Gus Cosio says so

Ideas on the Philippine Stock Market

The power of doornails

5:30 pm  Monday 13 December 2010

Among the biggest losers of the day were three of my recent favorites – JGS, ORE and SLI.  Essentially, the broad market was down today and these stocks got hit hard for various reasons.  JGS apparently is issuing new shares, so dilution is the message.  For ORE, people may have grown impatient considering that NIKL is almost in the tank.  SLI may have also fallen victim to the angst of punters.  Anyway, that’s the way the ball bounces, and taking a fall at this point does not necessarily translate to losses down the road.  I think that we are merely in a correction, and some corrections run deeper than others.  Fortunately, I still have some cash to average down on ORE and SLI.  I must warn you though that both these stocks are not for the faint-hearted.

What impressed me today was the strength of DMC.  You can’t put a good stock down.  I was hoping that it would come down to 33.50 or so in order for me to accumulate some more.  I was at a wedding reception last Saturday seated next to the guy who builds condos for the group and things sound like great guns for that particular business.  Undoubtedly, the energy and power businesses are also going great and people are just convinced that 2011 will go better for DMC.  These guys are also in water utilities and infrastructure which appears to be the dominant market theme for 2011.  It is for the same reason that I am not too worried for MPI even if it trades below 3.50 again.  I am prepared to see it as low as 3.20, although it may be wise to start accumulating soon.

My attention was drawn to PWR, a stock that I thought was deader than a doornail.  To my knowledge, this company is virtually inoperative because every time I drive by the road leading to Mactan Shangrila, I catch a glimpse of their power plant which does not appear to be generating any electricity.  I think that there is speculation going on in the stock because FDC disclosed that Jess Alcordo who was president of East Asia Power way back in the nineties has now joined FDC to be the CEO of their power generating business.  Given that the breadth of the market is consolidating, punters are scouring the board for special situations and this might just be one.  I must warn everybody that getting into PWR without adequate disclosure is extremely risky and only those who have money to lose should gamble on this stock.

As I mentioned in my earlier post, this market will be stuck in a range between 4000 and 4250, and we are somewhere in the middle.  Traders and investors must be able to visualize their effective trading thresholds in order to make some money when market conditions are the way they are nowadays.

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December 13, 2010 - Posted by | Financial markets in Asia

27 Comments »

  1. Hi sir,

    With what is happening and with what will happen to JGS, is it ok if I shift it to AGI, DMC & MPI? Those 3 are my cores and I really believe in them so i’m willing to invest more…

    Comment by James | December 13, 2010 | Reply

  2. Nice article sir Gus.

    May I know your personal outlook for the year 2011? Thanks!

    Comment by Jen | December 13, 2010 | Reply

    • Nice question Jen. I’d like to ask the same thing.

      Gus, what do you think will be the main drivers for next year? 2010 was mainly driven by power mostly on the 1stQ, Banks and Infastructure on the 3rdQ.
      What do you think next year will be? Will it be Infastructure due to the PPP ? How bout Power ? will it still be the main story? And which Stocks do you think will be leading these main drivers? Thanks Gus, your insights are highly appreciated.
      Though, we have a few more days of trading…it doesnt look like a very Merry Christmas hehe nevertheless, it is a season of sharing, giving and family. hehe Greed will have to wait for next year. I hope you’ve done your Christmas Shopping. Merry Christmas, old Pal!

      Comment by Gordon Gekko | December 13, 2010 | Reply

      • i think main drivers for Q1 will be mining. stocks to watch out for are SCC, ORE and NIKL.

        Gus, correct me if I’m wrong.

        Comment by the investor | December 13, 2010

      • Gordon,

        I didn’t know you were diversifying in the Philippines too. If you got time, let’s have a chit chat old pal!

        Comment by Warren Buffet | December 13, 2010

      • Hi Gus.. with the market down, there are so many stocks worth accumulating for 2011. Just curious, if you don’t mind, what does your portfolio look like now? Thanks for being so open with all of us.

        Comment by newbie | December 14, 2010

      • I personally think SMC stocks won’t take the backseat comes 2011 Q1 and continue to soar.
        There are many stories to tell.
        In the case of PCOR, it is on the way to very good 2010 earnings.

        Sir Gus, do you think so?

        Comment by Aldrien | December 14, 2010

  3. Nice article!

    I agree on SLI and ORE. These two stocks I think will shine in Q1 2011. Time to accumulate them.

    Sir Gus,

    may I know your top stock picks for 2011, both for short and long term?

    I’m thinking of putting SLI VLL AGI MPI ORE SCC

    Do you think I have a winning portfolio, both for the short, and medium term?

    Comment by the investor | December 13, 2010 | Reply

    • just be sure to do some homework too on ORE and SLI..pretty speculative stocks..

      Comment by cliffhanger | December 14, 2010 | Reply

  4. I started buying MPI from 2.8. But I bought so many, that my my average is now at 3.28. If it goes down below that, it will be quite a loss. :/

    I have some cash coming soon that I’m intending to put between DGTL or NIKL (Or even TEL if it goes down to 2360) – but I’m starting to feel as if I should wait till January. Who knows, maybe MER will go down to 175 again. The recent price action has been a relentless water torture for my portfolio.

    >btw: Gus said very big companies tends to maintain its critical mass. Perhaps I should stop worrying so much about my DMC and MPI. Can’t help it though.. – And MBT is below 70! I might have to consider that too..


    hey, MER just declared a dividend! hehe.. a little bit of good news. Its very small, but every little bit helps right 🙂

    Comment by jasper | December 13, 2010 | Reply

    • MER dividend only at 1.30/share 😦 Better than nothing.

      Comment by Shan | December 13, 2010 | Reply

    • may pang jabee na ako! yahooooo!

      Comment by RmR | December 13, 2010 | Reply

  5. btw. gus, whats the main selling point again of FLI? I see you mentioning it a lot of times already.. is there something there?

    Although the pe ratio is an annualized 9.15x so its a good value.

    Comment by jasper | December 13, 2010 | Reply

  6. I hope ORE recovers…Angping is on a buying spree today

    Comment by James T. | December 13, 2010 | Reply

    • he is on a buying spree and on the time that you join the bandwagon, he is already on a selling spree. hehehe…

      Comment by RmR | December 13, 2010 | Reply

      • Yeah. Hehehe, dont worry i am already in the wagon a long time ago..so no worries for me =) 1st Q will be a good one..

        Comment by James T. | December 14, 2010

    • he is on a buying spree and on the time that you join the bandwagon, he is already on a selling spree. careful…

      Comment by RmR | December 13, 2010 | Reply

    • Somethings been bothering me.

      Gus, when the analysts visited the ore mine, did they see real work being done there? Were there people mining and stuff? And, what ever happened to those mounds of ORE waiting to be shipped? Are those real or did we just imagine that?

      What i mean to say is, if only the shipment date slipped a month and if those ores are real.. then sooner or later them rocks will be sold and the company will earn. I have this nagging feeling that even if that first shipment earned something like a measly million bucks, ORE buying will resume like crazy.

      Comment by jasper | December 13, 2010 | Reply

    • I recently attended a roadshow event in Cebu and Jerry Angping was present. He is really serious about this stock and that it should reach 10p. If you believe him this could be the right opportunity to buy. With the recent price action, I just don’t know. But what I know, and as Sir Gus has said, is that there is value in the ORE mine.
      On another note, ORE has gone up 315% just this year. That is surprisingly better than AP and DMC. So a sharp correction is expected.

      Comment by Seth | December 14, 2010 | Reply

      • I sold my ore a couple of weeks back. Is now a good entry point?

        Comment by Ria | December 14, 2010

      • I agree on this. The mines are real. No wonder the contesting owners of ORE went through a long legal battle to claim this company. Mining play is the theme for 2011. Remember, MVP and RSA is also prowling in mining, so they could easily bid for ORE if they need to in the future. Just my 2 cents though.

        Comment by James T. | December 14, 2010

  7. Time to Buy property Stocks…I like Fli and Smph…Went to Mall of Asia last week the Mall was Jampacked..I think SMPH is worth 20/sh…

    Comment by Time2Buy | December 13, 2010 | Reply

  8. Hi sir gus,

    I don’t understand how you can say you had the money to average down if the top seller for the day was clearly First metro, Can you please elaborate?

    Comment by Anonymous | December 14, 2010 | Reply

  9. Thank you very much for sharing your knowledge.

    Comment by Jackie | December 14, 2010 | Reply

  10. Reading Sir Gus’s blog and the comments has become my morning ritual.

    Comment by Anonyme | December 15, 2010 | Reply

  11. Yep great blog. With all the traffic it is getting, Sir Gus, I think you should consider monetizing it. Just a thought 🙂

    Comment by D' Intelligent Investor | December 31, 2010 | Reply

    • A lot of people are telling me that, but wordpress is a non-profit site and I do not have time to manage my own website.

      Comment by Gus Cosio | December 31, 2010 | Reply


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