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Micro cap specs

Discussion in 'ASX Stock Chat' started by springhill, Jul 27, 2012.

  1. springhill

    springhill Make the drill work for YOU

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    What is the market appetite for them?
    What catalyst would see micro caps come back into favour?
    Are you holding any? What is their status?
    Are you watching any with intent to buy?
    Does an event like SIR yesterday whet your appetite for higher risk and that elusive multi-multi-bagger?
    If you would never ever ever touch them, why not?

    I know I post on them ad nauseum, but I have an appetite for research and discussion of them, so let's discuss!
     
  2. Bushman

    Bushman

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    Micros are starved of capital at the moment. So rule number one is screen out those needing to raise capital due to low cash levels.

    Top-down is not good for alot of the minerals micros, especially bulks, nickel, rare earths etc. Only concentrating on copper/gold plays and only hold one 'greenfield' explorer. Rest are 'soon to be' producers or producers trading at silly valuations. Great time to buy them as long as funding is secured for the next 12 months.

    In terms of my preferred micros, I am looking for a quick path to self-funding of future large scale mine developments. So always looking for high grade zones etc that can be brought on-line for limited capex and then the free cash used for lower-grade/higher volume open pits or underground.

    You don't want to be stuck with a deposits like Rex that has massive, low grade tonnage but needs +$600m in capex to get the mine up. Crazy numbers in this environment.

    Nice thread. I love the micros the most even though it has been a tough, tough market over the last few years.
     
  3. tigerboi

    tigerboi

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    Re: Micro cap specs,BCT is a sure thing 20 bagger imo...TB

    BCT is a micro cap i have been following for a few months now they are not a miner which is a plus as it wont take long for them to be cash positive.

    BCT have a product with no competitors so they have the market to themselves so imo this is

    a serious 10 bagger from 20c price or from its 25c listing price.

    i have spoken with management regarding an investment & they know their product & market...

    so its just a matter of time.

    micro caps to about $250m has had my interest for all of 2012 as i believe they are an undervalued area of

    investment many investors overlook.

    the appeal for me is the opportunity to get in right from the start or close enough to get yourself a

    10 or 20 bagger & be there while the company grows as it attracts the big hitters...TB
     
  4. springhill

    springhill Make the drill work for YOU

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    With the extreme movement of micro caps in the last couple of weeks, lead by SIR and then closely followed by MAT, SBR, AOC, PDZ, HOR and PEX just to name a few off the top of my head.

    Would it be safe to say there is more interest in micro caps lately?
    Has this pricked your interest to look at a few when you haven't been of late?
    Do you expect things to continue along this path, or are they the result of a few really good announcements?

    I know I have been flat out like a lizard drinking of late and have compiled a list of 15 stocks I see as having real promise. Near term and down the track a little.
     
  5. burglar

    burglar

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    I didn't mean for you to stop, when I posted that I could not keep up.

    Still interested, still looking at speccy stocks.
    I have found that I like to revisit old friends. Reduces homework!!


    Keep on cherry picking!!

     
  6. springhill

    springhill Make the drill work for YOU

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    Out ATM when i get home i will post my shortlist
     
  7. suhm

    suhm

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    BCT looks interesting but won't it need to raise more money in the next 3-6 months given the current cash burn it looks like it is running out of cash
     
  8. springhill

    springhill Make the drill work for YOU

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    So far I have run through over 800 quarterlies.
    This is the best of what I have found so far and the increase/decrease since identification and addition to watchlist.
    Criteria is based on MC:Cash position, micro cap, chart positioning (a downward trend toward cash backing is preferable), project potential.

    PVD +25%
    CQC +5%
    SKM +16.7%
    PRE + 9% (Thanks to burglar, and once consolidation & cap raising is completed)
    FRC 0%
    GBE -5%
    BGH 0%
    ESR +10%
    STK +9%
    PRA +7.7%
    ZTA -4%
    XCD 0%
    ATU +15%
    AXE -3%
    MTN +6.4%
    MDA +3.5%
    MEP +3%

    On a secondary watchlist I have these, which dont exactly fit all my criteria, but come pretty close.
    LGM, PDZ, GPH, WAL, BNR, SNY, LIN, PUN, JAL, EPC, MSR, MGL, JRL, IRM, IKW, MRQ, MGV.
     
  9. springhill

    springhill Make the drill work for YOU

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    My hand selected Micro Specs performing admirably ATM.

    PVD +18%
    CQC 0%
    SKM +30%
    PRE + 11% (Thanks to burglar, and once consolidation & cap raising is completed)
    FRC +22%
    GBE -5%
    BGH 0%
    ESR +10%
    STK +14%
    PRA +10%
    ZTA +4%
    XCD -4%
    ATU +22%
    AXE -6%
    MTN +28%
    MDA +10%
    MEP +15%

    I have since added
    PTS 0%
    LMR 0%
     
  10. Synergy

    Synergy

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    Good work on the selections. That's got to be more than a lazy afternoons work...

    My micro stocks system has been painfully lying dormant since April but kicked back into gear last week.

    The XSO is up more than 10% in less than a month so the bottom end of the market is certainly showing some signs of life.
    I'd be more than happy if things just trundled along like this for the rest of the year!
     
  11. springhill

    springhill Make the drill work for YOU

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    Thanks mate.
    IMO this is where the project selection element of Low Caps is critical. The other criteria set the base for the announcement induced/speculative purchase SP rises.

    Do you mind running through your system criteria and the stocks you are watching ATM?
     
  12. So_Cynical

    So_Cynical The Contrarian Averager

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    For anyone interested, Contango Microcap Fund (CTN) seems to be lagging the XSO index a little, even though it went up 3% today...dividend to come.
     
  13. Synergy

    Synergy

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    It's a sub 50c breakout system and I dont look at the fundamentals at all. There's plenty of criteria but I'm generally looking to catch the moves early. Recent market conditions (2 years nearly) have not been kind though and it's been quite useless. I think it at least requires a bit of optimism if not a rising market.
     
  14. springhill

    springhill Make the drill work for YOU

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    Latest status

    PVD +17%
    CQC -10%
    SKM +20%
    PRE + 9% (Thanks to burglar)
    FRC +33%
    GBE -6%
    BGH -20%
    ESR +10%
    STK +14%
    PRA +4%
    ZTA +22%
    XCD -1%
    ATU +30%
    AXE -3%
    MTN +28%
    MDA +17%
    MEP +15%
    PTS +20%
    LMR +9%

    To your point Synergy, yes a rising market probably means you can loosen the criteria a little, a falling market your criteria must be set in stone.
     
  15. prawn_86

    prawn_86 Mod: Call me Dendrobranchiata

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    Hi SH,

    I was just wondering what your exit criteria is for this 'project'? With specs being notorious for the first ones to drop when the market turns to the downside, do you have any criteria to lock in potential profits?
     
  16. Gringotts Bank

    Gringotts Bank

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    I was thinking the same thing. Wouldn't want to ruin that very nice set of numbers. Needs an index filter maybe.
     
  17. springhill

    springhill Make the drill work for YOU

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    Good morning fellas thanks for the interest.

    First thing is that my 'system' is completely manual. The only filter I have is the criteria in my head. Labour intensive, yes, luckily I enjoy this kind of work.

    Exit criteria. I honestly cant throw a blanket over the lot and say I will exit after X, Y, Z.
    Each stock has its own strengths and weaknesses, including a little niche reason why I enter in the first place. It could be cash position v MC v Cash burn, an announcement I am anticipating arriving, a cap raising, major investment, dilution etc etc.
    Exit reasons for each stock vary and timing varies.

    With entry based on MC:Cash, constant review is important to see if you are getting value for spend.

    I have got it very right and also very wrong in the past, but have learnt from both and have reduces my profit expectations and risk accordingly.

    Sorry I cant define it in a more clear way

    The pro/con of a manual system, I suppose.

    Thoughts?
     
  18. prawn_86

    prawn_86 Mod: Call me Dendrobranchiata

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    I entered AJQ recently based on cash:MC and good prospects for drilling. I then sold out my initial portion plus a 10% profit when it (virtually) doubled enabling me to free carry the rest.

    Surely a say 50%+ gain would prompt taking some off the table?
     
  19. springhill

    springhill Make the drill work for YOU

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    Absolutely, but with the caveat of how quickly it got to +50%.
    Every now again its obvious it will blast past 50%.
     
  20. prawn_86

    prawn_86 Mod: Call me Dendrobranchiata

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    OK makes sense i guess.

    Is there any on that list that you are considering sell all or part of your position at this stage?
     
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