@mouse
Thanks for tagging me and asking this question... I personally think that you don't have to ask this question as you do find plenty of winners by yourself along with some exceptionally talented other STT folks...
How do I come across these stocks?
Bear with me please as I won't be able to answer this question in few words and even after trying my best I would still miss few things... Here is the background:
1. First of all, I work hard... I have to as I am not one of those gifted people... So the saying "work smart not hard" does not fit here lol... What I am trying to say is working hard is the key for me... I keep trying and trying and then end up finding few stocks... Interestingly half of these still don't perform the way I think they would when I buy them...
2. This means finding few large winners can make more gains to me than collecting many small wins... So every stock I buy I make sure they have potential to multi bag... By saying this I still take small gains...
3. I trade based on FA... Perhaps should learn TA but I think FA makes you larger gains...
4. I have my own strategy... I follow it most of the times and it does produce winners...
Here is that strategy:
1. DYOR... Keep researching until it makes sense and a particular stock starts whispering... Oh yes, they do whisper lol... I normally spend 10 hours per day on average in stocks plus talks with my brother who spends the same time... I also sleep with them and eat with them... In between spend time with friends and family.... So research is extremely important after finding a strategy.
2. How do I research... I use few different ways depends how frustrated I feel at the time of doing research...
i) like if have not been able to find a winner in few weeks I will go nuts... Will open up the alphabetical list of ASX stocks and start looking from A-Z... Sometimes it takes days and I am not joking... For example, I found PDI and PSC (both made almost 10 bags in a very short time frame) at almost similar time just going through the list from A-Z... Once I found PDI, I was also able to find ARM and and PSM (made decent 50% plus on these two in a short time frame as PDI and PSC were the main plays)
ii) I will check 52 weeks highs and lows on pretty much daily basis and then go through the ones I have not seen before and add the potential buys in the watch lists which I later check when I have free cash available..
iii) I look for directors interests notices, appendix 3bs, change in substantial holder notices... Sometimes a stock or two does stand out... Particularly ceasing to be a sub holder in case a large fund dumping the stock as stock is no longer have a certain market cap... Sometimes these guys fire sale and do create an opportunity which produces handsome returns..
iv) Shells - management changes cap raises normally triggers a new deal coming... or simply a shell looking for too long means they must be close...
v) quarterlies half yearlies annual reports normally have some hints of what could possibly come in near future...
vi) Volume increases without much share price movement... This is perhaps the best indicator if I want small position... Simply, if I start buying a stock which is already facing demand from another buyer it just can't stay cheap... So small position is normally offered in this case which is still better than nothing... However, I still check that all of my basic criteria do meet perhaps compromise on 1 or 2 but buy signals should normally meet or I give it a miss...
vii) Some deal makers are better than others... Like MW and now Faldi Ismail... So simply following them in what they do normally means larger gains pretty fast... Faldi has done CR8, DTZ and ESE will be listed as IPO soon enough... I like OOK as well... So following these deal makers normally means less work more gains...
viii) Daily announcements... Like NAE when they applied for this gold lease... it was trading at 1.7c and then I knew it will go back to 1.1-1.3c range and it did... So I added heaps at those levels... In fact I was the only buyer for days and then I added 1.4-1.5 and 1.8c and then cap raise at 2c and then 2.3-2.4c... I am well set now...
ix) Research reports... but this is perhaps the least influential.
x) Hotcopper... Few of the posters find gems all the times so keeping an eye on them along with new comers with excellent research skills... sometimes they have done more work on a stock than the whole management team would have done.
So these few are the main things to do research. Now what I look into these stocks:
1. TREND is your FRIEND... whatever is hot normally does well... However, getting set in things before they get hot is the way to make larger gains... These gains can also be made when a certain trend reaches its peak... however, this time I try to find a small cap player which is not well known or a stand out story...
2. Does the co has multi bag potential? This is very important for me... I try not to invest 10-30%... How to figure out multi bag potential? This is more like hopes and dreams based on observation and potential... For example, NAE gold project is a mirror reflection of 10m ozs gold... Secondly The best geo in NZ is doing the exploration... He has studied these rocks for 20 years and have several articles published he even found nuggets in these leases before... he also thinks that the gold mine 10kms away have the source of gold coming from these leases... this mine had nuggets of gold and heaps of them... Similarly, PSC mentioned in their quarterly that they are looking for a project in Africa... BGS already multi bagged so it did make sense to take a punt...
3. Small caps with decent cash... if no cash then the management's capacity to raise funds and survive without killing the company... this one is a hard choice so I still prefer the ones with some cash.
4. Management and sub holders... management is important but not extremely important... for example SYA offered a big trades in few weeks based on management previous history. RLC is doing the same right now... The team has connections with LIT and PLP... and they are looking for lithium/lithium tech project.
5. Small tight register... If there is a sub holding holding large chunk and has been supportive of the co in the past... it bodes well IMO... Plus if management has decent skin in the game always makes me feel good.
Red flags:
6. Avoid Con notes... debt to management is still okay to some extent but a con note is a big no to me... Perhaps I have been burnt many times in the past...
7. Avoid life style managements... so if a co has admin cost which is high as compare to peers its a no go area
8. Avoid being rich over nights... So avoid hype... This comes back to same thing which id DYOR...
There are few more points but I think if I follow half of the above I find more winners than losers... If I follow most, accuracy improves accordingly... Also, my time frame of holding these stocks vary which depends on the profits or losses %wise and the available info...
Sorry for the long winded post but hopefully it does provide some insight... As said many times, we all need to find our own strategy like my strategy might works for me but might not work for others... also individual risk appetite is different for different individuals...
Cheers and all the best
