3SOF

Quote from: wrangler on December 20, 2007, 08:44:06 AM
Hi David
This stock is definately a candidate for bottom bounce. It gave buy signal yesterday,,bottom bounce plays are short term plays using 20 DMA for sell target because they usually bounce back down when getting close to 20 DMA. Buy signal is when RSI 5 rise above 30 line heading out of oversold territory.

I still think PAL is working up for a bounce : JMO

I don't know, it looks like its still not ready for the turn around.
take a look at the momemtum, distribution and money flow index.

PAL : has steadily been moving up to form small ascending triangle. If it can go above 4.00 and stay it could be the bounce.

I'm going to buy back PAL for the Main Portfolio today. Here are my reasons:

1 - PAL's $86 M private placement was mostly subscribed by its long term shareholder, the Kaiser Francis Oil Company, which is a very strong hand. According to an SEC filing dated January 14, 2007, Kaiser Francis currently owns 39,534,806 PAL shares, or 46.6% of the company on a fully diluted basis.

This means the market cap is (36,534,806/0.466)*$4.63 = $363 M.

This article gives us some more clues about the Kaiser Francis Oil Company and especially its CEO and 70% owner, George Kaiser, who is the 140th wealthiest person in the World (26th in the US), with an estimated fortune of $4.4 B.

Because Kaiser Francis subscribed the private placement, increasing the number of shares it owns from 26 million to 36.5 million, I believe there won't be more dilution and the invested money will grow, not diminish. This private placement isn't like others, when investors give money to the company and at the same time they sell/sell short the stock in the open market to lock in a secure profit. No, this was mostly subscribed by long term investors who probably won't sell for a quick profit.

2 - The $86 M will be used to enhance operations at some of the company's investments that still aren't producing any revenues:

«The proceeds of the offering and the exercise of the over-allotment option will be used to fund the growth and development of the Company's operations and, in particular, to advance the Offset High Grade Zone Project, the Shebandowan West Project and the Arctic Platinum Project.»

3 - Palladium prices recovered and are knocking on the 5 year high door. Of the by-product metals that the company produces, Platinum and Gold are at all time highs. Copper is also near all time highs and just nickel is lagging a bit, but still off the lows.

4 - Production increased 21% in 2007, as the company announced a few days ago:

• North American Palladium Increases Annual Production by 21%
Marketwire (Thu, Jan 17)

5 - Technically the stock just closed above the 50 days SMA and it looks like the bottom was made at $3.4. The trend is turning bullish again:



The Trading Plan is:

Buy PAL, 5% of capital.

David, why not wait until the stochastics on PAL are in oversold territory before getting in? Right now it's seriously overbought and screaming for a pullback.

What's a better entry point? Under $4?

looks like somewhere between 4.05 and 4.08 is a good entry point.

I'd wait for another 4% drop or so before getting in. But that said, since I'm 95% on the sidelines I'm speaking as an armchair quarterback. I am intrigued by swing trading in metals and using bollanger bands and schotastics to time the trades. Not exactly David's cup of tea though.... Right now is the time to sell in most metal markets and to wait for decent pullbacks before diving in. Of course David's long term approach works under different principles...

yeah, kind of the same thing I have been looking at. stochastic right now is showing over baught and the red line just turned south. I don't expect it to go back down to the oversold position of around 30% but stochastics do seem to have a funny way of going up and down.

Quote from: capricho on January 30, 2008, 08:46:42 AM
David, why not wait until the stochastics on PAL are in oversold territory before getting in? Right now it's seriously overbought and screaming for a pullback.

The stochastic oscillator can say anything you want, you just have to manipulate the time period. Take a look at this stochastic:



This is a 100 days SO. Obviously the one you're using is a shorter term one, perhaps a 9 or 21 days period?

Anyway, you were right on your assessment of the short term reality for PAL and I have to congratulate you on this call

But I caution you not to emphasize the value of the stochastic or any other technical indicator as a prediction tool. I want to tell you a story:

In 1996 I was eagerly reading all the books I could about the stock market and read a small book called something like "technical analysis explained". It had an explanation of how the stochastic oscillator was calculated and I started calculating it for some stocks ... at the time I thought the mathematical indicator was so fascinating (I didn't know more) that I really wanted it to work, so I adjusted the time frame so that signals would always be right. I even made a study for my university demonstrating how the stochastic oscillator could predict stock prices, with plenty of well chosen examples.

Obviously I was very naive at the time and a couple of years later I concluded that the stochastic oscillator or any other technical indicator can be manipulated to support our beliefs about the future and it doesn't have any predictive power.

Quote from: pinoleropuro on January 30, 2008, 08:35:42 PM
looks like somewhere between 4.05 and 4.08 is a good entry point.

Maybe, who knows about the short term?

To me $4.64 was good enough and now I have a 6.7% loss so surely I'm not the right man to tell you about short term timing in stocks. So good luck for you

In my study PAL's decline from $12 or so to below $4 was justifiable by a deterioration of the fundamentals. Now these fundamentals are turning north again and they're as good or even better than when the stock was at $12 (since palladium, gold and platinum prices are higher now and production is also higher). However, this isn't enough to judge the stock as undervalued, since it could be very overvalued at $12 and say, fairly valued now.

But if you look at the Mining companies average valuation metrics you see that PAL is deeply undervalued.

We'll make some comparisons in upcoming updates. I'll keep holding PAL for the long term.

South African Gold, Platinum Mines can raise power.
http://www.bloomberg.com/apps/news?pid=20601116&sid=an55.TnOERAw&refer=africa

Gap up today?!

http://www.thebulliondesk.com/

Hang on to that palladium guys. Check out SWC

palladium futures

Quote from: BigSully1 on February 01, 2008, 11:47:58 AM
Hang on to that palladium guys. Check out SWC

SWC, what a bull run, up 72% in 9 trading days

SWC also lost a bit of money over the last few quarters, like PAL. But there are positive EPS estimates for SWC for 2008, more precisely, $0.45 EPS, so SWC trades at 28 times forward earnings, which isn't expensive, when comparing to other mining companies.

Unfortunately there are no analysts estimates for PAL ... I wonder if it will also be profitable in 2008. For this I would like to know the reasoning behind the expected turnaround in SWC and then see if I could extrapolate that into PAL's business.

Well, if the reasoning is based on the price of palladium ...



... we're at fresh new 5 year highs. But I'll have to study SWC further in upcoming updates.

I think that if PAL moves another 10% up over the next few days, people will be surprised to see that most shares which could be converted from the recent private placement aren't showing up for sale (because most were bought by long term investors, not looking for a quick profit) and that can be a further reason to bid the stock higher.

Now we have Gold, Platinum and Palladium around multi-year highs (all time highs in Gold and Platinum cases), which are all produced by PAL and in higher quantities in Q4 2007 than in Q4 2006, according to this news release:

• North American Palladium Increases Annual Production by 21%
Marketwire (Thu, Jan 17)

Since Platinum is so high right now, I wonder about PAL's Arctic Platinum Project in Finland. It doesn't seem to be coming to production soon, but we'll hear about studies and projections for this project during the course of 2008. It's impressive to see how long it takes to build a precious metals mine, no wonder their prices are rising. I enjoy the partnership with GoldFields (GFI), since it is a $9.2 B market cap, while PAL is $396 M.

I guess my entry timing doesn't look so bad right now ... one has to pick his analytical tools according to his time frame, don't expect to be a long term investor while you're paying attention to technical indicators, because, even if you're exactly right in your entry timing, your hands will always be shaking, because your reasoning for buying came from a short term indicator that keeps changing, so, to be coherent, you should sell when the indicator says "sell", which is every two weeks or so.

I'll hold PAL for the long term.

   







 



 
Is Palladium Too Plentiful
To Be More Profitable?
By ALLEN SYKORA
February 4, 2008; Page C7

Palladium has been a laggard in the rally in precious metals, but some analysts feel it may be poised for a leg higher.

In Russia, the world's biggest source of palladium, holders of the metal appear to be selling smaller amounts. But with gold and platinum at records, demand for palladium jewelry is increasing, pushing up demand for the metal overall. There also is the potential for increased demand for automobile catalytic converters.


Still, the main problem that has plagued palladium -- that annual supply exceeds demand -- means some believe palladium prices already may be lofty.

Nearby and most-active March palladium on Friday rose $22.55, or 5.7%, to $417.05 a troy ounce on the New York Mercantile Exchange, the first time a nearby contract was above $400 since May 2006.

Palladium is one of the platinum-group metals whose main industrial application is for catalytic converters. Other uses include dental crowns and bridgework, electronics and jewelry.

Spot-month palladium on the Nymex peaked at $1,090 in January 2001, during a period when bureaucratic delays by Russia held up permits that sometimes meant no shipments for weeks at a time. By April 2003, it had tumbled to $145 and has traded in the $300s since February 2006. It has risen 25% since the February 2006 high, which is tame compared with a 63% rise in gold over the past two years and a 62% gain for platinum.

Comparisons to platinum and palladium are common as both are used for catalytic converters and jewelry.

J.P. Morgan Chase & Co. said it expected palladium to underperform against platinum, especially given large above-ground palladium stocks. Palladium averaged 27% of the platinum price in 2007, compared with a long-term average of 54%.

But "steady exhaustion" of palladium stocks could boost the metal, said strategist Michael Jansen, suggesting "the real long-term palladium price" should be around $450.

Frank Holmes, chief executive of U.S. Global Investors, looks for gains in palladium on the heels of rising platinum. Any efforts by the auto sector to substitute for more-expensive platinum may further help palladium, he said.