Capitulation Hit? And Some Hidden Value...
As we wrote our article yesterday we saw prices that were stable. After it was posted we saw a sharp decrease in prices of equities and the indices. A closer look revealed that the selling took place between 2:30 and 3 which is usually the time at which the brokerage houses begin their margin calls. Volume spiked at this time, and consequently followed through for the rest of the day. We watched as some of our stocks fell sharply (CWPC was down $1.01 at one time and CVVLF was down nearly 20%) but soon realized that the trading was unnatural. Selling in CWPC reached such a feverish pace that sometimes the bid was not being filled, but rather sellers were selling below market! CVVLF (Canalaska as it is traded in America) began to fall as ever increasing blocks began to cross the wires. Our mouth dropped as we witnessed 30,000 shares sold on our streaming quotes...this is astonishing as the stock averages somewhere between 50,000 to 100,000 shares a day.
We believe that yesterday was closer to the bottom than today is closer to a sucker's rally. We thought hard and long about this, but fundamentally we believe this analysis to be true. The Nasdaq tried 5 times yesterday to rally, and failed each time. Most importantly it failed horribly on the 5th and final attempt and chased many of those baby bulls off...indicated by the quick dip with high volume. Also, the smaller resource stocks that were dumped by the brokers, will most likely be bought back by the individuals themselves sometime in the future, so we have no problem holding them now. One may also look at the situation in the mirror. You must trust yourself in these times, and if you have some gunpowder figure out how best to manage it. Those who are adding to their positions are the ones who will eventually help push up the price of the stock simply based on supply and demand...if you double up, there are that many more shares in the hands of a strong investor as opposed to a speculator who may or may not possess the will power or the capital to stay in the game more than one inning at a time. Better to be a starting pitcher in this situation than a set-up man because longevity is everything in this game we call the stock market. Which brings us to our conclusion about the markets: The small resource stocks have had their speculation premium taken out and are now fairly valued accordingly. Note how many of them are near where we recommended them, do not view this as bad advice, because money has not been lost overall, but rather a small gain exists. This is impressive when the Dow is now down for the year and our small speculative plays are shielding our money at this time.
Over the past two weeks I have engulfed myself in much research over new uranium plays. I searched for stocks that were not recommended by others and then investigated them. There was one stock in which I kept coming back to over and over again simply because they had everything that our near-to-production picks possess as well as our speculative plays with an added bang that no other company possess! We then struggled with the timing of our recommendation as it seems to be a hybrid company, but today we believe is the correct time to allow our loyal readers to begin 'kicking the tires' themselves.
The company is Pitchstone Exploration (PXP.V) and we have been following it for ourselves since before we briefly mentioned it in our April 11 article on SXR and have watched it steadily decline from above $2 to a current price of $1.30. The company has roughly 27 million shares outstanding and recently disclosed that options had been excercised to bring this number to approximately 29 million shares. That money will help fund their projects in the Athabascan Basin not being funded by SXRuraniumone. They possess many properties in the Eastern edge of the Basin with properties around Cigar Lake and McArthur River. Also in the Hornby Bay area the company has Mountain Lake which they recently added some land through a deal with Ur Energy (another one of our picks). Mountain Lake has a NI 43-101 resource of 8.2 million pounds of U308. They are currently drilling on this 50:50 joint venture with their partner Triex Minerals in an attempt to add to the resource at a cost of $2.1 million CND. The company has nearly $1.5 million dollars due to them in the next year and a half in conjunction with their joint venture program with SXR, which will allow them to drill at their own projects. The company also owns 1,000,000 shares of SXR with 1,500,000 options (indicating 750,000 more shares) as well. If you are a believer in SXR, then you can truly see that Pitchstone possess a hidden gem within it. These shares not only allow the company to borrow against, but it also enables them to sell SXR shares in order to keep from diluting its own share pool (not what we would recommend, but certainly a possibility). Our best guess is that SXR will eventually purchase Pitchstone, especially in the event that they develop Mountain Lake or discover a new resource- either on JV land with SXR or on their own 100% owned properties. We have not purchased shares in this yet, but we look forward to doing so as the price has made the proposition much more attractive in the previous days. At this time we add PXP.V to -the investar's portfolio at a price of C$1.30.
Additions to -theinvestar's portfolio:
PXP.V @ $1.30
We believe that yesterday was closer to the bottom than today is closer to a sucker's rally. We thought hard and long about this, but fundamentally we believe this analysis to be true. The Nasdaq tried 5 times yesterday to rally, and failed each time. Most importantly it failed horribly on the 5th and final attempt and chased many of those baby bulls off...indicated by the quick dip with high volume. Also, the smaller resource stocks that were dumped by the brokers, will most likely be bought back by the individuals themselves sometime in the future, so we have no problem holding them now. One may also look at the situation in the mirror. You must trust yourself in these times, and if you have some gunpowder figure out how best to manage it. Those who are adding to their positions are the ones who will eventually help push up the price of the stock simply based on supply and demand...if you double up, there are that many more shares in the hands of a strong investor as opposed to a speculator who may or may not possess the will power or the capital to stay in the game more than one inning at a time. Better to be a starting pitcher in this situation than a set-up man because longevity is everything in this game we call the stock market. Which brings us to our conclusion about the markets: The small resource stocks have had their speculation premium taken out and are now fairly valued accordingly. Note how many of them are near where we recommended them, do not view this as bad advice, because money has not been lost overall, but rather a small gain exists. This is impressive when the Dow is now down for the year and our small speculative plays are shielding our money at this time.
Over the past two weeks I have engulfed myself in much research over new uranium plays. I searched for stocks that were not recommended by others and then investigated them. There was one stock in which I kept coming back to over and over again simply because they had everything that our near-to-production picks possess as well as our speculative plays with an added bang that no other company possess! We then struggled with the timing of our recommendation as it seems to be a hybrid company, but today we believe is the correct time to allow our loyal readers to begin 'kicking the tires' themselves.
The company is Pitchstone Exploration (PXP.V) and we have been following it for ourselves since before we briefly mentioned it in our April 11 article on SXR and have watched it steadily decline from above $2 to a current price of $1.30. The company has roughly 27 million shares outstanding and recently disclosed that options had been excercised to bring this number to approximately 29 million shares. That money will help fund their projects in the Athabascan Basin not being funded by SXRuraniumone. They possess many properties in the Eastern edge of the Basin with properties around Cigar Lake and McArthur River. Also in the Hornby Bay area the company has Mountain Lake which they recently added some land through a deal with Ur Energy (another one of our picks). Mountain Lake has a NI 43-101 resource of 8.2 million pounds of U308. They are currently drilling on this 50:50 joint venture with their partner Triex Minerals in an attempt to add to the resource at a cost of $2.1 million CND. The company has nearly $1.5 million dollars due to them in the next year and a half in conjunction with their joint venture program with SXR, which will allow them to drill at their own projects. The company also owns 1,000,000 shares of SXR with 1,500,000 options (indicating 750,000 more shares) as well. If you are a believer in SXR, then you can truly see that Pitchstone possess a hidden gem within it. These shares not only allow the company to borrow against, but it also enables them to sell SXR shares in order to keep from diluting its own share pool (not what we would recommend, but certainly a possibility). Our best guess is that SXR will eventually purchase Pitchstone, especially in the event that they develop Mountain Lake or discover a new resource- either on JV land with SXR or on their own 100% owned properties. We have not purchased shares in this yet, but we look forward to doing so as the price has made the proposition much more attractive in the previous days. At this time we add PXP.V to -the investar's portfolio at a price of C$1.30.
Additions to -theinvestar's portfolio:
PXP.V @ $1.30
posted by -theinvestar @ 6/14/2006 12:56:00 PM
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