only by virtue of the US investigation that the Beaufort scam came to light. Which makes the UK FCA look a bit of a soft touch. Why aren’t the FCA doing more? Perhaps they are too busy racing around trying to ensure the new MiFID II is in full compliance. The latter brings with huge changes for brokers and the market as a whole. Under the new rules ‘dark pools’ are to be tightly regulated (about time too!) The law was due to come into play on Jan 18th but got delayed until March 12th.

See Bloomberg link here for more detailed information on dark pools and what to expect

https://www.bloomberg.com/news/articles/2018-02-28/mifid-big-bang-dark-trading-caps-to-impact-hundreds-of-stocks

So in summary, March looks like a month which should see some significant changes across many ‘abused’ casino type processes. Some believe the mid-day auction will simply be the place to get those large block trades stuck through. Certainly a time to watch stocks closely as you may learn a thing or two by the change in trading patterns, volumes and bid/ask prices range and fluctuations.

As for Beaufort Securities… well all I can say on that matter is that it takes a buyer and a seller to transact and the other market makers and brokers out there will have detailed insight into what is going on across the book on a daily basis. Sometimes ‘saying nothing’ or turning a blind eye is just as bad as doing the deed yourself. I imagine this US case into Beaufort will send shivers through quite a few broker houses. If MiFID II is giving them a headache then I think they’ll need to stock up on the ibuprofen.

Week 9 delivered nothing major across the stock picks. News was light. The 2 heads up picks MATD and PDL are performing better. MATD looks in excellent shape and without a doubt this years big blockbuster with 2 x exploration drills cue up and 2 more (TBC) to follow in H2 2018.

Week 9 Status: ShareHub leads by 1% but is in the red for the year. As news picks up in March/April the ShareHub picks should kick on. Significant progress should be seen on HUM and SOLG in particular – both stocks have been subdued of late despite great news flow. Perhaps a touch of the MiFID II‘s!

And just for the record (with Beaufort in mind) The ShareHub does not take payment or requests from any of the companies covered. All coverage is based simply on the businesses potential and outlook. TheShareHub invests in stocks just like any other investor or fund with a view to banking a profit. It’s the opportunities, or the undervalued nature of many stocks that attracts the coverage. If a stock looks good value and has some potential then TheShareHub seeks to cover it. Hence the mantra, Hunting for Multibaggers. TheShareHub cannot cover all stocks out there and believes that it’s counterproductive to cover too many stocks. The main focus has and always will be heavily geared to the commodity sector. The Newspaper picks are added as a comparable and presents some interest in seeing how ShareHub picks fare against the newspaper picks which are often provided by apparent ‘experts’. The newspaper picks are often conservative bluechip focused stocks although some higher risk plays do get thrown in there from time to time.

As with any investment, risks of losing money (often all of it) are high and each individual must take full responsibility for investment decisions. If in doubt seek advice from an FCA regulated advisor. You can find the risk warnings on TheShareHub site in the sidebar on the left.

Remember, whether you think you are Neil Woodford or Warren Buffet, all make errors and costly mistakes. Hedge funds frequently go under. Woodford often makes loses as does Buffet. The key to success is not simple. But the bases of all investing is to make more money than you lose. Oh and remember, it’s a casino out there and the big players don’t always play by the rules… think Libor scandal (see link here). Think credit agencies like S&P (and Moodys etc) see link here. Think Barclays foreign bail out and BoE? The list goes on. It’s not pretty out there and made that much harder by those that do not play by the rules. Hopefully with MiFID II and the recent Beaufort case, it will improve.

 

ShareHub Hotlist 2018 Review – Week 8

Another week of not so subtle ‘tip-toeing’ for the Major indices as they build higher in an attempt to return to previous highs. The DOW has put on almost 2000pts since the dip to 23500 just a week of so ago and not one fluffy overbloated headline from the normal media channels. It’s all gone a little quiet which is odd considering the ‘noise’ that delivered the first major correction to international markets in over 12months, has not gone away. The weak dollar has certainly put the focus back onto commodities. But as mentioned last week, the disconnect between commodity focused equities and major market indices continues to widen. For example, Tullow was priced at 230p+ levels the last time the DOW was at 25500pts. Today, Tullow is 189p. As a comparable PoO has not changed a great deal in the period. At some point that has to change but for now it seems commodity focused equities get hammered when the DOW gets hammered and conversely, when the DOW surges higher, commodities are slow to follow. In theory, we are approaching the best period in nearly 3 years for commodity focused stocks. Earnings should now show the benefits of higher PoO from the last 8 months+. We’ve already seen strong numbers delivered via Premier Oil and Enquest. Yet despite the good news, the stocks are continually left languishing, unwanted. The next few quarters look like much the same in terms of good news on earnings and debt reductions galore. It’s going to be hard for the market to ignore.

PoO continues to stabilise and it is a surprise that after recent Libya woes, the market is not pricing crude much higher. The US rig count is relatively static on a 9 month basis, and one look at the cushing stockpiles (see chart below) tells a better story than most US media channels would like you to hear.

US shale does not look the powerhouse that many are claiming and I think the Saudi’s and Russian’s are beginning to see through the smoke and mirrors. For months now, numbers have been skewed by the irregular reporting standards of the API and EIA. Blurred by the previous ‘floating storage tankers’ that seem to get docked at key times by Vitol and co. Now, the seascape is empty. There are no floating storage tankers, They’ve all been unloaded. This is dangerous ground for Oil traders. The Saudi’s and Russian’s are firmly back in control. Woes in South America combined with potential unrest in MENA region could see PoO spike into the $80’s in the coming months. It’s a fascinating watch and one that is a good old fashioned tug-of-war. US Shale is not going to go away but I don’t think it’s as strong as many suggest. With Trump adamant on boosting sanctions on Iranians in the not-too-distant future, it might not be long before the oil market finds another chunk of production removed from the markets.

Week 8 will have pleased many as it brought much calmer waters enabling investors to catch a breath. The 2 x newspaper picks recovered some losses and TheShareHub picks got to within £8 of positive ground.

A mixed performance from the ‘heads up’ stocks as MATD unsurprisingly powers higher ahead of what should be this summers hottest stock on AIM. Much more to come from that stock in the months ahead. Petra Diamonds, raced to 75p from 62p levels but soon sold off after a decent results update. Investors want the debt situation finalised and until that happens, all eyes will be on the disputed ‘sales parcel’ that has yet to hit PDL’s balance sheet.

SOLG.L after months of being in the doldrums appears to be showing signs of waking up again ahead of the next major phase of exploration and subsquent MRE upgrades. At 22p, it is trading 3p lower than the bought book placing deal and is 50% away where it was when it reported the maiden MRE in early Jan. The mind boggles. I would expect some common sense to return the stock to mid to late 20’s over the next few weeks assuming commodities and newsflow remains strong. No guarantees of course… and the usual risks/caveats apply.

Week 8 below: