I’m going to use the current bounce, World-Cup-rally, summer rally, whatever to sell my position in Impala Platinum (IMPUY.PK). The South African stock looks like it’s in a steady downtrend despite its 13.8% gain off the June 4 low.
Platinum was bid up heavily by traders who bought it as a speculative precious metals play on market volatility, but the problem with platinum, unlike, say, gold, is that it’s both a precious metal and an industrial metal. With the European economy slumping and the U.S. economy showing signs of slower growth, the industrial demand for platinum hasn’t lived up to hopes and traders have been unwinding positions since April. (The company paid a half-yearly dividend on March 15.)
 I’m selling now with a 3.7% loss since I added the stock to Jubak’s Picks on January 25, 2010. I don’t think the current rally has much upside and I’m looking to raise cash for buys on market weakness later in 2010 and for a recovery in emerging markets stocks that could start as early as August. If you own this stock in a long-term portfolio like The Jubak Picks 50, you don’t need to sell.) This moves my cash position in Jubak’s Picks to more than 40%.
Full disclosure: I will sell my personal position in Impala Platinum three days after this is posted.
RM,
If you’re looking for a platinum play, then PPLT is a good one. I think platinum is a little high right now (it is in the middle of a VERY big trading range), which is why I don’t own PPLT at the moment. If it comes down, I might buy some.
LH,
CSKI took a hit when the Chinese market turned bearish. As for why I’m shooting low, that is my strategy in a secular bear market. When you buy at the lowest point possible, you have less room to drop.
Barron’s on platinum:
http://online.barrons.com/article/SB127689972265207937.html?mod=BOL_hps_mag
Ed.
Thoughts on PPLT? Still own it?
Thanks.
Would you put a discount on it’s valuation nonetheless? From your strike price target, That is a forward P/E of 5-6. What are your concerns on this stock? It just seems weird to me to want a super low P/E on a stock that generates big growth. I just find it concerning that this stock has been kept undervalued for so long. even at it’s peak, the stock was not that overvalued for it’s growth (in my opinion)
(sorry about this being completely off-topic).
LH,
I did notice that in a Google search. They did have an issue with their 2009 earnings report, which has since been corrected. The SEC brought it to the company’s attention, and the company took care of it. No charges or lawsuits filed.
I have read some positive things on the company too. Here is one example:
http://caps.fool.com/Blogs/on-china-sky-one-medical/230713
About CSKI, i held it for a while but there seems to be a lot of buzz about CSKI being a fraud. From what i see, it is not, but by looking at it’s stock price, it seems like the stock has been kept undervalued for quite some time. There are dedicated websites claiming frauds from CSKI. Anybody has thoughts on this?
grindy2424,
I have an $11 strike price on CSKI, although I might raise that if the market conditions change.
CSKI was a bit better than I was expected. Time to decide when to strike…
I had been looking at CHBT. I own ONP, would like to buy more when the market stabilized.
Java12jack,
As Ed mentioned FLS has solid financials.
They are starting to pick up market share in the liquefied natural gas sector which is a positive. Flowserve also does quite a bit in aftermarket sales and repair so should be stable even if capital spending cuts back.
FLS also has power, chemical, and water business that should continue to grow even with increased regulation.
Currency headwinds IMO are what attributed to the drop in price.
java12jack,
I don’t really know FLS well enough to comment on their business plans. The financials are solid though.
bcapshaw,
I like ONP also. I had some of it last year, and sold it at a nice profit. It is still a good company, as it’s financials show.
However, I like CSKI just a little more. CSKI has a larger net profit margin, and no debt. Mind you, there is nothing wrong with ONP in either of these areas. I might even buy some eventually.
I’m out too – with modest gain, though I’m somewhat surprised that Jim opted to sell this one. A “safe commodity”?
Well, IMPUY has tracked PPLT fairly closely these last six months – with Gold outperforming both. I’ll never understand the gold fetish – platinum has the attributes as a store of value, is rarer, and has myriad industrial uses. There’s no rational case for gold outperforming platinum under any ordinary set of circumstances. Yet price tells a different tale.
The fact that the stock market has been advancing, even on negative news, is a bad sign for closet bulls who have been waiting for prices to drop further before investing. My take is that investors quite simply see good valuations out there and want to get in while they can. (Personally, I’m kicking myself for not buying STD when I watched it fall below $9. My target price for the stock is listed in Jim’s post on STD and hasn’t changed.)
On another topic, I’ve posted before about irrational, fear-based crowding into bonds and my expectations of a coming decline in that asset class. Typically, you start seeing articles about bubbles before the bubbles burst. Sometimes the bullishness can last quarters, sometimes years after the bubble articles begin. Personally, because it’s hard to time the top, my investing strategy takes bubble warnings as a cue to begin underweighting or exiting the asset class or sector. MSN Money recently posted an article by MarketWatch about a bubble in bonds. The article is linked below:
http://articles.moneycentral.msn.com/Investing/MutualFunds/Pop-goes-the-bond-fund-balloon.aspx
Full Disclosure: This is a reiteration of a past comment, but I recently reallocated the portfolio to underweight bonds.
Jim,
What are your thoughts on Nat. gas stocks like ECA and the oil sands stocks like CVE?
Jim or ED,
Can you give your thoughts on FLS? How much of an impact will the potential cutbacks on offshore drilling have on their business?
How about Orient Paper? ONP
Jim,
While we are in preparation for the great “China buy-in”, any thoughts on China Sky One Medical, Inc. (CSKI)? It looks darn good to me.
I don’t think this current rally has much upside left either. I did a lot of selling yesterday and am now mostly cash.
Off Topic – Man! What has happened to Qualcom?