IAG

[Pascal]

Fishing for bottoms can be interesting, especially when the sector is in an oversold bounce.
For example, IAG is extremely oversold (for good reasons as it is running high production costs).
However, the Supply indicator shows that we are in a supply below 10% (not many shareholders want to sell) and the EV pattern shows accumulation.

Stops are key to success in this type of trade and many bounces fail, because they are mostly shorts covering bounces. hence, I use to take profits after a 10% to 20% gain.



Pascal

1758417585

[huesecon]

This is a good one, as pascal notes, for a dead cat bounce. But you may want to put it one the radar screen longer term as well. A lot of funds liquidated positions (including mine) the day after the company updated their expected cash costs (which rose dramatically) for 2013--this bad news came after an announcement of a significant acquisition that made very little sense for the company, in my opinion. However, they do have many unique assets, including a nobium mine and, additionally, potential a rare earths mine. The nobium mine is cash flowing. I would give them very little credit, if any, for the rare earths. While they appraised the nobium mine as worth more than 1.6 billion dollars, I think a more likely value is ~1-1.2 billion (adjusted for taxes). If you take that out of the enterprise value, your implied gold producing company is very cheap---cheap even by other miners. But management credibility is out the window for now. I would follow the EV on this one, particularly after any significant news event. I suspect at some point funds will re-enter and this will re-rate.

[Pascal]

This is a good one, as pascal notes, for a dead cat bounce. But you may want to put it one the radar screen longer term as well. A lot of funds liquidated positions (including mine) the day after the company updated their expected cash costs (which rose dramatically) for 2013--this bad news came after an announcement of a significant acquisition that made very little sense for the company, in my opinion. However, they do have many unique assets, including a nobium mine and, additionally, potential a rare earths mine. The nobium mine is cash flowing. I would give them very little credit, if any, for the rare earths. While they appraised the nobium mine as worth more than 1.6 billion dollars, I think a more likely value is ~1-1.2 billion (adjusted for taxes). If you take that out of the enterprise value, your implied gold producing company is very cheap---cheap even by other miners. But management credibility is out the window for now. I would follow the EV on this one, particularly after any significant news event. I suspect at some point funds will re-enter and this will re-rate.

Thank you for these comments. I did not know this "value" based story.
Always good to know when you are investing in a stock.

Below are similar patterns for a much larger miner: AEM.
Depending on the behavior of gold itself next week, I could take a long position on Monday.


Pascal

17593

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