Wednesday, March 30, 2011

Big name on register of Red Fork Energy

At the start of March I posted about following the big boys and their investment decisions.  One of the stocks that cracked a mention was Red Fork Energy (RFE).  At the time of posting the share price was at $0.405 and weakening.

It now appears that the others are catching on to the likes of BHP Billiton (BHP) and the potential of shale gas in the US.  George Soros, the billionaire investor, has taken a slice of Red Fork Energy through his investment fund.  After the news the stock surged as high as $0.52 on the 25th of March and trading volumes over the last few weeks have been excellent.

Definitely a stock to keep an eye on.

Further details on the investment made by George Soros can be found at this link.

Sunday, March 13, 2011

Unilife Corporation Updated Broker Report

  • Griffin Securities has released an updated broker report on Unilife Corporation (UNS)
  • Report dated 10/03/2011
  • 12 month price target $1.75 CDI's ($10.50 NASDAQ) 
  • UNS last trade: $0.74 (11/03/2011)
  • Research link

Friday, March 11, 2011

Julia rings the bell (of destruction)

The irony.  Our Prime Minister Julia Gillard rung the bells at the New York Stock Exchange last night.  The DOW dropped almost 2%.

Everything that the government touches turns bad.  I've read numerous articles the past week from Charlie Aitken to Coppo (Goldman Sach's trading desk daily memo) and they've been ruthless about the current government and it's decisions.  It's partly because it is the 2 year anniversary of the bottom of the GFC and also partly because the ASX has been smacked 4% this week that all this negative commentary has been floating about.

The instos have been waiting for their opportunity to sell and with commodities prices hitting all time highs, the Aussie dollar still above parity with the US and the Middle Easy troubles it has been an easy decision to sell.  This is coupled with the governments dangerous decisions regarding the resources super tax (which hurts all Australians, yes we all hold BHP and RIO through our superannuation fund) and carbon tax.  It's no wonder that Australian companies are targeting and acquiring projects overseas.  Africa used to have Sovereign risk but now we do!

There is a lot of fear in this market which unfortunately doesnt bode well for the small cap stocks that we follow.  For those that are gutsy it may be a time to top up on your favourite stocks whose share prices have been hit by low liquidity (the lack of buyers forces prices down on low volumes).  For others it may be a time to sit on the sidelines, not open any new positions and wait until the world settles down.  Having said this, who knows when things will settle - Japan has just been struck by an earthquake so markets may get hit further tonight.

Tuesday, March 8, 2011

Shell Play Brief: Olea Australis

One of the ASX shell plays that I posted about recently was Olea Australis (OLE).  I'm revisiting this one because the time frame for any action has now shortened or become clearer after the announcement made on 01/03/2011.

I have seen on occasions when the ASX will issue a query or 'please explain' to companies that have held cash and little in the way of a business activity or any assets for an extended period of time.  An example that comes to mind was Wavenet International (WAL) which held cash for ages and received this query.  This was an excellent example of a shell play that has seen the stock rise from $0.08 to $0.60 after vending in coal assets.

If you get a moment I would recommend reading the response made by OLE to the ASX.  The company has stated 'the directors have held preliminary discussions with at least ten parties interested in Olea as a basis for a transaction for a listing on the ASX'  In lamens terms this means backdoor listing another company.

OLE proceeds to advise that none of these discussions are advanced enough to warrant further disclosure.  The company does however state that 'the directors anticipate that OLE would be in a position to demonstrate to the ASX within four months that it is compliant with listing rules 12.1 and 12.3'  In other words OLE will be making some form of announcement in regards to this back door listing within 4 months - we now have a clear timeframe!

Sunday, March 6, 2011

Cobar Consolidated Resources Research Report

  • Ord Minnett has revised it's research on Cobar Consolidated Resources (CCU) with Buy recommendation
  • Report dated 01/03/2011
  • 12 month price target $1.20
  • CCU last trade: $1.035 (04/03/2011)
  • Research link

Mesoblast Research Report

  • Southern Cross Equities has updated it's research on Mesoblast (MSB) with a Buy recommendation 
  • Report dated 03/03/2011
  • 12 month price target increased from $7 to $11. 
  • MSB last trade: $6.33 (04/03/2011)
  • Research link

Saturday, March 5, 2011

Leveraging off the Big Boys...

It's not too often that I mention the likes of BHP Billiton (BHP) or Newcrest Mining (NCM) but today is a different day.  Having said that, NCM did manage to have an excellent day yesterday with a move up of $1.79 or a lazy 4.68% after a market update that included the doubling of an estimate at it's gold project in PNG.

So why do I mention the big boys when I am usually focused on the small cap minnows?  We can learn a lot from these guys.  After all, they have large teams of analysts, reasearchers and forecasters that can assess the future global trends in commodities.  They are in the know and following their moves could be very successful.

To explain in simple terms, the most recent example is BHP Billiton and POSTASH.  It started when they lobbed a hostile takeover offer towards Saskatchewan's Potash Corp.  Suddenly there was a focus on the world food shortage and how potash and phosphates used in fertilisers were going to be in high demand in the agricultural sector.  Every potash stock has run since including Souther Boulder (STB), Rum Jungle (RUM) and Reward Minerals (RWD).  We've also seen Fortis Mining (FMJ) rush to an intraday high of $3.98 and be as volatile as I dont know what.  General Mining (GMM), a company that may suffer from bad PR has a potash project in Mongolia however it had been overlooked, not til yesterday.  That probably leaves only Transit Holdings (TRH) yet to go for a run and it's a pretty good bet that it will.

Anyway, enough of Potash as I've gone off on a bit of a tangent.  So what are the next moves of the big boys that could give us some trading ideas in the small cap space?
BHP has now decided that it's next play is shale gas and it is going to spend just under $5 billion to purchase assets from Chesapeak in the US.  An article detailing the deal can be found here.  Gas prices in the US have been depressed for some time so I think that BHP is trying to get in early whilst projects can be acquired at basement prices.  Analysts think that this is more of a long term strategy whilst waiting for gas prices to improve.  Red Fork Energy (RFE) is a company that has shale gas assets in the US and like the prices for gas it's share price has been depressed for sometime.  I couldn't help but notice the improvement in share price the last few days and the number of buyers around generally increase.  A nice trend reversal too.  RFE last traded at $0.405.  Any readers that have companies in the same vein are welcome to post a comment suggesting them.

Back to NCM.  I posted recently about the EU List of Critical Raw Materials and how it formed the basis for a substantial amount of research by me of late.  Funnily enough, one of those materials is Tungsten and Newcrest mining has recently signed a deal with car giant Mitsubishi to supply tungsten!  Newcrest's O'Callaghans tungsten project is gaining more focus and compared to BHP's shale gas possible focus NCM's play could be more of a short term winner.  This puts the spotlight on other Aussie companies with an exposure to tungsten and I like Wolf Minerals (WLF), Vital Metals (VML) and Icon Resources (III).

Vital Metals has the largest market cap of the three and has somewhat been in the doldrums for some time.  Things look like they are about to change.  Not only have the trading volumes and interest in the stock improve however there has been changes at the board level so hopefully new blood can get the company back on track.  The company has boasted in it's quarterly report that their Watershed tungsten project is gaining world wide attention so there could be some good news soon regarding some form of a deal.  VML last traded at $0.14.

Icon Resources is currently rationalising it's projects including divesting projects to focus all it's efforts on the Mt Carbine tungsten project.  It's shares last traded at $0.13 but suffers from a lack of trading and interest currently.

Finally, Wolf Minerals is only a newly listed company however their project in the UK is possibly the fourth largest owned by an Aussie company.  With tin at all time high prices and also thrown into this project this company is one to definitely put on the watchlist also.  It last traded at $0.375.

Friday, March 4, 2011

WHL Energy Broker Report

  • Hartleys has issued a research report on WHL Energy (WHN) with a Speculative Buy 
  • Report dated 03/03/2011
  • 12 month price target $0.097
  • WHN last trade: $0.047 (04/03/2011)
  • Research link