Shares to watch

Froddy

Member
Messages
696
Chaps,

I quite like the look of Square (SQ) for a "pivot machine gun" move higher i.e. where the algos take out peoples' pivots/stops - in this case up to $240.

It's moved beautifully off the broadening formation bottom trend line from the oversold condition:

View attachment 81078
Chaps,

If you're in this trade, you should consider scaling out as we are at the profit target ...

81404
 

Ewan

Member
Messages
4,525
Now that GameStop has plummeted back towards reality, how many retail punters spurred on by Reddit etc. had their fingers burnt I wonder? One must assume it’s lots.
 

empzb

Member
Messages
227
Many lots I imagine!

C
I'm about £1k down across meme stocks like amc, Nokia and blackberry. Will just hold now. Bb I do have some long term hope for. Amc may come good post covid....at least that's what I'm telling myself lol.
 

Froddy

Member
Messages
696
Chaps,

Just to let you know that the S&P and the Nasdaq are simultaneously closing in on key technical levels (marked with a red line on the monthly charts below). If there is going to be a reversal, it would make sense for it to happen at these levels, so be careful if you're long. Notice how price has previously interacted with these red line levels historically.

Here's the Nasdaq (QQQ ETF):
View attachment 80736

And here's the S&P (SPY ETF):
View attachment 80737

Of course price may simply push on through, given the Yellen optimism - who knows?!
Chaps,

An update ...

The S&P has resumed its upward trajectory towards the red line (as has the Nasdaq):

81420

And the $US index (DXY) is rallying too:

81421

Be vigilant everybody as a strengthening dollar could harm the stock market which is itself reaching a significant inflection point.

If you hold (spot) metal or crypto positions, pay particular attention ...
 
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Froddy

Member
Messages
696
Decision time (S&P chart below). This could be highly significant - grab the popcorn (!) ....

Will we reverse hard? Probably not, but you need to be prepared for that eventuality.
Will we push on through? Perhaps - don't fight the Fed
Will we chop for a while? Most likely - Dow theory says we should have a period of "distribution" if the uptrend is ending; if it's taking a breather, we may see some "consolidation" before the uptrend is resumed ...

81507

81508
 
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stindig

Member
Messages
212
Does anyone have a view on this conundrum? Given that one can now buy stablecoins linked to gold, such as PAXG, that you can stake for an 8% return, why would you buy gold, which doesn't give a return? (Only fear of crypto-theft, presumably). The bigger question is, if everyone starts selling their gold and investing in gold stablecoins for their superior return, the price of gold will inevitably go down, thus inherently effecting the price of the stablecoin. Presumably everything then spirals downwards?

The same applies to any other derivative coin.
 

Froddy

Member
Messages
696
Chaps,

I have my eye on Tesla (TSLA): it tested and held support at the 50 SMA yesterday (the thin red line under the most recent candles), it has held VWAP support (the thicker purple line), and it has bounced off the lower broadening formation trendline. Arguably, this is a convergence of support.

As you can see from the grey lines to the right of the chart, there is a ton of volume above, and the volume point of control sits at c. $843. Will the liquidity above act as a magnet? Who knows?! Price may simply roll over ...

The markets are edgy and volatile at the moment, and tomorrow is weekly and monthly options expiration when the market prices are highly manipulated, so please be careful!

82116
 

breezer

Member
Messages
155
Do we tolerate long term punts on crazy small caps here or primarily day trading on large, liquid names? Just checking before I make enemies with my oil & gas picks! :laughing:
 

breezer

Member
Messages
155
Hi Breezer,

Anything goes here - please fire away - there have been plenty of both, historically ...
Well in that case...

Disclosures first so you can see my bias: I hold these shares, but not as a substantial portion of my portfolio. I see them as high risk, high potential reward opportunities. Never trust people trying to sell you on shares without giving you this context! They might have all their wealth or none of it tied up in them. The investment might suit them as part of their "play money" so they can take a loss on the chin. It might not be the same for you.

I’m not providing anything in depth, just a loose and amateur overview of my current thoughts on these – I have in the past been a professional investor but in my view not a very good one so don't listen to me! I’m not providing any advice and you should always do your own research before considering an investment. Each of these companies provides excellent information in their investor presentations and in their results and trading updates.

For context I’ve bought these because of their unique situations or what I perceive to be a value disconnect. I’m happy to be in the space overall as I see a rising tide reducing the risk of my being wrong on the specifics. The rising tide to me is likely due to years of underinvestment in oil and gas production capacity, the removal of significant potential US capacity due to Biden’s new policies, and the significant potential for natural gas (as a relatively clean hydrocarbon) demand to grow as many markets use it as a transition fuel on the way from oil/coal to renewables.


1) Savannah Energy (ticker: SAVE, 18p) is my highest conviction position. It has licenses covering 1bn bbls of2P (and 35MMstb of 2C gas prospect) in a quite phenomenal onshore oil field in Niger, a stable country. This basin contains plentiful sweet light crude with easy access, an 80% well hit rate (on its licenses SAVE drilled 5 wells and has hit profitable oil deposits in all 5). It has identified 146 further well prospects on its licenses...

There is plenty of existing infrastructure (pipelines, airfields, etc that are operated by the CNPC) and Niger has recently announced a big export pipeline to which SAVE will have guaranteed access.

Its second asset is a producing gas field, local monopoly pipeline, and processing facility in Nigeria, but well away from the Delta region. They bought this out of insolvency and it is throwing off significant FCF (c.$120 p.a. vs. an EV of c.$600m) due to significantly improved operations, shedding of debt, and reduced downtime. It is currently de-leveraging at a fair clip, and given a cost of debt of around 10% and debt outstanding of around $500m, the fact that it paid down nearly $80m of debt in 2020 should add $8m to its cashflow, allowing for snowballing debt reduction until refinance. In any even the debt is easily sustainable, with a 2.5x interest coverage ratio. A re-finance would just be icing on the cake. The cashflows are well protected and not connected to global oil prices – its contracts are long term, fixed price, take or pay agreements meaning revenue visibility is high.

Its gas clients are all either regional state power plants or blue chip internationals like Lafarge, and all are backed by a world bank guarantee. Nigeria (where the gas assets are) is undergoing a gas revolution. It’s added 2 new gas clients recently, and has capacity for many more, with 80%+ cash margins on offer and minimal setup costs required to add new clients.

Simply put I think this should be worth 150p+ and think the market is pricing Niger oil at 0 and not pricing in any growth in Nigerian cashflows.

CEO bought £3m worth of shares for cash in 2020 (i.e. he went to market and bought, he was not given them for performance!), and the strike price for employee options is over 60p iirc. Amazingly they didn’t try to weasel the strike price down “due to market conditions” they just carried on building a cash generating machine.

Key risks clearly Nigerian social unrest (mitigated by community investment, education, employment, and being away from the Delta region), inability to restructure debt (mitigated by 2.5x serviceability ratio and stable revenue), inability to fund drilling (will likely need a farm in partner for Niger, which has looked unlikely for the last 2 years. However it’s looking more likely at current oil price levels).

I expect many catalysts this year, including full year results confirming cash flows through COVID, new gas customers, and hopefully (wishful thinking?P) a refinance or farm in partner.


2) Jadestone Energy (JSE) – I’m only in this in a small way, and have settled for much lighter diligence but in short it’s a SE Asian offshore oil producer whose management team have made some astonishingly good acquisitions – to the extent one is now producing more annual FCF than the cost of the acquisition itself! Speaking of that metric, at $65 oil a sensible FCF forecast for 2021 is $286m, which would exceed half the market cap of $460m...

Average opex/bbl on their 3 producing assets are:
$18.50 - Montara - Est Current Actual
$25.00 - Stag - Est Current Actual
$16.50 - Maari – Confirmed Current Actual

So at any realistic oil price expectation this thing is a cash generating machine. Note it’s selling into Asia, where it receives a premium over Brent.

Catalysts include confirmation of cashflow generation in the new oil price world.


3) Deltic Energy (DELT, 2p) – is a pure play explorer with a broad set of potentially excellent and well explored gas assets in the South North Sea, several of which are joint owned with Shell, which has just announced that it is expanding its focus on natural gas…I’m awaiting a near term farm in announcement from Shell on the first asset. In the meantime Shell is paying all expenses for that asset, and Deltic has very few operating costs given its lack of operations! It’s well funded with no debt and is trading not far above the value of the cash on its balance sheet.

I think this could be worth 3p on the Shell announcement and up to 7 or 8p longer term IF the deposits are as good as the 3D seismic and other indicators suggest. Key risks include a negative drill decision from Shell, negative results of drilling, or change in UK regulation or taxes.

I expect very near term catalysts, including the shell drilling announcement.
 

Ewan

Member
Messages
4,525
These three companies current share prices are all (give or take) where they were 5 years ago, so everyone is still waiting for the big find/announcement that actually shifts the company and it's share price to the next level. Much like my long term investment in Quadrise Fuels - I live in hope that one day they'll sign the key contract that puts them properly on the map and sets the share price spiralling. Their product/idea is sound, they just struggle to find clients to take it. Fingers crossed it'll take off eventually.
 

breezer

Member
Messages
155
These three companies current share prices are all (give or take) where they were 5 years ago, so everyone is still waiting for the big find/announcement that actually shifts the company and it's share price to the next level. Much like my long term investment in Quadrise Fuels - I live in hope that one day they'll sign the key contract that puts them properly on the map and sets the share price spiralling. Their product/idea is sound, they just struggle to find clients to take it. Fingers crossed it'll take off eventually.
Yes, stagnation is a key risk with this sort of investment! I only invest money I can afford not to see for 5 years, if ever. To be fair, Savannah's share price has been tanked by one particular problem: the unbearably slow execution of the deal to buy the Nigerian assets. The CEO basically over promised and under-delivered for a while, but now that delivery is finally happening. However it's interesting to note that the institutional shareholders have stuck with it, and a new one (Vitol) has recently initiated a position.

Ditto Deltic - I bought this last year so got it cheap and have avoided years of heartache, but Richard Sneller (a well known fund manager) recently bought 9% on his own account...

Jadestone I'm not as sure about, I just thought it looked cheap, has low opex, and I think the oil market is positioned to take off.

Bear in mind the hammering all oil shares have received over the last few years and it's no surprise they're only at the levels they were 5 years ago.
 

empzb

Member
Messages
227
Well in that case...

Disclosures first so you can see my bias: I hold these shares, but not as a substantial portion of my portfolio. I see them as high risk, high potential reward opportunities. Never trust people trying to sell you on shares without giving you this context! They might have all their wealth or none of it tied up in them. The investment might suit them as part of their "play money" so they can take a loss on the chin. It might not be the same for you.

I’m not providing anything in depth, just a loose and amateur overview of my current thoughts on these – I have in the past been a professional investor but in my view not a very good one so don't listen to me! I’m not providing any advice and you should always do your own research before considering an investment. Each of these companies provides excellent information in their investor presentations and in their results and trading updates.

For context I’ve bought these because of their unique situations or what I perceive to be a value disconnect. I’m happy to be in the space overall as I see a rising tide reducing the risk of my being wrong on the specifics. The rising tide to me is likely due to years of underinvestment in oil and gas production capacity, the removal of significant potential US capacity due to Biden’s new policies, and the significant potential for natural gas (as a relatively clean hydrocarbon) demand to grow as many markets use it as a transition fuel on the way from oil/coal to renewables.


1) Savannah Energy (ticker: SAVE, 18p) is my highest conviction position. It has licenses covering 1bn bbls of2P (and 35MMstb of 2C gas prospect) in a quite phenomenal onshore oil field in Niger, a stable country. This basin contains plentiful sweet light crude with easy access, an 80% well hit rate (on its licenses SAVE drilled 5 wells and has hit profitable oil deposits in all 5). It has identified 146 further well prospects on its licenses...

There is plenty of existing infrastructure (pipelines, airfields, etc that are operated by the CNPC) and Niger has recently announced a big export pipeline to which SAVE will have guaranteed access.

Its second asset is a producing gas field, local monopoly pipeline, and processing facility in Nigeria, but well away from the Delta region. They bought this out of insolvency and it is throwing off significant FCF (c.$120 p.a. vs. an EV of c.$600m) due to significantly improved operations, shedding of debt, and reduced downtime. It is currently de-leveraging at a fair clip, and given a cost of debt of around 10% and debt outstanding of around $500m, the fact that it paid down nearly $80m of debt in 2020 should add $8m to its cashflow, allowing for snowballing debt reduction until refinance. In any even the debt is easily sustainable, with a 2.5x interest coverage ratio. A re-finance would just be icing on the cake. The cashflows are well protected and not connected to global oil prices – its contracts are long term, fixed price, take or pay agreements meaning revenue visibility is high.

Its gas clients are all either regional state power plants or blue chip internationals like Lafarge, and all are backed by a world bank guarantee. Nigeria (where the gas assets are) is undergoing a gas revolution. It’s added 2 new gas clients recently, and has capacity for many more, with 80%+ cash margins on offer and minimal setup costs required to add new clients.

Simply put I think this should be worth 150p+ and think the market is pricing Niger oil at 0 and not pricing in any growth in Nigerian cashflows.

CEO bought £3m worth of shares for cash in 2020 (i.e. he went to market and bought, he was not given them for performance!), and the strike price for employee options is over 60p iirc. Amazingly they didn’t try to weasel the strike price down “due to market conditions” they just carried on building a cash generating machine.

Key risks clearly Nigerian social unrest (mitigated by community investment, education, employment, and being away from the Delta region), inability to restructure debt (mitigated by 2.5x serviceability ratio and stable revenue), inability to fund drilling (will likely need a farm in partner for Niger, which has looked unlikely for the last 2 years. However it’s looking more likely at current oil price levels).

I expect many catalysts this year, including full year results confirming cash flows through COVID, new gas customers, and hopefully (wishful thinking?P) a refinance or farm in partner.


2) Jadestone Energy (JSE) – I’m only in this in a small way, and have settled for much lighter diligence but in short it’s a SE Asian offshore oil producer whose management team have made some astonishingly good acquisitions – to the extent one is now producing more annual FCF than the cost of the acquisition itself! Speaking of that metric, at $65 oil a sensible FCF forecast for 2021 is $286m, which would exceed half the market cap of $460m...

Average opex/bbl on their 3 producing assets are:
$18.50 - Montara - Est Current Actual
$25.00 - Stag - Est Current Actual
$16.50 - Maari – Confirmed Current Actual

So at any realistic oil price expectation this thing is a cash generating machine. Note it’s selling into Asia, where it receives a premium over Brent.

Catalysts include confirmation of cashflow generation in the new oil price world.


3) Deltic Energy (DELT, 2p) – is a pure play explorer with a broad set of potentially excellent and well explored gas assets in the South North Sea, several of which are joint owned with Shell, which has just announced that it is expanding its focus on natural gas…I’m awaiting a near term farm in announcement from Shell on the first asset. In the meantime Shell is paying all expenses for that asset, and Deltic has very few operating costs given its lack of operations! It’s well funded with no debt and is trading not far above the value of the cash on its balance sheet.

I think this could be worth 3p on the Shell announcement and up to 7 or 8p longer term IF the deposits are as good as the 3D seismic and other indicators suggest. Key risks include a negative drill decision from Shell, negative results of drilling, or change in UK regulation or taxes.

I expect very near term catalysts, including the shell drilling announcement.
Excellent post. I know nothing of the companies but props for taking the time to write it and explain for each.
 

Silvercat

Member
Messages
1,134
Well my brother took a punt on Bitcoin in 2017 and invested £20k and bought 7 Bitcoins. At today's price they are now worth £274k!! I asked him are you going to cash them in to which he said, "no this is a 10 year investment". Jesus, I would have taken the money now...However, some pundits are suggesting that Bitcoin could go to $500k per coin in the next 2-3 years.
There are several Crypto's you should be keeping a close eye on....it may turn 'traditional' investing on its head. Watch this space.
 

JJbing

Member
Messages
316
Well my brother took a punt on Bitcoin in 2017 and invested £20k and bought 7 Bitcoins. At today's price they are now worth £274k!! I asked him are you going to cash them in to which he said, "no this is a 10 year investment". Jesus, I would have taken the money now...However, some pundits are suggesting that Bitcoin could go to $500k per coin in the next 2-3 years.
There are several Crypto's you should be keeping a close eye on....it may turn 'traditional' investing on its head. Watch this space.
It’s hard to see it slowing down when Elon musk etc have jumped on it. Congrats to your brother!
Just think if he realised his gains he could get a new well specified MC20 ;)