Noble winning wager: How did I do it?

Please read my earlier post on Noble written on 18 May 2017:

http://superphang.blogspot.sg/2017/05/noble-one-mans-meat-is-another-mans.html

I thought it is good that I recorded down a more detailed journey of this winning wager on Noble for future reference as I believe my readers can take reference from it when there is extreme pessimism in a particular stock in the near future again.

(1)     My definition of extreme pessimism for a technical rebound

The dates of the various events that caused extreme pessimism among Noble’s investors

One of my criteria for judging the arrival of extreme pessimism is when the price of a stock or a commodity has plunged about 75% or more and you know that it will not go into liquidation so soon yet. For Nobel, it started to plunge from $2.80 and when it reached $0.59 --- the price I went in on 15 May at the close of the market --- Noble has plunged about 78.9%, and this fulfilled my important criterion.  

Another criterion is when there is more than 3 gap-downs, at least the last gap will have to be covered pretty soon.
Yes, I still have some other trading criteria for this wager and I will treat them as my secret weapons. 

(2)     The technical rebound will bring the price back to the 25% region before it hit resistance

See the chart to understand how I set my 25% target price.

The 25% mark will be roughly at 75 cents

(3) Have to run fast if it is time to run

Chart with illustrations showing the entry point and the two exit points

The price almost hit 74 cents on 18 May, just a cent off from the target price of 75 cents. I believe if not for the Trump’s impeachment issue, the price should have gone past 75 cents easily. But when the 5-minute chart shows the bearish momentum, I made a decision to divest all my remaining position in Noble at an average price of 68.25 cents. And true enough, the next day, 19 May, the share price plunged 8.1% and closed at 62.5 cents. 

The 5-minute chart of Noble from 15 to 19 May 2017.

(4)      Conclusion: 

For short-term trading or for long-term investing, the secret is still about due diligence to increase our odds of winning.  When there is a confluence of many positive signals to support a trend and the risk/reward ratio is good, it is worth the bet.

For trading, the mindset of big fish has to revolve around accumulating the shares at low points and sell them at high points, and repeating this a few rounds till there is no more meat for them. The big fish will also look at the global situations to play their cards. For example, if Trump is in more trouble or the hike in the US interest rate is getting more imminent, they will go short on stocks more.
I do not have all the answers at all times for the best opportunity, but when the golden opportunity presents itself again and I happen to spot it, I will go in for the kill.

Superphang
http://superphang.blogspot.sg

Noble: one man's meat is another man's poison

I declared a solid bonus, $10.66k, for myself today (18 May 2017) with my winning wager on Noble Group when I got to know from newspapers and from InvestingNote that almost all analysts and punters thought that Noble would not be a going concern soon. The company directors also declared that it would take a long time for the company to be in the black again.


My instinct was I might have a chance to make my quick bucks. I started monitoring the share prices and was waiting for it to keep plunging till it reached the maximum pessimism, i.e. near the closing bell on 15 May 2017 (Monday), which I decisively bought 170,000 shares at 59 cents apiece, amounting to a total of $100,557.6.

The target prices that I set and my reasons for the entry then:

2 weeks target price = S$0.75 (Dead cat bounce)
3 months target price = S$1.14 (When dust settles) 

1. Noble should have an immediate dead cat bounce as the plunge is over-corrected. 

2. Short –squeezing will take place as shortists will all run at the bottom almost simultaneously. 

3. The bosses will go in also at this time to give support to the share prices. Who knows some of the insiders also went short as they would have known the bad results and now they are closing the loop to make some money. 

4. The fundamentals of commodities all over the world are actually quite sound and Noble has become too much undervalued after this triple whammy (bad quarterly results + 10-into-1 consolidation + Icerberg Research's condemnation.)

I made use of my chart-reading skills to time the entry. I had learnt this through experiences, reading of many books, and attending courses. The action to enter Noble at 59 cents, to me, is a moment of truth that my years of preparation was put into good use and I was very excited about it. Yes, I was greedy when others were fearful. Yes, I am a shark and when I smell blood, I will go for the kill!

I shared my thought in InvestingNote after my purchase in the same evening. I do not think that I alone can decide the movements of the prices of the stock that I recommend, especially volatile stocks like Noble. That said, I hope I have had the wisdom to help InvestingNote viewers and my followers at the first opportunity to quickly uncover the gems or take advantage of extreme anomalies to accumulate wealth. I am sure anomalies will be reduced to parity sooner if more people get to know about them fast enough.

Noble daily chart at market close on 15 May 2017

I was proven spot-on and Nobel’s price took a reversal on 16 May and carried on its uptrend on 17 May, and the most part of 18 May till around 3+pm that it started to move down quite rapidly. The highest price done on 18 May was 74 cents.

I sold half of my position on 16 May at 63 cents apiece, and the other half on 18 May at an average price of 68.25 cents, all within the contra period and a handsome return of 10.6%! 

Noble intraday chart on 18 May showing the downtrend towards the close of market

Some people may say the plunge at the later part of 18 May was due to Trump's impeachment issue or Europe's bearish opening. But I believe that technically, as chart usually does not lie, when it is time to run, we will have to run much faster than those uninitiated. I think I have achieved just that. 

Kudos to my own hard work, good judgement call and a mission well accomplished. Congratulations to all those who followed me in this journey and I noticed some of them even made more percentage of return vis-à-vis mine.

Superphang
http://superphang.blogspot.sg

There is every prospect of Federal being a multi-bagger

Federal's 1Q2017 result was released on 5 May 2017 with its profit declining 69% in comparison with that of 1Q2016. I am not too concerned about the short-term blip of Federal’s performance and I want to give another perspective to why there is every prospect of Federal being a multi-bagger going forward:

(1)     Confidence displayed yet again by Executive Chairman  and CEO on the company’s expansive growth

The management of Federal is forward-looking and the confidence was expressed clearly by the Executive Chairman and CEO of Federal: Our sound balance sheet underpins our profitability and ability to win new business. Looking ahead in 2017, we are well placed to benefit from our strategic partnerships with CMIH and PTG. We are focused on forming strategic partnerships in order to strengthen our competitiveness in the trading business. Our MOU with CMIH is recognition of both the Group’s expansive business ties in Indonesia, and its established capabilities in the oil and gas industry.

As Indonesia plans up to US$ 200 billion of investment in order to increase output at its oil and gas fields and expand refining capacity, this is a particularly exciting time for Indonesian offshore marine contractors.”

The CEO did not just pay lip service but he kept increasing his stake in the company, buying about 1.07% of the company shares in the period between 3 Jan to 4 April 2017. Now that he has pocketed the 2-cent dividend (4.167% yield based on the last done price of 48 cts) for every share he owns, he can use the proceeds to start his purchases again. I estimate that the proceeds can be used to purchase another 0.755% of the total company outstanding shares and we are not talking about pledging probably some of these purchases with finance institutions which he did so during his last purchase made on 4 April 2017, involving 400,000 shares at 39 cts apiece. Now that the barring period for his purchase of the company shares has been over after the release of the 1Q2017 result, he may start his buying spree again if his confidence has not wavered a bit.

When the CEO who knows the company better than anyone else keeps buying his company shares, it means he has confidence in the long-term growth of the company. Likewise, I am in for the long haul till my target price is hit.

(2)     Nearsightedness will cost you dearly

I remember clearly AEM announced a poor FY2016 result over FY2015’s on 23 Feb 2016 with its profit after tax dropping 19.5 percent, after my AEM post was out on 12 Feb 2017 and a lot of punters, without going into the details of its financials and the positive actions of the company, threw the gem away and regretted big time when it reported subsequently a very solid 1Q2017 result on 24 Apr 2017. Based on AEM’s closing price of $2.36 on 5 May 2017 and taking 1-for-2 bonus issue into consideration, AEM has surged 247% in less than 3 months since I posted my recommendation in InvestingNote on 12 Feb 2017.

Always do your due diligence as there is no shortcut to make money.

(3)     Many positive developments begin to take shape

(A) The Group has a committed order book of S$ 86 million (as of 24 April 2017), including the procurement for the Zawtika Development Phase 1C Project.
(B) On 20 April 2017, the Group announced it had signed a Memorandum of Understanding (“MOU”) with China Merchants Industry Holdings Co., Ltd (“CMIH”). Under the MOU, the Group and CMIH will co-operate exclusively on certain identified oil and gas projects in Indonesia. The Group is still in discussion with the parties concerned on the projects.

(C) The Group is also in discussion on the possible charter of its 1,200 HP land drilling rig which is located in Jakarta, Indonesia.
(D) The Group continues to benefit from a steady source of recurring earnings from CNOOC’s charter of Federal II, a floating, storage and offloading vessel owned by PT Eastern Jason (“PTEJ”), in which the Group has a 30% interest. Federal II is chartered to CNOOC until September 2018 with an option to renew the charter for a further 5 years.

(4)    Conclusion

I will not throw the baby out with the bathwater at this stage. I know more good news from the company is in the pipeline and it will have very solid subsequent financial reports and there is no doubt about it.

When others are in doubt but not doing their due diligence and become fearful, it presents a golden opportunity for me to accumulate more of this gem.

Superphang
http://superphang.blogspot.sg