Gus Cosio says so

Ideas on the Philippine Stock Market

The second time around

6:30pm  Wednesday  11 November 2009  Philippine Stock Exchange Index  3047.14  (+1.68%)

Another 50 point day market.  It is starting to feel like May 2009 all over again with the index rising relentlessly.  My conservative sense tells me to start taking profits, but the trader in me would like to ride my profits.  In earlier posts, I encouraged investors to accumulate AC and ALI  as they were moving softer in price.  Actually, I had even advised a fund manager to pick up some TEL when it dropped on the news that MPI bought an option to buy the Lopez stake in MER at 300.  I’m of the view that TEL’s finances would be unaffected by the MER/MPI M&A activity in spite of them being controlled by the same share holder.  As far as I’m concerned, TEL owns 20% of MER at an average price of around 91 per share.  Remember that they accumulated from a low of 65 to a high of 126.  My math works it out that they have some positive values in their books if the value of their MER holdings is now, say, 200.  The value gain should have some sort of impact on TEL.

I also mentioned in yesterday’s post that I was sensing a push in SPH.  I’m very sure today that a buy program is indeed going on.  While I expect some resistance forming in the stock around 4.00 due to the traders that got stuck on the stock in the last buy cycle, my instinct tells me that the target of this cycle is around 4.50 at least.  We may be lucky and it goes to 5.00.  The reason why I’m comfortable on betting on this stock is because I’m very familiar with the company’s financials and operation and I try to stay in touch with their Investors Relations officer.  Furthermore, I believe that there are specialized funds that are on the prowl for small cap companies with good brand equity for their products.  One such venture fund told me of their investment criteria for small cap companies and I reckon that SPH fits their bill.


November 11, 2009 - Posted by | Financial markets in Asia


  1. I’m currently on the look for SPH. Thanks, Gus for a giving a support explanation on this.

    Comment by Bullish Trader | November 12, 2009 | Reply

    • you’re welcome bullish trader. There could be more trading opportunities in days to come.

      Comment by Gus Cosio | November 12, 2009 | Reply

  2. hehe what do you think of AGI sir gus? I bought it at 4.65 before…

    Comment by wren | November 12, 2009 | Reply

  3. Thanks for sharing your thoughts on SPH. It’s certainly encountering resistance at the current price but I think that if it breaks 4.05, It ought to move very quickly. Your explanation gives me more conviction to hold on to this stock as it consolidates.

    Sir, would you know why AEV never seems to attract much interest in our market.

    Comment by Warren | November 12, 2009 | Reply

    • Warren, SPH was still pretty well traded today although I sensed some profit taking just below 4.00. I’m not worried about the stock and I’ll probably be a buyer if it touches 3.70 again. As for AEV, it is one very predictable stock which moves only together with market. The problem with AEV is that its 2 biggest contributors to value are AP and UBP which both trade with more liquidity than AEV. My strategy with AEV is to buy it when the market is quiet because that is when the stock normally just dwindles because of neglect. It will usually bounce back when the market perks up just like it is higher now.

      Comment by Gus Cosio | November 12, 2009 | Reply

      • I agree with your comments and that also usually how I trade AEV. Except that for the past few day the total value of trading spiked and yesterday I found out that it was due to buyback wherein AEV bought 88 Million worth of shares. Today they bought roughly the same amount.

        So my question is, should I buy this stock now or stick to the usual stratey of buying the stock while it is asleep? Thanks

        Comment by Warren | November 12, 2009

  4. i don’t mean to dampen the enthusiam for SPH but has anybody seen their last two disclosures? i have to say a bit of pessimism doesn’t hurt. just trying to add a little balance.

    Comment by ed | November 12, 2009 | Reply

    • No offense taken Ed. I heard that there were resignations and I am scheduled to meet with their investors relations next week to learn more about what’s going on. If you are referring to lower EBITDA for the first half of ’09, I’m also quite aware of that and I’d like to learn more about the 3Q results.
      Notice that I said in my main post that “I was sensing a push in SPH.” What I was addressing was the fact that people may be attracted to the momentum of a stock. Certainly SPH has momentum behind it right now. What I am pointing out is that when you trade a stock on pure momentum, be careful that the stock at least has fundamentals behind it so that if you get stuck, you can at least earn dividends. SPH will pay at least 21 centavos next year.

      Comment by Gus Cosio | November 12, 2009 | Reply

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