Birds of a feather, let us flock together, share your portfolio ideas - Aussie Stock Forums

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  1. #1

    Default Birds of a feather, let us flock together, share your portfolio ideas

    I have been liquidating my holdings as of late and haven't really found anything that I am all that keen on investing in at the moment. The discussion in the forum is quite interesting but at times I find there isn't actually all that much talk about individual companies.

    If you have or had similair holdings if you could share what else you hold I think it may lead to an interesting discourse as part of the reason why we all post here is to learn and share ideas with each other. It will also help me to save some time if we have similair criteria for identifying companies to invest in.

    Low P/E companies with high ROE and scope to increase earnings reasonably realiably for a few years, these are the ones I prefer but hard to find.

    CCV - Earnings should increase by converting franchise stores into corporate owned stores

    FGE - This is one of the ones I am liquidating, mining services company with a good history of increasing earnings but has been lucky to not have any contracts go sour and no longer cheap as chips.

    MMS - Bought interleasing for a steal which allowed it to deploy a lot of capital relative to its size which should set up to increasing earnings over the next few years.

    RHD - Another company which I will probably be forced to liquidate, human resources company being taken over for less than a premium price as the founder wants out and the 2nd largest shareholder is working with CMG to buy it out and between they own about two thirds of the company.

    Biotech companies with commercial products that lead their field and do not need to raise capital.

    BTA- Good wad of cash but potential relies on the company getting a good outcome for the licenscing of their next generation anti-influenzae drug, but given the deal they got from GSK for relenzae and the dominance of tamiflu even though it is an inferior anti-viral this may end up more costly for me than it already is.

    SRX - Good treatment for liver mets potentially useful for primary hepatocelluar carcinomas which is a much larger indication. Trial data will take about 3 years to come in and if positive about 5 years for dose sales to grow exponentially. As is dose sales are increasing at a linear rate and it does not have an excessively high p/e if you take out cash backing and it is one of the few aussie biotech shares with any e.

    Gold miners

    DRA - Scandinavian gold miner chosen because of it should be able to increase reserves, had lacked cash to drill exploration holes as had to close out a unprofitable hedging contract and has recently released some high grade holes from a future mine site. Chosen more because of its high cashflow relative to market cap due to the closing out of the hedge book and rising gold price.

    TBR - Aussie gold miner who likes to hoard their gold instead of selling it. Had at one point more than its market cap in gold bullion in inventory and low cash cost gold mine.

    High cashflow:price

    IPX - Extremely small IT company involved with cloud computing, IT support as a subscription service, overinvested in capacity and suffered for it so now any contract wins should translate to the bottom line quite readily.

    Oil and gas producers/explorers

    New theme based on rising energy consumption and hence prices and not a very successful one as I basically chose companies which had a high cash backing and hoped that they would spud oil or gas without having to raise capital which TAP did anyway.

    COE & TAP - High cash backing with producing wells helping to fund exploration.

  2. #2

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    New addition to the portfolio, Hawkley oil and gas (HOG), 100% owned tenaments with higher than expected flow rates from their first hole drilled, expect a resource upgrade after further flow testing otherwise will be out.

    I've also topped up on COE and TAP to standard weightings as spud dates approaching.

  3. #3

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Have you had a look at GDO recently as an addition to your Gold section? An underrated South African producer, earnings per share forecast to be 7 cents in 2011, price still in the mid 30's. Have a look at the recent presentation .

    http://www.jochimaker.com/ - Blogging my trades and opinions.

  4. #4

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    2 new additions Coretrak (CKK)- In the process of commercial testing of a new drilling probe and drill rig. The probe will potentially decrease the amount of downtime for oil and gas drill rigs, so hence decrease the cost of drilling significantly. The drill rig should allow the company to become cashflow positive once further contracts are won. It again has been designed to decrease the downtime and cost of drilling exploration holes this time by reducing the interval between changing drill bits, the drill bits are expensive and it takes a long time to change them when holes are over 3-4km deep.

    Ceramic Fuel Cells (CFU)- Been watching this for a long time, first commercial order for 200 units, pending approval for funding under government subsidies, hopefully the first of many which would make this a long term hold, otherwise a short term hold selling on weakness.

    Ross Human Directions (RHD) - Sold out to fund above purchases unlikely to get an increased bid price given peoplebank's declaring their bid final and option granted to CMG by Julia Ross for 19.9% of shares.

    Thanks for the redirection to GDO - I may be wrong, I often am, but doesn't quite fit my profile, my appraisal was a fair amount of the value was due to its gold reserve base. I prefer to pay for current production with exploration upside as I can't really tell whether one tenament is better than another and usually companies are able to extend the life of current mines with extra drilling, which seems technically easier to me than developing a new mine.
    The convertible notes also will limit upside and mine is not yet producing at a steady state and production projections often have a habit of being wrong on the downside and costs on the upside, but there in lies the reward if you get it correct, not familar enough to asses it properly though.
    Last edited by suhm; 3rd-December-2010 at 11:34 AM. Reason: GDO response

  5. #5

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Rest of Forge sold off for 4.62 to increase position in CKK 0.22.

  6. #6

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Timing of the last few trades hasn't been astute, increased holding in biota as timing for lani deal is approaching, flu on the increase in the UK and volume picking up the last few days. Missed out on the open, didn't expect it to gap up that high order was in at 1.07 ended up buying at market for 1.15

  7. #7

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    MAD- Another energy stock for the collection for when COE and TAP drill more dusters and I finally sell. Poor flow rates on the wells but it owns the rigs and the oil is onshore so drilling costs are low. Market cap around 90m 1p reserves of 7.8m, >400 bopd at present being pumped out with 2 drill rigs active and2 more by mid year, should increase the production rate steadily. It also performs contract drilling for other companies and intends to continue doing so. Purchased for exposure to rising energy prices, increase in cashflow with new wells coming online and because it made a new high. In at .265.

    Partial selldown of TBR to fund above purchase as I have held for just over a year and its subsidiary RND has acquired an option for an iron ore tenament, not sure what it is worth but new shares will be issued which will dilute the percentage that TBR own of its Raleigh gold mine due to the companies cross share ownership. In at .78 out at 2.08.

  8. #8

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Sold out of CFU today, price has not increased after first larger volume orders, still only 200, they need about 20000 then it starts getting very interesting, will look at reentering after the selling has abated, I think ASCI now has a sell on it at this level and on news of new contract orders. In at .18 out at .15.

    Additional MAD added at .27

  9. #9

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    IDM acquired at 0.185 after legal injunction to its building of mineral sands plant was thrown out of court. Subsequent to my purchase the plantiffs have decided to appeal the decision but I am assuming the merits of the case can't be that strong given it did not go to trial.

    As again timing of purchase is terrible, IRR is expected to be about 70% based on their modelling. Main product is chromite for foundry use as a replacement to zircon, zircon and garnet. Most of the money will be made from the chromite but is a new product as a zircon replacement. Modelling was based on a zircon price of around US700 but as seen with illuka prices are now >1000 so returns are potentially higher. Will buy more when the plant starts producing and am anticipating that to be sometime in may or june

  10. #10

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    CKK sold at .165 doesn't look like a long term commercial contract for the gt3000 will not be signed anytime soon and might need to do a cap raise if they don't get one. Funds used to purchase zgl at .365 for reasons look at skc's thread.

  11. #11

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    EXS also purchased at 0.61, low cost gold producer expecting net cashflows to be about 60m pa, mine life only about 2-3yrs atm with a market cap of 210m. Upside is from further exploration increasing minelife and possibly bringing on a new copper gold project very soon with a NPV of 400m, uses 8.5% as a discount which is a bit low and ausd at 80USc but 1000USD/oz for gold and 3USD/lb for cu is low so it cancels each other out. Possibly very low capital outlay if they can negotiate a deal with Xstrata which is mining a deposit 8km away and has an extraction plant with spare capacity.

  12. #12
    Mod: Call me Dendrobranchiata prawn_86's Avatar
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    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Nice work Suhm, watching with interest

  13. #13

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Small position taken in UOS at 0.35 today due to illiquidity of the stock as senior management own 70+% of the stock as they have been taking dividends as stock and completing regular buybacks. Ownership structure is also very complicated.
    Malaysian property developer/manager/owner anticipating a 120m pre tax profit this year from an upswing in the value of their developments, market cap is 347m. They had 420m in net assets at their last half yearly which should increase this year as booked above and rental income of approximately 30m/yr.
    They have proposed selling off some property to a REIT controlled by them for 500m RM, approx 165m AUSD, 90m AUSD in cash, 75m AUSD in stock.

  14. #14

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Rebalancing portfolio partial selldown of MAD in at 27 out at 23.8cents to help fund SPP application due to capital raising to increase drilling program, thought it would eek its way out to being cashflow positive but was wrong.

    Sold out of IPX, in at 0.152 out at 0.14. No new large contracts won since its deal with wilson HTM but will take another 6 months or so before cashflow improves, will look to renter if results are better at the next report or new contracts are won.

    bought TXN at 0.76, price down due to recent capital raising to purchase new acreage and accelerate drilling program, new wells online should allow good cashflow generation with scope for reserve upgrades as drilling program continues with decent resource vs market cap, not as good as HOG but this is in the US rather than the Ukraine

  15. #15

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Post results season update of current portfolio stocks.

    BTA- Savaged, actually saw it going down soon after and was considering selling out to renter and in retrospect should have done so. Hindsight is so 20/20. If the product was not so good I would not be in this stock, but potentially that is not enough, it already had the better 1st generation flu treatment but has been outsold 9:1 by tamiflu which has a poor resistance profile but is a pill. LANI however is the only 2nd gen flu treatment and now only needs one dosing so is more convenient than tamiflu and in Japan has outsold both Tamiflu and Relenza at launch. Every time management speaks however the share price seems to tank, they are good at developing drugs but absolutely pathetic up to date at commercialising it. In the lawsuit against GSK they were offered >100mil but in the end abandoned their lawsuit and settled for 20million. Nothing Peter Cook said in the announcement but he seems to be a weapon of mass destruction for shareholder wealth, when he speaks the share price goes down.
    He said relenza should have been a billion dollar drug and it should have been but LANI is even better and hopefully this time they have learnt their lesson and they co own the molecule with Daichii Sankyo so hopefully we don't get screwed again.
    There seems to be a huge discount for poor management, mesoblast's market cap is 1.6billion and is years away from a product, albeit a potentially huge one, a treatment for heart failure, given there isn't one at the moment only optimising other medical management but surely a drug that could treat the next flu epidemic, H1N1 and Sars were just a taste of what could happen, think the Spanish flu which killed more ppl than world war 2 and this was back in the day when you needed to go by boat to spread the disease.
    Vaccines arenít the answer in this day and age when a small infective cluster can spread across the globe within one day. All of this and more, they have a treatment in the pipeline for the common cold as well all for a market cap of 200million of which 78 million was cash, cash burn is high as they are spending 25 million for the phase 2b trial for HRV treatment.
    To put this in context biocryst has received >300m USD in grants to develop premavir an IV flu treatment that doesn't work that well, it has the same resistance.
    That is why I love this stock and why I won't sell any until they do a deal to commercialise LANI for the rest of the world. Potentially if they got grant funding they could commercialise it themselves as it has been significantly de risked post the phase 3 trial in Japan and its commercialisation there.

    CCV- Chugging along nicely with a good increase in profit, EPS increase not so good given it has only started to finally deploy most of the money it raised during its placement to EZCorp like the placement forge did to Clough for strategic reasons. EPS should now enjoy the full uplift.
    COE- Drill results drive this stock and they really need to start finding some oil on the holes they operate. PEL 92 program seems to be working well but its Menzel Horr which will provide the blue sky in the short term but this has been delayed because of the civil war in Tunisia but the delay in results post resumption of drilling are a bit ominous.

    DRA- Good profit as expected given the price of gold. Expect good drill results from Kusamo given the bonanza grades they found previously. They have increased the reserves of their mines but they have a very short mine life but they have been proving up extra reserves, share price is definitely in a downtrend though.

    EXS- Still waiting for a development plans for its Cloncurry copper mine, share price going down in the interim. Production from its white dam gold mine is good though.

    HOG- Started production from its initial well, news events are an increased reserve base after flow rates have stabilised on the final choke size, should be in a month or so and after they drill more holes and show that oil will flow commercially in their other lease with cash flow to increase rapidly after they drill more holes to exploit their fields. Same sort of no brainer upside as I see for BTA with the only downside being that this is happening in the Ukraine.

    IDM- Not much news here waiting for production to commence in April and for final resolution of the legal action. Less worried about the legal action given it was dismissed without going to trial but the litigants are appealing the decision. What I am more worried about is the plant actually working properly and the price that they will receive for their chromite given it is a new product.

    MAD- A bit disappointed with my analysis of this sold out half for the SPP, guess management didnít want to skate so close to the wind with their cashflow and wanted to accelerate their drilling but this will take 6 months longer to play out post their capital, not quite the exponential potential or downside protection of my other energy stocks, more of a steady increase in cashflow as they bring more wells online, flow rates are extremely low for the holes they drill but they drill them themselves and they are cheap to drill.

    MMS- They are bedding down their interleasing acquisition well and it has set them up for further profit increases in the future.

    SRX- Need to wait another 2-3 years for this one to pop, they have rapidly expanded their trial program which is eating up the cashflow increases from the steady increase in dose sales. Currently they are only being used for 1% of the market. If the trial results are good profit will increase geometrically given the huge margins they have for their drug.

    TAP- Finally found something instead of dust, Zola-1 being commercial would be the next news trigger for an increase in share price.

    TBR- Opaque as always, profits are good and they are developing a new gold mine. However I have always been wary of management and with the increase in shareprice the risk is increasing and while the reward is still probably >100% I may recycle the rest of my capital.

    TXN Ė Only entered it post results season so no real effect at this stage, waiting for flow rates of its new drill sites and for cashflow to increase.

    UOS- Result as expected rental income is enough to support the current share price with development as the cream. Risks are a downturn in the Malaysian property market, liquidity, there is none, slightly more than TBR when I bought it however because management is constantly buying back shares. The final risk is that management will reach 90% and screw over the minority shareholders as they already hold >70% and have reinvesting dividends at a 5% discount to the market price and have been buying shares on market.

    ZGL- Result good as expected, management not ramping up expectations but matching the first half would already see profits rise again and they were excited about the prospects for their divisions and new products coming online for the companies they invested in.

  16. #16

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Excellent summary on Biota, suhm. BTA is my largest position.
    A number of possible catalysts for the share price exist this year:

    1. BARDA grant for funding of LANI program. While the market will see that as highly positive I think it would be the runner up prize. Management should really have secured a partnership for LANI RoW rights. A partnership deal would have a better risk/return profile and better net present value with upfront and milestone payments hitting the bottom line and therefore improving shareholder returns.

    2. LANI royalties. It has been a bad flu season in Japan and if LANI sales from the first 8 weeks are anything to go by even the 4-5% royalty will start being meaningful and more importantly will highlight the potential.

    3. Reduced R&D spend. I think the market freaked out at the high R&D spend last half, without understanding that was simply front loaded costs from the HRV study. Many people extrapolated the burn out for a few halves and thought Biota was running short of cash; crazy lazy stuff.

    I recently took a punt on ADO. I think keeping an initial investment small and adding on an improving story is the way to go with that one.

    Prana, PBT, is my ultimate long shot. Terrific science and great product in one of the last true mega blockbuster areas left, AD. If they could get funding from some where then it would fly. Sadly their progress has been appallingly slow.

    RCO is a slow burner that I've been looking at recently. I like the royalty model and it appears to be a classic heads I loss/win a little tails I win a lot. Acorn Capital recently took a stake.

    I continue to watch CFU and many other companies with potential, but most are best left to they have earnings. If CFU gains traction investors will have years to get in and still make tidy profits. It's only appropriate for small risk capital at this stage.

  17. #17

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    RCO and PBT both look interesting, RCO looks cheap but don't see earnings increasing rapidly, PBT has issues with funding but the science looks good.

    COE- Sold out, doesn't just find dust, it drills >500m past its terminal depth and still can't find its primary target, hopefully i'm not wrong as its a huge target and its back down to cash and reserve values with the upgrade from PEL-92 but as an operator that seems to be a phenomenal misinterpretation of their data, which makes you wonder maybe that's why they have such a poor drilling record as an operator. In at 0.435 out at 0.385.

  18. #18

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    2 new positions today

    PBT- Do like the drug for this, the treatments for dementia are quite poor, aricept is a 3billion USD drug but only slows cognitive decline and has a lot of problems with anti-cholinergic effects. Phase 3 trials targeting amyloid plaques have not been that promising so despite only having phase 2a trial data, there aren't that many drug candidates more advanced than it. Needs to clarify its funding proposition for its phase 2b trial anticipate a cap raising with one previously organised with souther equity lapsing at an 80% discount, will have to see if the Ballieau government will cough 15mil like the Brumby government said they would, which would fund half the trial with a cap raising post that likely. Will go to a standard weighting in a follow up SPP post the raising. They would then be funded until a phase 3 trial partned with a big pharma.
    Its co-founder also got an NHMRC australia fellowship, only 39 of those and is one of the biggest funding blocks available from the government worth 800k a year.
    In at 0.145

    ABY- Reasonably high copper producer which should see cashflow increase dramatically given the high copper price and restarting of a mine put on care and maintainance due to low copper price previously, catalyst is that it was in the news recently. No real debt, receiveables are quite high 90m mostly owed by a related party its parent company which owns 50.1%.
    In at 1.33

  19. #19

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    Partial sell down of 2 positions for capital preservation, tax purposes and spare capital to see how all this volatility plays out to scale up again at a later date.

    CCV in at .58 out at .77, still think it has great potential and will reaccumulate at a later stage as potentially may decrease in share pirce and has less blue sky upside in this environment.

    MMS in at 3.83 out at 8.80, same as CCV.

  20. #20

    Default Re: Birds of a feather, let us flock together, share your portfolio ideas

    More portfolio trimming

    MMS - I have completely exited in at 3.83 out at 8.82

    MAD - I have completely exited in at 0.265 out at .202

    Reasons are the same as previous, seeing what opportunities will crop up and will look to re enter both in the future.

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