Share tips thread

[Oakey]

DonkeyApple said:

Any AIM director or broker will do. They're easy to spot as they are all short, fat, penniless alcoholics desperately looking for the next scam to keep their debtors off their back for another quarter. Try and avoid the ones with funny Colonial accents as they find it harder to sell lies because no one could ever believe anything they say.

Are you referring to DL here?

[010101]

walm said:

I still don't understand all you guys investing in junior resource stocks.

You are simply taking a massive punt on 1. the price of the underlying, 2. the ability of these muppets to get it out of the ground without screwing up and most importantly 3. the ability of their geologists to guestimate the actual resources underground/undersea.

How you think you have some information or valuation edge is utterly beyond me.
It's WORSE than gambling IMHO!

What is the definition of a mine or an oilfield?

[NRS]

010101 said:

What is the definition of a mine or an oilfield?

I guess it can vary, but to me it would be an area of land you are producing oil from/ where you have a tunnel to extract minerals from.

Problem is in an exploration phase there is lots of things that can go "wrong" in regards to predicting the volumes you have in-place and can recover. Some of these are outlined below, but with a focus on hydrocarbons since it's where I work:

• The test hole is not representative for the area. If it's very negative then you'll probably not develop. If it's very good you might go ahead with development but then have much lower recoverable volumes than expected so your platform etc is too big and not (as) economic.
• You discover the hydrocarbons are not over the whole area equally. In theory there will be one contact across the whole field at one level, but things like faults can mean this is not the case. If you get this wrong you can suddenly lose a lot of volumes.
• We normally use seismic to work out the 3D area that will have oil. This has lots of uncertainties that can easily be +/-30% of the volume (sometimes more/sometimes less). You can only find this out with time.
• You also have different things with the fluid, how it moves, how much is left stuck to the rock etc.
• The number of wells you need to develop it is also based on permeability (in effect how quickly the oil will flow into the well). If you get the changes in this wrong you may need a lot more wells than you thought and so you have to use a lot more money than expected drilling more wells.

These are just some of the underground things, and of course depending on the company there can be pressure from managers to produce "good" results for the stock market etc (that tends to be smaller companies due to the impact it can have on share price). It also depends where the volumes are going to - if you are trying to sell out of an area (farm out) then you have to focus on the better things to make it look nicer to people who might buy it (although you can't lie if they ask - just push certain evidence more than other parts). Another scenario is if your field crosses into an area owned by another company you have to divide the hydrocarbons at fixed percentages between the companies, so you have to again be more selective with the data to show more of the hydrocarbons you can get out are in your area, so you get more of the production volumes.

Edited by NRS on Monday 7th March 22:38

[Jon39]

walm said:

I still don't understand all you guys investing in junior resource stocks.

You are simply taking a massive punt on 1. the price of the underlying, 2. the ability of these muppets to get it out of the ground without screwing up and most importantly 3. the ability of their geologists to guestimate the actual resources underground/undersea.

How you think you have some information or valuation edge is utterly beyond me.
It's WORSE than gambling IMHO!

+1

Maybe if there were one million forum pundits on here, talking about tiny loss making companies that I have never heard of, one of them might stumble upon a 'Microsoft'.

Perhaps the others would be kind enough to post their end of 2016 performance reports.
I doubt it, but I intend to whatever my result might be.

Edited by Jon39 on Monday 7th March 23:12

[010101]

NRS said:

I guess it can vary,

Edited by NRS on Monday 7th March 22:38

I admire your commitment, and I apologise in advance for my lack of profundity.
However I was going to say, a hole in the ground into which alot of people throw their money with a liar stood above it.
Present company excepted.

[walm]

010101 said:

NRS said:

I guess it can vary,

I admire your commitment, and I apologise in advance for my lack of profundity.
However I was going to say, a hole in the ground into which alot of people throw their money with a liar stood above it.
Present company excepted.

I like both your answers and I learned what "profundity" means.
So far today, is a good day!

[NRS]

010101 said:

NRS said:

I guess it can vary,

Edited by NRS on Monday 7th March 22:38

I admire your commitment, and I apologise in advance for my lack of profundity.
However I was going to say, a hole in the ground into which alot of people throw their money with a liar stood above it.
Present company excepted.

No problem. Depending on the oil company though it does vary on the liar aspect. Big companies tend to be more accurate since their share price will be messed up if they get things wrong in the long term. Smaller companies will be much more likely to lie to try and boost their share price shorter term, potentially with the owners selling when the price is high before it collapses and they then repeat with a new company. Thing is in the oil industry geologists are known for saying "it might be this or it might be that". There's just so much uncertainty that even when we have a discovery you will often have at least +/-30% uncertainty in the volumes, and that's before you get into the field development/production stage where others can get involved and mess things up economically even if the volume is "correct".

A new word learned here too!

[R8Steve]

walm said:

I still don't understand all you guys investing in junior resource stocks.

You are simply taking a massive punt on 1. the price of the underlying, 2. the ability of these muppets to get it out of the ground without screwing up and most importantly 3. the ability of their geologists to guestimate the actual resources underground/undersea.

How you think you have some information or valuation edge is utterly beyond me.
It's WORSE than gambling IMHO!

Having made a LOT of money investing in the early days of RKH, GKP, CNE, BLVN, TLW, XEL and countless others i'd have to disagree. All of the above were junior resource stocks that increased in most cases 1000's of %.

[CRB14]

R8Steve said:

Having made a LOT of money investing in the early days of RKH, GKP, CNE, BLVN, TLW, XEL and countless others i'd have to disagree. All of the above were junior resource stocks that increased in most cases 1000's of %.

This is what I'm thinking. I have a small chunk in Diamondcorp which is currently heading towards full production and the first sales tranche is this month. I don't think I have some kind of advantage but isn't the idea to get in early, buy low and sell high? If I waited and bought in once already in full swing then I've lost that opportunity. There are always risks in these stocks but to completely rule them all out on the basis that they are junior stock seems a little excessive.

Besides, plenty of the big boys can mess it all up just as easily as the small ones.

[R8Steve]

At the end of the day, ALL shares involve gambling to an extent and relying on the big FTSE companies and their excellent financials is risky. There is no company you can say is 100% as you never know what could happen.

My biggest losses have been with the big, safe, FTSE companies. BP, the big banks, TSCO, etc, etc.

BP - oil spill disaster
Banks - where to start!
TSCO - accounting discrepancy

To rule out junior resource/explorer stocks as part of a balanced portfolio is a mistake imo. We all trade differently and have different appetite for risk i suppose.

[twinturboz]

CRB14 said:

R8Steve said:

Having made a LOT of money investing in the early days of RKH, GKP, CNE, BLVN, TLW, XEL and countless others i'd have to disagree. All of the above were junior resource stocks that increased in most cases 1000's of %.

This is what I'm thinking. I have a small chunk in Diamondcorp which is currently heading towards full production and the first sales tranche is this month. I don't think I have some kind of advantage but isn't the idea to get in early, buy low and sell high? If I waited and bought in once already in full swing then I've lost that opportunity. There are always risks in these stocks but to completely rule them all out on the basis that they are junior stock seems a little excessive.

Besides, plenty of the big boys can mess it all up just as easily as the small ones.

You can make a lot of money fast when stocks go parabolic but you also have to know when to get out! The question is what made you get in early, can you repeat that again and again or did you just get lucky on that trade and circumstances worked in your favour.

The risks of getting in early and getting in once it's in full swing are miles apart. Getting in early while a stock is dormant is just a gamble it could stay like that for months or years before taking off, once it's in swing it has a catalyst and momentum therefore the trade is more likely to work.

Also like the posts above are indicating Aim stocks are rife for pump and dump if you can time that great you'll do well, where those same stocks are now tells you everything you need to know.

Edited by twinturboz on Tuesday 8th March 13:33

[walm]

R8Steve said:

My biggest losses have been with the big, safe, FTSE companies. BP, the big banks, TSCO, etc, etc.

BP - oil spill disaster
Banks - where to start!
TSCO - accounting discrepancy

To rule out junior resource/explorer stocks as part of a balanced portfolio is a mistake imo. We all trade differently and have different appetite for risk i suppose.

I am simply suggesting that you can't do what I would call "proper work" on those junior resource stocks.

Perhaps they have a place in a portfolio but that would need analysis to look at the entire class over time on a relative basis. I am not overly convinced by rose-tinted 20-20 retrospection.

We all suffer from remembering all our winners and forgetting the losers!

You can't claim "woohoo I made loads of money on RKH because I am really clever with some deep and insightful analysis".
They literally struck oil - you can't get anything more like a punt!!

Whereas Banks and Tesco are companies where you can actually do some research and proper analysis that leads to a variant perception...

I just see all these LSE style bulletin boards where there are a bunch of punters patting themselves on the back for having done "good" DYOR where a new field is more productive than expected and suddenly this proves they are a bunch of geniuses.
It's laughable.

[R8Steve]

walm said:

Whereas Banks and Tesco are companies where you can actually do some research and proper analysis that leads to a variant perception...

I'm not sure if you're being serious here? Where did research and proper analysis get any holders in these companies?

The figures were false, a case of smoke and mirrors that no amount of research would highlight.

I remember my losers more than my winners, it's the only way you can improve and learn from your mistakes.

Your example of RKH being a punt isn't entirely accurate either, i purchased after the oil find therefore had the opportunity to evaluate the size of the find, it's approx value, costs, etc vs mCap before making my decision.

Like i said, everyone has their own trading style but if i'm just a gambler i'm an extremely lucky one

[DonkeyApple]

Oakey said:

Are you referring to DL here?

DL?

[R8Steve]

DonkeyApple said:

Oakey said:

Are you referring to DL here?

DL?

I'll take a guess at Dave Lenigas. He meets all of your criteria.

[DonkeyApple]

R8Steve said:

DonkeyApple said:

Oakey said:

Are you referring to DL here?

DL?

I'll take a guess at Dave Lenigas. He meets all of your criteria.

Ah, I'm out of date on who the latest scumbags are for AIM but they won't be any different from the ones who appeared the day AIM opened its doors and every single day since and until AIM ends and the next deliberately weakly regulated junior market fires up to replace it. The names change but the people don't.

AIM is a toilet and everyone in it is either a turd or smeared with turd. And the toilet hasn't been flushed for 20 years.

[R8Steve]

DonkeyApple said:

Ah, I'm out of date on who the latest scumbags are for AIM but they won't be any different from the ones who appeared the day AIM opened its doors and every single day since and until AIM ends and the next deliberately weakly regulated junior market fires up to replace it. The names change but the people don't.

AIM is a toilet and everyone in it is either a turd or smeared with turd. And the toilet hasn't been flushed for 20 years.

Very nicely put!

[walm]

R8Steve said:

walm said:

Whereas Banks and Tesco are companies where you can actually do some research and proper analysis that leads to a variant perception...

I'm not sure if you're being serious here? Where did research and proper analysis get any holders in these companies?

You realise you can short companies right?

As for RKH the major announcement was on May 6 2010 and the stock hit 142.
There wasn't anything like enough data in the press release to assess the costs vs. 3P reserves etc...
And by the time of the Sea Lion technical update (4 June) the price was 326. The stock hit an all time peak of 510 when the well was successfully flow tested...

Essentially mo-mo investors hopped on with the hope that the news would continue to be positive, which it was.

The stock is now on 34.

At any point during the meteoric rise to 510 the company could have found a problem with the well.

So in short, yes, you were damn lucky!

Perhaps you did some in-depth analysis on the potential reserves and probability weighted your DCF using the forward oil curve but simply put, they found lots of recoverable oil where no one really thought there was any which was good for the stock price.

In fact I just checked the prices for every company you mentioned.
Here is there performance since the end of 2010:
RKH -91%
GKP -92%
CNE -85%
BLVN -95%
TLW -85%
XEL -95%

Average -90%.

So perhaps I take back what I said earlier. Actually keeping these things in your portfolio is generally madness!

[jcremonini]

How far have the banks fallen since their highs ?

[R8Steve]

walm said:

You realise you can short companies right?

Yes, i rarely do though.

walm said:

In fact I just checked the prices for every company you mentioned.
Here is there performance since the end of 2010:
RKH -91%
GKP -92%
CNE -85%
BLVN -95%
TLW -85%
XEL -95%

You do realise you can sell companies in timescales of less than 5 years right?

What are some of the big FTSE companies like the banks showing using the same criteria? -99% or there abouts?