cnp analysis...

Am I surprised by today's action??? You bet I am! I was betting heavily that we would see between 25% - 30% sustained rally today based on past historicals, the December 15 extension (as I saw it, not the media), the 'shoe-it-in' May 30th milestone, the advanced negotiations for the America Fund, the stream-lining of the business complexities, and the additional up to $155 million additional capex to fund the extensions, Advisors and Legals for a margin at what has to be close to the cost of that capital.

So ... what did I miss???

1. Bad news sells media! What I saw as a December extension that would be a walk in the park, the media widely reported as a May 30th extension Eg; "Beleaguered Centro gets another breather"

2. The investors that hold CNP scrip have probably made little change to their portfolios today as they are a longer term investor. The shares were held by a lot of 'speculators' (I am an investor; however I have traded Centro a few times). It is the many 'speculators' who were always going to sell out today and take a profit. I do not have a problem with this as it is the nature of the game! Theoretically the traders & 'speculators' were to be replaced by the bigger boys, Funds, and longer term more risk adverse investors, and the traders buying back in imo - but it quite simply didn't happen that way today!

3. From what I understand the May 30th deadline (which really has nothing to do with Centro, but is an inter-Bank way of a communication and consent plan) is a stumbling point that spooked investors. Not being an investment banker I do not really understand what the problem is here; so do we simply stay in limbo for the next 3 weeks??? Wait for the stream-lined Business model to appear??? Or wait for more information on the probable sale of the America Fund???

4. There could be a little bit of 'buyer remorse' sentiment around from the lenders who were bustled & beaten into the inevitable agreement. Maybe it is this sentiment that spread through the investment Companies and threw a wet blanket on the sp. It's kind of like buying something where you think you have paid too much for it & you're not really sure if you even really like it or not; but then you fall in love and get very comfortable with it after a few short days/weeks.

5. Is the stock being capped or manipulated??? Maybe, but I haven't seen any evidence. All on a day where the market is up 50 points atm. So, where are the traders??? Maybe they are all over at the 'flavour of the day' stock - Maximus Resources (MXR) - who had an exceptionally good announcement out after opening this morning, currently up 110% and has turned over ~80m shares today.

6. So what do I see happening next week (like I really know, lol)??? Well - I see CNP consolidating; I see people getting comfortable with the deal and understanding the milestones; and a gradual improvement up to the May 30 deadline and then hopefully a 20% - 30% sp improvement on subsequent deadlines/property or fund sales/milestones.

Personally I am looking for the 'dumbing down' of the Business model and the hedging book, so even a blonde girl like me can understand it (lol); oh, and of course the word 'dividend'!


I would like to hear some other (sensible/reasoned) analysis as to why others think the sp didn't fire today!!!

Cheers, Pie :-)