Cal Gary - I'm sure that's just a figure of speech, but I wouldn't mortgage the house to buy any stock in this environment (unless I was doing so in a Caymans account because I was on the board and knew the deal would be announced on Friday HA-HA-HA).
Seriously though, accumulating a stock at what one believes is an attractive price is one thing - setting yourself up in a large suicide trade, e.g. ahead of an NG price collapse or an unexpectedly large reserves writedown, isn't prudent investing IMO. I get enough excitement in my life without taking those kinds of chances. Still, we all know this is a cyclical business and you have to discipline yourself to position in the troughs even when they look like crap.
To get in the game but still try to cover yourself, one approach would be to establish a maximum dollar exposure limit to the stock, then pick up maybe the first 25% when it prints $13, adding another 25% at $12, $11, and then finish loading the boat around $10 if it ever gets there.
If Peters is right about the $16.82 NAV, I believe we can expect to see some $11-13 zone prints this spring. However, if there are invisible hands preventing the lower end of the range being reached for some reason (e.g. "informed" people stockpiling for a takeover), at least you'd have a small position from the initial buys.
Of course, if the fix is already in, I doubt "the boyz" will let it drift as low as $13, lousy fundamentals and technicals notwithstanding. Go back and look at the patterns for AXL and HTR - if you see the RAX price holding up in the face of really bad news, be suspicious, be very suspicious, and I'd also get long without waiting for $13.
My personal preference would be to not see that kind of manipulative support, and I'd rather see a good washout and a corporate turnaround than a takeover. A washout would also signal abandonment of the stock (and the takeover rumors) and that the worst of the price action is probably over. That would strongly encourage me to sit back and wait on positive fundamental changes (internal and external) to kick in.
I'm mindful that RAX could still do itself in yet with a few missteps, and there could be losses from even an $11 average cost if they eff up badly. But if it looks like the boat is starting to turn around heading into next winter, it could make for a good ride up.
Sounds easy, doesn't it? Too bad it really isn't...... |
