buying spree gains momentum, page-64

I explain it in a variety of ways.

- Delays - the market doesn't like delays. The market is very short term in outlook. It hates having delays to pilot production due to hard-fought negotiations with the NSW State Government to get Tintsfield infrastructure done. It hates delays to Wilga Park. It hates having rain delay pilot progress. It hates deferred and unknown reserves upgrades. It hates not being told what is going on behind the scenes.

- Lack of Catalysts. Like the lack of M&A activity. When something 'happens' it creates an impetus for people to buy. That may be company-specific, or it may be related to sector events. In the absence of a catalyst, the price drifts downwards. As for the lack of sector catalysts... well, most of the large reserves have already gone up the foodchain. The QLD projects have been busy dealing with their own issues. Now, they are all looking at acquisitions again. The second round of consolidations is not far away.

- The market is frequently wrong. Often by orders of magnitude. it happens all the time. Pick almost any chart and you find wide changes in mcap, often for very little change in fundamental value. How can the market say a company is worth x one day and 6 months later 200% of x (or 50% of x)? Because the market is frequently wrong, sometimes way too bearish sometimes way to bearish. There isn;t wisdom in groups, just mob behaviour that exacerbates pricign errors.

- Study your history. Look at companies who were previously takeover targets (and are no longer here). Look at QGC. One could have argued exactly the same thing about QGC - that old line: 'what is the share price telling you?' Well, it tells me nothing. It is the price. The value is separate. And if you use the price to judge the value then the price IS the value. Then how do you find value gaps in the market? It is a circular argument.

- Large Holder Price Control. The reality of the ticker price is that it can be controlled by a relatively small number of transactions. A large holder can push a share price around using shorting, using algorithmic trading, so as to prevent any breakouts gaining a momentum of their own. And the evidence says that ESG has been party to a great deal of such trading for the last 18 months.

- ESG is content to hold back information. ESG are not attempting to talk up the share at the moment. They wish to delay corporate action until they have a few more boxes ticked (reserves, LNG etc.). So whilst they could have done a resource and reserves upgrade already, they are holding them back precisely because they are a takeover target, and they will be used against a possible hostile approach. So this means share price weakness in the meantime, but a great price in the endgame.


But Alley, don't let me convince you. I won't anyway. Go and spend your time searching for a stock you really do want to buy. It is time better spent than arguing with poor misguided souls like me. :)

Yaq