Too many writers pussy foot around the goings-on in London’s Alternative Investment Market. This needs to change and something has to be done about this market.
Today there was an absolute shocker of an announcement from Bowleven (BLVN), but it was yesterday’s price action that has set alarm bells ringing.
I am convinced that there was insider trading of BLVN’s stock.
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At the end of August my MIDAS system gave a very clear read on BP. It said to buy.
And so buy I did.
I managed to open at 441p and today sold out at 485p for a fantastic, leveraged, tax free profit!
I saw Zak’s video this morning suggesting there was more upside to come for BP, but in my position I was happy to bank the profit. From a MIDAS perspective, what’s just happened with BP is a fairly common occurrence; a beleaguered stock in a bull market pulls back to long term primary support and then spends a couple of months consolidating at that level. During this time management becomes increasingly exasperated with the stock’s performance (after all those bonuses aren’t given out for languishing share prices!) and surprises the market with a positive corporate action. Usually this comes in the form of a share buyback or, as in the case of BP, a surprise dividend.
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A throwaway comment at the end of my last piece on this blog last week drew a surprising response over the weekend. Writing about the AIM resource sector, I said “buying and holding these stocks is, after all, investment suicide.” Let’s just say, this view has not proven to be universally popular..!
I can accept I am a little jaded towards the small-caps, after a rotten 18 months, but the more I look at AIM the more broken I feel the model is. This might sound a little contradictory, after I was celebrating the purple patch resource stocks have just hit, but just because I plan to make good money in the coming months, doesn’t mean I have to like how I do it.
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At the start of July I asked “Has the tide turned for AIM resource stocks?”
Eight weeks later and this looks like it is going to be one of my better calls. As always, I prefer to look at the general conditions to help guide my stock picking. We can often fool ourselves that success is based upon our prophetic talents at divining the fortunes of individual companies, but often the reality is far simpler than that. All we need do is plonk our speculative little investment boats in the water when it is low and wait for the tide to rise, hoping that our choices don’t suddenly spring leaks!
For most of the summer, I’ve been telling anyone who would listen that the AIM resource sector appeared to be going through a final phase of capitulation. The previous 18 months had been a horrific experience for anyone with money in this market. General pessimism was reaching a peak and there were some desperate corporate actions, as companies struggled to survive. Many stocks were being priced to fail and there were several examples of companies trading at a decent discount to cash, a sure sign of fear. Even some of my perma-bull friends seemed about ready to throw in the towel and I have to admit, I came pretty close myself.
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