Saturday, December 29, 2007

2008 - Simple Predictions

  • Sub Prime Loses will be much worse than everyone expected.
  • The Chinese won't care because Americans are still buying their junk with more borrowed money thanks to Ben 'the put' Bernanke.
  • Australia will keep selling rocks to China to turn into junk for Americans to buy with money they don't have.
  • Twiggy Forrest will get to $10bn in quick time and won't look back.
  • Australian interest rates will rise.
  • Everyone will get sick of Kevin 'the Turnip' Rudd's smuggness and lack of substance.
  • Inflation will rise.

Monday, December 17, 2007

The World isn't going to end.

I don't think it's particularly rosy for the next few months. Inflation is back on the agenda in the US, with higher than expected CPI numbers. This has to be a concern in an environment where Bernanke is dropping interest rates at the first sign of trouble. I'll be buying a few out of the money index puts as a little protection over the next few months. The Fed is in a difficult place because at every sign of trouble in the US economy, people are expecting them to drop rates, which is counter productive when you're trying to fight inflation. This seems to all be part of modern man's inability to be accountable for their actions. 'I'll borrow a stack of money and if I can't pay it back, then the government will freeze my interest rates at artificially low levels or drop interest rates to help me out'. All seems a little quick fix, a little phoney and bound to fail.
A lot of people think the world is going to end on their shift, it's not, but the US economy might head into recession.

Tuesday, December 11, 2007

igrin - Peer to Peer lending in Australia

Well, it didn't take long for peer to peer lending to appear in Australia. offers the same service in Australia as does in America. It will be really interesting to see how it goes. It seems to me that it will take a long time to get the sort of volume of lenders required to really make it work, but who knows.

Monday, December 10, 2007

Ethanol is stupid

Soft Commodity Prices will keep going up if people keep using their food as fuel for their cars and not themselves. One tank of ethanol for a standard sized car requires about the same amount of maize as to feed a standard sized human for a year. The increasing use of ethanol fuels, particularly in America means that they are forced to import more and more food as ridiculous ethanol subsidies encourage farmers to grow corn for oil (I'm blaming you Al Gore).
Another string to the bow in the Bull market of food is that fact that China is eating more and more meat. China was consuming 20kg of meat per person in 1985, by 2007 that is expected to be 50kg. It takes 8kg of grain to produce one kilo of meat. It's not hard to see where this is going.
Maybe we'll see America embark on a new global security program, this time securing an alternate source of energy, food. Anyway, the upside of it is, there's plenty of compelling reasons to be exposed to soft commodities prices.

Monday, December 3, 2007

Primed for PrimeAg

With wheat prices up above $400 a tonne the drought and surging global demand for soft commodities means that the coming float of PrimeAg, which is being managed by Comsec will be a hot float. Macquarie Group has recently moved into this sector with one of their 'infrastructure' style funds being created earlier this year. If you want exposure to rising soft commodity prices (and you do) then try and get hold of some of this float. I'll definitely be putting my hand up.
The economies of scale in farming and in particular cropping are huge, so this is a trade that makes a lot of sense. Key management seems sound with Roger Corbett and a former president of the National Farmer's federation on board.

Key Dates:
Lodge prospectus with ASIC 14 November
Offer Opens 26 November
Shares trade on ASX 17 December

Thursday, November 29, 2007

Credit Markets are Broken and Loan Sharking is Legit

...and the proof is, which offers an online market place for person-person lending (loan sharking).
This is bizarre, as a borrower, you decide how much money you want, and the max you're going to pay for it. You write a semi plausible excuse as to why you can't/won't get money from the bank and punters bid to give you money at a rate up to the maximum the borrower specified, which they promise to pay back. It works a bit like pricing a bond issue at a bank. You call up all the investors and fill the book with their bids and shift the debt to the lowest bidders.

Monday, November 26, 2007

Aim Resources, AIM.AX

This stock is an old favourite and anytime it's below 20c, it's cheap. It's been there a few times in the last week, and represents great buying at these prices. This stock will get back above the 30c level at some stage in the next few months. It's just a matter of some positive news coming out of Perkoa (which is their major project). While the stock is much more mature now and was weighed down by the significant capital raising done at about 28c, it just goes to show that there are plenty of investor who think that 28c is cheap. I'm going to keep buying these up below 20 and wait until I can tip them out above 30.

Thursday, November 22, 2007

FDL.AX - Blue Sky Ahead

FDL today revealed a potential 300m tonne plus deposit right next door to FMG. This is sort of size that MIS has and it has a market cap of $900m. FDL is about $60m at the moment and gaining rapidly. They also have a right to earn a 1% royalty from FMG on any JVs, which should fund further exploration activity. This is a very speculative trade, but it doesn't hurt to follow the weight of money that will surely pour into this trade.

Wednesday, November 21, 2007

Don't be a Fool of Randomness

There is too much noise in the world, and by noise I mean unfiltered meaningless news and data. A higher and higher percentage of what we read, see and hear comes straight from the event to you. Doesn't matter what the event is, we'll hear about it as it happens live and unfiltered and full of unintelligent garbage from the first reporter on the scene. Where am I going with this? What I am getting at is that in a small time frame, a snapshot of recent activity is meaningless, and I'll use the example provided by Nassim Taleb in his excellent book 'fooled by randomness'
Suppose you have a portfolio with an expected annual return of 15% above the risk free rate (very good), 10% volatility (very low). This is a high return, low volatility portfolio. The one we'd all like to have. It should be almost painless as it grinds its way higher with little or no large unexpected deviations, but the results of putting this portfolio through a monte-carlo simulation are very interesting. We'll see that only 1 year in 20 is a down year. The interesting thing is to look at a shorter and shorter time periods and see what the probability of success becomes;
1 year = 93%
1 quarter = 77%
1 month =67%
1 day = 54%
1 hour = 51.3%
1 minute = 50.17%
1 second = 50.02%
in a given day in front of the screen (8 hours) that's 241 happy minutes and 239 sad ones. So the moral of the story is that if the pain of a loss exceeds the joy of a victory (which believe me it does) then don't watch the stocks you own (and plan on owning for a long time) all day. It's an easy way to get stressed and sell too early and miss out on making money.

Tuesday, November 13, 2007

Messrs Rogers and Soros

"on the verge of a very serious economic correction"
"I'm hoping to get all my assets out of U.S. dollars in the next few weeks or months"

Not exactly bullish sentiment from the co-founders of the Quantum fund.

The US economy is heading for recession and all the smart money has/is moving their cash out of USD assets. The recent dip in the AUD against the USD represented a great buying opportunity, and at 8900 it's still a buy. The US is due for a decent sized leg down, so it makes a lot of sense to position yourself for this. I am long AUD against the USD and I'm shorting the Dow. Don't forget that there are 3 Billion people in the sub continent and south east Asia and they are becoming a lot more independent of the US.

Dow Jones

Here's a simple trade. Short the Dow.
  • More write downs from banks are on the way
  • Several large companies (AMBAC, MBIA?) will be downgraded by rating agencies (S&P, Moodys, Fitch)
  • Bernanke will get sick of dropping rates to spur the economy because it has a damaging inflationary effect. It can't keep happening. Inflation is much scarier than a dud economy, just ask Zimbabwe.
  • Global investors will get sick of losing money to the devaluing USD and will pull their cash out and invest somewhere a little more compelling (at home.)

Friday, November 9, 2007

Babcock and Brown Power (BBP.AX) div yield of 9% (not bad for just turning up)

If you want a bit of safety I like Babcock and Brown Power (BBP.AX). Has a div yield of 9% (not bad for just turning up).
Very much exposed to peak electricity prices.

  • People use more electricity through Plasma TV's and A/C (these things use heaps of elec)
  • Going to be more black outs in Sydney this summer
  • Going to be hotter, more A/C used
  • These guys can charge whatever price they want cause their electricity isn't contracted. When there is a black out they can just choose what price they charge
  • There hasn't been any money spent on electricity generation in Aus in 25years, yet the population has bee growing circa 3% and we are all using more electricity

Get on board at low $3!!

-Wizz Kid

Thursday, November 8, 2007

Are the Monolines Going Broke? MBIA, AMBAC et al?

With all the hype surrounding 'sub prime' and US housing and multi billion dollar write downs from American Banks (and European, that's right UBS, not so smart now, Rocky made more personally than your entire Investment Bank last quarter, although admittedly, so did anyone who didn't lose billions of dollars, which is most of us.) people have forgotten that the whole game with mortgages and debt products is really about shifting risk. Who is willing to hold the hot potato? If I bundle up a big bunch of bad debts so that on average, most of them get paid and I flog the product to a pension fund as a high yield product. I'm really just shifting the bad credit risk from the bank that issued the loans to the unit holders in the pension fund. Where is this ramble going? Well in a long winded and not particularly pointed way, I'm having a crack at the these so called Monoline insurance companies, who package up lowly rated credit risks from various companies and 'wrap' it to AAA. So that the investors in the product, aren't buying BBB credit risk and yield, they're buying something like AAA risk for AA yield. Sounds good right? But this little trade forgets one of the fundamental laws of nature. It's damn tricky to get something for nothing. If you don't pay for AAA, you don't get AAA. So when a few trillion dollars worth of CDOs and AAA wrapped bonds turn out to be worth a little less than the paper they're written on, no one should be surprised. When MBIA writes down $20bn on some dodgy guarantees, you know they don't have a 'business model' or any sort of mathematically sensible risk control, they're just a bunch of 'positive carry' cowboys like the rest of them. The kids who took economics and business maths at school were all the brightest ones right....?

Banks Bad

Don't be long MBL.AX or BNB.AX, seriously, they've been good, great even, just not right now.
Have a look at the way all the Investment Banks have been getting smashed offshore. Night after night we read about it. This is just last night's action;

  • Washington Mutual down more than 16% after management warned mortgage lending would decline to an 8-year low next year. Adding to woes, a further admission that as much as $1.3bln would need to set aside this quarter to cover bad loans.
  • Morgan Stanley down around 5%
  • Lehmans off 4.4%
  • Goldmans down 3%
  • Merrills both down 3%
  • and JP Morgan 2.4% lower
  • Fannie Mae down 10%
  • and Freddie Mac more than 7% lower
  • Capital One down 12%

If you are adding to your portfolio, don't add banks right now, there's more pain to come.

Tuesday, November 6, 2007

Time for a Punt!

It's Melbourne Cup time, and H.O.T's "Lock" for the cup this year is Zipping. Zipping has had a 9 day break after winning the Cathay Pacific Airways Cup at Moonee Valley. The win was a stunning come from behind, with Zipping demonstrating explosive speed on the final straight. Coupled with that, Zipping's solid performance in the cup last year is testament to the fact that the it can run the distance, and according to Zipping's trainer, he is much better prepared this year than last. All signs point to Zipping taking home the prize.
H.O.T's "dark horse" for the cup is Tungsten Strike. According to trainers, Tungsten is in the same form as when he romped home to a six-length win in the Listed March Stakes in England in August. At odds of Around $30 to $40, this seems to be one horse that has been overlooked by the betting public. Worth a punt.

Good Luck to All

Monday, November 5, 2007

China will end in tears part 2

PetroChina listed today in Shanghai. They have a quarter of the revenue of Exxon and a larger market cap and no particularly exciting prospects. This makes no sense. Lock in this value by going long Exxon and short PetroChina. If you can stay solvent longer than this bubble can remain irrational then you're in the money.

PetroChina's Value Tops $1 Trillion. This is crazy valuation. It is bigger than;
  • The entire Russian stock market
  • Exxon Mobil Corp and General Electric Co combined and
  • The entire Chinese stock market in 2006!!!

The trade I suggest above is high risk, but you hedge out your oil price risk by being long short. You've just got to wait for the rug to be pulled out from under China.

The week ahead - Interest Rates, Child Care and Leverage, USD, Emerging Markets and other Hogwash

There are a few interesting items coming up on for the Aussie equity markets this week, including the reserve bank's decision on rates. At my latest mark, it was about 90%+ priced in. So it'll be interesting to see if this slows the market at all. My feeling is that it's got to start hurting some of the highly leveraged margin traders who are bidding the market higher, particularly in some of the index heavy weights.
Early Learning Services (ELS.AX) the soon-to-list child-care provider will follow in the footsteps of larger rival, ABC Learning . We've all seen the progression of ABS.AX and I'm sure there'll be plenty of investors looking to get in on this trade. The company, which owns seven child-care centres and has contracts to buy a further 44, will float on the Australian Stock Exchange next month.
Sixteen contracts for difference (CFDs) products, listed over Australia’s top companies, will debut on the Australian Securities Exchange (ASX.AX) today. Later in the month, the ASX will also launch two index CFDs, seven foreign exchange CFDs and one commodity CFD. These will include a product based on the Dow Jones Industrial Average. This will provide more unneeded leverage for the average punter. With so many of these products already available. (CFDs, Warrants, Minis, Options, Margin Lending etc etc.) The only people likely to be impacted by this are people like CMC Markets, with investors taking it easier option of purchasing ASX listed CFDs instead of the bespoke ones from third party providers.
Emerging market equities have out-performed major markets in recent months. It is as if emerging markets are the new safe haven from the US and other developed nations. This makes some sense , given the strong external accounts of many emerging countries. It is hard to imagine that emerging market growth could diverge from developed market growth for a long period of time.
Fiscal policies in China and other emerging Asian countries, have resulted in accelerating FX reserves growth. The result is a world that sees the glass half-full, and problems in the US as a local problem. However, as the diversion in market performance becomes clearer, the risk grows that something gives, and that may be a global equity market rout and global risk aversion trading. If the USD continues to fall out of bed, the risks that it falls dramatically in a single session continue to stack up. I would not be trading USD from the long side at any point, the risks are simply too great. A friend of mine recently predicted the USD to be buying 50 Euro cents within 18 months, and while he's mad, he might be right.

Friday, November 2, 2007

Emperor Update

Paradigm have just released a target price on Intrepid of C$0.50, which implies a share price of $0.13 vs $0.076 - a 75% premium!

Get to it. Se previous post for more info.

Opportunity Abounds Giralia and the AUD

With the market having a panic all because Citi bank had a bad day, it's a good opportunity to add to positions. People forget just how poor a measure of economic health the Dow Jones industrial average is. You have to remember this only has 30 stocks in it. When one of them (Citi) drops 7%, the Dow will tumble. Fundamentals remain unchanged and I for one am trying to pick up a few more GIR, although in the last 30 minutes they've really got a run on. On another note, the AUD got a fair hammering against the USD and I'm starting to think about getting long again. I'll let you know when I decide to pull the trigger.

Thursday, November 1, 2007

Going for Gold - The Emperor's New Clothes

Gold continues to climb, closing in on US$800/oz, and it won't stop there. Here's another little tasty gold treat for all you punters out there:

Emperor Mines (EMP.AX) is a company that has undergone an amazing transformation in recent times. Not more than 6 months ago, the company was laden with debt and underperforming assets. Since then it has managed to sell it's Vatokoula mine, it's Porgera mine, and is soon to announce the sale of it's Tolukuma mine, leaving it debt free, with cash and investments of around $68m and a very valuable exploration program. Furthermore, it has now announced a friendly merger with Intrepid Mines, which has the Paulsens gold mine and the Casposo gold-silver development project.
The merger is the merchant banker's ideal "1+1=3" story. The combination of Emperor's cash and strong management team, plus Intrepid's quality assets in desperate need of cash and management, has the potential to really create value. Furthermore, being a laregley unhedged gold producer (at low cash costs), MergeCo will be very exposed to any upward movement in the gold price.
At a share price of around $0.07 to $0.09, the stock represents a real bargain. In addition to this the sale of Tolukuma will add another $0.015 to the share price, as this will be distibuted to shareholders before the merger.

Maurice's Rating (Take a swing)

Gold Gold Gold - ZAUWBA

We've been bullish on Gold for a long time and I think there's plenty more left in it yet. It might as well be $800USD an ounce after it's movement overnight, but this is something that we believe will be going north of $1000USD in the near future. We saw a good bounce overnight, particularly amongst American gold stocks, we'll see the same today in Oz. There's plenty of ways to play this including buying physical gold in Australia. ZAUWBA is a an exchange traded Australian Gold warrant, with the physical gold being housed in the Perth mint. You could of course just buy gold futures, which would give you a stack more leverage and a lot more potential upside or just buy Australian gold producers/prospectors.

Wednesday, October 31, 2007

GIR.AX is off to the races

GIR.AX submitted their quarterly report today and the market received it very well. They have an excellent suite of projects and today's bounce above $1.30 is a good sign. I think we stay long and see if it can't consolidate above the $1.50 level. They are due to release some more results for their Weld Range resources in the December quarter.
Interesting to note the negotiations that BHP.AX is currently involved with in trying to get rid of the antiquated Iron Ore price negotiations and move it to a traded market like practically everything else. This can only be a good thing for producers and prospective producers as the market is still in under supply. They still seem to have plenty of cash in the bank so things are looking good. I recommend getting on to the ASX website ( and having a quick flick through the report.

Happy Punting.


Tuesday, October 30, 2007

China will end in Tears

A recent report on Bloomberg highlighted the fact that of the 10 largest publicly listed companies in the world, 5 of them are Chinese.... Only 3 of them are American. This seems a little out of whack. The Chinese CSI300 Index is up 168% this year! The CSI300 is trading on a forward P/E of 43. While I believe there is a lot of growth to come out of China, a forward PE of 43 seems a little optimistic. If you want to trade the emerging markets story from the long side, I'd recommend having a look at India, whose Sensex Index is up a 'conservative' 48% this year, and only pricing in a forward P/E of 24.4. The interesting thing will be to see if a Chinese correction will cause global equity markets to slow down. It has happened twice this year that China had a decent size drop and on the first occasion (in Feb) markets dropped 3% globally, the second time it happened, no one seemed to notice.

Monday, October 29, 2007

Going for Gold - Chesser Resources

Maurice's boot-of-the-week goes to gold, which is really starting to heat up. If you like it gold, small and risky, here's what I suggest:

Chesser Resources (CHZ.AX) is an undervalued leveraged gold option for investors who believe in the gold story and want to benefit from an uplift in the gold price.
Chesser's flagship asset is the Sisorta gold project in Turkey, where Chesser has the right to earn up to 70%. The project sits in the highly prospective Tethyan Porphyry-Epithermal Belt, which is host to 89 million ounces of gold. Previous drilling has been promising and all indications suggest the project may well host a multi-million ounce gold resource. Based on an average resource multiple of around A$60/oz, this values Chesser's shares at around $2.30 vs their current price of around $0.48.
Considering this, and taking into account Chesser's other exploration assets, a conservative share price target is $1. The time frame on this is likely to be in the medium term and I expect it to start moving when the drilling program starts in a few months and the company starts to promote the project much harder.
Couple with this the rising gold price, which is widely tipped by industry participant's to reach US$1000/oz (up from US$780/oz) and this is one stock that has oodles of upside.

Maurice's Rating (Do It!)

Stocks to Watch - FND.AX and ESG.AX

Whack these guys on a watchlist. I haven't looked into them fully, but I'm hearing plenty of talk about them and the price action seems to indicate a bit of interest. Finders seems to have run out of sellers, which is never a bad sign. Only issue with this one is finding some stock. Easter Star is another one of those Coal Seam Methane guys that have been so good lately. On a cursory glance they appear to have a good amount of gas and ready market access.

The Week Ahead

Well it should prove to be an interesting week, with the market already fully pricing in a drop in rates from the FOMC on Wednesday. It will be interesting to see what happens, remembering that the market spiked 300 pts North when 'Bad News' Bernanke pulled the trigger on the Fed Put.
What we need to ask ourselves is; "is the US economy really that bad?" I know I've been rubbishing it in recent posts, (mostly as justification for my long AUDUSD position), but should the Fed really be rushing to stimulate the American Economy? The fundamental driver of the big American Machine is consumer spending, which seems to be continuing with the same reckless abandon as always. If I was Bad News, I'd be more worried about inflation as Oil cracks the ton than whether or not a few property flippers in Florida will be able to service their loans. ANyway, it should provide a bit of interesting volatility, which will give traders and investors alike some good entry and exit points in the coming days.

Friday, October 26, 2007

PXS.AX - 10 Bagger

PXS.AX is cheap. It's a punt, but it's cheap and the numbers make a lot of sense. It's currently trading around $4, and we think it could be $15 by 2010 as it transitions to a mature Pharma company with a suite of products being sold in a range of markets.

here’s why:
- A suite of products with multiple uses in markets where there is a huge need but there are no (or very
few) substitutes
- Importantly these products are either already being marketed and sold or in late stage clinical trials,
significantly de-risking the company
- A strong financial position with ~$125 million in cash
- Scale – PXS has a market cap now close to $800 million which means it will begin to get the attention
of funds and big investors, allowing the company to source the necessary financing needed to bring
its products to market… and has a NASDAQ listing
- A very strong, dedicated and proven management team
- A vision to develop an independent and fully integrated pharmaceutical company meaning
shareholders will reap the long term benefits of PXS success, not an international company
- Potential for a big re-rating as the company moves from a research and development company to a
fully integrated and profitable pharmaceutical company
- Tight share register with a number of substantial institutional shareholders on board

Don't bet the farm, but have some exposure to this stock, it's not often you find an Australian Company that has this much blue Sky Potential, particularly one that isn't leveraged to the commodity bull.



The AUD popped above 9100, peaking around 9118. Time to take profits and wait for a little consolidation. Another nice 100bps+ profit on a long AUDUSD trade. Also, happy not to hold a position over the weekend. No point paying funding for 2 Days when you can't trade on anything. The trend continues to provide good opportunities on the long side and I'll next be looking at getting long around the 9080 level for a trade to 9150.

Thursday, October 25, 2007

AUDUSD if you're not long you're wrong.

The outlook for the USD remains negative, with the market pricing in fully the probability of a 25bps cut to to the Fed funds rate on the 31st of October, and some economists pricing in a 50 bps cut and all of us (in Oz) are aware of the probability of the Reserve bank slapping us in the face on that most sacred of days, (Melbourne Cup Day) with another rate rise.
The reduction in yields is a reflection of the lower economic growth predicted for the US and it's not really hard to see why the market is predicting that. Merrill Lynch's announcement of more than $8bn of credit market write downs was a stinker, pure and simple, and we're already seen big losses at other banks, (Citi, GS et al). The housing data remains terrible, the only thing underpinning the economy is consumer spending, which sooner or later will have to abate.
On the plus side for the AUD, continued Chinese growth and demand for our natural resources seems set to underpin a strong, high yielding Aussie dollar.
I'm playing this long by purchasing AUD at low 9000s, with a stop about 50 points below. Keep rolling that stop up and take profits the other side of 9100 in the short term.
*The trend is your friend*

Wednesday, October 24, 2007

Where do we go from here?

The AUD powered up against the USD and made the 9000 level quite easily in the end with not a lot of volatility along the way, personally I’m out at 9004, having decided that once the price got to 9000 it would punch through quite quickly, I didn’t expect it to run so hard once it got there. Can’t say I’m unhappy with the trade though, up almost 200 points in a few days. I am bearish the USD on a long term fundamental basis and believe that there will be excellent opportunities shorting the North American Peso in the coming weeks. I think there is potentially a trade of going long some low inflation, low yielding JPY against the USD and waiting for the carry trade to blow up in a big way, but I don’t think the market is signalling an attractive entry point at present. I will be keeping an eye on the EURUSD, the GBPUSD, the USDJPY and the AUDUSD and I’ll let you know when I think it’s time to pounce.

Tuesday, October 23, 2007

Iron Ore - UBS

Broking Heavy Weight, UBS has just initiated coverage on 3 Mid-West Iron Ore companies, MMX, MIS and MGX. (Buy, Buy, Sell) This should focus more investor attention in this area and bodes well for GIR.


The overnight strengthening of the USD seems a little overdone and as a result, today provides a good opportunity for AUD longs to add to their positions.

· The global economy remains strong, with the IMF predicting global growth of 4.8%, keeping industrial production strong, keeping commodity prices strong and should keep resource driven currencies well bid.
· The US economy is weak, housing, low growth….recession?
· Carry trade should continue to drive high yielding currencies upwards and with the market now pricing in a 25bps rate cut at the next FOMC meeting, this should further the appeal of borrowing USD to buy AUD.

We may not be going to parity in the near term, but I’m expecting the 0.9000 level to act as a focus for the market and I expect it to get back up there with a week.

Monday, October 22, 2007

Non-Renounceable Entitlement Offer - CAV

Lately there have been a slew of aussie exploration companies issuing entitlement options to shareholders as a sort of loyalty enticement. The latest is Carnavale Resources (CAV.AX). If you own the shares on or before the 7th of November this year, you'll be entitled to purchase 1 option with a strike of 20c and expiry in June 09 for 1c each. Carnavale jumped 6% today on the news, but it's my opinion that this run will continue up until the ex-date which is the 31st of October. This has happened a few times in recent memory with NTU.AX being a good example. In my opinion the best way to play this is buy the CAVs now and sell out the day before they go ex as traders rush to cash in on the $1.40 per share intrinsic value you are getting for 1c. Given that CAV is in the Iron Ore space, which has been running really well lately, this trade makes sense to me.


Why Giralia Resources (GIR.AX) is the cheapest Iron Ore play in the market.

Giralia owns tenements in the Weld Range. This is the same part of town as MidWest (MIS.AX) and Murchison Metals (MMX.AX) and not too far from that other little Iron Ore stock, Fortescue (FMG.AX). Initial drilling has outlined grades in excess of 65%, this compares with the other's who have prospective grades in the region of 60%. The big advantage here is that the more pure the iron ore, the less you have to do it before you ship it. For GIR it's just a case of dig it up and ship it out. At $1 a share, GIR has a market cap of around $200m, and on a resource base of more than 100m tonnes (estimate), this is undervalued by about 4 times. The ongoing consolidation and interest from offshore investors (Russia, China, etc) means that this is one stock that is cheap at twice the price. This stock will be dragged along by the pedigree of it's neighbours.

Sunday, October 21, 2007

A New Start

Welcome to the House of Trade. A blog design for Traders of all descriptions. This is a place to discuss, speculate and above all to make money. Stand by for what should be a series of posts regarding what's hot in the Australian and international markets. It is my intention to have several contributors with specialties ranging across markets including Equities, Resources, FX, Futures and anything else that rises and falls.