PAL

[poli]

David;    Nice trade.  Nothing wrong with taking a profit.  I still have my 4 servings and will let you know when I sell.  I do not expect to sell today or this week or next week unless we have a big move,  but my plan is always subject to change.  Good trading and health to you.

Poli

[buddjas1]

Great trade David (although I disagreed with it).  All that matters (here) is making money.  Whether "tic-tac" or "long-term," the point is to buy low and sell high.  You did that.  So, congrats and applaud. 

[berloga]

A few more tic-tac old-style David, and we'll see a lot more cheer on these pages. Great work. Thanks.

[bluesea]

yep, same opinion...why not try a mix between fundamental analyses and ticktack ideas?  and congrats Dave to this trade.

[soxguy]

Nice trade David. Some more of that would be greatly appreciated. Your winning ways at short term trading is what brought me here in the first place.

[ravenquork]

yep, same opinion...why not try a mix between fundamental analyses and ticktack ideas?  and congrats Dave to this trade.

I came here for the trades also. I think that the best way to trade is trade fundamentally good stocks, or at least stocks with great growth potential (which requires a good fundamental analysis) I agree with David that trading solely on techs is a net loosing game. I think Davids greatest skill lies in his ability to do both. I hope we see some more of this trading, especially with the market trend in doubt at this point.

David, I did not intend renewing my subscription at the end of this month, but if you intend to shift in this direction I will renew.

[pinoleropuro]

I second that motion!!! 

come on David, I can't forget GOAM becuase I missed the stinking trade. 
I mean you made back in less than a week what you had lost with TZOO in months.
come on David you can do it. 

[terainvestment]

Congratulations David for your great pick on PAL, even if I did not join.
Despite other people who prefer to tic-tac the market, I joined 3SOF because I have seen in you a great potential in terms of long term investing and SERIOUS investing.

There are thousand of other sites that are focused on short term and swing trading, I joined many of them and each one, at the end of the day, failed.

I think that actually almost all the investing capital should be on the sideline and stay in cash: cash IS a POSITION, and in these tough times the best position you can have.

Probably you could obtain great reward if you realize the right mix between market timing and long term investing: the best investors of all the times are all long term investors who picked the right stocks at the right moment, and this is not occasionally.

So, I hope you will stay focused on long term investing, despite the ups and downs of the market, picking up the best stocks at the right moments.

good luck, I will stay tuned

Andrea

[ravenquork]

Congratulations David for your great pick on PAL, even if I did not join.
Despite other people who prefer to tic-tac the market, I joined 3SOF because I have seen in you a great potential in terms of long term investing and SERIOUS investing.

There are thousand of other sites that are focused on short term and swing trading, I joined many of them and each one, at the end of the day, failed.

I think that actually almost all the investing capital should be on the sideline and stay in cash: cash IS a POSITION, and in these tough times the best position you can have.

Probably you could obtain great reward if you realize the right mix between market timing and long term investing: the best investors of all the times are all long term investors who picked the right stocks at the right moment, and this is not occasionally.

So, I hope you will stay focused on long term investing, despite the ups and downs of the market, picking up the best stocks at the right moments.

good luck, I will stay tuned

Andrea

You are correct when you say that the worlds great inverters are long players. What you have not said is that these guys made their money by investing LARGE positions.Positions big enough for them to influence the course of action for the companies they invested in. Small investors do not have the ability to have this strong position. Nor do small investors have teams of people watching every aspect of the companies operations, markets , competitors, suppliers, management, impact of debt, etc. they definitely have a leg up on small investors. try doing all of that with GE for example and you will find you do not have enough hours in the day, or even access to enough of the right information. Also, the biggest investors also have the burden  (blessing) of having to find vehicles suitable for large investment sums, which would create havoc if they tried trading. I believe that some of an investors capital should be in long term investments (supposedly lower risk), some should be actively traded (supposedly higher risk) The proportion to be determined by each investors needs and abilities. Further more ,"investing" long term in small companies is nothing more than speculation(there are just to many fundamental unknowns as well as market forces to leave such a portfolio untended), unless measures are taken to preserve capital  (in other words some trading)

just my 2 cents

[David Randolph]

Thanks for your comments on this thread

PAL, again. I want to squeeze as much juice as I can out of this orange.

Here's my reasoning for buying back PAL:

1 - $PALL has stabilized after what seems to be a correction in a long term bull market. Using Elliot Wave theory just to describe the market action, it appears that the corrective a-b-c is complete:



The long term bull market in Palladium should resume after this normal correction.

2 - PAL (the stock) was down due to the anticipation and then realization of negative 4th quarter results. I knew this bad news was coming and that's why I took profits around $9:



Now, as we've discussed previously, this bad news was relative to the 4th quarter of 2007, which is distant past now. Since then fundamentals have improved dramatically as we'll see next.

Considering the following information released in January 17, 2008:

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



And the outlook for 2008:

«Outlook

Palladium production is expected to increase by approximately 5% for the year ended December 31, 2008 with an estimated total production of approximately 300,000 ounces. The proportion of by-product metals produced is, in aggregate, expected to increase in tandem with palladium production.»

Leads me to expect production numbers to be something like the ones in the following table:



Now, if we compare the 2007 average prices with the current price, and if we expect these metal prices to remain where they are for the rest of the year (I expect them to keep rising), this will mean that revenues will rise by 37.6%, or $73.7 M, in 2008 vs 2007.

Considering PAL lost $28.7 M in 2007, you can see that an increase in revenues of $73.7 M will probably bring the company to profitability by a comfortable margin.

I expect PAL to rise back up to the $9 level and eventually surpass this level, if the long term bull market in Palladium continues as I think it will.

The Trading Plan is:

Buy PAL, 6.66% of capital, for the long term.

[David Randolph]

The succession of profitable trades with PAL makes me think that if I know stocks reasonably well (in technical and fundamental terms) and at the same time maintain an open mind and flexible attitude, I would have a much better performance.

I know what makes stocks move over the next month or two ... but then factors usually change and are somewhat unpredictable.

This isn't to say that I'm getting ready to abandon the long term approach, it is just a recognition that perhaps I need different tools to access the long term prospects for a company. It appears that the best long term investors are the best by employing a strategy that looks to minimize risk, instead of trying to maximize returns.

This trade with PAL started well and I feel my hands a bit stronger now than in the latest trade. The stock made a higher low, now let's see if it can make a higher high above $6.39.

I'll hold PAL.

[David Randolph]

I want to invest for the long term in PAL, but the market needs to confirm my views. I would be really disappointed and would bail out if the stock were to close below $5.

Anyway, so far so good, I continue to expect a higher high above $6.39.

[David Randolph]

This trade with PAL started well and I feel my hands a bit stronger now than in the latest trade. The stock made a higher low, now let's see if it can make a higher high above $6.39.

Indeed, PAL closed at a higher high yesterday, with volume above average.

$PALL is also showing strength:



I'm expecting much better results when PAL reports Q1. You see, palladium prices are more than 30% higher now than what they averaged in Q4 2007, so this will probably have a material positive effect in PAL's revenues and profits.

[buddjas1]

Have to hope for a triple bottom at 5.4 or so; otherwise ... $4?

[David Randolph]

Have to hope for a triple bottom at 5.4 or so; otherwise ... $4?

I think PAL is trading within an ascending channel, as shown in the chart below.

1st quarter results will probably be positive since the products the company sells were up about 30% in price, but the earnings results will be out just in May 12.

Hmm, I see now that Merril Lynch cut estimates for PAL a few days ago. Probably this was the cause for the stock's recent slide

Here's what they wrote:

Steady palladium production expected in 2008

Decreasing 2008, 2009 EPS estimates
After adjusting our financial model for Q4'07 financial results and incorporating company guidance, we are lowering our 2008 and 2009 EPS estimates. For 2008 we now expect EPS of $0.11/share (revised downward from $0.25/share), while for 2009 we are forecasting EPS of $0.24/share (vs. $0.60/share previously). The decrease in EPS is due to a reduction in expected production and higher depreciation expenses.

Relatively flat palladium growth for 2008
For 2008, PDL sees palladium production of 300,000 ozs, up 5% from 2007. Byproduct metals production is forecast to increase in tandem with the higher palladium production (though there is no official forecast). The company also did not provide guidance for cash costs. We are now modeling 2008 palladium output of 300,000 oz (previously 305,000 oz) at total cash costs of $110/oz.

Net asset value estimate decreased
The revisions to our model have had a small impact to our estimated net asset value. Our revised NAV now stands at $4.65/sh ($3.21/share DCF of mining assets and $1.44/share net cash and working capital), down from our previous NAV of $5.00/share. Although trading at only 1.53x cash-adjusted NAV, we believe the stock is fairly valued at this time given the current commodity price environment. Renewed strength in PGM prices and the timely and successful development of the company's proposed growth projects could lead to an expansion in PDL's valuation multiple. We are maintaining our Neutral rating at this time.



Now me:

Not even one word on the fact that Palladium prices rose 30% in Q1 2008 vs Q4 2007.

I'll keep holding PAL for the long term (even though "holding for the long term" has been a poor strategy in most stocks).