It's no secret that the bears have taken control of market sentiment over the past couple of months and it's certainly no secret that large institutions rely on manipulating the market for profiteering.
Although, should these same manipulating methods ever be adopted by the retail investors among us it would be considered a criminal act punishable by law, it's also no secret that both the ASX and ASIC welcome market manipulation by all large institutions.
Their endorsement for algorithmic trading and shorting of stocks provide enough compelling evidence of their support for institutions to continue stealing the hard earned dollars from those of us less priviledged retail investors. Shorting a stock, although not limited to institutional investors only, is another method for profiteering by these insto investors who have access to unlimited amount of funds which as a result only serve to damage companies. If there was anything ethical about this form of trading then why did many international regulatory bodies around the world including the ASX decide to place a short ban on these transactions during the GFC?
Although I still consider it more luck than a smart choice for not holding any stocks throughout all of 2007/2008 my decision to re-enter in March 2009 was solely based on one observation, and for the very first time this weekend I have noticed, what imo appears to be exactly the same phenomenon taking place.
"Warning warning - caution caution - sell sell"
Not since back in March 2009 have I seen so many "so called respected large institutions" collectively pushing the same message!
I'm not suggesting that everything around the world looks rosy and there are no real problems because that's clearly not the case. Quite obviously there remains many serious debt related issues around the world today which we as investors need to consider and should not be ignored, however my question is, who can we rely on for the truth when it comes to the future outlook for world markets?
Those who keep in touch with market news will probably agree that the institutions pushing their message over the last few days especially, had also largely reduced their own positions months ago, so my question is this:
Are they still treating us like fools or have they really now become intent to finally start helping the little guys?
If they sold the majority of their positions months ago, which is the reality, why have these same institutions who have been so reliant on robbing investors like us to meet their ROI quotas suddenly pushed harder their tune over one weekend, much the same way as they tried to convince investors back in March/April/May 2009 to steer clear of investing on the stock market advising only after the fact that it still hadn't bottomed out?
Throughout most of March/April/May 2009 large so called "respectable" institutions such as Commsec were aggressively delivering their message of investor caution through main stream tv and radio medians, whilst at the same time we witnessed a huge surge in "New Substantial Holder" notices highlighting their own name?
Among all the doom and gloom stories I've been reading lately a couple of abstracts from one article in the Wall St Journal relating to two investors named within the world's top ten most successful stock market investors stood out:
Bouncing Back With the World's Greatest Investors
Bill Nygren - Oakmark Global Fund "With the past year's rollicking recovery in stocks, it may come as a surprise that Nygren still feels wildly upbeat about where the market is going, predicting rises of nearly 10 percent annually for the next decade. "The bears are missing the strength of corporate balance sheets," says Nygren, who points out that the level of cash kept by companies after paying dividends has been on the upswing.
Sitting behind his desk in his Chicago office, the fund manager relates a recent exchange with a shareholder that sums up his investing philosophy: "Most people are soured on technology stocks," the man began, a bit huffily. "Why do you own them?" Nygren took no time in his reply: "You answered your own question."
Bruce Berkowitz - Fairholme "His fund's motto is "Ignore the crowd", and that's what Berkowitz does." As for diversification - heck, that's for sissies, says the 53-year-old Berkowitz
Posting abstracts quoting a couple of the world's most successful investors really shouldn't have any relevance to a 2c biospec stock like OBJ - And to a large degree I can't argue with that, so why have I taken the steps as a cautious measure in these volatile times to lower my position across all other stocks and continue accumulating OBJ? ___
Maybe I'm just crazy, and I'm happy to be told so if that's ones opinion, however this is what I'm thinking, should we be faced with much more than just another correction.
* The SP is now at the lowest level since it closed at 0.018c on October 29, 2009 so we should accept that the market has since factored in a negative score for all fundamental growth proceeding this date.
Lets evaluate this further - Why has the market continued to value OBJ lower than it did back in October 2009:
What has changed
1. Announcements
November 2009 - OBJ introduce a new relationship with 3M which we've since been advised is continuing to grow stronger
December 2009 - Publication by the Journal of Pharmaceutical Science of a paper into the enhanced transdermal delivery of Naltrexone by the Company's technology.
February 2010 - Statement of Intent is received from Major International FMCG Company - OBJ advises us of their satisfaction with the rapid progression with our FMCG #1.
February 2010 - GlaxoSmithKline enters into further Agreement with OBJ for our ETP technology in a non-prescription consumer healthcare application
March 2010 - OBJ's International Partnering Manager, Dr Hammond joins OBJ bringing with him over 30 years experience with some of the world's leading pharmaceutical, FMCG and cosmetic companies. His principal responsibilities have involved managing the partnering, licensing and new product innovations for companies such as Reckitt Benckiser, Unilever, PZ Cussons, CB Fleet and GSK.
April 2010 - 3M has studied the performance of two transdermal patch formulations with some encouraging results and requested another 6 month extension to the MTA. OBJ advised that 3M are working closely in patch development with OBJ partner companies.
April 2010 - OBJ advise they are now actively engaged with a number of international companies across a variety of product sectors in the USA, Europe and UK and have expanded in the fields of non-prescription therapeutics, oral health, skin care, cosmetics and hair care.
May 2010 - Introduces the new FIM platform which broadens the field of commercial activity for OBJ.
August 2010 - OBJ advises they are working with one of the world's largest pharmaceutical companies in consumer acceptance testing for a patch version of an existing multi-billion dollar product currently sold internationally, two of the world's foremost cosmetic brands for the design and development of new products, five of the world's largest companies across a variety of applications in consumer healthcare and discussions had also commenced with leading international groups to further explore suitable applications in the industrial sector.
August 2010 - Announces significant expansion of its IP and patent portfolios with the lodgement of six additional "Field of Use" patents covering the major commercial areas of interest to OBJ's partner companies.
August 2010 - Anounces expansion of marketing and research activities and the new appointment of Dr Matthew McIldowie as OBJ's Research Manager.
September 2010 - Letter of Intent to establish a new Strategic Alliance program with one of the world's leading Consumer Products companies for the evaluation of OBJ technologies across multiple product categories.
October 2010 - Commercially significant levels of enhancement reported by GSK in testing model. Commencement or design and development stage with FIM technology in a common household consumer product for human efficacy studies to demonstrate the level of consumer benefit provided by the FIM technology and consumer acceptance testing to determine marketability within the US$29 billion market sector.
December 2010 - Announces Resolution #5 approved for holders of options of the company that are exercisable at $0.01 cents each on or before 31 December 2010, shall, receive New Options (being options exercisable at $0.01125 cents each on or before 31 December 2011)
April 2011 - Announces that Strategic Alliance with a major international FMCG company announced in September 2010 is progressing across multiple fronts. Independant University study shows a significant increase in the delivery of a key anti-ageing ingredient for enhanced penetration of cosmetic compounds.
April 2011 - The Company's collaboration with a second major international FMCG regarding a product subjected to consumer studies and development program was moved to being reviewed by FMCG's international marketing department. Interest from another product group within the same FMCG company has also created further potential product development opportunities for the Company.
April 2011 - The increasing levels of partnering and scientific activity in the UK and Europe have encouraged the Company to expand its presence in that region. Mr Edwards headed to the UK to provide additional partner support for Dr Hammond.
May 2011 - OBJ and GSK sign a Collaborative Development Agreement to work exclusively together with the objective of developing new products with OBJ's proprietary Enhanced Transdermal Polymer and Field-In Motion technologies in the field of Oral Healthcare.
Total market value for all of the above factored in = - 15.80% - (Based on VWAP 5 days either side of October 29, 2009 ___
What remains the single most important key to surviving market corrections and crashes?
Partner company sectors: Pharmaceutical FMCG Healthcare Cosmetic Industrial (Home wares)
Safest Market Sectors during recessions: Consumer Staples - FMCG's, Cosmetics, Industrial, Healthcare Utilities Energy Telecom Healthcare - Pharmaceutical Partners, Healthcare
Whilst the Dow only closed a modest 60 points up on Friday I noticed a large accumulation of Consumer Staple stocks such as Unilever which closed + 3.71 or +$1.18c. These stocks are considered safe stocks to hold during recessions simply because consumers don't stop purchasing everyday items such as toiletries - tooth brushes, strips, toothpaste - sales simply don't decline.
Note: Furthermore, partaking in a thrilling educational session earlier this evening with my better half regarding her make-up or skincare purchases I have been informed that ladies (generally speaking) will never consider these items (especially skincare) as luxury purchases and in times of budgeting are more than prepared to neglect nessessary weekly food items on the grocery list to replace their finished prefered skincare product.
Whilst I can't deny the possibility of our market pushing the sp down further the in the event of world markets continuing to correct I have only been able to come to one conclusion, based on the fundamentals that any potential crash or large correction has already been factored in to the current sp.
Using the 2008/2009 market crash scenario as one example, if GSK or one of the FMCG companies announced one of the imminent license agreements during the height of that crash OBJ would've still re-rated to a priced that could only ever be calculated in multiples of the one we're still looking at today.
The fact remains that the market have yet to factor in any progression at all over the past two years.
Imho this stock today remains the most de-risked stock on the Australian market for long term investment.
Happy to be proven wrong, thought's most appreciated.
OBJ Price at posting:
1.9¢ Sentiment: LT Buy Disclosure: Held
(20min delay)