I am an occasional reader of this forum looking to participate a bit more as I enter the stock market for my first purchases. Just so I can get my feet wet while I become more familiar with the market I've put aside $5000 to gain experience with - knowing that I could lose some but it's not exactly going to bankrupt me. I have considered paper trading but I don't feel as though the emotional investment is exactly the same and if I am successful would at least like to gain a little something for my time and troubles.
To introduce myself a little, I am 26 years old and have come to a point in my life where I feel I have learned and recovered from personal debt and wish to start planning for my future with a view to put a percentage of my salary into investment vehicles that I think will do well to increase my personal wealth.
With all of the above in mind, I have read some books such as The Intelligent Investor I have signed up to a nabtrade account and am interested in some feedback on some of my picks from a value-investing perspective. Please note that some of my 'picks' are actually negative ones that I think I would do well to avoid buying and I just wanted to get some perspective on how others rate the same stocks.
Please do not treat any part of my post as recommendations or financial advice for others. This is a learning exercise from which I am hoping to gain from some others perspective (and others who may be reading may be welcome to do the same).
AFIC seems to me like an attractive investment opportunity for mostly passive investors. They have a solid amount of experience as a company and from what I have read exist virtually for the interest of their shareholders. I haven't been able to find any negative behaviors that have the chance to set investors up for failure at all, in fact they seem pretty transparent. As of March 2013 their Net Asset Backing was $5.28 per share and they are currently listed at $5.47. While on paper it seems like they could be overvalued I feel as through their guiding principles from an investing perspective will mean that they will become much more valuable in future.
Despite falling commodity prices and the general beat down of the mining industry, I'm personally surprised that such a solid company is what I personally think - undervalued. It seems like their SP just seems to be affected by current economic circumstances but overall I see nothing concerning in their general fundamentals. When the global economy eventually picks up (and it will in one way or another) - BHP should turn a solid profit again.
I picked ERA despite it's current lack of profits simply because of its low debt and it seems to be investing in a lot of activities that will make enable it to perform very well in the event of an economic recovery, especially due to their positioning as a player in the uranium supply market and that fact that global energy needs are more than likely increase instead of decrease. They are also sitting on the second(?) largest Uranium mine in the world.
In my personal view this makes ERA an extremely attractive target for a take over and I'm surprised that any of the majors haven't done so already.
I somewhat struggle to make sense with what's happening in SYR. They have declined severely since the end of March and on paper their financials don't look all bad. There haven't been any shock announcements or anything either and seem to have a few projects where they have positive results. I decided to dig a little deeper and found they were queried by the ASX about an earlier price adjustment to see if there were any news that had yet to be announced that could be affecting the SP and they had responded that there was none.
A couple of other things I did find:
- Merryl Lynch became a substantial holder in approximately 22/03
- Credit Suisse ceased to be a substantial holder in approximately 12/04
- The MD of Copper Strike Limited has exersised a stock option to purchase 1,000,000 shares at $0.26 each
After looking through Syrah's and actually CSL's businesses as well (out of interest) I found the company is primarily engaged with exploratory activities that do not seem likely to produce much income if at all in the near term if they decide to convert their findings into a mine. At an educated guess I think the general batting that miners are taking at the moment are also affecting doubly on these types of companies. However their strong findings around Balama and the general economic circumstances with resource-based companies tempts me into rating this company into a strong buy as if they were able to translate their findings into something that generates a profit for them will make them severely undervalued using present figures.
I'm wondering if I can have someone else's opinion on SYR? I am currently considering this stock speculative - which does not fit with a value investor's approach to the market... unless one was willing to dedicate just a fairly small percentage of your portfolio to these types of companies.
I will review a few more companies and post here for some feedback. Thanks for all of your time and willingness to help me understand what some of the more successful and experienced people would be thinking.