AFF Member Stock Discussion

[glasszon]

I’m tossing up a contrarian investment into Whitehaven Coal At the prices. If the world recovers from C19 even in a muddled round about way, the supply/demand balance for coal is compelling. Fossil fuels and coal aren’t going away for some time yet.

I looked into WHC too, but right now there's no sign on when they might bounce back, and there are still plenty of blue chips near the March lows. I would rather buy once there's life in the coal industry rather than trying to pick the bottom.

 

[cove]

@GoldMember often we think like you as you can get to pick up completely out of favour shares at bargain basement prices.
No one rings a bell to tell you something is a bargain and sometimes a buy can turn to a bust.
With so many folks playing the market due to not travelling the small and mid caps have been interesting.
We don’t stay in stocks that have price earnings of 200 or more. We won‘t be here in 200 years time.

 

[Mr_Orange]

I’m tossing up a contrarian investment into Whitehaven Coal At the prices. If the world recovers from C19 even in a muddled round about way, the supply/demand balance for coal is compelling. Fossil fuels and coal aren’t going away for some time yet.

I wouldn't. WHC has been trending down for over 2 years with no sign of the trend changing.

 

[cove]

Sometimes we have to file Form 603 and / or Form 604 when we buy more than 5% of a company. Just a bit painful but it is better not to have a stoush with the corporate regulator.
We have way too many stocks and bonds but it is a game like frequent flyer point collecting was when planes flew.

 

[Gold Member]

I looked into WHC too, but right now there's no sign on when they might bounce back, and there are still plenty of blue chips near the March lows. I would rather buy once there's life in the coal industry rather than trying to pick the bottom.

Agreed, but the markets and share prices are always forward looking so it won’t take much for things to change. There are so many things going against coal right now that if you take a medium term view it can‘t get much worse.

I wouldn't. WHC has been trending down for over 2 years with no sign of the trend changing.

Can’t fault you there either. I usually like to see a sustained rebound in any turn around story as well, but for this opportunity I think the risk reward equation permits a more audacious entry point against traditional charting trends.

 

[Gold Member]

Sometimes we have to file Form 603 and / or Form 604 when we buy more than 5% of a company. Just a bit painful but it is better not to have a stoush with the corporate regulator.
We have way to many stocks and bonds but it is a game like frequent flyer point collecting was when planes flew.

In context, the extra admin from becoming a Substantial Holder of several listed companies is truly a first world problem, Cove I would be happy to have that problem.

 

[Mr_Orange]

Agreed, but the markets and share prices are always forward looking

They are, and if a recovery is going to happen you will see it in the chart. There is no sign of it yet.

There are so many things going against coal right now that if you take a medium term view it can‘t get much worse.

Are you sure? Remember, your opinion means diddly to the stock market. Trade the chart not your opinion or a forecast.

 

[Gold Member]

They are, and if a recovery is going to happen you will see it in the chart. There is no sign of it yet.

Are you sure? Remember, your opinion means diddly to the stock market. Trade the chart not your opinion or a forecast.

I’m not a Chartist, so as more of a value investor the charts play less of a role in my decision making. There are lots of arguments for and against both approaches so I’m not going to get into that debate. But let me try and balance the discussion with these two quotes:

1) Man who pick bottom have smelly finger, and
2) The trend is your friend, until it isn’t.

 

[cove]

@GoldMember it is only ok to have a biggish holding if that business knows what the word profit means. We had one director of a business call us to say everything was good and about 4 or 6 weeks later they declared a $100 million loss. We are still there and the current directors know how to make profits. We are now much closer to being square on that horror story. Mrscove was in my car when we had that phone call.

 

[Buzzard]

Put a bid in for BEN @ $6.50 but it didn't get filled.
I'm now thinking about TWE.

 

[Mr_Orange]

Put a bid in for BEN @ $6.50 but it didn't get filled.
I'm now thinking about TWE.

BEN looks to be the better choice.

Also, very different sectors so TWE is not really an alternative to BEN .

 

[cove]

@Buzzard you don’t really need TWE do you? They might be in a Chinese downdraft in the next little while.
We don’t follow BOQ nor BEN so no comment on those two.
MQG is probably overpriced but we are still there.
We are down on WBC as they have been heavily fined since we bought.

 

[Mr_Orange]

The banks will have their time now that the lending shackles are starting to come off.

 

[cove]

Yes @Mr_Orange we think that too but there are still claims for past misdeeds coming out of the woodwork.We need about $24 to get out of the red with WBC.

 

[glasszon]

I’m not a Chartist, so as more of a value investor the charts play less of a role in my decision making. There are lots of arguments for and against both approaches so I’m not going to get into that debate. But let me try and balance the discussion with these two quotes:

1) Man who pick bottom have smelly finger, and
2) The trend is your friend, until it isn’t.

True, ultimately WHC is a high risk, high reward play. I tried the same thing with URW when they are at $4, but rather than recovering with the rest of the REIT market, they decide to keep dropping, dropping and dropping, eventually reaching $2.5 and still deeply in the red.

 

[Mr_Orange]

2) The trend is your friend, until it isn’t.

I hear you, however, "Never, ever trade against the trend."

 

[cove]

So we spent a couple of hours reading Cash Converters figures CCV. Just under 30 cents of net assets and they have cleared the two law cases. They need to do a share buyback or announce a dividend program or both.
Austrac is reviewing some 6 years of transactions and their bad debts in 2020 were about $40 million down from $60 million.

 

[cove]

Coronado Coal would fit into a coal story if you wanted to take a risk. We spoke to a fund manager who had dived in at their low. Easy to get in but often harder to get out. The problem is the Chinese are playing a game on stuff like coal, barley and wine so it is easier to stay away.

 

[Buzzard]

@Buzzard you don’t really need TWE do you? They might be in a Chinese downdraft in the next little while.
We don’t follow BOQ nor BEN so no comment on those two.
MQG is probably overpriced but we are still there.
We are down on WBC as they have been heavily fined since we bought.

I don't have a crystal ball but given that TWE might split off Penfolds with Penfolds returning to Australian ownership, it might present an opportunity. More research is required.
BEN is near the 52 week low so could represent good buying. Even a 70c rise would give a nice 10% return.

 

[cove]

Ok we read the BEN financials. Operating costs rose and net income dropped. It is assets at a discount as the share price dropped to below the net asset value. They will take some losses from their lending.
BEN is cheap but they need to improve their income and reduce costs at a difficult time due to Victoria underperforming.
You might look at AUB in insurance as they are growing profits In a very difficult year.
Time to say this is not financial advice as share prices can go every which way..............