I am yet to find a stock that rises continuously without the pull-backs and 'ebbs and flows' of daily/weekly price fluctuations.
Some will capitalise on such volatility, others will pull their hair out. Some would've sold at 4.7 and locked in handsome profits, looking to buy back in at a cheaper price, others would've sat tight and waited for the 'big bang' or the 'cash cow' so to speak.
With the 'retrospect-o-scope' in hand, it appears that those who "traded" NWE recently would be in a happier place at present, however lets not lose sight of the fact that things haven't changed for this company.
In my opinion, the price has fallen 30% over a few days because the company has stated that they need more time to finalise their JV agreement. Compounding matters is the fact that their cash position is not great.
The market does not like delay or uncertainty. Hence the sell down. It is important to realise though, that these very people who are selling down, will be buying up again when the news/sentiment changes.
In regard to the JV announcement:
-we have been told that new players have come to the table (hence the need to re-negotiate), and that any delay will be beneficial for NWE, resulting in better terms and conditions of the farm out. This is not bad news!
In regard to the cash position:
-I believe that management have been quite clever in this aspect. They could've raised a lot of capital with the last raising, and it would've caused a great deal of dilution. However they raised as much as they needed in the short term, albeit at mate's rates, as they knew that a favourable JV agreement will change things completely.
It is understandable that people are selling - they can't be bothered waiting. Time is money.
At the same time i can understand people not buying - does NWE have enough cash? Will they do a capital raising soon? As i said earlier, the market does NOT like doubt.
At present, the market is thinking, "these guys have all the assets in the world, especially this 90mmbls oil in Perth, but they have to drill it by the end of this year, and they still haven't announced a JV...and they don't have much cash"...
I'll bet anything that once the JV is announced, and the market realises that NWE are actually serious, and in a position to commence drilling, the share price will not be sitting below 6c...you watch this baby re-rate.
-TP15 -UK tenements -Shale Gas -Puffin royalty set to resume -EP413
I'm in the process of re-accumulating at these levels, and i intend to buy when people are selling and sell when people are buying.
NWE Price at posting:
3.4¢ Sentiment: Buy Disclosure: Held
