I put a buy order on REX this morning, at $1.055 per share. My paper loss on the ASX is mounting and no island is on sight whatsoever. However I can't leave the money stay in our non- interest based account either, inflation is terrifying.
Why, REX?
Well, as I wrote few days/weeks ago, REX does have a lot of good qualities. It share price has been slammed to the low side for a while now, and I think it's enough bad news already. The fact that REX's share price hold, despite an ever increasing fuel price and other things, is a bit reassuring.
Oil price can't go up forefer (or can it?), so I guess it's my way of hedging my portfolio against the oil stock. I hold ARQ and BPT.
OXR/ZFX – Say Hello to OZ MINERALS
From Macquarie Trading Pick of the Day:
17 June 2008
OXR/ZFX – Say Hello to OZ MINERALS
Zinifex (ZFX) shareholders have now voted in favour of the proposed scheme of arrangement to merge with Oxiana (OXR) to create Australia’s fifth largest mining company. Renamed OZ Minerals (OZM) and with a market cap of circa A$8.4bn, the scheme was approved with by an astounding 97% of ZFX shareholders.
Macquarie Research Equities (MRE) provide some very interesting analysis on the deal and deliberate their guidance on the new global diversified miner…
The Deal Drivers
MRE believe the real catalyst for the merger is the ability to leverage ZFX’s balance sheet into OXR’s growth pipeline. In addition to this, the deal will further facilitate an aggressive acquisition strategy. OZM will essentially become the second largest global zinc producer and following the commission of Prominent Hill will be close to the top fifteen global copper producers
Global “Targetting” or Global Target
MRE believe that OZM will be aggressive in their growth strategy underpinned by brownfield expansions – i.e the development at Prominent Hill and Greenfield projects incl. Dugald River and acquisitions. However MRE also indicate that the merger will likely position the firm as a target for even bigger suitors, namely Teck Cominco and Xstrata.
Recommendation
MRE state that OZM is well placed to enter the ranks of the global diversified base metal miners. And in line with a strong balance sheet, there is also the expectation of an aggressive organic and acquisition growth strategy.
The complexity of market activity over the last 12 months has certainly caused considerable investment uncertainty. With many investors feeling the pinch in their margin lending accounts, perhaps a protected lending strategy in the mining sector would provide some comfort for investors still looking for Australian equity exposure.
17 June 2008
OXR/ZFX – Say Hello to OZ MINERALS
Zinifex (ZFX) shareholders have now voted in favour of the proposed scheme of arrangement to merge with Oxiana (OXR) to create Australia’s fifth largest mining company. Renamed OZ Minerals (OZM) and with a market cap of circa A$8.4bn, the scheme was approved with by an astounding 97% of ZFX shareholders.
Macquarie Research Equities (MRE) provide some very interesting analysis on the deal and deliberate their guidance on the new global diversified miner…
The Deal Drivers
MRE believe the real catalyst for the merger is the ability to leverage ZFX’s balance sheet into OXR’s growth pipeline. In addition to this, the deal will further facilitate an aggressive acquisition strategy. OZM will essentially become the second largest global zinc producer and following the commission of Prominent Hill will be close to the top fifteen global copper producers
Global “Targetting” or Global Target
MRE believe that OZM will be aggressive in their growth strategy underpinned by brownfield expansions – i.e the development at Prominent Hill and Greenfield projects incl. Dugald River and acquisitions. However MRE also indicate that the merger will likely position the firm as a target for even bigger suitors, namely Teck Cominco and Xstrata.
Recommendation
MRE state that OZM is well placed to enter the ranks of the global diversified base metal miners. And in line with a strong balance sheet, there is also the expectation of an aggressive organic and acquisition growth strategy.
The complexity of market activity over the last 12 months has certainly caused considerable investment uncertainty. With many investors feeling the pinch in their margin lending accounts, perhaps a protected lending strategy in the mining sector would provide some comfort for investors still looking for Australian equity exposure.
Oxiana
It's just my opinion. I think OXR is oversold and severely undervalued.
Clear Buy at around $ 2.75 - 2.85.
A concern on Zinc price on the upcoming merger with Zinifex.
Clear Buy at around $ 2.75 - 2.85.
A concern on Zinc price on the upcoming merger with Zinifex.
Cross Trade
What does it mean?
A practice where buy and sell orders for the same stock are offset without recording the trade on the exchange, which is outlawed on most major stock exchanges. This also occurs when a broker executes both a buy and a sell for the same security from one client account to another where both accounts are managed by the same portfolio manager.
Typically, this is yet another way for a broker to rip you off. When the trade doesn't get recorded through the exchange, there is a good chance that one client didn't get the best price. However, cross trades are permitted in very selective situations such as when both the buyer and the seller are clients of the same asset manager. The portfolio manager can effectively “swap out” a bond or other fixed income product from one client to another and eliminate the spreads on both the bid and ask side of the trade.
The broker and manager must prove a fair market price for the transaction and record the trade as a cross for proper regulatory classification. The key point is that the asset manager must be able to prove to the SEC that the trade was beneficial to both parties before executing a cross trade.
(source: investopedia)
A practice where buy and sell orders for the same stock are offset without recording the trade on the exchange, which is outlawed on most major stock exchanges. This also occurs when a broker executes both a buy and a sell for the same security from one client account to another where both accounts are managed by the same portfolio manager.
Typically, this is yet another way for a broker to rip you off. When the trade doesn't get recorded through the exchange, there is a good chance that one client didn't get the best price. However, cross trades are permitted in very selective situations such as when both the buyer and the seller are clients of the same asset manager. The portfolio manager can effectively “swap out” a bond or other fixed income product from one client to another and eliminate the spreads on both the bid and ask side of the trade.
The broker and manager must prove a fair market price for the transaction and record the trade as a cross for proper regulatory classification. The key point is that the asset manager must be able to prove to the SEC that the trade was beneficial to both parties before executing a cross trade.
(source: investopedia)
REX Airlines
I was talking to my husband last night about choosing stocks to buy- apart from my trading account. Talking here and there, I came about REX Airlines. I have made lost on REX, but somehow I have the urge to buy some more. I decided to look at it again this morning, and here are my findings:
Fact:
Fact:
- Airline business is very risky. It is not for the faint hearted.
- Small, very high pilot turnover.
- Even Warren Buffet lost money in his 1989 investment on USAir.
- Massive fixed costs, strong labor union, skyrocketing oil price.
- Revenue is very sensitive to the change of demand among other things.
Considerations:
- Share price had been on sideways for quite a long time
- Not too many competitors, REX is the only option on 33 of its 39 routes
- No debt!! Owning 22 of its 38 passenger plane.
- There's been Share Buy Back recently
- Directors buying
- Own its own pilot training academy (expected to produce 80 graduates a year)
Re-Post: War, Oil Prices and Stock Market
(This was originally posted on 3/27/07, the oil price graph was taken from http://www.wtrg.com/oil_graphs/oilprice1947.gif )
THIS morning, news reported that world oil prices overnight hit new highs for 2007 as the market fretted over rising tensions between the West and major crude producer Iran.
Iran, OPEC's second largest producer and the world's fourth-biggest producer of oil, certainly plays a considerable part on the world oil supply.
How far will it go? Will it head to oil crisis again?
Looking back at the history, there were several events that trigger the oil crisis:
First Oil Crisis, 1973-4
- Arab countries’ retaliation for US support of Israel in Yom-Kippur war 1973.
- Triggered sharp recession around world.
- 1973-4 is second sharpest stock market crash in US history.
- S&P Composite lost 53% of its real value between Dec. 1972 and Dec. 1974. (Only worse two-year experience was June 1930 to June 1932.)
Second Oil Crisis, 1979-80
- Iranian revolution, expulsion of the Shah of Iran, Ayatollah, capture of US Embassy hostages in Teheran Nov. 1979.
- Iran-Iraq war erupts 1980, disrupts oil supplies. US CPI inflation reaches 18%/year in March, 1980. The “great recession”of 1981-82 is the worst recession since Depression of the 1930s.
Collapse of OPEC Cartel, 1986
- After suffering bombing by Iraq, Iran demands that Iraq be given the same oil export quota as everyone else.
- Other arguments about the disproportionate share of some OPEC states.
Persian Gulf War, 1990-1991
- August 2, 1990, Surprise invasion of Kuwait by IraqUN Security Council deadline for Iraq to withdraw by January 15 1991.
- January 16, 1991 Air bombardment of Iraq and its Kuwaiti positions begins.
- February 24, 1991 Allied ground invasion begins. War is over February 26, 1991.Brief interruption of oil supplies mark recession: NBER dates July 1990-March 1991.
Oil Price Collapse 1997
- Nov. 1997 OPEC Meeting, the “disaster in Jakarta” involved bitter disputes among OPEC nations about market share. Fuming about widespread cheating in limiting exports to quotas. Asian financial crisis dropped demand for oil
Oil Price Spike 1999
- OPEC resolve to stop cheating left supplies shorter than they expected
- Erroneous data led them to underestimate how fast inventories were dropping.
- Backwardation in oil futures market (futures price below spot price) began in January 1999. OPEC Increased quotas
Second Gulf War
- Oil SpikeIn anticipation of war, oil rises to nearly $36 per barrel
- February, 2003US invaded Iraq, March 19, 2003. Symbolic end of war: after capture of Baghdad, crowd topples Hussein stature April 8, 2003.
- Oil falls to $28 per barrel by April, 2003
2008 Oil spike
- Oil price spike to $135 per barrel
- Inflation is high around the world
- Stock Market tumble in what is said to be second worst to the 1930 Great Depression
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