Gus Cosio says so

Ideas on the Philippine Stock Market

The better part of valor

11:30 am Wednesday Sept. 14, 2010 Philippine stock exchange Index 3961.15

From time to time, even if we have a strong market, we cannot avoid some profit taking. In some cases, we see broad-based profit taking across all sectors; in other occasions, corrections are selective and investors rotate to other sectors.

The move I am observing is profit taking setting into the power and financial sectors while strength is looming in Telcos ad Mining.

I took profits on PNB, DMC and AP. These are positions that i have held for a long time. I sold all my AP and PNB while I sold only half of my DMC. The price action of AP shows some reluctance from buyers to push it forward and with good reason. The stock has gone up seven times in 18 months and profit taking has never been more compelling.

As to PNB, I think the story of the merger has already run its course. PNB may move up in the long run, but short-term, I think all the juice has been squeezed.

On DMC, I am selling only half because while its power story may be taking a rest, its mining (SCC) and housing businesses will still be on a roll. Property businesses will likely continue to perform given the very compelling margins particularly in high rise dwellings in urban areas and those within easy access to business center. That is why I also like VLL and SLI ā€“ laggards stocks that have very good land banks and have recently gone into vertical development

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September 15, 2010 - Posted by | Uncategorized

56 Comments »

  1. Hello sir gus,

    What’s your take on the action of LND recently? it’s been performing pretty well.
    Thanks

    Norman

    Comment by Norman Go | September 15, 2010 | Reply

    • Hi Norman,

      I was just about to ask Gus the same thing until I saw your post. Anyway, last thursday I bought LND because I saw its chart had some promise and so far, it has delivered. Below is the link to its 3-year chart.

      As you may notice, volume has been consistently good, something previously seen only prior to its peak in 2007. I believe this still has more room to go.

      Comment by richard | September 15, 2010 | Reply

    • Norman & Richard,
      Right now we have a case where the tide rises and all the boats are moving up due to the tide. LND is one such stock that is following the big move. May I suggest that when you have a profit on the stock, try not to be greedy. Right now, I do not know what is happening to land. As far as property stocks go, I would rather put my hard earned bread on VLL and SLI .

      Comment by Gus Cosio | September 15, 2010 | Reply

  2. Hi Sir Gus,

    The property sector is also taking a hit. It might have been a wrong move for me to put a significant portion of my portfolio in ALI lately. šŸ˜¦

    Comment by Jonathan | September 15, 2010 | Reply

    • jonathan,
      i have likewise ali in my position but not significant. do not worry this stocks repeatedly rewarded me and it may soon reward you too. it has still room to climb, this i believe. i am a follower of this since it is still at 11 per share level.but do not put much of your fund on it try to diversify.

      Comment by richard | September 15, 2010 | Reply

    • like you Sir Jonathan, i had also put a portion of my portfolio there but though it had gone down, i believe that it still will go up as it always will

      Comment by tatels | September 15, 2010 | Reply

      • Thanks Richard & Tatels. I just wished I could’ve invested on other performing stocks rather than putting everything in one stock.

        Comment by Jonathan | September 16, 2010

  3. I’m 100% committed at this point and even though some of my holding have gone up a lot – SECB is now +60% for me, I think I’m gonna wait a bit.. maybe till next year.

    Although taking profits is kinda tempting really :p

    Comment by jasper | September 15, 2010 | Reply

    • Jasper,

      I had to comment when I saw that you also have SECB. We have quite similar holdings. Some of the stocks you have, I have also looked into and considered for purchase but decided to put off most of them. GLO’s pretty much back up huh? Hehe

      Comment by gp | September 15, 2010 | Reply

    • yeah, GLO has recovered. Who’d a thunk right? But I have no regrets as the funds I had on GLO was diverted to MPI and DMC so.. all in all, I’m still one happy camper.

      Regarding SECB – I’m evaluating whether to cash out. Like Mr Gus said regarding PNB, maybe SECB has no juice left too so to speak.

      But If the market is this bouyant, and the banking sector is getting attention, then maybe there is still some? I dunno.. also, i don’t know yet where to divert the proceeds. :whattodo:

      Comment by jasper | September 15, 2010 | Reply

  4. Hi sir,

    What is your take on SMDC? I already sold most of my PNB and DMC which I’m planning to dump to SMDC for a long term hold. What do you think?

    Thanks

    Comment by Noel | September 15, 2010 | Reply

    • Hello Noel, may SRO play ito.
      Kay din ako kumuha pero below 8 pa yun…

      Comment by Aldrien | September 15, 2010 | Reply

    • Noel,
      I like SMDC. From what I gather, both their land bank and development margins are very compelling.

      Comment by Gus Cosio | September 15, 2010 | Reply

  5. Hello sir Gus,

    I made some good profits on PNB too, thank you for that..What do you think of RFM?

    Comment by lai | September 15, 2010 | Reply

    • Lai,
      I am not comfortable with RFM, but that is not to say that it will not move up. I would rather go for something like VLL which is definitely undervalued and is gathering good following.

      Comment by Gus Cosio | September 15, 2010 | Reply

      • Thank you sir Gus…What is your fair value estimate for VLL? I already made small positions in SLI earlier..I read in a forum that this will reach 3.5 – 4 in two months time..Do you think they are just hyping SLI?

        Comment by lai | September 16, 2010

      • Lai,
        VLL should be at least 5. I don’t know if they’re hyping SLI, I just think it is a good company.

        Comment by Gus Cosio | September 17, 2010

  6. Hello Sir Gus,
    I very much agree with what you said about the laggards, telco and mining,

    Laggards and minave a solding currently take up 55% of my portfolio. My question with regards to SLI(which is part of property) its also moving up well they also h business plan based on what I have read and seen. How about FLI any thoughts on them.. it has gone up quite significantly in the past month. I still believe their is alot of space to go up, since the company is very strong fundamentally, Technically speaking volume(net foreign buying)(60 M- 3 day average) has been increasing since the start of this week but the price has been in a sideways – down trend

    It would be nice if you can share your thoughts.,,
    Thanks and have a great day sir šŸ™‚

    Comment by Foreign Investor | September 15, 2010 | Reply

    • * Laggards and mining… currently take up 55%…..
      I wrongly typed what I said earlier. Thanks

      Comment by Foreign Investor | September 15, 2010 | Reply

    • I think both FLI and SLI will go better. I just think that SLI could be the faster horse.

      Comment by Gus Cosio | September 15, 2010 | Reply

      • Thanks Sir Gus, got both my hands on both horses, once FLI will make some profits I’ll add up to SLI and ORE

        Comment by Foreign Investor | September 15, 2010

      • I just read an interesting newspaper story about FLI last Sunday. Basically there were certain shady allegations about the owners and that FLI is quite cash-poor. It has had to resort to partnering with the other developers since they don’t have the funds to develop themselves. It also doesn’t help that FLI was a sister company of the now defunct CAP (Suggesting serious mismanagement). I dunno about the fidelity of that article though.. (Wait FLI is Filinvest right?)

        Also, the inquirer has an article regarding PX wherein they said it just sold 1B worth of minerals in a single day.

        Just sharing bits and pieces of news.. I have not the two stock btw.

        Comment by jasper | September 15, 2010

      • Thanks for sharing Jasper, by the way where did you find the article, do you have any link or so?

        Yes FLI is Filinvest.
        Best of luck

        Comment by Foreign Investor | September 16, 2010

  7. Hello sir Gus,

    What do you think of FDC? Will it not go up in tandem with FLI and the good earnings of EastWest Bank?

    Comment by Mike | September 15, 2010 | Reply

    • Mike,
      FDC always trades cheap versus FLI. This is because of the lack of liquidity in FDC. Lack of liquidity oftentimes makes a stock underperform the more liquid ones.

      Comment by Gus Cosio | September 16, 2010 | Reply

  8. Good day gus!

    PNB hit 50 today =D and this stock doubled the money i placed in it in less than a year =) yet sadly, I might follow your play and try and sell it tom at 50. I’m planning to switch it to dgtl and add my positions there. I also have around 20% cash now and have been waiting for a correction (however the PSE has been defying gravity) to enter either MPI (3.80-3.85) or JGS (21.50-21.60). I’m choosing MPI for its good performance and projects while JGS controls RLC , DGTL , URC and with the upcoming IPO of CebuPac. What’s your advice Gus? PNB switch to DGTL good ? and which is better MPI or JGS? Thanks so much! your opinion is such a great insight!

    Comment by raymund | September 15, 2010 | Reply

    • We actually have the same plans.. I already sold 60% of my PNB today then the last chunk I would unload tom. I was able to buy JGS and SMDC at closing. With the cash left, I also plan to buy DMC and DGTL but Im also looking to add some land to my portfolio. Maybe VLL or SLI. Btw, JGS’s long term value is estimated @ 30, SMDC @ 18,DGTL @ 3, VLL @ 6. Either way, its gonna be an exciting year ahead! šŸ™‚

      Comment by Nico | September 15, 2010 | Reply

    • Raymund,
      I think PNB could still go to 55 which is 10% away from today’s price. DGTL, I reckon, could trade up to 2.20 which is around 40%. It is really a matter of where I think allocation can return more.
      Between JGS and MPI, I will probably choose MPI. While I like JGS also, it is more difficult to follow and liquidity is more erratic than MPI.

      Comment by Gus Cosio | September 16, 2010 | Reply

  9. Sir, what do you think of fgen? and LC break out kasi?

    Comment by dennis | September 15, 2010 | Reply

    • Dennis,
      I think FGEN is normally a good investment and the big driver of its earnings is EDC. For that matter, I trade EDC rather than FGEN. Also, I have had better experience with its parent FPH. It’s more of a preference on my part.

      Somehow, I do not like LC. It does not look to me as transparent as PX. While LC has the largest mineral reserves among Philippine mining companies, its management suffers in comparison to PX and even AT. I do not have good experience in the stock.

      Comment by Gus Cosio | September 16, 2010 | Reply

  10. Hi Sir Gus,

    Just read your words for PNB, and right now I am considering to sell tomorrow. But Im a little bit hesitant because of the huge volume today which happened at the last 30minutes of the trading hours, don’t know what’s going with this big fundies. I also read an article that it can be a potential acquirer.

    Comment by Cliff | September 15, 2010 | Reply

    • Today,
      CLSA bought ~20M pesos
      Deutsch sold ~45M pesos

      Disclosure: I don’t have any PNB.

      Comment by Mal | September 15, 2010 | Reply

    • Cliff,
      You should really trade stocks according to your level of comfort. I took on PNB for over a year, trading in and out of the stock while keeping a core position. I must admit, it was a very profitable stock for me over the past year, but because of my limited personal capital, I’d like to put my resources to what I perceive to be higher projected returns.

      Comment by Gus Cosio | September 16, 2010 | Reply

      • Hi Sir Gus,

        I just sold all my PNB shares for a decent 34% profit. Would you mind sharing those stocks you perceive to have higher projected returns? Thanks in advance

        Comment by Sonn | September 16, 2010

  11. Hi Sir,

    Was just wondering… bought ATN shares before.. I know it’s not a popular stock but do you think it’s better to just sell it or wait for it to go up? It’s been going down….

    Comment by ella | September 15, 2010 | Reply

    • Ella,
      I’m sorry I can’t help you with ATN. I have no information whatsoever on the stock.

      Comment by Gus Cosio | September 16, 2010 | Reply

  12. Hi sir,

    I have been holding on to SMDC for quite some time now and i’ve been hearing news about an SRO? I am not familiar with this but I still want to hold on to what I have. Is this something I should look forward to or should I get out before or when it happens?

    Thanks!

    Comment by Randy | September 15, 2010 | Reply

    • Hi Randy,

      Sir Gus, please correct me if I’m wrong. SMDC is conducting an SRO to raise capital to fund its aggressive expansion plans. One disadvantage is that they will be issuing more shares (increasing total outstanding shares) thereby diluting EPS. If, however, you believe that SMDC will be able to put the money into good use, then I believe you should subscribe. If not, then I suggest you sell before the SRO. I’m personally bullish on the SRO. Just my thoughts. Hope it helps.

      Comment by marts | September 16, 2010 | Reply

      • Randy,
        I agree with you completely.

        Comment by Gus Cosio | September 16, 2010

  13. Hi Sir Gus,
    Would you know what caused the increase in the price of NI? It is one of the first stocks i bought (i only started last month) and its price seems stationary until now.
    Thanks.

    Comment by jamezu | September 15, 2010 | Reply

    • Jamezu,
      I have no idea about what’s going on in NI. The mining stocks I follow are ORE, PX, and AT. Generally, mining shares are moving because base metal prices have started to move up again.

      Comment by Gus Cosio | September 16, 2010 | Reply

  14. Sir,
    Im 75% invested. Took some profits on PNB, DMC. At present I have MPI (25%), AP (25%), DGTL (12%) and PX (12%). Im looking at going back to DMC, maybe add more positions in MPI, look at EDC as well or just leave myself 75% invested. When do you normally go for 100%. Your thoughts would be much appreciated.

    Comment by mark anthony | September 15, 2010 | Reply

    • Mark,
      I never go 100%. what I do is post a buy order on a stock that I want to rotate into and I sell something in my portfolio to generate enough cash for the purchase. In which case, I normally sell the stock I least like.

      Comment by Gus Cosio | September 16, 2010 | Reply

  15. Hi Sir Gus, I have a somewhat different view on AP. While i transfer some fraction of my positions yesterday to DGTL from AP because DGTL is now on brink of a breakout. I think AP is also due for a surge to 23-24 anytime now. Two of the bigger players in the market puts a conviction buy on AP recently and i see them following their advise so far. While the observed resistance recently was due to the fact that other brokers put a hold or sell tag to AP, that they valued less that its current trading price, i see these bigger players to dominate in the next few trading days.

    Comment by Chris M. | September 16, 2010 | Reply

    • Chris,
      I will not disagree with you on your point about AP. In my case, I considered AP a short-term sell simply because it is way overbought.

      Comment by Gus Cosio | September 16, 2010 | Reply

  16. Is VLL still a good buy at p3.3+ level? thanks!

    Comment by trixia | September 16, 2010 | Reply

    • Hi Trixia,

      For me its still a good buy. If I had additional cash ill get into VLL too. Fundamentals are strong and Mr. V as said in his latest interview that he will focus more on the business. And currently lagging other property developers especially SLI.

      But that’s only my opinion. Sir Gus will be able to explain this in a much better way.

      Thanks

      Comment by Foreign Investor | September 16, 2010 | Reply

    • Yes it is, Trixia, I’m looking at 5.

      Comment by Gus Cosio | September 16, 2010 | Reply

  17. Wow! PSEi is at 4,010.79 as I write.

    Comment by KennyV | September 16, 2010 | Reply

  18. Did Fgen Holder transfer to Atlas Mining? Fgen starts to trend down while AT goes UP….

    Comment by brad | September 16, 2010 | Reply

  19. Hi Sir Gus and other followers, What are your thoughts on SLI? I bought it this morning at 2.3 and was advised by a broker to sell it asap! Now Im confused.

    Would appreciate your thoughts on this. Thanks!

    Comment by Cholo | September 16, 2010 | Reply

    • by the way his basis was that SLI came from a low of less than a peso and now its all the way up to 2.3, so chances are its gonna go all the way down soon.

      Comment by Cholo | September 16, 2010 | Reply

      • Cholo,
        If that’s his only basis, perhaps you should change your broker. You have to teach yourself perspective when trading a stock. If you don’t you are merely gambling.

        Comment by Gus Cosio | September 16, 2010

  20. Hi sir Gus,

    Is SLI’s price going up because it no longer has the big marketing expenses (in the PBA) that it used to?

    Comment by Sonn | September 16, 2010 | Reply

    • Sonn,
      I think it’s really a matter of fundamentals. With such a strong domestic economy here, real estate take up will simply move higher. people need homes and there is regional diversification in businesses so value can be created by property developers who have a diversified land bank. I think SLI should be one of those and it looks undervalued.

      Comment by Gus Cosio | September 17, 2010 | Reply

  21. Sir Gus, I noticed that SLI has been highly recommended by so many gurus. One setback that I observed is its low free float at 2.8%. Would this make the stock not liquid in the future?

    Comment by Nel | September 18, 2010 | Reply


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