Gus Cosio says so

Ideas on the Philippine Stock Market

The patience to be right

9:15pm  Tuesday   19 October 2010

From the way prices behaved today (Tuesday), I cannot help but think that stock prices in general will continue to consolidate.  The quick recovery of MBT gives credence to the notion that there is nearby support for the stock.  While my view on MBT is very constructive, I think that some more squeezing out from weak hands will be happening over the coming trading days.  I do not think MBT will be moving up yet.

I had a look at how EDC traded today.  I like this stock a lot because it has one of the most important resource in the country – the geothermal deposit in Ormoc where it produces about 700 megawatts of electricity from 5 generating facilities.  While EDC similarly recovered today, I sense that there will be some sellers emerging at slightly higher prices.  I honestly think that EDC can do much better if it goes down below 6 so that firmer hands can take over.

My favorite DMC was starting to trade below 33, but enthusiastic buyers took it back to 33.50.  Personally, I would rather wait.  I really like to get back in the stock, but I think time will cure my restlessness.  Whether I buy it higher or lower matters less than the comfort of buying it after it has consolidated.

TEL has also come of a bit and is starting to look interesting.  Having sold the stock above 2730, today’s level of 2660 is already looking to be a good buy back level.  On second thought, I will probably wait a bit more, but 2600 on TEL will be difficult to walk away from.

SECB went ex-cash dividend today.  They are paying a total of 1 peso cash dividend on November 19 which makes a total of 2 pesos paid so far in 2010.  I think interest will continue for SECB.  The second tier banks still look cheap and SECB appears to rank high among fund managers.  SECB may be a better performer than PNB and RCB at this point.  Nevertheless, given the underlying fundamentals of the economy, investor should not ignore the banks.

There have been concerns about SLI slipping much from the highs of 2.45 to 2.50 last month.  The concern is if this stock has already run its course.  Personally, I do not think so.  I think the stock will still move beyond 2.50.  It will just take some more time.

I received a comment that one reader has posted pictures of the ORE mine site on Facebook.  Thank you.  I think at this point, some fund managers have assured themselves that ORE indeed has a producing mine and will be shipping soon.  Moreover, I think some investors are slowly being convinced that the reserve level of the mine is quite extensive.  My take on the stock is that it will eventually attract the cash of other resource funds overseas.  I was just at a meeting earlier today with a metals trader.  He was telling me that there is quite keen interest in funding metals.  Of course, a stock like ORE has to be marketed to these overseas fund managers.  If there is that much nickel on the ground, it is just a matter of time.

I would also remind DGTL followers to keep an eye on the stock.  It has been quiet lately, but you do not see any selling in a big way.  I sense that there may be a big move soon.  But even if it takes longer, I have chosen to be a lot more patient on the stock, just like I think we will need more patient in the broad market for the time being.

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

26 Comments »

  1. PATIENCE, DOW IS JUST BEGINNING TO DROP LETS SEE HOW LOW IT GETS BEFORE WE DECIDE TO BUY IN? BUT MY GUESS IS AROUND PISIX ANOTHER 100 PTS , I WILL FEEL COMFORTABLE………..

    Comment by mike | October 19, 2010 | Reply

  2. Sir Gus,
    What do you think about PX? My average cost on this is 14.75. Is it time to cut loss? Thank you.

    Comment by Nel | October 19, 2010 | Reply

    • my question too. When do you think PX will go up?

      Comment by Joey deleon | October 20, 2010 | Reply

      • Joey,
        If I knew, I wouldn’t be here. I would be out trying to get as large a credit line that I can muster to buy as much PX as I can.

        Comment by Gus Cosio | October 21, 2010

    • PX went down to 12.98 today…

      Comment by denchjp | October 20, 2010 | Reply

      • Denchip,
        I would buy PX at these levels. Nothing to worry about.

        Comment by Gus Cosio | October 20, 2010

  3. We’re still waiting for DGTL to actually break the 2.7+ resistance. Whether it comes sooner or later, I guess I’ll hold on to this stock because I believe in its potential.

    Comment by Topmace | October 19, 2010 | Reply

    • 2.7? or 1.7? assume this is typo

      Comment by Jacob | October 19, 2010 | Reply

      • Sorry, I mean 1.7. Thanks for the correction. 😀

        Comment by Topmace | October 20, 2010

  4. nice to hear abt SLI and DGTL…comforting words…hope it comes true. really been down on these

    Comment by Jacob | October 19, 2010 | Reply

  5. Hi, Sir Gus.

    Question po..

    How much reserve, in terms of percentage, is required, banks should have? Does a rural bank have a different reserve requirment from commercial and investment banks?

    Thanks.

    Comment by oliver mia | October 19, 2010 | Reply

    • Oliver,
      These are all listed in BSP regulations. I haven’t looked at banking regulation manuals for a long time. Although, I am aware that rural banks have lower reserve requirements than commercial banks.

      Comment by Gus Cosio | October 20, 2010 | Reply

      • Thanks sir gus. I’ll try to take a look on that.

        Comment by oliver mia | October 20, 2010

  6. Sir:
    I read in the business news that AC has doubled the buy back, what is your view on AC buy back program? I hold on to my DGTL for long term, willing to wait for a year or two before release. FOOD is disturbing me, the stock dipping to the bottom, any thought on FOOD, Sir?

    Comment by art | October 20, 2010 | Reply

    • Art,
      FOOD has a very good story. They have acquired tuna canning facilities in Indonesia and Vietnam. They also acquired packing facilities for salmon in New Zealand. They have very good international distribution network. They are a toll manufacturer/cannery of tuna so they do mostly bulk business for different brands. Unfortunately, I haven’t followed its valuations lately. Perhaps, you could research valuation info through FOOD’s investors relations office.

      Comment by Gus Cosio | October 20, 2010 | Reply

    • hi ART! I also got FOOD in my portfolio. want to check out my portfolio? http://everyonecaninvestinstocks.blogspot.com/
      16% of my portfolio is FOOD. it is at the bottom for quite some time now. maybe it’s just waiting for 1 good news…

      Comment by RmR | October 21, 2010 | Reply

  7. Hi Sir Gus,

    What is your thoughts on AT, will it be good to keep AT and ORE together in my portfolio.?

    Comment by Olive | October 20, 2010 | Reply

    • Olive,
      Nothing wrong with having both AT and ORE in your portfolio. Just remember to take profis at some point.

      Comment by Gus Cosio | October 20, 2010 | Reply

  8. The discipline of JFC in staying in the food business is admirable. What’s a good entry price for JFC?

    Comment by Mal | October 20, 2010 | Reply

    • hi! for me jfc is undervalued. you can buy at the current price because it’s still in uptrend level.

      Comment by marketbeginner | October 20, 2010 | Reply

    • Mal,
      JFC is a very conservative company. It also has low volatility. Anytime is a good time to buy particularly when it has dropped a bit.

      Comment by Gus Cosio | October 20, 2010 | Reply

  9. Hi Sir Gus,
    Can you share your latest thoughts on ORE. Volume all time high based on 2 year chart from PSE. Is there are reason to be cautious now? I’ve been accumulating 3 weeks ago and have shifted some positions from PX with a 70-30 ratio in favor of ORE. My total mining stock is now 20% of my portfolio.

    Comment by Mark Anthony | October 20, 2010 | Reply

    • Mark,
      I have no idea who has been buying ORE today,but with such a huge volume going through the board, I can only surmise that some institutional money has started to come in. My conviction on the stock is that it can only gain consistently if institutional funds put it on its buy list. Now that there is assurance from some fund managers that shipments will be made in November and more nickel will be extracted going forward, I am hoping that this stock will find fair value. I am betting with my own money that ORE could go to 6. This is no assurance but an educated speculation.

      Comment by Gus Cosio | October 20, 2010 | Reply

  10. Hi sir,

    What are your thoughts on AGI? This is my main holding and I’m thinking of acquiring more of it…

    Thanks

    Comment by Ryan | October 20, 2010 | Reply

    • Ryan,
      I think AGI will continue to move up, but if it were my money, I’ll be willing to wait for it to come closer to 10.

      Comment by Gus Cosio | October 20, 2010 | Reply

  11. Gus, Thank you very much! Been following your advice. Thanks!

    Comment by Joey De leon | October 21, 2010 | Reply


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