Pick of the Week for Wk18 is BEL

BEL is the pick of the week for intermediate term (hold until Q4 2014), for the following reasons:

1) BEL still has room to increase vis-a-vis its 52-week high. It stayed above 6 for more than a month, which tells something about its true base value assuming the casino is already open.

2) it is a relatively 'safe' bet in small tranches/ Even if it goes down with a sudden negative market sentiment, we know it has an upside as its casino is nearing opening in Q4. Yes, it's better to wait until Q3 to invest here, but by that time the price might not be as 'cheap' as it is today.

3) It was already explained elsewhere in this blog why BEL's business model is attractive in its uniqueness. The company is almost guaranteed to show profit year on year beginning last year.

Pick of the week for Wk 16 is to accumulate your favorites; give a special eye on banks

I was about to post yesterday LRI as the pick of the week because of the merger news, but because of an early morning meeting, I wasn't able to go online even to open brokerage and post a market opening buy (to add up early). LRI since flew away. Im selling current position--entered into months ago--in LRI at +20%..

I suggest you already position on other previously-good performing stocks. Check their upsurges during the bull run last year. These are my off-the-cuff suggestions:

--GTCAP still has a very probable +5% in short-term.

--then the banks BPI and MBT still have big room to increase, until before BSP announce an interest rate increase (you must watch out for news on this; we must exit some positions before they do the announcement and then just buy again below. bsp has no choice but to increase interest rates because the increase in inflation is also imminent at this time).

--BEL is a good stock to accumulate until Q4 when they open their casino and a surge will occur (if you wait that long, the price might already be too high). See the trend of BLOOM months before they opened Solaire in 2013.

--TA has room until it reaches another resistance at 2.18 - 2.23

But these are not strong recos at this point. I suggest you still look around. Look around on your own. Research. Check history, previous price movements of specific stocks, news, committed milestones. For power companies, for exampl, check when plants and increases in capacity are planned to happen.

For me--Im still maintaining a good cash position just in case AGI, MEG, SCC, or PGOLD temporarily goes on sale. I have already GTM buy points set for these stocks.

Entering gently

Trend followers recommend that we buy at big volume the moment the index started to break resistance at 6550, which happened convincingly yesterday.

However I opted to enter gently. I bought BEL at two tranches, and it promptly turned green same day. I added also to existing positions in FLI and ELI, and then BPI. The addition in BPI seems to be iffy since banks today seem unattractive and being exchanged around foreigners (instead of buy-and-stay-a-bit) for some reason.

Entering in small tranches is just a precaution. I feel that many countrymen are poised more to take profit than stay on for longer, so stocks will definitely not jump straight as they did last year. So better still to have some cash to be able to add on big and small dips.

The next two weeks, again, will be crucial for us to judge if we're on to finally a general market uptrend.

On the upcoming adjustment and re-weighting of PSEi

Not much is being written on tips/newsletters and forums yet on the upcoming PSEi adjustment (effective MOnday), but this could be very important and impactful in the next two weeks. We might have something short-term (in days) to take advantage of. And since we're still in that type of market where we're just riding the wave of volatility, hoping to time the right entry and get  +5% in one upswing, and then quickly hit sell, the possible effect of this re-weighting deserves particular attention.

BPI, Philequity, and supposedly some foreign funds (not immediately visible to us) hold billions in the index funds that they manage. These uitf and mutual funds have to re-allocate their capital accordingly by [ideally] Sept 16, probably [latest] Sept 30. There are also foreign funds (which again are not readily available to us) that are also basically (if not completely) anchored on the PSEi. They also have to adjust according to the charter of the particular.

1) The addition of GTCAP and LTG would have immediate positive impact on these two issues, since the funds would be forced to add them based on a deadline date rather than price. I already profited 15%+ on GTCAP recently. Explaining the gain--presumably some of the funds did already some proactive adjustment immediately after the announcement. Some funds would add more. Further, since it went down, Im readying to enter again [hopefully] at 750 which served as good support for GTCAP in the past. If not 750, Im thinking whatever price below 800 on Thursday.

Im not favoring LTG, mainly because I dont trust its management. Not even Lucio's broods now managing the conglomerate have good credentials to me. LTG also made considerably big loans in USD recently. Similar to SMC and JGS, they have to make provisions for forex losses soon.

But for both LTG and GTCAP, the immediate positive jump can go as high as +10% (but Ill be comfortable selling at +5%).

2) The disclosure does not include yet the weight changes among the incumbent blue chips in the PSEi. We have to watch out which increased/decreased. Im assuming JFC, AGI, and AC would have more weight, and SM less, SMC less and less (less than 0.5%?). TEL could also probably shed some of its weight (which is warranted, I think; we have more and more companies heavily traded, more so contributing to our GDP). The one assuming more weight of course should be the one to enter in on short term, but Im only speculating at this point which ones are affected. We have to wait for the real data. The %weight is also important. If a stock will have +0.5% or more to be added as contribution in the index, that would substantial.


Now on to the two which will be removed:

3) MER has only a 1.63% weight in the index. It might go down -5% in the next two weeks, but not for long. Considering the high average volume it trades historically in the past few months (prompted by extraordinary transactions like the selling of SMC shares, among others), it will not stay down in one week. Those divested by the funds will be chomped up by retail (including me) and other funds for sure.

I still have considerable holdings in MER showing -5% paper loss at this time. Im willing to hold out the short-term negative even up to -15%, keeping in mind that this is respectable-paying in terms of dividends. Moreover, MER used to be one of the most resilient issue and was gunning for 400 PhP just a few weeks ago--it was only pulled down by SMC's need for cash. Its forward P/E is also only at 15 to 16--which is cheap for a steady cash cow and monopoly company by MVP.

BEL, on the other hand, shouldn't have been in the index on the first place. By 2014, yes, but not this year. Anyway, its weight is only at 0.8%. It might have already gone down to reflect the removal, and might not go down further. But if it flirts with 4.0, I will buy add a substantial position, preparing for its definite jump by latest mid-year 2014. Other unique merits of BEL also mentioned here. 

Mga minamatyagan, mga plano, at mga inaasinta: BELLE

BEL--bumabagsak ang isang ito dahil ang mothership (SM) ay pinapasadsad ng mga naghaharing pondo. Subalit sa lahat ng may hawak ng lisensya ng pasugalan sa PAGCOR Entertainment City, siya lamang ang garantisadong kumikita at kikita na agad, maski hindi pa bukas ang Belle casino nila. Mangyari kasi, binabayaran na agad ng Melco ang BEL  bago pa man paikutin ang unang roleta o ilahad ang isang baraha sa lamesa ng blackjack. (Aktwali, may isa pang partner na kompanyang pinoy, pero alisin muna sya sa piktyur para lang sumimple ang diskusyon). Medyo kakaiba at may kagulangan talaga ang business model ng BEL. At di araw-araw mapapapayag ang mga partner sa ganitong pakikipag-negosyo.

Iniisip ko rin na may bentahe ang Belle casino kumpara sa Solaire ni Bloom. Si partner Melco dapat ang mas garantisadong makakapagdala rito ng maraming sugarol, dahil konektado na ang pamilyang nag-ma-may-ari ng MCP sa Macau, anak pa man din mismo ni Stanley Ho ang pinuno ng mcp. Sandamakmak na tsinong bagong-yaman ang dapat mahakot ng anak ni Stanley Ho para tumira sa magagarang hotel, maglasing, kumain, at magpatalo ng pera sa Belle Grande Casino, pag bukas nito neksyir. Ang suhestyon ko'y, magtayo rin ng branch ng F168/Airforce at maganda-gandang inuman sa tabi para kumpleto na ang trayanggulo ng bisyo sa lugar nila--alak, babae, sugal!!! Tapos ang mga lokal ay patawan ng entrance fee bago pumasok, a la Singapore, para hindi naman tayo masyadong malulong dyaan.

Ilambeses na rin ako kumita sa pagtaas-baba ng BEL. Tumatanaw ako ng utang na loob, kaya't ipoinoste ko na ang pagpasok sa 4.8. Kapag palpak ang entrada, 'hold' lang; garantisado naman itong tataas bandang Pasko at mga dalwang buwan bago magbukas ang Casino.

Gudlak!

Market Skim Through: August 06, Are they really bargains?

PSE index tumbled down -1.37%, but many are still thankful because it was nearing -2.0% earlier in the day. PSEi is going deeper below its short-term moving averages, so chartists indeed exited in the morning. But many funds clicked buy in the afternoon, which also brought the volume to a decent 5.95 volume. Foreigners were net sellers mostly because they continue to unload Sy stocks, but these funds also bought some index issues like MEG, which recovered to positive.

#	Stock Code	Last	Change	%Change	Value
1	PORT	9.6000	-3.8600	-28.68%	960
2	SPC	4.8000	-0.5000	-9.43%	48,000
3	CSB	11.5400	-0.9600	-7.68%	463,056
4	SEVN	130.0000	-9.0000	-6.47%	358,110
5	PRIM	1.6100	-0.1100	-6.40%	54,950
6	CDC	1.0500	-0.0700	-6.25%	32,710
7	FFI	14.8200	-0.9200	-5.84%	8,836
8	EG	0.0170	-0.0010	-5.56%	23,900
9	ARA	1.3200	-0.0700	-5.04%	342,800
10	LIB	2.0000	-0.1000	-4.76%	734,000
11	OPMB	0.0200	-0.0010	-4.76%	2,100
12	T	2.1000	-0.1000	-4.55%	21,000
13	MAKE	27.5500	-1.2500	-4.34%	5,510
14	AP	32.0500	-1.4000	-4.19%	51,093,170
15	MWC	31.1500	-1.3000	-4.01%	71,176,810
16	SOC	1.0300	-0.0400	-3.74%	431,990
17	HI	7.2400	-0.2600	-3.47%	5,749,837
18	RCB	50.2500	-1.8000	-3.46%	14,116,674
19	EEI	12.0000	-0.4200	-3.38%	13,051,840
20	FGENG	111.6000	-3.7000	-3.21%	11,160

AP and MWC are in the list of worst performers, because of separate news items. AP, because supposed to be power will be the first to get hit by impending rising interest rates. The company's latest earnings report is also not too good compared to last year because of forex losses. MWC, on the other hand, is still threatened by a possible new policy of disallowing them to pass on VAT to consumers. (Changing the rules in the middle of the game = always bad for business).

Albeit the perceived low prices... Cash is still my pick of the week. However it is still useful to ruminate on these:

Sy Stocks are battered. What among BDO, BEL, SMPH, SM, SMDC are now bargains? BEL has potential I think as we near December. Gaming stocks should jump very high as it nears the opening of a new casino. BDO is a bargain at 10 p/e. The rest must find their bottom.

MPI, although it entered my previously declared price entry range,  I wasnt able to get in at 4.93 this morning (conflict with a meeting). Might have another chance within the week?

I added a tranche of MBT at 103.5; thankfully it rose to 105 + in the afternoon. This stock might be a good opportunity to profitably range trade again. Im keeping my substantial position. I also reentered BDO after cutting a small loss yesterday. The bank also recovered decently today, already showing me a bit of profit. But all these are gambles, mind ya.

There's a fighting chance that our market will be green tomorrow. JFC piled on good, confident numbers (and a relatively high divs announcement at that!) to encourage our PSE to show some life. Could be the needed antidote to what SM prompted.

Depending on you appetite for risk, you may get in or not. If you decide to get in, I cant over-emphasize the better-for-risk move of buying in tranches. Do not go all-in. Buy staggered.

If you decide to be on the sidelines, youre aligned with an experienced group of Ghost Month believers. (the month officially starts tomorrow and ends September 4). But would not hurt to be on the lookout for strong companies that are perhaps being sold-off by locals but becoming interesting for foreign brokers.

Good luck!