Sunday, 28 September 2014

DocsLaymanChatter XXVII

As one opines the weeks events from the small cap markets we also consider the wider global events which directly and indirectly affect sentiment and momentum. When we talk about civil / political or religious unrest we think about problems in both the Middle East and the old Eastern bloc, both regions have rarely been at peace for more than five minutes however this has caused money to move into a tighter herd which is my explanation for the seemingly pansexual rises we see from time to time in aim companies.

I was asked about WRN and the forum chatter of £2 '' would I buy or could I see the upside potential from here '' - Oh boy! was a favourite catch phrase from one of my favourite childhood T.v shows quantum leap... If we look at the quantum mechanics or the phenomena of WRN its very very hard to find logical reasoning for buying stock now, however I'm a keen advocate that logic can be profoundly damaging to investor/traders so look for technical and fundamental formula to validate a buy or sell position and the truth is V+M-T= Avoid (Volatility+Manipulation-Traders=A)

The markets are full of shares and if taken in by them will give you a 2 day feeling like you're sailing on the love boat and then a lifetime aboard RMS Titanic as the inevitable iceberg collision takes place. There is no doubt that you can make money in such fervent demonstrations within the market but managing one's expectations has to always take priority.

This week I approached the concept of '' New Money '' entering the markets, are we seeing an increase in private equity spending or are we witness to a relaxed attitude form institutions!!! however the general consensus is '' Simply the herd are avoiding dangerous pastures and now channeling into the same environment which is the spearhead to some bumper rises in the small cap sector. Whilst analysts predict the worse (yet again), I'll be sticking to the program and moving into the small caps with a clap of excitement. Why? well the volume increase in a bundle of small cap resource stocks tells me there is a game to be had so consequently I'm happy to sit at the table until the violins are played, at which point we can reavaluate.

The alliance are now in full swing as bombing raids over Iraq and Syria are ramped up, Islamic state are the new enemy now that Bin Laden has expired. Jeez even Al Qaeda are calling for the release of British aid workers and the FBI have identified jihadi John. '' Oh how things change '' - Syria's president Assad is now not an evil pumpkin slaughterer of his own people, he's the head of a state under attack by I.S. Fuck me we were arming these rebels 12 months ago (from the west) now we are dropping 300lb bombs on them, If you're confused then you have every right to be!!! The world has gone mad....

Mx Oil: Had a significant pull back as private investors speculated on timelines, I believe there is far more newsflow coming than has been credited so on this basis I see Mx Oil as company likely to really catch a few out by surprise. The PSA process will not simply be '' we have signed '' The company has steps to take to secure the agreement but also a deeper level of transparency and value should come from this. If Mx Oil get a tiny fraction of something then the SP will react well... That's quoting a well known oil analyst who shall remain unnamed.

Sound Oil: Investors were left mesmerized by the companies big cap feel as they formally focused on its institutional support who have entered the register at a 75% and 25% premium to the share price, Badile alone is worth over double the SP today and with high end valuations of $1.7bn
Its no surprise that meetings with Mid cap and industry majors are becoming a somewhat regular event. Watch these closely over the next 3-6 months (Edison,ENI anyone)

Nostra Terra: I'm not going to focus too much on Nostra as I do believe that the investor base wanted bigger and more controlling assets which would return greater rewards, by doing so you have to accept that fast tracking costs money (Nobody likes it) but thats the way E&P companies run at the bottom end of the markets, this is no exception. Click here for my full thoughts

Westminster Group: Have been under the cosh from lack of expected contracts and a world recognised epidemic Ebola breakout. As much as folk want news just count how lucky we all are not to have to endure poverty or fatal infection of disease. I fully expect news to flow nicely once the epidemic has peaked as I believe the contraction of infected will recede quickly, this is a well run company however natural disasters or breakouts like this are unavoidable.

Now some of those companies that can sink you quickly: Leni Gas & Oil is well and truly overvalued, Hurrican Energy maybe carrying out a funding drive so beware when taking positions over the next few weeks - Lots of talk at the Oil Barrel of awkward moments when asked about the situation, Worthington Looks far too choppy to get into the water, Kalimantan Gold need funding immediately and in my opinion we will see more of the HH (Horse Hill developments investment companies) placing into the drill excitement - watch out you have been warned here

All the best


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(These are but opinions derived from my own experiences and thoughts and are not adopted as a statement of fact)

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