SPREADBETTING The e-magazine created especially for active spreadbetters and CFD traders
N IO IT ED
Issue 5 - June 2012
Interview with a spreadbet dealer Myths exploded & secrets revealed
Fundamental v Technical analysis which is best suited to you?
Dominic Picardaâ€™s technical take Special feature on Xcite Energy, Chariot Oil & Gas & Gulf Keystone
5 pairs trade ideas www.financial-spread-betting.com
All your favourite columns including... Directors dealings and Guess the FTSE end month value to win ÂŁ1000
Editorial Contributors Simon Cawkwell aka Evil Knievil Simon Cawkwell aka Evil Knievil lives in West London and has successfully navigated the markets for nearly 45 years. Although he started working life as a chartered accountant, he came to prominence with the collapse of the infamous Robert Maxwell’s affairs where he cleared £250,000 profit some twenty years ago - no small sum back then. His specialisation is short-selling and he is a self confessed inveterate gambler. One thing’s for sure he doesn’t pull punches and tells it as it is!
Dominic Picarda Dominic Picarda is a Chartered Market Technician and has been responsible for the co-ordination of the Investor’s Chronicle’s charting coverage for 4 years. He is also an Associate Editor of the FT and frequently speaks at seminars and other trading events. Dominic holds an MSc in Economic History from the LSE & Political Science.
Robbie Burns aka The Naked Trader Robbie Burns - The Naked Trader has been a full-time trader since 2001 and has made in excess of a million pounds trading the markets. He’s also written three editions of his book “Naked Trader” and the “Naked Trader Guide to Spreadbetting” and runs day seminars using live markets to explain how he makes money. Robbie hates jargon and loves simplicity.
Reliance on content disclaimer Material contained within the Spreadbet Magazine and its website is for general information purposes only and is not intended to be relied upon by individual readers in making (or refraining from making) any specific investment decision. Spreadbet Magazine Ltd does not accept any liability for any loss suffered by any user as a result of any such decision. Please note that the prices of shares, spreadbet’s and CFD’s can rise and fall sharply and you may not get back the money you originally invested, particularly where these investments are leveraged. In comparing the investments described in this publication and website, you should bear in mind that the nature of such investments and of the returns, risks and charges, differ from one investment to another. Smaller companies with a short track record tend to be more risky than larger, well established companies. The investments and services mentioned in this publication will not be suitable for all readers. You should assess the suitability of the recommendations (implicit or otherwise), investments and services mentioned in this magazine, and the related website, to your own circumstances. If you have any doubts about the suitability of any investment or service, you should take appropriate professional advice.
Foreword Welcome to the fIfth edition of Spreadbet Magazine. Sell in May, but don’t go away! It’s amazing to me just how fast the year is rolling on again (perhaps a sign of growing old?!) and how quickly the month end comes around ready for production of a new issue of our magazine. I’d like to start this edition by thanking all those readers that have taken the time to email me with compliments on the magazine. It is no small task putting a publication of this size and calibre together each month, and the fact that it is supplied free to all readers is a rare thing. Our contributor line up, which includes Simon Cawkwell, Robbie Burns and Dominic Picarda, is unsurpassed within the on-line financial media space, and I am very proud to have them as part of our team. We have 2 feature articles for you this month — a piece on Fundamentals v Technical analysis and the appropriateness to you as a trader, and also some pairs trading ideas. We hope you enjoy these as well as our usual contributors’ articles. Finally, what with the recent shake out in the market, word is reaching me that trading has become a little more difficult again for clients en-bloc. I’d recommend that in this environment you dial back your leverage further and wait for true opportunities to present themselves. What I can say is that my ‘value’ radar is beginning to twitch again, and I’m getting ready to mop up some undervalued companies — perhaps a sign the recent snap back is nearing an end… As ever, good look trading this forthcoming month! Richard
The views and recommendations in this publication are based on information from a variety of sources. Although these are believed to be reliable, we cannot guarantee the accuracy or completeness of the information herein. As a matter of policy, Spreadbet Magazine openly discloses that our contributors may have interests in investments and/or providers of services referred to in this publication.
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Interview with a spreadbet dealer Myths exploded & secrets revealed!
Fundamental v technical analysis
Evil Knievil feature on Randgold
Robbie Burns aka The Naked Trader
Square Mile Data
The importance of diversification to professional trading.
Which style potentially suits you best?
Simon Cawkwell takes a look at the gold mining giant.
Our regular feature writer regales us with some trading wisdom.
A special feature on short interest in the oil explorers.
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Dominic Picardaâ€™s Technical feature on the Oil Explorers
US feature Nokia Is it time to buy?
5 pairs trade ideas
A selection of high conviction trading opportunities.
FatProphets - BSkyB
Home Retail Group
An indepth analysis of Rupert Murdochâ€™s media company.
Where to next for the struggling retail company?
Daily options - how best to use these.
Gulfsands Petroleum is brought to our attention.
Gulf Keystone in focus this month.
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Interview with a spreadbet dealer Myths exploded and secrets revealed!
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Interview with a spreadbet dealer
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There are a lot of misconceptions, myths and rumours surrounding the spread betting industry and here at Spreadbet Magazine we get asked numerous interesting questions from spreadbetters — both new and old alike — and so we thought it appropriate to put some of these questions to a true ‘insider’ within the world of spreadbetting. In this special feature we ask Capital Spreads CEO, Simon Denham, the most popular questions and receive answers in a refreshingly candid and honest manner. At the very least, we hope the answers below will shed some light on how the industry operates, and hopefully give readers something to think about in terms of their own trading approach and chances of success. Thank you for your time in granting this interview Simon, here are our questions for you: Q. What do the winning spread bettors do that the losing ones don’t? A. The one major thing that winning clients do not do is over-extend themselves with margin. If a company offers you 200:1 leverage, that does not mean that you should use it. Most professional hedge fund managers do not actually gear up more than a maximum 10 times on their equity. If you look at the major blow ups over time — Lehmans, the banking system, LTCM back in 1998 — the one thing they all had in common was an over extension of leverage Q. What advice would you give the novice spread bettor? A. The best bit of advice is to stick to just a few markets. Do not leap from product to product watching for anything and everything that moves. If you find yourself thinking “wow, pork bellies are volatile today, I must get involved” it is probably time to stop.
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Q. Which do you think is best for generating profits Fundamental or Technical analysis? A. An almost impossible question as fundamental analysis is, almost by definition, a long term game plan whereas technical analysis is generally confined to the shorter/medium term player. With technical trading, dealers must exert very precise controls (if the trade is going wrong then get out quick) a point to which, unfortunately, many traders fail to adhere. On the other hand, Fundamental trading can often be confused with ’my personal opinion‘ type of investing, which can lead to traders ‘falling in love’ with positions and often leads to the worst possible act of ‘doubling up a losing trade’. Q. Is it true that spread betting firms want clients to lose? A. In general, the revenue made by spread betting companies does come from client losses. In reality we are no different to any ‘market maker’ so our overall income can hardly come from anywhere else. But it is not true that we ‘want’ clients to lose. The fact is that, here at Capital Spreads, when the final trade analyses are made our revenue is largely made from the ‘spread’. This is the effective outcome of millions of trades over long periods of time, and so we have a vested interest in clients remaining clients and continuing to trade without any trading we make no revenue. Whilst we do hedge quite a bit, this will always be the ‘excess risk’ on our books… which means that our overall risk is still in the direction against our hedge book. So clients should stop obsessing with the fact that their counterparty wins when they lose. The same happens no matter what orum you trade on. Q. What is the typical life of a spreadbetting account? A. If the client lasts longer than 2 months, then the average with Capital Spreads is around 14 - 15 months. The first few months tend to separate out the ‘gung-ho merchants’ — those who risk everything every time they trade. Like tossing a coin... you may call it right three, four, even five times in a row, but eventually you will call it wrong. If you risk everything on each call, you will eventually get carried out. That is an immutable fact of trading — nobody ever gets it right all the time.
No matter what, we wonâ€™t try to slip you one on the quiet.
At Capital Spreads we will never re-quote you or slip you on new online trade requests*. Create a financial spread betting account at capitalspreads.com Losses can exceed your initial deposit. Spread betting may not be suitable for everyone. *Excludes orders.
capitalspreads.com Capital Spreads is a trading name of London Capital Group, which is authorised and regulated by the Financial Services Authority and a member of the London Stock Exchange. Registered Address: 2nd floor, 6 Devonshire Square, London, EC2M 4AB. Registered Number: 3218125.
A capital place to spread bet June 2012 | www.financial-spread-betting.com | 9
Q. Do the larger accounts tend to be more profitable than the smaller ones? A. No, percentage wise this is not the case. While big clients might be able to fund a bad position for longer, this is a double-edged sword. It can sometimes help through the temporary blip of a short term adverse market (i.e. put more money up to protect a losing position), but this also opens them up for bigger losses on those positions if ‘the market move’ proves to be sea change. Q. Where do clients make the most money - stocks, currencies, indices? A. Equities; because people have a longer time frame and generally take more care over their analysis/investment choices. FX is the biggest overall loser for clients. The randomness of the product always seems to average the revenue in the market maker’s favour in the long run. Q. What is the biggest win a client has ever made? A. With London Capital Group we have some very large traders who have made a few million in profits over the years, but they have risked this magnitude of capital in the first place. The biggest absolute percentage return for a sizeable sum was a client who turned around £4k into £350k. Q. Is the rumour true that certain spread betting firms ‘read’ a clients position before making them a price? A. I am not sure how you could actually do this. The prices are live on screen. The client chooses a price to trade. If we were ‘reading’ them, then the price they would see would have to be different to the price another client sees. We certainly do not have systems that can do this.
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Q. Does ‘day trading’ actually work? A. The number of clients who make it pay is very low on a percentage basis but, of course, there are some clients who do manage it. It is very difficult though to consistently win using this process. The problem for many is that, in the long run, their Profit & Loss means more to them than it does to ‘the market’ which means that they are always operating under a psychological burden of ‘needing to perform’. The best traders are those who can divorce their trading from their feelings. What conclusions can we draw from this interview? For our regular reader base, you will know from our monthly ‘School Corner’ feature column that the main point we try to hammer home each month is to control your leverage — if you control your leverage and do your homework, be it technically or fundamentally orientated, then you will increase the odds of success in your spread betting. Simply applying a ‘gambling’ and ‘hope for the best’ mentality to your account operation will very likely end in disaster. What is also interesting to hear is that, unsurprisingly, the market is no respecter of ‘pocket depth’ when considering Simon’s remarks about the larger accounts - this can give you a false sense of security. At its base level, disciplined money management is the ONLY way that you will ensure longevity of your account. To receive a FREE e-book on “7 ways successful traders stay profitable and reduce risk” click here.
Special Feature - LS Trader
LS Traderâ€™s Phil Seaton Explains the importance of diversification to professional trading. In this monthâ€™s article we are going to discuss the often-misunderstood subject of portfolio selection and diversification. importance of portfolio selection and the impact it has on their performance.
Many traders do not realise the importance of portfolio selection and the impact it has on their performance. These can be big mistakes for numerous reasons.
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Special Feature - LS Trader
Let’s look briefly at each of these key points:
Trading too few markets.
If one selects only a few markets to trade, what often happens is that the markets chosen are not the markets where the action is. Within reason, the more markets that a trader has to choose from, the more chance he has of catching a big move, which is ultimately what trading is all about. This is the equivalent of casting out a big net in order to catch a few big winners. If one employs the very wise policy of cutting losses short and letting winners run, he can place numerous small bets and give himself a far greater chance of catching a market with a big trend. If a trader has a decent selection of markets in his portfolio from different market sectors or asset classes, when one sector is underperforming or consolidating there will very likely be other sectors or assets that are in fact trending well. By trading a diversified portfolio, the trader therefore increases his chances of success and handily, also reduces his risk.
Trading with too large a bet size.
When one trades too few markets, it is easy to get sucked into trading with a bet size that is too large on each individual trade. This can often lead to disaster. For example, if a trader is risking a large amount of equity on just a few trades and he is wrong (an occupational hazard of the trader!), then the losses generated can be terminal. This is, in fact, a riskier approach than trading a selection of markets with a smaller bet size, even if the overall risk is the same. The risk on any one trade should always be kept to a small percentage of overall equity, ideally around 2%. In this way the trader can afford to have a series of small losses in the pursuit of some big winners.
Trading only from the long side.
Perhaps one of the biggest errors in trading is being positioned only from the long side. Many traders don’t understand or feel comfortable selling ‘short’. Having a few shorts in the portfolio gives a natural hedge against long positions, thereby reducing overall risk and bringing in some crash protection. Let’s look at a very simple example. Assume that one is trading 10 stocks and they are all long positions. If the trader is trading 10 equal size positions, we can say that each trade is called 1 unit. In the above example he effectively has 10 units at risk in the same direction. Now, if the same trader instead had 7 long trades and 3 short trades, he has the same 10 opportunities for catching a winner but has less risk. In an oversimplified version one could say that the trader was net long 4 units. In practice this is not quite the case and the hedge is not quite so effective as there is no guarantee that the short trades will go down if the general market does, although this is likely. What I tend to do is divide the lesser number (short position), in this case 3 short trades in half, to give 1 ½ units and then subtract that from the long trades. This gives a net long exposure of 5 ½ units, but the trader still has the profit potential of 10 trades, but now at just over half the risk of the first example. This is clearly a smarter and safer way to trade.
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Special Feature - LS Trader
The above points show that a trader should trade a diversified portfolio of markets, with a small bet size to keep overall risk under control and trade from the long and the short side. So, what markets should be included in a diversified portfolio? At LS Trader we have researched this subject heavily and we trade 40 markets, both from the long and the short side, including stock indexes, currencies, bonds, interest rate futures, grains, soft commodities, metals, agricultural commodities and metals. Traders can also add individual equities. It’s not just us that have come up with the above answers based on years of research. Consider David Harding of Winton Capital, an ultra successful hedge fund manager who also employs a trend following strategy to trading the markets. He’s been so successful that he now has some $29 billion under management at Winton Capital. Diversification? You bet. Winton Capital trades markets from all of the above asset classes as well as some 2000 individual equities, and yes that is not a misprint! Now, clearly the retail trader cannot possibly trade 2000 equities for obvious reasons, but it does show the importance of diversification. We’re now in the month of May, which often brings up the Wall Street adage of “Sell in May and go away”. That may be fine from a stock-trading viewpoint but does that mean you need to stop trading altogether? No, not if you are happy trading stocks from the short side when the right opportunities arise, but even better, why not look at some other markets such as commodities? There are very often some excellent opportunities in the commodity markets both long and short.
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The past few weeks have seen stocks correct and have seen many people take a hit from holding long stock index positions. This is not so much an issue for those that trade a diversified portfolio, especially across different asset classes. At LS Trader we have been picking up nice profits by trading other markets, such as being long bonds and grains (especially Soybeans and Soybean Meal) and short soft commodities, metals and energies. We were also long stock indexes until a few weeks ago when our system flagged that the uptrend was over, getting us out fairly near the top of the move. There have also been some big opportunities over the past few weeks from the short side. Many commodity markets are moving lower, including gold and oil, as well as some of the less popular markets such as orange juice, cotton and coffee. At the time of writing our system is up almost 30% YTD against a largely flat FTSE. Next time you have a few spare minutes, pull up some commodity charts. Have a look at the moves in orange juice, coffee, cotton, natural gas and soybean meal to name a few. Then ask yourself, would I be better off adding some diversification and some short trades? I think by now you know the answer. Hopefully this will give you some food for thought over the coming month and assist you with your trading. If you’re interested in seeing exactly how we apply the strategies outlined above, we are currently offering a 30 day free trial to our proprietary spread betting system purely for Spreadbet Magazine readers at the following link: www.LSTrader.co.uk/spreadbetmag Until next month, good trading. Phil Seaton
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Special School Corner Feature Technical Analysis v Fundamental Analysis which suits you best?
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Technical Analysis v Fundamental Analysis
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When trading, irrespective whether this is through the mechanisms of spreadbetting, CFD trading or outright physical instruments, there are only 2 primary investing styles that investors will use either technical or fundamental analysis. The most appropriate style for you will depend upon a number of factors including: your personal time availability, understanding of accounting and personal mathematical capability, level of economics appreciation, intended timescale of the trade etc, etc… Generally, it seems most traders, particularly those looking to make quick-fire short term trades and certainly those with a bias towards commodities and currencies (the ultimate trending markets), will focus upon technical analysis and in many instances use this method almost exclusively for their trading. The attraction of technical analysis is that once you understand some relatively simple terms, and how the indicators are made up, that you can quickly form an opinion on the instrument you are looking at and so, at face value, technical analysis is potentially more suited to those traders with less time to allocate to their trading. Fundamental analysis tends to be the favoured option of ‘investors’ as opposed to traders. With this approach an individual looks to analyse the economic backdrop affecting that particular instrument and, in the case of shares, delving into the accounts to calculate ratios such as Price Earnings, dividend yields, price to cash flow, book value (balance sheet worth) etc, and a whole variety of other measures. Usefully, there are a number of companies that provide this type of research for the fundamentally orientated but time poor investor. One company whom we recommend, and is also a contributor to our magazine, is FatProphets — they cover a whole host of companies and markets and their research pieces are written by CFA’s (a serious and respected charter of analytical ability) — take a look at their feature this month on Bskyb in assessing the calibre of their work.
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As mentioned above, if you are day or ‘swing’ trading then you will almost exclusively use technical analysis, certainly in relation to indices, currencies and commodities. You are trying to look for the optimum set of indicators that tip the scales in your favour. Vice versa, if, for example, you feel that Japanese stocks are undervalued and fancy taking a long bet on the Nikkei, then you would probably look at measures of fundamental value and attempt to ‘time’ your way into the market through technical analysis. You can see that for the more medium - long term trades then the bias of analysis is towards fundamentals, with technicals used to optimise your trade entry level. Short terms trades like FTSE day trades are almost exclusively based upon using technical indicators in guiding you with your entries and exits, and this is why many spreadbetting & CFD firms now include charting packages on their platforms. One of our contributors, Phil Seaton of LS Trader, uses technicals exclusively, even for medium - longer term trades, and this is all based on trend following - he in fact argues that an awareness of the fundamentals affecting a particular instrument is not required and that all that matters is the ‘trend’ and being on the right side of this. You can see that there are therefore 2 extremes of this approach and whatever works for you, you should stick with.
Technical analysis basics Let’s look at some of the most used technical analysis measures and terms, and attempt to understand how they are calculated and finally look at some current example of these: (i) RSI (Relative Strength Indicator) - Developed by one of the Grandaddy’s of technical analysis - J Welles Wilder this is a measure of a particular instrument’s strength or weakness based on its closing prices over a recent trading period — generally 14 days. It is, at its heart, a momentum oscillator and is deemed to be overbought when the measure is over 70 and oversold when the measure is below 30.
Technical Analysis v Fundamental Analysis
Measures below 20 and over 80 are very rare and can signify the final throes of a trend particularly when the trend is long in the tooth. A simple way that I find to understand this indicator and what it is telling me is as follows: assuming a 14 period RSI, a zero RSI value means prices moved lower throughout the entire 14 day period, i.e. there were no gains to measure. An RSI of 100 results when the average loss during this period equals zero, i.e. the price moved higher throughout the entire 14 day period; there were no losses to measure. When a divergence occurs between the RSI measure and the underlying price action, this is usually a strong indication that a market turning point is imminent. Bearish divergence occurs when price makes a new high yet the RSI makes a lower high and so failing to confirm the price action. Bullish divergence occurs when the price makes a new low but the RSI makes a higher low.
We will look at a real live example with the Spanish market. You will see that here we have a bullish divergence - I have put a square around the RSI measure to the top (14 day RSI used). Although prices have continued to grind lower (at time of press), the RSI is beginning to rise, i.e. on a daily closing basis, prices are actually gaining strength relative to the 14 day closing average. What you generally see at a true bottom is the RSI makes another low over the period in question, but the underlying instrument rallies sharply on a particular day or successive days. This will still leave the RSI in oversold territory, but the price action tells you that the bottom is in place. As the RSI is a ‘smoothed’ measure of a particular period, then it will, by its very nature, ‘lag’ the underlying instrument price — this is an important consideration. Regular readers of our blog will know that I believe the Ibex (Spanish) market to: (a) fundamentally be materially undervalued, and (b) to be probing out a technical bottom. It will be interesting (not least to my P&L!) to see how this plays out over the ensuing weeks and months.
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Here is another example of both bullish and bearish divergences using Ebay during the 2007-08 period.
You can see in the first half of the chart how the price continued to make new highs yet the RSI began to wane between Sep & October â€” this is telling you that the rate of ascent in the share price was faltering and that there were, in fact, a number of days during that 14 day period when the stock price did not make new highs â€” an indicator that the trend was turning.
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Similarly, in March of 2008 you can see that as the stock made a marginal new low that the RSI was continuing its rise, hence a positive divergence.
Technical Analysis v Fundamental Analysis
(ii) Trend lines - these are very easy to understand - a price can be said to be either on support or resistance and potentially breaking out of a particular trend line.
We can clearly see the importance of the 200p price level where the intermediate trend line from July of last year comes in and also the old resistance level of 200p (that should now act as support) is positioned. Here you have the trend line and the support line. Technical analysis dictates that a break of either of these will tell you that the trend is changing and that the shares are going lower.
Let’s use a topical example below with trader’s favourite — Gulf Keystone.
These happen very frequently and can catch the novice technician out. The way I deal with these is to act on half my position and then wait on the other half for a 2-3 day close above/below the support/resistance in confirming the breakout.
One thing, however, you must be aware of and that is what is called a ‘false breakout’ — this occurs where the support/resistance/trend line is broken and the price action returns back to keep the original premise intact.
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(iii) MACD (Moving average Convergence Divergence) This is simply the measure of the difference between 2 moving averages. There are 3 figures that are inputted into the calculation of the MACD, these three signal lines are: the MACD line, the signal line (or average line), and the difference (or divergence). The first line, called the ‘MACD line’, equals the difference between a ‘fast’ (short period) moving average and a ‘slow’ (longer period) moving average.
The MACD line is charted over time, along with a moving average of this MACD line, termed the ‘signal line’ or ‘average line’. The difference between the MACD line and the signal line is shown as either a bar chart (histogram) or chart line.
In layman’s terms, what the chart is showing you is the 12 day moving average minus the 26 day moving average (the blue line) and this itself is then also averaged over a 9 day period and so smoothed. You can see how the MACD thus gives you an indication of a change in trend. You can of course change the parameters, I, for example, find using the combine of 9, 27 and 13 quite a good indicator and, again, we will use the Spanish Ibex index to the right in analysing this.
What this is telling me is the difference between the 9 & 27 day moving averages smoothed over 13 days, and you can see it is indicating an imminent change of trend. Let us re-visit this in subsequent weeks and see just how good an indicator this was.
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I think the chart below is a good graphical illustration of how this works using the typical 12, 26 & 9 day indicators.
Technical Analysis v Fundamental Analysis
(iv) Volume - this is very simple and works on the proven principle that volume generally leads price and should also confirm price. For example, if a stock price is rising on strong volume then this is good, whereas if a stock price is falling on strong volume then you should watch out if long. I personally find, at bottoms in particular, that when strong volume occurs in the latter stages of a prolonged downtrend and the stock price/index etc rises on that day that this signals a final clearance of overhanging selling pressure and thus a platform to move up. (v) Moving averages - There are 3 types of moving average measures - simple, weighted and exponential - the latter being similar to the weighted average and so I will look to explain just the former two here.
So the 50 day moving average would simply be the sum total of the 50 day price of that particular index divided by 50. You can quickly see how if a stock price is rising then the 50 day moving average would be rising and vice versa if falling. The weighted moving average essentially weights the most recent prices at a higher figure and so should be, at any one time, closer to the underlying price instrument than a simple moving average. For example, using a 10-day weighted moving average you would take the closing price of the 10th day and multiply this number by 10, the ninth day by nine, the eighth day by eight and so on to the first of the moving average. Once the total has been determined, this is then divided by the number of days the WMA is being calculated for.
The simple moving average is exactly as its description states, an average over a particular period, for example 50 days, displayed as a moving price line.
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Two important indicators to look for in technical analysis are what are known as the golden cross and dead cross. The former is when the 50 day moving average cross up through the 200 day moving average (and the price is above both) â€” this is considered to be an indicator of a medium - long term bull trend. A dead cross is when the 50 day cross down through the 200 day moving average and price is below these.
Below is a chart of Gulf Keystone that shows 2 golden crosses and one dead cross.
What you can find happens, on many occasions, is that a golden or dead cross will form, only to be negated by the price action in ensuing weeks â€” this has, in fact, wrong footed technicians on the major stock markets twice over the last 2 years where dead crosses occurred.
As with most things in the markets, nothing is certain and there is no holy grail to profitability, and so the golden and dead cross should form part of the overall technical picture and not be the primary reason for the trade.
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Technical Analysis v Fundamental Analysis
So, let us combine all the measures above into one chart on the FTSE and see what we can glean from this.
We can see the major trend line from the lows last summer coming into play around the 5600 level and also the support line converging with this at the 5600 level. The index is now trading beneath the 50 & 200 day moving averages (I am using weighted here), but has yet to create a dead cross, in fact the golden cross formed in the New Year is still intact. The RSI is trading down towards 40 indicating that we are getting close to oversold, whilst the MACD is showing a bullish divergence. In short, this is a chart that has no clear direction at this stage, and one would be well advised to sit on the sidelines to see if the index breaks decisively below 5600 and the MACD confirms this turn down. For those readers with a particular interest in technical analysis, I would recommend the following book — Technical Analysis of Financial Markets by John Murphy — this is widely considered to be the ‘bible’ for those truly interested in this investing art.
Of course, you can always listen to our resident feature writer, Dominic Picarda, in one of his webcasts posted on our website each month — you’ll likely find his interpretation of where we are in that month’s featured market(s) very interesting and hopefully learn something too. And so, to conclude, for most readers I would guess that when spreadbetting on currencies and indices in particular, that technical analysis is the favoured method of trade analysis. I know from a hard personal experience that with currencies in particular, the old adage of ‘the trend is your friend’ should be honoured and respected. I felt that the pound was fundamentally undervalued against the Australian dollar during 2010 and 2011, and certainly most economic and currency commentators agreed with the stance. Purchasing Power Parity dictated a fair level against the Aussie of around $2.10-$2.20, and so with the pair trading at $1.60 I felt it a good buy. The pair continued to fall, however, during 2011 hitting a low in the early part of this year of $1.47. The trend was still intact and I ignored it to my cost.
June 2012 | www.financial-spread-betting.com | 25
The lesson to me of this is as follows - when there is a divergence in the technical picture relative to the fundamentals, it is invariably better to wait for the technical situation to play out first and align with the fundamentals before making the trade. The more â€˜boxes you can tickâ€™ in your trade line up, and when coupled with good money management, the more profitable your trading will be - fact. When it comes to stocks then certainly a thorough understanding of the fundamentals of that company should be undertaken â€” even if you are day trading. Technicals can then be used to time the entry and plan your exit from the position.
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Technical Analysis v Fundamental Analysis
At the end of the day it is down to your personality type as to where your bias will be - the more aggressive traders, I have seen, tend to favour the immediacy of a technical chart, whilst the more measured, and typically more risk averse, tend to concentrate on fundamental analysis. I believe that a basic understanding of both should be the bare minimum of all traders and that weighing up the position of each, with stocks in particular, should be used when entering a trade.
The technical chart shows a nice golden cross forming in recent weeks, a break of the long term 2 year downtrend, a rising MACD and perhaps the only negative cautioning about the long side - an overbought measure on the RSI.
Let’s have a final look at the trade that cost me dearly last year — GBPvAUD. The fundamental backdrop still indicates a PPP measure in excess of $2 and there are signs of the Aussie economy slowing due to China’s recent pause in economic growth, whilst in the UK the hawkish noises out of the BoE and the diminishing prospects of more QE tend to lend weight to a stronger pound going forward. fair level against the Aussie of around $2.10-$2.20, and so with the pair trading at $1.60 I felt it a good buy. The pair continued to fall, however, during 2011 hitting a low in the early part of this year of $1.47. The trend was still intact and I ignored it to my cost.
In essence, both the fundamentals and technicals now align and so this is a less risky point to enter the trade - I think I’ll re-open that long bet...!
June 2012 | www.financial-spread-betting.com | 27
words of wisdom Randgold – all that glitters is not gold. I am 65 years old and got married in 1969 in central Africa where my wife and I lived for the ensuing four very happy years. I had arrived, excitedly, in the belief that Ian Smith in Rhodesia should be overturned forthwith. However, after a few months looking at African government in practice, I realised that that was a silly idea. Just look at Zimbabwe today. I have always since followed developments in Africa and therefore marvelled at UK investors’ willingness in the early noughties to turn a blind eye to the history of economic development in sub-Saharan Africa. The governments there note that approving the influx of foreign capital-financed projects is beneficial in the short term, particularly during the development of the project. However, there comes a moment when no more cash is being brought into the territory and it is worth unilaterally rescinding the licences that attracted the capital in the first instance, thus in effect giving the benefit of the development expenditure to a local politician. If in doubt, look around the DRC. I shall not waste your time, but I could go on and on and on. We are now in this phase of “repossessions” as the economic optimism of the noughties evaporates.
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Randgold (RRS) got the hint of the threat of that a few weeks ago when there was some question as to whether Tuaregs (camel-riding nomads) would take control of Mali, Randgold’s principal area of operations. In short, there re-emerged the threat of adverse political developments which are entirely beyond the guest corporation’s control. Make no mistake: Randgold is not a small company: at £48 a share it is capitalised at £4.4bn and is a member of the FTSE100 index. And it is its size which is key to understanding the future. I myself turned mega bullish on gold in 2001 when our very own pet lunatic Gordon Brown sold Bank of England gold. I knew that from that moment on, gold bugs were on a free ride. And, as it happens, I have made about £5m on gold shares since then – although I must concede that the last two years or so have been very disappointing as further gold price rise expectations have become muted. However, seemingly immune from this downturn was Randgold since institutions seeking gold price appreciation benefits could only deal in the UK market in size by investing in Randgold. Thus its capitalisation grew out of all proportion to its prospects.
Evil Knievilâ€™s words of wisdom
Times change. For I reckon that Randgold now has two giant clouds overhead: one is the much reduced hope for the gold price and, much more importantly, doubt has returned to sub-Saharan investing.
It really does not matter how well Randgold does or how lucky it proves to be in escaping adverse political change. It has hit the buffers sentiment-wise. I reckon you should get short of Randgold for the next two years and, should you prefer to be a cowardly custard, hedge through a long portfolio of junior golds or indeed the gold price itself.
June 2012 | www.financial-spread-betting.com | 29
Ruspetro – Putin comes up trumps Readers of SBM from the first issue will recall the worthwhile rise, highlighted here, as distinctly possible for Ruspetro (RPO), a Russian-based oil field developer and producer. The target price then given was 500p. However, I am persuaded that matters have changed. For, despite the long history of oil and gas profligacy practised throughout the Soviet Union and, now, Russia, Russian political concerns have demanded that taxation law be changed to encourage development and therefore maximisation of marginal fields.
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This is right up Ruspetro’s street. Putin changed the law on 3rd May. However, it was clarified on 10th May and clearly identifies Ruspetro’s opportunity. The new target price is 750p.
Evil Knievilâ€™s words of wisdom
Gulf Keystone and its touchy CEO On 10th May Gulf Keystone (GKP) announced that its lawyers would inhibit malicious comment by bulletin board posters. This was in response to a rash of allegedly mischievous comment forecasting a 160p placing. I reckon a wise lawyer would have sat Mr Kozel down, advised a momentâ€™s reflection and then told him to drop it.
For all that Mr Kozel has done is to raise doubts amongst his followers through causing them to wonder whether a more serious concern is being camouflaged from public view. I have never, ever noted lawyers on the defamation trail ever achieve anything for their corporate clients other than to strip them of yet more money. Surely, Mr Kozel knows this.
June 2012 | www.financial-spread-betting.com | 31
Fixed FX spreads. (No change there then.)
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A capital place to spread bet
US Feature All over for the iconic mobile company or Microsoft to step into the breech? We first covered Nokia very briefly in our inaugural issue as part of the special feature on “10 contrarian trades for 2012” within which we postulated upon the possibility of the mobile phone giant being taken over at some point during 2012. The shares were trading at that point at around 4 Euros and at the last look they had slumped to less than 2.5 Euros, valuing the company at just over 9bn Euros — in excess of a 90% drop from its early millennium peak value, as the chart below pays testimony to. Like the eponymous blackberry maker, Research in Motion, it seems that the ‘market’ is saying that the future is only Apple and Android operating system variants and that there is no room for the 2 ‘also-rans’ of Nokia and RIMM. This throws up the interesting potential for a recovery/contrarian play and it seems an opportune time to revisit our early year question — is there a realistic possibility of a takeover for Nokia? The most obvious suitor for Nokia is, of course, Microsoft following Stephen Elop’s (himself ex Microsoft) tying up with the computing giant some 12 months ago now, and which is centred around installing the Windows operating system into Nokia’s smartphones. There are no shortages of commentators bemoaning this strategy and who are resolute in their beliefs that Android and Apple now have an unassailable position.
It seems that Elop is in fact shying away from the fight with Apple, in particular with his statement post the results that Nokia is to continue to concentrate on the low end smartphone area of the market place (and so continue to battle with Samsung and Rimm here). The results released at the end of April further emboldened bears of the stock with a disappointing and tub thumping loss of over 1.5bn Euros for the first quarter alone, although 945m Euros of this was a one off restructuring charge and so non-recurring. Sales fell by almost 30% as shipments of the Lumia phones (the first to feature Windows 7) were lower than expected. It is noteworthy too that April’s results continued a string of 4 consecutive quarters of losses. The killer questions of course are: (a) is it in the price and (b) is anyone, and in particular Microsoft, likely to step up and put shareholders out of their misery? At the current price of 2.4 euros (time of writing) the stock yields just under 6% (having recently just paid the dividend) and is trading on a forward earnings multiple of a shade over 8 times. Its price to book level is under 1 times at 0.75 — a pretty compelling valuation backdrop I’m sure most ‘value’ biased traders and investors will agree.
June 2012 | www.financial-spread-betting.com | 33
The cash backing of Nokia which currently stands at a net figure of 4.9bn Euros (adjusted for debt liabilities) needs to be considered as part of a ‘sum of the parts’ valuation exercise as Elop forecast continuing losses into the second quarter. If they continue to burn cash and incur the level of operating losses at present then within 2 - 3 years this cash pile could be gone.
This seems highly unlikely to me, however, as even in the face of a dire first quarter, the depletion of 700m Euros from their cash reserves was largely due to “non recurring” working capital changes, i.e. discounting of stock.
Let’s look at a realistic ‘sum of the parts’ breakdown for the shares:
Gross margins were just under 30%. The nearest comparable company is Alcatel Lucent which has slightly higher margins, and so applying a 20% haircut to the valuation of Alcatel Lucent and dividing this by 2, due to Nokia’s 50% share, results in a potential value of around just over 1bn Euro’s circa 30c per share.
NSN (Nokia Siemens Networks) - 30c per share Nokia’s JV with Siemens essentially maintains and services their networks and this produced total revenue of just under $20bn for the last full year.
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Devices & Services division - 1.40 Euros per share This is the major part of Nokia and where the partnership with Microsoft is centred, and so is likely to be at the forefront of any valuation exercise undertaken by Microsoft in appraising a fair value for the business. We calculate a value along the following lines: gross revenue for 2011 was $33.5bn and its nearest comparable Sony Ericsson was bought out by Sony for $1.5bn in 2011. Sony Ericsson was producing annual revenues of $7.3bn at the time of the buyout yet similar gross margins to Nokia, and so pro rating this multiple results in a valuation for this division of $6.9bn; per share in Euro’s this equates to circa 1.40 Euros. Location & Commerce - 30c per share This segment had about $1bn in sales in 2011. One of its primary competitors, Telenav, generated gross sales of $210m in 2011 and has a market capitalisation of approx $300m. Telenav’s revenue is just a fifth of Nokia’s and so applying a pro rata multiple results in a value of $1.5bn — approx 30c per share. With net cash of approx 1.30 Euro’s per share, the sum of above results in a total of 3.30 Euro’s per share. This excludes any value whatsoever for the brand of Nokia (and which incidentally Interbrand, the respected brand valuation and consultancy company, put a value of $25bn in 2011!) and of course a control premium that would be required to be paid in the event of a wholesale takeout — generally around 25 - 40%.
If there is any realism in the brand calculation and even with a major haircut, it seems to us that Nokia is certainly worth more, potentially a lot more, than its current 2.40 Euro’s per share. The impending sale of Nokia’s luxury phone arm Vertu - is a possible clue as to how Nokia could also piecemeal divest elements of its empire with NSN, perhaps next on the block, and so leave the rump Devices and Services division for Microsoft to swallow at some point within the next 18 months. The shares look to be one of those classic value plays with no value being embedded for any upside catalysts, and a good security net of value to underpin a long trade at this level. It is also worth recalling that in early 2000 Apple shares themselves had been written off by Wall Street and were trading at less than $10’s per share. The rest is, of course, history... Below is a recent chart with some near term potential retracement levels for the more short term orientated traders (PLEASE NOTE THE NYSE LIST DOLLAR DENOMINATED SHARES HAVE BEEN USED HERE).
June 2012 | www.financial-spread-betting.com | 35
Five pairs trading ideas.
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5 pairs trading ideas
June 2012 | www.financial-spread-betting.com | 37
The beauty of a pairs trade (essentially a long position v a short position) is that it essentially provides you with a natural hedge in the event of a shakedown in the market (like what we are currently experiencing at time of writing!). The short position would be expected to mute any losses on the long side and of course, if you have chosen the ‘pairs’ correctly, then you would expect the short trade to fall farther than the long trade. Readers will recall our piece about pairs trading in the Feb/March edition of the magazine (page 70). The key with the pairs trade, aside from actually choosing the right trade ideas, is to get your respective long and short wagers correct. I suggest that new readers take a look at this article to gain a thorough understanding but put simply, what you need to remember is that your wagers on both sides should equal the same percentage move, i.e. for a 1% move in both trades you make and lose the same amount. This is very important. Many a novice pairs trader has come unstuck through getting the long and short monetary base wrong! To quickly refresh readers as to how you calculate the respective wager let’s take the FTSE v the Dow Jones potential pair. At time of writing, the FTSE is trading at 5600 and the Dow at 12000. If you wanted to enter a long FTSE v short Dow trade in the equivalent of £10 per point, then you would divide the long side, the FTSE (5600), by the short side (12000) = 0.467. What this means is that for every £10 of the FTSE you wager on the long side, you need to wager £4.67 on the Dow on the short side. Let’s check this. Say that both the FTSE and the Dow move 5% we can check we have our calculations correct. The FTSE would have moved from 5600 to 5880 and the Dow would have moved from 12000 to 12600.
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On the long FTSE trade we would have made £2800 (280pts x £10) and on the short Dow we would have lost £2800 (600pts x £4.67) - exactly matching each other. Always perform a test calculation using a predetermined percentage move (5% is easy) to verify you have your stakes correct. Now let’s look at Spreadbet Magazine’s 5 potential pairs ideas with a brief overview as to their respective reasonings:
5 pairs trading ideas
Long Research in Motion (RIMM) V short the Nasdaq 100 index Regular readers will know that we called a Conviction Buy on this stock last month at $13, quite simply on pure valuation grounds and also in the reasonable expectation of corporate activity in the near– medium term. For those punters worried about the Nasdaq chart formation and the potential for the market to fall and drag back RIMM, then a pairs trade on this basis alone could be justified. Alternately, looking at the chart below, we can see just how much RIMM has underperformed its benchmark index over the last 2 years - some 80%. This measure of underperformance is extreme by any standard and unless the company disappears into the ether (unlikely given its robust net cash balance) then we think the underperformance is likely to reverse.
What is also encouraging is that if you look closely at the chart, you will see that, in fact, the underperformance has been arrested since late March even though RIMM has remained weak — an indication perhaps that RIMM is finding a floor relative to the Nasdaq. The relative short wager to the long side is 0.46 (1200/2600). For every £10 long on RIMM, you need £4.60 short on the Nasdaq 100 future. Remember, however, to check the denomination of how the Nasdaq is traded with your spreadbet provider - some are per tenth of a point and others per whole point - if the former, then you need to wager 46p short on the Nasdaq per £10 on RIMM.
June 2012 | www.financial-spread-betting.com | 39
Long Ibex (Spanish equity market) v short the S&P 500 Below is the 3 year chart of the Ibex versus the global benchmark - the S&P 500. You can see that whilst the S&P 500 is presently probing new 3 year highs, the poor old Spanish market has (at time of writing) just revisited its 2009 lows.
This level of dislocation between major markets is very rare. In essence, the US market has outperformed the Spanish market by almost 90% (excluding currency movements) - a phenomenal level of underperformance.revisited its 2009 lows.
Whilst the worries within the Spanish economy are not to be trivialised, with an amazing almost 1- person-in-4 of working age currently unemployed and continued worries within the sovereign debt markets over the ability of Spain to repay its debts, as with most things, the question is now; is it in the price? With Spanish equity yields on their way to 8% and, even with the bond vigilantes pressurising yields, 10 year bonds currently hovering around 6%, unless there is a major wholesale dividend cut around the corner and no real growth in dividends over the next 10 years, it is hard not to come to the conclusion that Spanish equities are cheap.
Analysts at Soc Gen recently opined, “The Ibex either discounts a dividend cut or a further rise in interest rates; or, all signs suggest that Spain is in a similar situation to Japan during its lost decades, with the spectre of deflation rearing its ugly head. Thus, any positive sign from the Spanish economy could lead to normalisation of 10-year bond yields and send the IBEX higher, as recently occurred on Italian financial markets.”
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The pairs trade suggestion here is simply long Ibex v short S&P 500 (again remembering to check with your provider if the S&P contract is trade in £’s per whole or tenth of a point). The denomination factor on the short side per £10 is 6800/1360 = 5, i.e. for every £10 long on the Ibex you would short £50 of the S&P 500 (or £5.23 if per tenth of a point).
5 pairs trading ideas
Long Heritage Oil v Short FTSE 100 I would refer readers back to our piece on Heritage Oil last month on page 26 to familiarise themselves with the bull argument for this stock. Essentially, we believe it to be perhaps the most undervalued mid cap oil exploration stock in its universe. In recent weeks its underperformance versus the FTSE 100 had begun to be reversed, and below is the chart of the stock v the FTSE over the last 2 years.
The respective long:short ratio here is 135/5600 = 0.024, i.e. for every £10 long of Heritage Oil shares you should go short 24 pence of the FTSE. We can check this with a 10% rise in Heritage Oil taking the shares to 148.5p = 13.5 x £10 = £135 profit while a 10% rise in the FTSE would take us up 560 points = £135 loss at 24p per point.
June 2012 | www.financial-spread-betting.com | 41
Long Dow Jones v Short Gold Below are two charts on the so called Dow:Gold ratio - one going back to 1980 and the other showing the ratio over the past 3 years. In looking at the 32 year chart, what is apparent is that the Dow Jones was massively undervalued relative to gold in 1980 = the ratio being almost exactly 1 before embarking on a major re-rating culminating in the millennium madness which grabbed hold of stocks and created the biggest equity bubble in history with the ratio rising to an amazing 45 times the gold price! Since then it has been one-way traffic, hitting a low of just over 5 last year as European sovereign debt worries took hold, and gold was squeezed higher on expectations of continued money printing by the world’s central banks.
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The short term chart shows an interesting golden cross formation (read our piece this month on Technical analysis v Fundamental analysis for an appreciation of the significance of this indicator) that points to continued outperformance of the Dow Jones index relative to the gold price (so eloquently coined the “barbarous relic” by gold bears!) in the medium term — perhaps a clue as to tightening monetary policy and no more money printing so lessening the appeal of the yellow metal that produces no income. The long:short ratio is simply the ratio itself currently 8, i.e. for every £10 of the Dow Jones you go long, you should sell £80 of the Gold future.
5 pairs trading ideas
Long Lloyds Banking Group v short HSBC This idea is quite simply a play on the disparity in the so called ‘book value’ of Lloyds bank relative to HSBC that is currently very extensive, and closing in the medium term. Lloyds’ book value is just under 0.5 meaning that the price of its equity compared to the banks so called NAV (total loans portfolio, assets etc) is 50% of this. The reason for this, of course, is that the market is still sceptical on the value of Lloyds’ loan portfolio given the legacy bad debts within it courtesy of the HBOS takeover. In comparison, HSBC’s book value is 1, i.e. the bank’s shares are priced exactly the same as its NAV.
The 5 year chart below shows the total underperformance of Lloyds relative to HSBC but you can see a clear stabilisation pattern. We are probably two thirds of the way through the working off of the bad loans in Lloyds portfolio at this point and when the market can see a normalisation (albeit at a lower base) of ROE (return on equity) and perhaps dividend re-instatement then Lloyds shares could re-rate and so outperform the already richly valued HSBC. The long short ratio is 0.058 (32/550), ie for every £10 per point of Lloyds you go long you should sell 58p per point of HSBC.
Conclusion I hope these ideas have given you some food for thought as to the merits of each of them, and perhaps to look for your own pairs trading ideas. The ideas detailed here are all of a medium term nature and not quick fire trades to expect returns overnight.
The other important element to remember is that when you unwind your pairs trade - always take off BOTH sides of the trade, otherwise you are quite simply speculating on the direction of the remaining leg you have left running.
June 2012 | www.financial-spread-betting.com | 43
aka The Naked Trader May Diary Well, as I write, volatility has returned big time to the markets and this volatility is actually what spread betters really need to make the quick money they are always after! And remember, spreadbetting is a cracking mechanism that gives us a good chance of making some money from a market downturn. However, one thing about volatility to comment on is stop losses... You simply can’t just stick a stop loss on something in a fast moving market and leave it - stops ought to be moved up or down depending on what’s happening yes, I know that’s contrary to what many people tell you to do!
In particular, I think that it is worth looking through your stops before the markets open each day to check whether they are in the right place. For example, if you are in a short and the market is set to start the day up but you feel the move will be temporary, check you won’t be spiked out at the start of trading... Those of you with level 2 prices can check, a few minutes before the opening, the kind of opening price that is likely. Turning to what I’m up to during the current downtrend... Two main tactics… quick fire FTSE shorts work very nicely, and they did for me during the last downturn. And sometimes you get lucky and you can hold onto the FTSE short if the market simply carries on falling.
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Robbie Burns’ Trading Diary
For example, in the first week of August last year I put what I thought were very short term FTSE bets but the market simply kept falling and over a week or so I got 500 points my way!
Another that appealed was Kentz in the 380s, and Fenner in the low 400s also looks appealing. After all, it’s odd to think that when shares crash down that people often don’t buy. But it’s like the sales isn’t it?
Trailing stops can help with FTSE bets, though setting them too close to your entry is usually a bad move and will just spike you out on natural variability.
One thing to watch during extreme volatility is to check your exposure to leverage.
I used to short individual companies in downturns, but these days I find it easier to just use the FTSE. I’m also using the current downturn to pick up spreadbets on a longer-term basis (say June/Sep expiry) in companies that look to have been oversold. For example, picking up Costain at just over 200p looks like a bargain to me, with the aim of picking up around 30 points riding it up to 235, perhaps even more in time.
At the risk of being a boring old fart, (You boring old fart! — Editor) which is quite a risk here for a magazine which enjoys a bit of risk... make sure you can afford to cover losses. What you don’t want is a spreadbet firm calling you up demanding money. Make sure you are not in over your head. Have a great June! At least there won’t be any more “Should you sell in May and come back on St Ledgers Day” features… Robbie
June 2012 | www.financial-spread-betting.com | 45
Square Mile Data provides an introductory feature on the current Short Positions in the popular Oil Explorers sector. Square Mile Data is passionate about financial analytics. We like to answer questions such as ‘is there a relationship between a director selling shares, directional short interest trending, a scheduled financial announcement and price action?’ We believe that knowing if there is in fact a relationship between these factors gives investors an edge in the markets. Our aim is to provide short interest data, that is typically privileged information available to proprietary hedge funds, to the trading public, and so level the playing field. For now, we have released a ‘stock on loan’ ticker search for selected UK shares. In time, we will build a community type capability so that like minded traders can share their thoughts.
On launching the website we noticed quickly that the hottest sector of interest was the Oil & Gas Exploration & Production - although Banks have also been receiving a lot of attention in recent searches e.g. RBS. Visit most bulletin boards and Bowleven, Borders & Southern, Bahamas Petroleum Company etc are really hot topics for different reasons - and that is just those starting with B! However, Cove energy is the share with the most stock out on loan per the Crest Settlement System. Do not be fooled into thinking this share necessarily has a negative sentiment. There are many reasons why stocks are loaned and they are not necessarily to short a share. In Cove’s case, Shell Exploration & Production made an offer, the Mozambique government has consented to the offer should the Shell’s offer be successful - and yet it has a high stock loan %.
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Square Mile Data
From the point of its admission there was a relatively high stock on loan %, but my guess is that the horters got their timing wrong and proceeded to quickly cover their positions which added to purchase volume in recent weeks - we note that Ruspetro is one of Evil Knievil’s ‘rare Buy’ recommendations within this magazine, and it is interesting that Evil’s typical signature of shorting stocks is not apparent here even though there has been relatively high short interest. In recent weeks there has been a steady increase in the stock loan % once more while Ruspetro has been coming off its highs. It will be intriguing to see how this plays out over the next few months... .
One thing to note is all stock loan % figures represent the stock in crest on which a security lending activity has taken place — this is not the same as total shares in issue - since not all shares go through the clearing house, and it is certainly not the same as free float. In addition, the figures are available three days after the lending activity took place in order to protect the interests of those borrowing the stock, and this is why trend spotting is important. If we add price to the graph then it starts to talk. Ruspetro is interesting because it has a high stock on loan, and only this year was admitted to the LSE.
And finally the top 10 stock loan% for oil as at 9th May are as follows. They all have a different story to tell.
By the time you read this it will have changed so check out the latest figures on our website www.squaremiledata.com
June 2012 | www.financial-spread-betting.com | 47
British Sky Broadcasting Record telecoms sales; 9 month profits up 24% Pay-tv broadcaster Sky is being overshadowed by issues affecting its major stockholder News Corp. However, results for the first nine months show profits up just under a quarter as the group overtook Virgin to become the UK’s largest triple play provider. A stock buy-back programme adds to the attractions and with content leadership assured we rate the shares a buy. In a downturn consumers are keen to hold onto relatively low cost entertainment and treats. This is provides a cheer amidst the gloom and helps explain why Cinema chains are able to ride out recession relatively well. Pay-tv company Sky fits this mould well which explains how it has continued to grow as UK unemployment has continued to increase and inflation remains strong. The monthly cost of a subscription to Sky is around the same as a night out which illustrates the relative entertainment value it provides. The key to Sky is that it is a leader in content which allows it to out-bid others for additional content and thus attract more subscribers – a virtuous cycle. In March Formula 1 was broadcast on Sky for the first time while a deal to renew UK football premier League rights should be signed in the autumn. This serves to counter the threat from new entrants which can use the internet for content distribution i.e. companies like Lovefilm and Netflix. We discussed this threat in our last look at the shares (FAT 422, 2nd Feb 12) and argued that with Sky taking the fight to the competition – through a new on-demand service – the stock was worth buying at £6.86.
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Sky’s on-demand product is NOW TV and is due to be launched before the end of June. It would allow users to take small parts of the overall Sky package and buy content on-demand as well as by subscription. The service will be distributed through the internet and so opens up Sky’s services to customers who just want Sky movies for example and/or just want internet delivery.
This service helps take the fight to the competition and helps widen the potential customer base. This is as Netflix has a £6 all you can watch movie package and Lovefilm has a £5 a month movie deal. Netflix is an independent US firm while Lovefilm is owned by Amazon which potentially gives both deep pockets.
After finding firm support at the 78.6% Fibonacci retracement region, prices have bounced firmly higher to break above both the 50 and 200 day moving averages. Momentum is now geared to the upside, with target levels towards the 750 then 775p region.
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With reference to the weekly chart, a sustained break above the 39 week moving average would signal a continuation of the longer term uptrend.
Subscription numbers: record telecoms take-up
Looking at the subscriber numbers and Q3 (three months to the end of March) saw a stronger quarterly increase than a year ago at 78,000 extra customers and 904,000 extra total products sold. This is illustrated in the below chart:
The litmus test for Sky is subscriber numbers which drives investor sentiment and demonstrates the group’s market appeal relative to competitors. The competition is Virgin Media which has the best broadband, Freeview has free digital content and internet only offerings provide low-cost subscription in niche areas like movies.
Thus while overall customer growth continued the key driver was selling more products which means higher product uptake with existing customers. Total product growth was 13% with total products per subscriber now 2.6 versus 2.4 a year ago. Churn decreased to 10.1% from 10.4% a year ago with 31% of customers now taking triple play which is up from 26% a year ago. Average revenue per user was up to £9 to £546.
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In fact Sky is now the largest triple play provider in the UK, having overtaken Virgin Media, with 3.2m triple play customers. This comes as home communications saw 702,000 additions which was the strongest ever quarter.
A slightly weak figure looks to be the 15,000 net additions to TV subscribers in Q3. This compares to 40,000 in Q2 and 26,000 in Q1 and given that TV drives the whole business we will watch this metric closely.
However, it comes as operating margins are improving as the marginal cost of providing services to new or existing customers is low and the group continues to cut costs.
Margins improve at SKY
For the nine month’s of Sky’s financial year so far (to end March) revenue was up 5% which on face value doesn’t look strong.
The below graphic shows that while direct costs – content and so forth – as a percentage of sales are increasing other operating costs are falling. As such operating margins are trending higher to 17.9% in 2012 against 15% in 2010.
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Thus the 5% increase in revenue fed through to a 15% increase in operating profits for the nine months to the end of March.
Share buy-backs helped translate this into an even larger increase in earnings per share with a 24% boost to 37.8p. The following graphic shows the nine month financial performance:
Buybacks completed so far come to £387m with £750m planned which is not insignificant relative to the £12bn market value of the group i.e. around 6% of the market cap. The dividend yield at around 3.5% shows that Sky has matured into a cash cow provided it can maintain its pre-eminent content position relative to competitors.
If TV subscription starts to fall investor sentiment would turn. However, with the group having performed well despite the UK’s rising unemployment we believe trading will get a boost when the UK economy finally turns. The competitive threat from the internet is real but in our view not a mainstream threat.
Summary and valuation Sky’s results were overshadowed by a possible forced sale of News Corp’s stake and some relatively minor hacking at Sky News. The media regulator is currently seeing if Sky is fit and proper to hold a TV licence which could mean that News Corp is forced to divest its stake. The yield for the next financial year (12 months to end June 2013) is just under 4% and the forecast P/E comes in at 12.9X. This doesn’t look expensive but is dependent on Sky retaining traction with its subscribers.
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Accordingly, SKY will remain firmly held in the Fat Prophets portfolio.
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June 2012 | www.financial-spread-betting.com | 53
Home Retail Group Should you be tempted by the ‘sale’ of its shares?
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Home Retail Group
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Home Retail Group was launched in 2000 when GUS (formerly Great Universal Stores plc) merged its Argos and Reality UK businesses. It went on to acquire Homebase in 2002 and 33 Index stores in 2005. It was demerged from GUS plc and listed on the London Stock Exchange in October 2006.
The Group comprises three distinct operating companies: • Argos • Homebase • Financial Services Argos represents 72% of group sales and 80% of profit, whilst Homebase represents 26% of sales and 18% of profit. Financial services is minor with 2% of sales. Argos was founded by Richard Tompkins who had previously established Green Shield Stamps. Whilst on holiday in the Greek city of Argos, he came up with the idea that people could purchase goods from his “Green Shield Gift House” with cash rather than savings stamps. He rebranded the original Green Shield Stamps catalogue shops as Argos, beginning in 1973. It was subsequently bought by BAT Industries in 1979 for £32 million and was demerged and listed on the London Stock Exchange in 1990, and was then later acquired by GUS plc in 1998. It is now the second biggest Internet retailer in the UK. Homebase was founded by the Sainsbury’s supermarket chain and Belgian retailerGB-Inno-BM in 1979 as Sainsbury’s Homebase. Its first store was in Croydon, opening in 1981. In 1995 it bought rival store group Texas Homecare from the Ladbroke Group plc. Sainsbury’s sold the Homebase chain in December 2000 for £969 million mainly to venture capitalist Schroder Ventures and a smaller proportion to Kingfisher, B&Q’s parent company. Homebase was later sold on to GUS plc November 2002 for £900 million.
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In 2011 the company bought Habitat out of administration for £25 million. It’s fair to say that the financial performance of Home Retail has been pretty dire in recent years. Pre-tax profits fell to £90.2m in the year to 25 February 2012. Sales were down 6% to £5.58bn. Cash gross margin fell 7% to £2.02bn. Group operating margin was 1.8% with earnings per share down 59% to 8.7p. The net cash position at 25 February 2012 was £181m. contibuted to the weakness through income funds selling. The decision by the company to retain 748 stores for now has been questioned by some analysts given the move by consumers from the high street to online shopping, but the management team believe it is more prudent to cut 300 stores over the next 5 years as leases expire, rather than closing stores with ongoing rental payments.
Home Retail Group
The poor results have driven the shares down to a price of just 81p, valuing the group at £661 million compared with a 52 week high of 227p. The year low is 72p, coinciding with the recent 2011/12 financial results publication. The decision to cancel the final dividend, after a 4.7p interim dividend, was particularly disturbing for investors and has no doubt contributed to the weakness through income funds selling.
On a Price/earnings ratio of just 9 and with the UK consumer in a fragile state and the Groups stores badly needing expensive refurbishments, the shares are hardly in bargain basement territory.
The decision by the company to retain 748 stores for now has been questioned by some analysts given the move by consumers from the high street to online shopping, but the management team believe it is more prudent to cut 300 stores over the next 5 years as leases expire, rather than closing stores with ongoing rental payments.
It looks like the only strategy left is to close retail stores and expand online. I doubt whether this will be enough to stem the profit declines however. The Argos and Homebase brands look increasingly tired as well as the stores themselves. If you are looking for a retail investment and a turnaround story, I would look elsewhere. The risks and challenges remain very high for Home Retail and, as everyone knows, the UK is very much in recession and the outlook looks bleak for shoppers for the foreseeable future. Many a punter has decimated his capital in recent years buying ‘recovery retail plays’ like HMV & Game Group - both covered in our Feb/March edition of Spreadbet Magazine.
Home Retail describes itself as the UK’s leading home and general merchandise retailer. However, with margins, sales and earnings per share under pressure, it is questionable how Chief Executive, Terry Duddy, plans to execute a turn around plan to stabilise the battered share price.
The Group has the benefit of a strong e-commerce operation but with Tesco increasingly aggressive in this space with plans to launch an online marketplace, competition is only going to get tougher.
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Options Corner Daily options and how to use them to your advantage. One of the attractive offerings within the option spreadbetting arena and that is not actually offered in the underlying options market itself (certainly in the UK & Europe) is the facilitation of daily options that one can trade — typically in the FTSE 100 and US indices — primarily the Dow Jones & S&P. In reality, it is similar to the quick-fire area of binary betting. If, for example, you were long the FTSE 100, say in the amount of £10 per point at 5500, and the market rallied to 5600 during the day handing you a nice £1000 profit, you could construct what is in effect a ‘box’ position for the balance of that day and so lock the profit without the risk of having to close the underlying position. You might, for instance, believe that the FTSE is unlikely to push on further that particular day, but you do not want to lose the position which might be medium term in nature.
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What you could do is sell a 5600 Daily Call at say 10, and buy a 5590 Daily Put also at say 10 — both in an amount of £10 per point. In this instance, you have taken in exactly the same premium that you have paid out and so the net cost to you is zero. The net effect for the remainder of the day is that should the FTSE rise above 5600, you will lose £10 for each point, but of course, on your long FTSE position, you will make £10 per point and therefore you are perfectly hedged. Similarly, if the FTSE falls below 5590, then you will make £10 per point on your Put position, and below the 5590 level you will be perfectly hedged against the £10 per point losses on the FTSE long position. You are indifferent to the market movement for the remainder of that day.
Another way to use Daily options is similar to what we detailed with regards to Binary options last month. In fact, at the time of writing this piece, Daily options would have been an ideal way to deal with this past week as we have just experienced a sustained shake down in the markets with the FTSE 100 toeing the 5500 level. How you could use a Daily option if you are looking to catch a bounce intra-day, and not extend yourself over an evening for example, is to buy half of your position size that you would ultimately like to wind up with as a standard long spread bet. Then, if the FTSE falls further (as it invariably always does when trying to average into a downtrend!) you would add the other half of the position equivalent per point by way of a daily option bet. Let’s take an example that I personally traded this last week below: As the FTSE fell to 5530 I began to build a £20 per point position. The FTSE then fell to 5480 and the time was 1:30pm. I felt that the US markets were ripe for a rebound that afternoon, but did not want to extend the ‘natural’ long spread bet position in case I was wrong. The 5500 Daily calls were trading at 11 and so, for a cost of £220, I was able to purchase another £20 equivalent position size.
Now, if the market had continued to fall I would still be losing on the £20 outright long bet position and of course on the fixed premium paid for the option position, but I had the flexibility to close the outright long bet on a further fall and so capping my losses whilst still being able to benefit from any rise before the close above the 5511 level (5500 being the strike price and 11 being the premium cost) as I was still exposed to the 5500 Daily calls. As it happened, the FTSE did rally back up to 5540 that day and a useful profit was booked on both the long bet and the option — the latter with minimal incremental risk. The key with FTSE Daily options that are opened as outright speculative plays (i.e. non hedging) is to only bet a small percentage of your equity pot. When you are speculating on an outcome over such a short time-scale then it is imperative that your trade size is scaled back. This doesn’t mean that you will not make as much as usual, however, as the very nature of options is that they are a ‘geared’ investment, i.e. your returns to the upside are outsized. I call this measured leverage.
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Another way to use Daily options is in fact to generate extra income/reduce the cost of an underlying long/ short position. Letâ€™s look at a possible application of the strategy at present (time of writing FTSE 5500) but with an underlying short position. You might take the view that the FTSE is modestly oversold but that the trend is now down in looking at the current chart (see below).
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So, you open a short position on the FTSE at 5600 and that you intend to run over the next few weeks as we enter the usual summer moribund period, and your expectations for the market to fall hopefully play out. Now, on a particular day, letâ€™s say that the FTSE falls materially to say 5400 and you are sitting on a nice profit of 200 points but you are concerned that the market is potentially due a short term reactive move to the upside. You do not want to come out of the underlying short position only to see the market drop further again and of course, on the other hand, you cannot see into the future and be sure a reactive move is definitely coming to the upside.
The beauty of the daily option is that you can sell a Daily Put option against your short FTSE position. For example, depending on the time of day that you look to sell the option (the longer the amount of time there is left in the day the higher the value of the option due to the larger ‘time’ value element), a 5400 Put might be selling at 30. By selling the same amount (or less) of the Put as your underlying short bet what you have done is capture an additional 30 pts of premium. Now, should the FTSE rise back up to say 5500 that day, you have taken in an additional 30 pts and so increased effectively your short level to 5630 (5600 + 30) — you have therefore mitigated the up move.
This strategy works particularly well on the short side when there is a sharp drop as opposed to a long and drawn out market fall, as the sharp and large fall invariably has the effect of increasing ‘volatility’ — an important component of an options price and so allowing you to sell premium at a higher value. When the FTSE falls by 150-200 points in a day or overnight, in many cases, you can get sharp temporary rallies off this magnitude of fall, and so the daily short put ‘at the money’ sale when the market is down by this scale is a useful strategy that can be employed to allow you to remain in a more medium term position.
If the FTSE continued to fall that day, then any level below 5370 would result in your losses on the Put being exactly matched (if you had sold the same amount as the short bet) by the profit on the short side. In effect, for that day, you have locked your exit level on the overall position at 5370. Of course, should the FTSE continue to fall after the days bet had expired, then you would continue to gain on the underlying short bet as the option would no longer be in existence.
Here is a Profit & Loss diagram showing the sale of a Put premium against a short position:
Note — in our opinion, you should always sell ‘at the money’ options as the time value (which is what you are really selling) is the highest here. Also, if the premium is less than 20, I personally don’t think it is worthwhile selling the option — you may as well just exit half your position to hedge yourself.
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Directors Dealings Perhaps a sign that the recent declines in the market are coming to an end; in the last 2 weeks the ratio of Directors buying to selling (in the UK) has reverted back to a more normal pattern and there has not been such a plethora of sales by value. The alternate explanation, of course, for the volume of selling we saw in March and April is that this was related to a lot of end-of-tax-year planning by our collective corporate leaders, and not a signal as to where the UK economy was heading. One particular story stands out to us this month in the widely followed Oil & Gas exploration sector.
Gulfsands Petroleum Gulfsands Petroleum’s shares have been hit heavily in recent months primarily due to the spill over effects of the Arab uprising and in particular the civil strife in Syria — a region where the Company’s main exploration operations are based. Unfortunately for Gulfsands, the EU sanctions imposed on the Syrian Government resulted in the suspension of their Syrian activities — the main part of the company that was currently cash generative and profitable. That said, the company does have interests in Tunisia, other parts of the Middle East, North Africa & the Gulf of Mexico. From a high of over 400p in early 2011, the shares recently touched a low of 105 and, in looking at the chart below, one could surmise that they are mightily oversold.
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At the current price of 115p (time of writing), the market capitalisation is just a shade over £135m and the company sits with around £68m of net cash. General Petroleum Company (GPC), a Syrian Government owned corporation which is Gulfsands’ effective joint partner in the Syrian operations (known as Block 26), has continued to pump oil and, at the beginning of February, Gulfsands was owed approximately $25m from GPC. Interestingly, and before the Syrian issue flared up, the company was embarking upon a share buy-back exercise and was happily purchasing their own shares at prices in excess of 200p. This indicates that the Board believed the shares undervalued at this level. This type of situation where there has been forced and nervy selling resulting in a material undervaluation relative to its NAV is a classic ‘catalyst/re-appraisal’ purchase story. Should improvements in the political situation in Syria come to pass in the ensuing months, then there could be a sharp re-rating indeed. On the 11th May Mr Mahdi Sajjad purchased 30,000 shares at 111.75 on behalf of a Discretionary trust his children are beneficiaries of, taking his total beneficial holding up to 8.65m shares. Back in February, Chairman Andrew West also purchased 17,500 shares at 179p. What has really piqued my interest, however, relative to the frankly disgusting treatment of shareholders by great swathes of listed corporate UK these days, is the deferral of cash bonuses and also the suspension of share option awards until the Syrian situation is resolved. I applaud this approach and only wish the likes of Simon Fox at HMV would show similar morality and appropriate behaviour.
There is a further intriguing spin on the Gulfsands story and that is the stake-building by both Michael Kroupeev (the Russian oil financier who has amassed a stake of 18% of the shares in the past few months) and also Soyuzneftegaz (a group headed by Yuri Shafranik, Russia’s former energy minister) that has picked up 3.4%. Clearly these boys see value and they each have prior ‘form’. I am minded to follow them and will shortly commence building a holding in Gulfsands Petroleum — adding on any weakness below 100p, particularly as rumours of predatory takeover interest by CNOOC (China National Offshore Oil Corporation) has sporadically broken out in recent months.
Finally, to whet the investment appetite even further, reflect upon the situation in April 2010 where Gulfsands received an unsolicited bid proposal from Oil India Ltd & Indian Oil Corp Ltd at a price of 315p (nearly 3 times the current price) that was unanimously rejected as undervaluing the company at that time. Should political signs of stabilisation and or Government change in Syria become apparent, then I fail to see how the shares cannot re-rate or alternately be swooped upon by a predator.
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Dominic Picarda’s Technical Take An oil exploration stocks special Dominic Picarda is a Chartered Market Technician and has been responsible for the co-ordination of the Investor’s Chronicle’s charting coverage for 4 years. He is also an Associate Editor of the FT and frequently speaks at seminars and other trading events. Dominic holds an MSc in Economic History from the LSE & Political Science.
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Striking oil has always been a daydream of those who crave instant riches. Rather than drilling in your backyard, however, the most popular way of pursuing wealth like this nowadays is to buy the shares of small oil exploration firms. When such a firm makes a significant discovery, the effect on its share price typically resembles that initial skyward spurt of crude that a freshly-dug well famously emits. From the perspective of technical analysis, small oil explorers are far-from ideal subjects. Their shares are often fairly illiquid and prone to violent, out-of-the-blue movements, triggered by nothing more than a bit of misleading gossip in some internet chat-room. However, it is still possible to use charts to pick out the main trend in these stocks and identify when a change-of-trend may be in the offing. Having spotted an opportunity, the biggest challenge is where to place your stop-loss. You can be entirely right in your view of a share’s outlook, but easily get stopped out on some random gyration in the wrong direction. It is particularly important therefore, to enter positions only when the price is currently going the way you expect it to.
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Dominic Picardaâ€™s Technical Take
Ascent Resources Ascent is an amusingly unsuitable name for a firm whose share price has essentially been a downtrend ever since July 2007, when it peaked at 32p. Late last year it had plunged to as low as 1.6p, within sight of its record low of 1.25p. However, it has since staged something of a comeback, although it is still far from decisively reversing its long-term decline.
The near-term outlook would improve if Ascent could get back above its 55-week exponential moving average, a line that currently sits at 3.55p. That would open up a possible move to 4.686p and then 5.63p. Overall, the spiky nature of the recent gains leaves me suspicious here. A decisive drop back below the 21-week EMA (3.257p) would turn me into a bear, seeking a return to the 2p area.
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Xcite Energy Having hit a record high of 425.25p in December 2010, the only excitement in Xcite Energy has been short-lived, albeit dramatic. The overall trend has been downwards in that time, but twice during that period Xcite has more than doubled in value within five days or so.
It would have been very hard to make money from these powerful surges, however, given how rapidly they then reversed themselves.
As of now, Xcite appears to be headed for a retest of its December 2011 lows at 72.5p. If it canâ€™t find floor there, an ongoing decline to the 58p level looks to be in order. My ideal short-selling opportunity would be to wait until the share rallies to its 55-day exponential moving average (currently 110.89p) and then drops back once more.
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I would probably only rethink my negative outlook on a move above the 200-day simple moving average, now 128.101p.
Chariot Oil & Gas The 136 per cent advance in Chariotâ€™s share price from December to late March was both powerful and seemingly sustainable, consisting of sharp moves upwards and shallow retreats. But then, in early May, what started as a shallow retreat turned into rout, with the price more than one-third down from its March high of 208p at one point. It became oversold in the process, which raises the prospect of a bounce back towards the 21-day EMA (currently 170.4p and highlighted in yellow).
If Chariot can get back above that line - and even more importantly, its 55-day EMA (170.3p) - I would look for a return to the highs at 208p and 233p thereafter. Given the danger of another summer shakeout in the markets, though, my instinct says that it will probably fail at or before those EMAs, and that the new downtrend will therefore extend further, with the risk of a return to 88.2p. So, a rally ending around those EMAs would persuade me to sell short.
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Dominic Picarda’s Technical Take
Gulf Keystone Petroleum Bulletin-board rumours that GKP would soon tap shareholders for further funds to pay for exploration may have contributed to the weakness in its share price of late. Management has firmly denied this chatter, threatening legal action against saboteurs. Nevertheless, the stock had recently shed slightly more than half its value since its record 450p high of late February. This isn’t anything abnormal for GKP, looking at the pattern of the last few years.
Since its all-time low of 4.55p in March 2009, GKP has advanced by a series of four massive bursts of several hundred percent each, interspersed by gut-wrenching pullbacks. These retreats have been remarkably uniform at 52 per cent, 51 per cent, 57 per cent and, so far in 2012, 59 per cent. Assuming the longer-term uptrend resumes, obvious targets include 450p and 491p. To confirm this, I’d buy upon a decisive move through the 55-day EMA (now 248p).
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Gulf Keystone’s path to market for A lot is written about so called ‘gaps’ in the price movement of shares. Most of it is rubbish and Gulf Keystone unfortunately shows why. We’ve turned candles OFF on the chart displayed to illustrate movements as, in our opinion, they often serve to distort the history of the market. The movement from March 6th, circled in RED on the chart, represents something fairly basic. On the morning before the markets opened, the “nice people controlling the price of the shares” decided the time had come for the price to officially stop going up. Two important things occurred. The price opened down 5p and worse; this movement gapped the price below the uptrend shown in BLUE. This is never a comfortable signal as the implication given is simple. The market makers want some of their money back! Now, the price has a problem. At time of writing (14th May, 2012) it is at 192p. We have a long term target bottom showing of 184p and this level has been broken once, briefly intraday, a few weeks ago. Taking a bigger picture viewpoint, a target below this level exists and it’s at 100p.
Generally, we give a computed support level three chances. It may provide support twice but the third time can be the killer punch which introduces the bottom number of 100p into the frame. Shown in a RED box on the chart is a movement from August last year. During that dreadful month, GKP dropped below the long term support level. This movement suggests the black line ascending the bottom of the screen is perhaps not as solid as it looks. We thought we would look at something different on GKP. We don’t need to run through the billions of barrels of oil and the crazy valuations that have been calculated and talked about many times. One of the key potential influences for any GKP price rises is (as with any oily) “Getting the Oil to Market” and the Erbil Conference on May 20-21st 2012 called, “1st International Energy Arena” - Erbil (Energy and the Kurdistan Region’s Road to Development) - has, as one of its primary intentions, the highlighting of avenues open for the exporting of oil out of Kurdistan.
What usually occurs in this sort of instance is that a support level – 184p in this case – becomes a point around which the price will bounce, but until such time the price actually CLOSES above the 3 month downtrend shown in GREEN then we remain resolutely bearish.
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With the speakerss and presenters at this Conference being top drawer it is showing potentially that Turkey are throwing everything into this public relations event in harmony with the Kurdistan Regional Government (KRG). The significant opening presentation is by a particularly powerful individual in terms of influence on the world’s energy scene (Chief Economist at the International Energy Agency) - Dr Fatih Birol who is also Turkish; he is representing the major world nations to highlight the strategic importance of the KRG and Iraq’s oil reserves. (recently updated in Forbes) There is an interactive platform chaired by the managing partner of one of Turkey’s largest global law firms specialising in Oil and Gas, then you also have the Head of Pipelines in turkey alongside GKP’s very own Todd Kozel.
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With the most important people in the region all opening this two day conference and the conference results and evaluation finishing up on joint KRG / Turkey project plans – it is clearly indicating that they are preparing to get the oil to market by showing the relationship between Turkey and the KRG has been well planned and the public appearances, the detail of the content and the synergy is no coincidence. With Todd Kozel being on the Interactive Panel we can only hazard a guess that the GKP Shaikan asset will be a major component in their plans to get the ball rolling. (Source for conference http://www.arenaerbil2011.com/indexen.php ) Interesting times ahead for GKP.
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N IO IT ED LY JU
Issue 6 - July 2012
In next monthsâ€™ edition...
5 potential 10 baggers Mid-year update - how are our trades faring? Special Dominic Picarda currency feature
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Thank you for reading, we hope your trading is profitable during the forthcoming month. See you next month!
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Published on May 16, 2012
Published on May 16, 2012
Spread Betting and CFD Trading Magazine. Feature articles this month include an Interview with a Spreadbet dealer - myths exploded and secr...