Kick Back: The 10 biggest stories you might have missed on Stockhead this week
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It’s Winter Solstice, which means beer, in Australia.
Lots of things in Australia mean beer though, so really the only thing special happening this weekend is tomorrow has less daylight hours in it than any other day of the year.
Bonus: the days get longer from here on. And in Australia, longer days mean more beer.
Here’s what you might have missed on Stockhead this week, but everyone else didn’t, and liked the most. Cheers.
It’s nearly tax time.
That’s means if you’re holding a bunch of dog stocks, it’s also time to make some hard decisions. The Secret Broker canvassed what to do with those last week, but we thought we’d have a look at what stocks are in the firing line for a big EOFY selloff.
(We’d never recommend catching falling knives, and we all know picking bottoms can be unpleasant. But it’s hard to resist starting 2019-20 with just a little bit of bargain shopping…)
So how do you spot an EOFY selloff? It’s not as simple as just looking at whose price has fallen the most in the past 12 months, although that would certainly have plenty of shareholder fingers over the big red button.
A better indicator is the good old RSI (Relative Strength Index) which we cover weekly in our Hot Money Monday column. Any stock with a figure under 30 is considered to be oversold – ie some bailing out on is evident.
We’ve got them all covered here.
You know the drill by now. We know that because HMM has quickly become a regular weekly favourite for Stockhead readers.
Over the past two weeks, 29 companies recorded an RSI reading of at least 75. And this time around, a couple of mining companies surged to the front in the wake of some recent M&A activity.
Bligh Resources (ASX: BGH) had an almost off the chart RSI measure with a reading of 91, but that was most likely due to talk of a takeover offer from Saracen (ASX-SAR) at almost twice Bligh’s closing share price the day before.
And our lost of companies running cold grew by quite a bit.
Leading the lack of interest was Evans Dixon (ASX: ED2), which recorded an RSI reading of just 7.96 — the lowest measure since we launched HMM.
How are your neodymium stocks holding up? Pretty well, we’d imagine:
But if you really want to impress the bar staff, talk loudly about your praseodymium investment. You’d probably just call it “NdPr”.
And you’d be holding something like Lynas (ASX:LYC) because demand for NdPr is forecast to outstrip supply within the next five years — possibly as early as 2020, according to Adamas Intelligence.
Rare earths aren’t going away any time soon — at least, not until the Chinese and US presidents stop fighting, and all indications are that’s a good five years away yet.
But here’s the thing – rare earths aren’t as rare as they sound. BHP chucked away a project in Western Australia once, and it’s been picked up by Krakatoa Resources (ASX:KTA).
A legendary Australian band once sang “You don’t get nothin’ for nothin’, but you always get what you deserve.”
Startups weren’t a thing back in the 80s though. They were called “small businesses”, and the only person who’d give you any money to start one was a generally very stingy and suspicious small town bank manager. You had to get a haircut and borrow someone’s flash suit before the meeting, tell many lies, and resist all temptation to drop into the casino on your way home with the cheque.
Even then, it was only a loan.
It sounds a bit easier these days, or at least it looks like it on the telly with Shark Tank sharks throwing millions at things like smart handkerchiefs and machines to squeeze juice out of bags of juice. You might have to pay them back, but only if your startup is successful, which is unlikely.
Still, VCs keep falling for this kind of stuff, and it’s all because the odd startup founder does work hard, and gets what they deserve.
We found six of them, and they all recall the hardest questions they were asked by investors at their first serious pitch.
Since February, Rachel Williamson has interviewed, lunched with, and interpreted over dodgy WA phone lines 12 people at the top of companies with operations intimately tied to the burgeoning cannabis sector.
Yes, we’re talking about pot stocks. They’ve been a bit of a darling with small cap investors for a couple of years, but the magic isn’t quite happening as fast as many might have hoped.
Having spoken to them all, Rachel has learnt probably more than anyone about the state of the pot industry in Australia right now. The overriding sense she got was of:
“…an ‘industry’ which still doesn’t quite know where the moneyball will land, yet considerable amounts of money are being spent to find out.”
And in the battle for market share, and ideas, these nine concepts stood out.
“What is really exciting is that this new high-grade zone is completely open in all directions at depth and is similar in combined average grade and depth to SolGold’s high-grade zone at its world-class Cascabel discovery in Ecuador.”
That’s Hot Chili’s managing director Christian Easterday, and shareholders believe him.
It’s such big news, Barry FitzGerald got on the podcast blower to them immediately to get the full story.
Here’s a little ripple effect SH readers liked this week.
Norway, a country famous for black metal, Os with crosses through them and waffles spelt with a V served with brown cheese, is actually a kingdom.
And it’s sovereign wealth fund is the envy of the world, with about $US1 trillion invested in assets all around the world.
That includes around 300 ASX stocks, and some of those are small caps.
Or were. Because a couple of days ago, Norway’s finance minister Siv Jensen made good on a promise that Norway’s sovereign wealth fund was backing out of investing in any company that generates over 10GW of power from coal or mines over 20 million tonnes of thermal coal annually.
That may be due to environmental conscience. Or it may be due to not wanting to be exposed to a falling oil price.
Anyhoo. Here are the 22 ASX small caps we found among the fund’s mining and energy stocks.
For once, an investor who doesn’t want to bang on about their technology stocks.
David Keelan, co-portfolio manager at Ellerston Capital, got on our Money Talks bandwagon this week and brought back an old favourite which we hadn’t seen for years.
He’s invested in property.
Specifically, a property funds management business called Centuria Capital (ASX:CNI), which Keelan likens to “mini Charter Hall”.
This week’s lesson is all about scoping studies.
No, wait – this is good.
Because if you’re going to invest early in a small cap explorers, you need to know they’re not telling fibs about or at least, wildly overestimating things like their future production targets or finances.
This is too complicated to sum up here, but essentially, ASIC has regulations and guidance about when and how a company can make forward-looking claims.
And if those claims turn out to be unfounded, ASCI won’t let those companies refer to them in future presentations or market releases.
They can, however, continue to discuss those retracted forecasts with sophisticated investors.
Mums and dads miss out on that information.
Cryptocurrency is a real thing.
You might have thought Mark Zuckerberg was busy trying to solve all his problems in the past year, and you were right. Only his problems weren’t “how do I fix this mistrust issue?” They were “how do I make even more money”?
In fact, they were “how do I control all the money in the world?”
By changing a huge chunk of it to a single tradeable currency – Libra.
Now’s probably a good time to stop laughing at crypto
billionaires nerds. Facebook has 2.3 billion users. And as of next year, 2.3 billion people will be able to give each other money across the globe, virtually instantly, without a bank having ever come near the transaction.
The Secret Broker smells an opportunity. Well, The Secret Broker’s mate does, because The Secret Broker has already made his fortune and evolved into a beach-dwelling semi-marine mammal that can survive on pina colada alone.
Enjoy your weekends, all. Thanks for tuning in to Stockhead this week. We’ll leave you with this Stupidest Car Chase Ever: