Caninius Maximus - Welcome back Big Dog - re: averaging down -
Good to have the voice of reason, experience and the "Dogfather" of - ''it's the Oil Prices - Stupid...'' back; ... you may have missed the equivalent of the Normandy Invasion here recently - hopefully you were ''wired'' - curious as to Europe's reaction to the Russian debacle...
Ps; have a fifth of Jack Black ready; before you pull up a quote for FGII....
On ''averaging down'' -- No; actually I've metamorphisized into a damn ''trader'' - had to - to survive... Successfully played a series of 7-8 trades where we saw dramatic one day selloffs in individual stocks that were disproportionate to the rest of the sector for that given day... . I've kept about 40-50% in cash for active trading here; as this is a stock pickers/traders market currently. Certainly not a time to buy accross the board yet - yes; we will need crude to move to trigger that - buy anything mode... But; IMHO - we needed an overall market correction first; to trigger a massive move to cash; which will allow a big flow of funds into our sector when crude does move. If crude bounced (unless it blew through $18...) and we did not have a market correction - imho; we would only see a moderate flow of funds into the oil patch. The overall market correction, Russian & International political/economic turmoil will ultimately be our savior. It is in our best interest for these events to unfold before crude bounces...
I played the 1 day ''bounces'' in DRQ CDIS , couple of times in FGII, BDI, TBDI, and a few others... recently made a borderline reckless trade with almost 40% of my portfolio on Input Output IO - a seismic company that I've followed extensively as a take over candidate along with PGO ( I love the seismic subsector) - thinking SLB with their $1.78 Billion in cash may play pac man here and buy... anyway we have had what I view as ''taking candy from a baby'' plays develop after a series of absolute top shelf small cap stocks sold off due to individual hedge/energy sector funds just dumping en masse huge individual company positions due to a cash redemption run on them. I had seen this 6-7 times here, where a fund literally stood on the sell side and dumped a Million shares (or more - in IO's case) - causing a virtual meltdown in individual stocks. While these funds were forced to literally sell at any price - forcing IO down over 30% in a 1 day dump; I saw some value funds and other Institutions step in and buy these the next day. The creme de le creme - were afftected here DRQ, CDIS, SCSWF, CXIPYand now IO - I bought the largest single buy I ever made on IO - in waves of trades as the selling took them out... No Institutions stopped the bleeding as it was crazy to buy in big blocks untill this bloodletting was complete...when the dust was clear - the buyers stepped in, and I got the bounce. Dangerous trade yes; reckless no. I knew from my research that the reason some of these funds were dumping was that they were faced with massive cash redemption demand (this is also an individual investor fund owner - bottom/capitulation sign here folks...) and that they would first blow out & pare down their largest individual company holdings. They had huge positions in smal cap growth leaders (smart) like CDIS, DRQ, IO, CXIPY, SCSWF etc. Knowing why they were selling (redemption demand) and why they were selling ''who'' they were (small cap niche players - who may not have future liquidity in a meltdown) made the scenario an intelligent, allbeit - somewhat risky trade... I knew IO was virtually debt free had one of the very best ''ratios'' in the oilpatch (asset/liability ratio of 4.82) and had a strong cash position. However the ultimate safety valve - was they are a prime buyout candidate - no way - they stay at $8 or go lower - on this I would bet the farm; I did - I sweated - I puckered - I got paid well...
CXIPY not bouncing immediately; scared the $#^) out of me; I felt the day of trading off these ''bounces'' was over - but alas; CXIPY bounced big as well - so I will continue to trade low debt/financially solid companies, in great sub-sector niches, ,mainly small & mid-cap companies who may still continue to get blown out by Instituitions - the key here; is knowing WHY they are being blown out & literally dumped at any price - and knowing what companies wil likely have buying support.
A ''trader'' has to have the conviction -absolute 110% confidence in this concept - as to "why" these companies are being sold; and must be willing to be ''caught/stuck'' with these individual companies if the trade or the market goes sour... Would I not sleep owning 40% of my portfolio's value in CXIPY or IO ? NO - I'd prefer not to - but it wouldn't be the end of the world... I would only trade low debt, financially very, very strong companies in great niches here - would I trade MAVK on a 50% 1 day drop - NO, - picking the correct company targets is the key.
Being quick, well planned, thinking ahead and targeting future trades is the key.... this is a traders market here; however some companies like FGII, RIG, ROn, EVI here are at great prices fundamentally to ''begin'' buying/nibbling - saving some extra ''powder'' in which to buy lower... allthough; I believe we are at the bottom now - in a basing mode since EVI's big blow out - we are NOT establishing new lows accross the board - With the World meltdown/selloff on ''BLACK-RUSSIAN THURSDAY'' and it NOT continuing on friday - its over - what other bad news/scenario is not priced into these stocks. Every scenario 6 months out is in todays prices - classically oversold...
Would Institutions step up to IO off a 6 million share dump if we weren't ? Would HOFF being selling at a market cap at less than its Cash on hand - HOFF has $134 Million in Cash & a market cap of $123 Million(hello - Paulo ! - lets buy the damn company with 100% financing and keep the extra $10 million) if this wasn't a ''bottom'' ?
The land drillers have strong support, and we have many, many unique to bottoms - scenario's and financial ratios that only occurr at ''bottoms'' - indisputable indicators imho...I could go on & on - but won't...
Comments later on what constitues ''Value''...
PSS - BIg Dog; Is FGII the play here or what ? IF Holloway isn't buying here ???? |
