Gus Cosio says so

Ideas on the Philippine Stock Market

We could get lucky!

9:25 am   Friday   19 March 2010        Philippine Stock Exchange Index  3100.95  (+0.42%)  Thursday close

So far, we have been seeing a very defensive market, and the trading pattern Thursday reflects this sentiment.  All anxieties are being revealed, and both traders and investors wait it out during the day to see if any selling will develop since we are just sitting below the triple top. My take on the matter is the longer we stay close to that perceived resistance without dropping, the stronger the chance that we break it.  Investors just have to develop conviction in their stock choices

It was one of those days when most of the large cap stocks had been down for most of the day only to recover strongly just before the close.  This is symptomatic of a condition where investors are constructive about the market but do not want to jack up prices.  In my opinion, we are seeing a very healthy market.  Investors are getting the opportunity to accumulate core positions at decently priced levels.  This pattern of trade is base building for a potentially strong take-off.

Today, PNB was one of those who saw good strength.  It should be about time because present management have indicated that mid-year is a definite target for the merger with Allied.  Another good reason to buy PNB is the prevailing strength of the banking sector of which PNB is the cheapest.  I would suggest that investors increase their weighting on banks notably MBT and UBP or even SECB.

Another stock that took the day was JGS probably because there was an underwriters meeting in the afternoon for Cebu Pacific’s initial property offering.  Of course JGS has a reputation for being a laggard but some people are starting to appreciate the strength of the JGS portfolio – URC, RLC, the possible turn around in DGTL and the neglected investment in UIC of Singapore.  Both PNB and JGS are not very fashionable stocks in spite of the fact that they are trading way below their fair value.  I guess it is just appropriate that they gather some attention when the rest of the market is moving sideways.

CYBR is slowly creeping up.  I think my theory that this stock close to 0.60 is a buy with a target to sell above 0.75.  I also think that it will move in sympathy to what is happening to PCOR.  Both are the object of acquisition by SMC and the Ramon Ang/ Danding Cojuangco team.  Keep in mind that the tender offer for PCOR had been indicated at 6.85 which is still quite a ways from where it is right now.

I also think that MPI is agood to accumulate now.  Support for the stock looks to have moved higher particularly because it has secured its MER position.  From a technical perspective, I remember last year’s share placement was at around 3.00 and it looks to me that most weak holders have already left during that sell-off in February.

On other ideas, I believe that PIP was just taking a breather from Wednesday’s surge.  I will not take my eye of this stock.  I think it may be wise to overweight the stock a bit.  I am also curious about the price behavior of BPC because someone is drawing its chart to look like it is moving higher.  There might be a play on it soon, but this idea is just like a bet on the blackjack table – and who knows, we could be lucky.

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March 19, 2010 - Posted by | Financial markets in Asia

15 Comments »

  1. Hi Gus,

    PNB is doing well. What do you think would be the max. price to sell PNB?

    Comment by Kier | March 19, 2010 | Reply

    • Kier,
      I am approaching PNB from both value and quant perspectives. For value, I hold on to my belief that this stock should be worth at least 40 that is why I am not yet thinking of selling. From a quant or trading point of view, the volume spike only happened today. I think it has enough momentum to go through 25.

      Comment by Gus Cosio | March 19, 2010 | Reply

  2. Hi Gus,

    AP managed to beat expectations that it will go lower today being that today is its ex-div date. It traded today as though it was just any other day. I’m pretty sure it’s behaviour is positive and might be indicative of the strength of this stock. Does this mean that we can expect it to continue its ascent and go nearer it’s target price sooner rather than later?

    Also, I would like to hear your thoughts on NI and DMC.

    Thanks!

    Comment by richard | March 19, 2010 | Reply

  3. Richard,
    There is a lot of investor focus on the local power industry and AP is the most visible and most profitable as of today. I think that the stock is worth 15 but the market may take it even higher as it imputes a premium on such a good company.

    I do not follow NI. DMC is one of my favorites. This stock could go to 15 at least.

    Comment by Gus Cosio | March 19, 2010 | Reply

  4. hi Gus, is AT a good buy @ 10/share?

    Comment by mike | March 19, 2010 | Reply

    • Hi Mike,
      All i know of AT is that it has operating copper and nickel mines with claims to further deposits. As to its value, mining stocks are very tricky. If you want to trade mining stocks you have to keep your ear close to the ground with some of your broker contacts. Mining stocks in our market is not so straight forward. My view will only be as good as yours. Yours can even be better if you can get your hands to proper information on the company.

      Comment by Gus Cosio | March 20, 2010 | Reply

  5. hi Gus, is AT a good buy @ 10/share? Looks like there’s alot of accumulation going on in GLO..

    Comment by mike | March 19, 2010 | Reply

    • GLO is probably in the middle of its trading range. If you go back, you’ll see that the effective range of this stock is 900 to 1050. I do not yet see it trading out of the range. It will only do that if analysts upgrade their profit forecasts on the stock.

      Comment by Gus Cosio | March 20, 2010 | Reply

  6. gus, is the “listing date” of a stock the same date with the IPO at the Par value? example JFC’s listing date is July 14, 1993, at the par value of P1.00, does this mean that from the listing date, the price per share of JFC went from P1.00 all the way to P60.00 w/c is the current market price today?

    Comment by JimBoy | March 19, 2010 | Reply

    • Jim, For your info, stocks hardly get listed particularly in a normal IPO at par. JFC, if I recall, was listed in 1994 at 12 or so. It has paid a lot of dividends, both cash and stock I think, so if you put a 1000 pesos on it at IPO, it is now 6000. That is even better than buying real estate. I bought a lot in a subdivision in Antipolo in 1994 at 1200 per sq.m., it is only worth 3000 per sq.m. today. I also have a prime property acquired for 10k per sq.m. in 1994. It is 25k per sq.m. today. It appears that investing in JFC was a good decision. In 2003, I bought some TEL at 216 which is now 2550; that is a least a ten fold increase. Today, TEL pays 210 pesos dividends a year. Unfortunately, I sold it at 430 after a few months. I think the lesson here is that if you spot a good stock, you must leave some in your core portfolio for the long haul. Candidates for such long term buys are AP, AEV, FGEN, EDC, MBT, PNB, SMPH, SMDC, DMC, and MPI to name a few.

      Comment by Gus Cosio | March 20, 2010 | Reply

  7. Sir Gus,

    What do you think of ACR. I went in at 1.02 and both another bunch at .94? Should I cut loss now? Thanks.

    Comment by Nel | March 19, 2010 | Reply

    • Nel, I assume that you bought ACR because you were speculating on the Tampakan holdings which will hopefully be ransfered from the Alcantara family into ACR. If you think that it will no longer happen, then, yes cut your loss. From what I gather, it is still in the process. If you bought it for a punt, wait for another bounce to get out.

      Comment by Gus Cosio | March 20, 2010 | Reply

  8. I mean bought ACR.

    Comment by Nel | March 19, 2010 | Reply

  9. Hi Sir,

    There’s news that finally the last license for a CMTS will not be awarderd to Bayantel.How do you think will this affect its operations. While it seems to be strong on wireless landline and it’s the majority owner of a telecom infrastructure backbone, I think it cant compete and be viable in the long term with out cellular operations.

    Bayantel was fully written off in the books of BPC and its turn around will undoubtedly be a big plus to BPC’s value.

    Thanks

    Comment by alexis agujetas | March 19, 2010 | Reply

    • No wonder BPC is holding above 3.00. I see good possibility of it breaking out, because a few months ago, an analyst was telling me that given the price of FPH, ABS, and even MER (because of the cash they will receive and they still have a small stake), BPC should be worth double of what it is. I am not saying that it will get there; I’m just willing to place a bet for around 3 months for a 30% gain which would be roughly 3.60 as my exit level.

      Comment by Gus Cosio | March 20, 2010 | Reply


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