BHP Billiton (BHP)
Still doing time above and below $32. There have been a couple of opportunities to get in and out of warrants in the past fortnight. I’m currently out.
We are getting close I feel to the "big rotation" whereby sentiment and momentum will swing back towards the resources and away from the banks, even though the yields on the banks will probably mean they mark time rather than pullback hard. I’m looking for one more decent pullback under $32 to re-enter for the third time and may then hold for a more extended rally over the year as stochastic indicators based on weekly data are suggesting this long period of decline is reaching a close.
Kingsgate (KCN) – A Value Buy?
Has fallen back to $1.83 as I write following its quarterly report. Cash costs were high in the past quarter and at least one prominent broker has extrapolated the costs and called the stock a sell.
Reading the quarterly, its clear to me that the Chatree costs were impacted by a number of initiation type costs and as this quarter the plant is chugging along at 6.44mtpa I expect production costs per oz to be markedly lower in the next report. In addition it is clear that a large holder is liquidating in a hurry in a thin market and with a high number of shorters active. About 12m have gone through this week so if it turns out to be the US holder with 7% or about 10m shares I would expect a "Ceasing to be substantial" notice next week possibly with one decent crossing to finish it and that might be a catalyst for a bounce.
But I shall be happy to hold this one for the next quarterly and beyond for a much bigger recovery to $5.00. The MD Gavin Thomas is one of the gold industry’s most experienced people whom I’ve known for years. I baulked at paying $8.50 a share in 2012, and while I’m not a gold bug, I’m not looking for a collapse in the gold price either so $1.80 seems a pretty fair entry level. It also pays unfranked dividends.
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John Aldersley is the CIO of AldersleyCapital, a “tax-aware” investment manager of separately managed accounts within the Phillip Managed Accounts. He can be contacted by email to john.aldersley@aldersleycapital.com or by visiting www.aldersleycapital.com. |
