Shares to watch

Nayf

Member
Messages
2,734
Rolls-Royce (aeroplanes) and Iberia look strong long terms.
Even if there's a third wave, there's going to be such a demand for international travel when COVID clears off, or is deemed at an acceptable level.
 

stindig

Member
Messages
446
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.

 

Wattie

Member
Messages
8,640
In other news Nancy Pelosi and her hubby have just bought a $million Paul Pelosi worth of calls i n Tesla, Apple and Disney shares.
They fpurchased 100 $100 strike Apple calls that expire in January 2022 and paid between $250,000 and $500,000 for them. He also bought 25 in the money Tesla calls, selecting the $500 strike calls with a March 2022 expiration, according to the report. Those cost between $500,000 and $1 million. Finally, he bought between $500,000 and $1 million in Disney options, buying 100 calls at a $100 strike that expire in January 2022.



There is now a political interest for them to soar.
Beggars belief.
Purchased before it was announced the company secured a lucrative government contract worth nearly $22 billion to supply U.S. Army combat troops with augmented reality headsets.

 

Froddy

Member
Messages
1,072
Chaps,

Keep an eye on silver (spot). It's cleared the mean (the 21EMA) on the weekly and daily charts (circled below), and there are volatility squeezes on both of those timeframes too. Will she shine again soon?

84273
 
Last edited:

foibles

Member
Messages
511
Chaps,

If any of you dabble in forex, you should keep your eye on the AUDUSD pair for a potential short.

Tomorrow is the last day of the month, and the monthly candles are very nearly complete. The US$ index is looking very threatening (monthly chart here):
View attachment 83614

The Aussie dollar is looking a little tired compared to the US$ (monthly chart here):

View attachment 83615
Interesting post that one.....

I've been an on again off again buyer of USD (and as an aussie its therefore the AUD/USD pairing) for the last 13 years.

One of the great things about high risk currencies such as our own AUD (and others such as CAD} is that they absolutely fall off a cliff during times of economic crisis. As history consistently and persistently shows, every several years there is the predictable black swan event, and when this happens global markets will retrace 30 to 50 percent, as will the AUD against the USD. Which is why, for those aussies lucky enough to have liquidity, its as simple as buying a swag of USD and letting the rout unfold. Wait 2 to 3 months and switch back to AUD and then hope the markets bounce again. A simple yet effective strategy.

But i only do straight over the counter spot market USD purchase. Plain vanilla. I'd willingly trade up risk for greater reward.

If anyone understands how this might be possible.... Such as futures contracts (if indeed these are even available to retail customers) I'd appreciate the insight!
 

foibles

Member
Messages
511
Beggars belief.
Purchased before it was announced the company secured a lucrative government contract worth nearly $22 billion to supply U.S. Army combat troops with augmented reality headsets.

Hey Wattie,

I've not even read this article yet... But I'm hoping its a hoax.... Otherwise this is about as brazen as abuse and exploitation of political office can get. Funny how socialists... whilst deriding both the mechanics and outcomes of capitalism, leverage it so effectively for fheir own personal enrichment if and when the opportunity presents...
 

Froddy

Member
Messages
1,072
Interesting post that one.....

I've been an on again off again buyer of USD (and as an aussie its therefore the AUD/USD pairing) for the last 13 years.

One of the great things about high risk currencies such as our own AUD (and others such as CAD} is that they absolutely fall off a cliff during times of economic crisis. As history consistently and persistently shows, every several years there is the predictable black swan event, and when this happens global markets will retrace 30 to 50 percent, as will the AUD against the USD. Which is why, for those aussies lucky enough to have liquidity, its as simple as buying a swag of USD and letting the rout unfold. Wait 2 to 3 months and switch back to AUD and then hope the markets bounce again. A simple yet effective strategy.

But i only do straight over the counter spot market USD purchase. Plain vanilla. I'd willingly trade up risk for greater reward.

If anyone understands how this might be possible.... Such as futures contracts (if indeed these are even available to retail customers) I'd appreciate the insight!
Hi Foibles,

You've hit the nail on the head as regards AUD as a measure of risk, particularly the AUD/JPY pair which is traditionally the "carry trade", and you obviously know quite a bit about the markets.

I don't trade futures myself, but I've done a bit of research for you, and you can trade the AUD/USD pair as a futures contract as a retail trader; the symbol on the exchanges is "6A". If you're going to do this, you have to nail your timing so that your chosen direction and expiry time accord.

For me, there's presently no actionable sell signal - it's a case of watch and wait patiently, but everybody has different criteria for trade entry.

In fact, since I posted that idea the $US dollar has weakened and the $AUD has strengthened (hence the rise in the metals) so, for me, now is not the time to short the pair. I don't think it will be long, and I don't know how much of a reversal we'll see, particularly as the economic recovery data is so strong.

However, the markets ALWAYS revert to the mean (the 21EMA), and we are at such extremes that it won't be long before we have (at the very least) a healthy pull back.
 

Wattie

Member
Messages
8,640
Well... I bloody well hope so, because after Wattie posted a screen grab of SVL and TMZ, I've been left holding onto a sock full of horribly underperforming ag-related ASX stock. :eek:
TMZ, I did alright with that one....in then out in Feb when it spiked. If I’d known anyone was in I’d have said.
SVL i’m Down $23 (it’s at my buy price) but still hold....should have cashed out at 0.35 (as above in Feb)...it’s now 0.21 but as silver is one of the most under valued assets on the planet it’s still worth a punt.
 
Last edited:

Wattie

Member
Messages
8,640
Interesting post that one.....

I've been an on again off again buyer of USD (and as an aussie its therefore the AUD/USD pairing) for the last 13 years.

One of the great things about high risk currencies such as our own AUD (and others such as CAD} is that they absolutely fall off a cliff during times of economic crisis. As history consistently and persistently shows, every several years there is the predictable black swan event, and when this happens global markets will retrace 30 to 50 percent, as will the AUD against the USD. Which is why, for those aussies lucky enough to have liquidity, its as simple as buying a swag of USD and letting the rout unfold. Wait 2 to 3 months and switch back to AUD and then hope the markets bounce again. A simple yet effective strategy.

But i only do straight over the counter spot market USD purchase. Plain vanilla. I'd willingly trade up risk for greater reward.

If anyone understands how this might be possible.... Such as futures contracts (if indeed these are even available to retail customers) I'd appreciate the insight!
Yup AUD/USD is a Great and easy way to make cash if you’re liquid.

Buying Gold/silver of course reflects this too.
 
Last edited:

Froddy

Member
Messages
1,072
Foibles,

I've just run a seasonality scan on the AUDUSD pair for the last 19 years and, statistically, it should show weakness over the coming weeks. No guarantees, obvs!

84310
 
Last edited:
Messages
1,687
Interesting post that one.....

I've been an on again off again buyer of USD (and as an aussie its therefore the AUD/USD pairing) for the last 13 years.

One of the great things about high risk currencies such as our own AUD (and others such as CAD} is that they absolutely fall off a cliff during times of economic crisis. As history consistently and persistently shows, every several years there is the predictable black swan event, and when this happens global markets will retrace 30 to 50 percent, as will the AUD against the USD. Which is why, for those aussies lucky enough to have liquidity, its as simple as buying a swag of USD and letting the rout unfold. Wait 2 to 3 months and switch back to AUD and then hope the markets bounce again. A simple yet effective strategy.

But i only do straight over the counter spot market USD purchase. Plain vanilla. I'd willingly trade up risk for greater reward.

If anyone understands how this might be possible.... Such as futures contracts (if indeed these are even available to retail customers) I'd appreciate the insight!
I'd stay away from futures unless you have expert knowledge of the markets.
My purely amateur sense of futures is that by the time you and I get a sense
of the direction of movement, the leading investors and then the markets
already have this priced in. Strictly my ten cents worth.
 

dgmx5

Member
Messages
1,142
I'd stay away from futures unless you have expert knowledge of the markets.
My purely amateur sense of futures is that by the time you and I get a sense
of the direction of movement, the leading investors and then the markets
already have this priced in. Strictly my ten cents worth.

Unfortunately by the time I read this, your opinion was only worth eight cents.

If you don't understand it, or don't believe in it, don't invest in it.

Even if you do, always only risk what you are prepared to lose.

This is why spreadbetting and derivatives are such a risk as they become so much more accessible to people who do not comprehend what you can lose.
 

breezer

Member
Messages
229
Messages
1,687
Any takers of Coinbase?
Unfortunately by the time I read this, your opinion was only worth eight cents.

If you don't understand it, or don't believe in it, don't invest in it.

Even if you do, always only risk what you are prepared to lose.

This is why spreadbetting and derivatives are such a risk as they become so much more accessible to people who do not comprehend what you can lose.
That's what I always believed.
Especially after getting caught out with Marconi stock in my early 20's.
The moment I saw leveraged instruments being offered to the public, I put my head in my hands.