Shifting Shares – Hoping for a strike (AAOG, HSW, G4M, BREE)
This will be a new weekly trading column, covering briefly anything of significance that happened in the week that we can potentially profit from, and future setups that may be occurring. My personal goal is not long term investment, but to ‘shift’ shares about in order to generate short terms returns. Long-term investors may also find it interesting to see which shares are on my radar – due to their volatility, news flow, instutitions buying and selling, etc.
Obviously, none of the below is intended as trading (or investment) advice and they represent my opinions only. These opinions can quickly change when the facts change. A lot can happen in trading in just a week!
So far January has been brighter, with Santa finally deciding to give us his rally. A lot happened this week, but as markets are forward facing, and I sadly can’t ever cash in my hindsight portfolio, I think it’s best to focus on the third Ghost of Markets Yet-to-come.
Anglo African Oil & Gas (AAOG)
One of the stocks that I am keeping an eye on is Anglo African Oil & Gas, which I covered previously here. As I mentioned, volatility was likely to be high in this stock offering many trading options, and so far this has been a brilliant stock to trade.
Gaps to the downside, gaps to the upside, a rampy CEO full of lies pumping it before knocking out a discounted placing that was leaked by Tom Winnifrith – this has been a fun stock but there is still mileage in it to trade. The company is expecting to know the result of its high impact exploration well soon, and fortunes will be made (and lost) on the back of this as punters place their bets.
The likelihood of companies in general hitting oil is not high, and so anyone holding this stock should acknowledge they’re gambling. The problem with gambling is that when you win, the high reinforces the risky behaviour and encourages one to make even riskier and more speculative bets. I’m not holding, but I’ll be trading the result regardless.
If it’s a strike, it’s a buy. If it’s a duster, scalp the oversold dump.
This stock came onto my radar in December with the large volume that went through the stock in December. Woodford was selling the stock putting a lid on any rallies, and the stock has now made a base over the last few weeks.
The stock has not traded above the 50 EMA since last May, and now looks to have broken out of that base and made a shallow inverse head and shoulders. I’m long Hostelworld, and I will look to add on weakness provided there is significant bid support. The nice thing about SETS is that if you want to get out you can quickly slap the bid and take a hit without worrying too much about liquidity. You may get a few pence less per share selling in one go, but that should always be considered before buying stock.
I would consider this an overhang play and a change in trend – the fundamentals of Hostelworld aren’t relevant to my trade.
I first wrote about Gear4Music here when the share price was at 590p back in September. I said that it looked like an attractive short given its valuation and that a profit warning was likely. Well, that profit warning came and the price now sits just below 200p.
I still don’t think Gear4Music is very good, but getting long on oversold bounces is in my trading playbook and so it went on the radar. BlackRock trashed the price, and it was not until last Thursday that there any real buying appetite. One of the advantages of being a full time trader is that it allows me to see the market live and in real time, and so when I noticed large buy volume coming through on Level 2 I decided to jump onboard with a tight stop at 180p. If selling pressure came in to shut down the buyer, I could exit quickly and unscathed. However, that buying carried on and showed up as a hammer on the daily chart.
I think there will be some resistance at 200p, but given the extent of the fall and the fact that directors have bought, 250p seems like a good target. Of course, if selling pressure comes in hard I will be quick to take profit. While it’s true that the directors bought shares, they weren’t exactly hoovering them up. They were token purchases, and nothing of any real substance. If G4M was a real bargain, they’d be making a statement and digging deep. The fact that they are not tells me everything.
Breedon Aggregates (BREE)
Breedon Aggregates has been in a downtrend for a while, and again Woodford has been selling down (he was at 6.83% in September). On the positive side, Old Mutual came in and notified with a 5.14% holding in September. There have consistently been large trades going through and the price not moving, meaning that buying and selling pressure is equal.
One thing to note is the sheer amount of director buys since September, with no less than nine director dealings RNSs. No fewer than twelve directors and PDMRs bought – some repeatedly – purchasing just over £1.3 million in stock, many of the deals occurring above today’s price (Gear4Music directors should take a leaf from these guys’ book).
I am long BREE and looking to add once the overhang clears and the stock breaks out of the downtrend drawn on the chart.
The coming week
There are plenty of companies still to report, and many “ahead” RNSs and profit warnings to come I’m sure. Never let a small loss become a large loss and protect what you have – there’s always another trade.
At the time of publication, the author has financial interests in shares discussed in this article.