I've had a number of people ask about my position on the PM markets. Here it is and a little more:
Strong hold mode. Short term (next month) neutral given COT and sentiment ratings. Juniors look under accumulation by holders not renters however. Intermediate term (rest of 2002); very bullish, POG target 340, with a "fat tail" event (400 or more) a distinct possibility (10%). No new buying as I spent over a year stinky bidding a huge holding already, just don't need to be a buyer.
Recent actions: Used spike in BAY to off load half of a large position at 2.95. Rest is solid hold. Got rid of several "mistakes" at favorable prices: GLDR @ 82 and GEO @ 9. Traded TVX from 40 to 52, using prior loss position as tax loss sale after wash period, retaining low cost purchased in Dec. My goal is not to trade however, as I'm trying to set up for long term cap gains. Overall gains on the PM portfolio from inception are now considerable, with many individual stocks showing large or solid gains, with a few large losses as well. This is not a sector for the faint of heart.
Current holdings:
Core: ELD, BGI, BAY, NGT, FGX, MFL, IP, GBG, CTQ (bought at 62).
Second tier, mid size holdings: SUF (picked off before the big surge at 2.62), ARQ (another PGM that should be bought here below 50), YMC.u, CBD, GNG (almost a core, bought at 38), IMR, MOY, NSU, SLR (big loss), SWG, TNK, TVX
Smaller holdings: MNP (was once a mid-size holding <g>), TNX, PFN, PLY (bought at 22, sold half at 30, retain rest at 14).
Energy: Had profitable trade here last year, got out. This time the move will be more serious and sustained IMO (see prior post). The stocks employed are more "main stream" and not as wild as PM juniors. Therefore, I feel they are a good bets for the average risk tolerance (goes without saying that PM juniors require very high risk tolerance). I like Kurt Wolff's work as he was associated with several of the major takeover specialists (Boone Pickens, Gordan Getty, Carl Icahn) in the oil patch throughout the 80's.
mcdep.com
As such he applies criteria to his picks that a premium price acquirer would also use. Peter Linder is worth following as well. I've been picking off swoons in the following starting in mid-Dec. and was very active late last week: CED, PTR, CEO, PCX, SJT, PEL.t, BR, FST. I'd like to pick off AOG below 35.
There is another "pipeline" play shaping up that I don't imagine many here are aware of. The biotech sector looks today about how the juniors looked in 1999. The PM juniors experienced a bubble in 1996-97, similar to the biotech bubble of 1999-2000. Enormous capital was raised and is now being applied. There will be some outstanding products coming out the other end in the next several years. The bubble is now popped and the sector appears to be undergoing the difficult process of returning to the rightful owners (from the hands of bubbleoneans). Right now the sector is facing the "real world" : failed projects
thestreet.com, a scandal (company called Imclone), biz.yahoo.com
regulatory hurdles dailynews.yahoo.com
(all sound familiar?)so the fantasy crowd is capitulating. As the PM junior arena showed in year 3 and 4 of it's post-bubble, that can take awhile (the base) and it's difficult to know when the process is over.
Biotech in the late 80's was one of my most profitable investments so I have a fond place towards it. The concept is very similar in philosophy to the PM junior sector (majors need pipeline). To me it looks like it's about to undergo the third in a series of vicious shakeouts with a target of 400-450 (currently about 500) on the BTK.
finance.yahoo.com^BTK&d=c&k=c1&a=v&p=s&t=5y&l=on&z=m&q=l
If you look at the third and even the second tier names here one can begin to spot the net nets (trading at cash) or near net nets even in some highly regarded names. That gets my attention and I've been hard at work since the beginning of the year relearning the story and overloading my brain on this sector. I even bought two small positions Friday as ownership focuses the brain more. What am I hoping for? The big payoff in PM and energy this year, and another "historic" pipeline opportunity in this third theme. |
