To Trade or to Invest? - Philippine Stock Exchange, Inc. (PSE)

 Timing is everything - sort of. The Philippine Stock Exchange, Inc. (ticker: PSE) broke out to as high as Php 245 a share before closing at Php 237, a 3.33% gain from it's previous close at Php 229.60. For technicians, the breakout could be attributed to the symmetrical triangle formation illustrated above. In addition to the technical aspect of the stock, the market in general - except for the industrial sector - closed in the green with 100 advancers, 54 decliners, and 41 neutral-"ers". The Philippine market traded on a positive note responding to the bull run in the US markets with the DOW up by 337.32 (2.87%) in a single day. Following this logic, we could also say that PSE's price increase is attributed to the US market. This is why I love the eccentricities of the stock market - given a sound explanation, anything can be attributed with anything. 

Anyways...

I've spotted PSE's  symmetrical triangle formation two days ago but didn't expect it to break out (or break down) anytime soon, less alone two days later. Even though I love breakouts, I usually like taking my chances before a potential breakout may occur. Therefore, should you intend in entering into a position with PSE,  be cautious because a symmetrical triangle breakout is susceptible for it to return to the previous support or resistance line that it just broke through. Hence, make sure to watch for this level to hold.

On the other hand, if you are looking to INVEST in (the) PSE, let me be your devil's advocate and give you a couple of speculative advice.

Invest in PSE because:

Metro Pacific Investment (MPI): Breakout 101

Metro Pacific Investment (MPI) closed at Php 3.77 today when it broke out from it's resistance level of Php 3.60. This is a 5.6% gain from it's previous close of 3.57. (What is a breakout? - definition and terms http://www.investopedia.com/terms/b/breakout.asp)

The break out occurred as a result of a cup and handle and/or an ascending triangle formation that was supported with a total volume turnover of 129 million shares -  a 117 million shares more than yesterday.  It's worthy to note that 50 million shares alone were purchased by Macquarie, "a global provider of banking, financial, advisory, investment and funds management services with more than 70 offices in 28 countries".

If the break out holds, the new resistance level would be at Php 3.85 with the support at Php 3.61.

Metro Pacific Investments holds interests in water and sewerage utility company, Maynilad Water Services, Inc., through DMCI-MPI Water Company; toll roads through Metro Pacific Tollways Corporation and its subsidiaries, Manila North Tollways Corporation and Tollways Management Corporation; hospitals through Medical Doctors Inc. and Davao Doctors Hospital Inc., Riverside Medical Center, Inc., and East Manila Hospital Manager's Corporation; and real estate through Metro Pacific Corporation.

Disclaimer: I currently hold MPI in my portfolio (although I have sold 40% of my position as of today's close)

TANDUAY HOLDINGS, INC (TDY) Secondary Offering

Cheers to those who subscribed to TDY’s secondary offering! 

With your funding, Tanduay, which has brands across all major liquor categories - rum, gin, brandy, vodka and whiskey - will utilize the proceeds “for the expansion, improvement and rationalization of its various plants in Negros, Cabuyao and Quezon as well as the upgrade of its facilities in Batangas…, all of these are targeted to improve manufacturing and production capacity” (Accord Capital).

According to researchers at Citiseconline, “the new investments will allow Tanduay to expand capacity to 192,800 cases/day from 158,800 cases/day (bold and italics mine) and reduce costs by as much as Php849Mil annually”.

Investing in Cebu Air, Inc. (CEB) – A Quick Techincal Analysis

In addition to my previous post on Cebu Pacific Airlines, I’ve added a quick technical point of view on the matter below. 

Even though my previous post indicated some positive factors that you may consider in your evaluation of CEB, the charts may tell us otherwise. According to the lines drawn above, CEB for the past year has been following a downwards trend with no broad signs of any long term reversals.

Investing in Cebu Pacific's Dancing Flight Attendants

"These days no one can make money on the goddamn airline business. The economics represent sheer hell."

— C. R. Smith, President of American Airlines from 1934 to 1968 and from 1973 to 1974

After 37 years from leaving American Airlines (AA), C. R. Smith's point was clearly made when news of what was once the largest U.S. airline carrier, is now filing for bankruptcy protection. Since learning of AA's demise, questions like, how the hell are companies in this industry going to make money and remain competitive with rising fuel costs and a declining economy, have been popping through my mind while I surf for cheap airline seats online. To make it more geographically relevant, how are private Philippine airline carriers, like Cebu Pacific (CEB), able to maintain a healthy profit margin while pegging itself as the country’s largest budget carrier?

With today being Bonifacio Day and I have no Bonifacio party to attend to, I decided to do something productive and research on whether or not I should put my money in the company now that it’s relatively (will get into that later) cheap. 

To start off, I motivated myself by watching a YouTube clip of their dancing flight attendants. 

Enticing but not compelling, enough. Hence, I had to watch some more. 

Agreement entered into by AAI stockholders re: sale of AAI shares to Prime Metroline Transit Corporation 23-Nov-2011 Disclosure No:8183-2011

A day after Active Alliance, Inc. (AAI) voluntarily suspended the trading of their shares on Nov. 22, five of AAI's major shareholders agreed to sell 60,000,000 shares (75% of AAI's outstanding shares) to Prime Metroline Transit Corporation for Php 200,000,000 (roughly Php 3.33 a share).

Much to my surprise, well not really, Prime Metroline Transit Corporation happens to be owned and controlled by Enrique K. Razon, Jr. (also the owner of Bloomsbury Investment). In light of this, we can safely draw an end to the week long speculation that Razon's new company Bloomsbury Investments, which is constructing a $1 billion integrated casino resort complex, will most likely use AAI as a vehicle to go public.

The question now is, will the Exchange or the SEC accuse and charge anyone for insider trading? Just to make sure we understand what insider trading is, Investopedia.com defines it as "the buying or selling of a security by someone who has access to material, nonpublic information about the security".

Active Alliance, Incorporated (AAI): Reply to unusual price movement (PART TWO)

Six trading days, five immaterial corporate disclosures, and one unconfirmed rumor later, AAI’s share prices rallied to an all time high of Php 102.80 before closing at Php 76.00 today. That’s a mind-boggling, astounding, shocking (and I shall further add, envious) 730% increase from Php 9.15/share!

To illustrate this non-sense, I’ve included a chart of AAI’s closing prices below to visually demonstrate how steep a line could go up in one week.

 

Since I last wrote on AAI’s unusual price movement, news - or as to properly re-classify - rumors have emerged indicating that there is a possible backdoor listing play on AAI’s somewhat dormant stock.

Active Alliance, Incorporated (AAI): Reply to unusual price movement 11-Nov-2011 Disclosure No:7966-2011

One of the things I love about the Online Philippine Stock Exchange (PSE) Disclosure System is how listed corporations are compelled to give an explanation to why their stock prices are doing so well (or not so well) during a short period of trading days.

In as much as we want to find answers to these "unusual price movements", the corporation themselves, like you and I and perhaps 98% of the investing public (with the other 2% as the market manipulators), almost always have no clue either. If ever their is anything that they might know of, they probably wont disclose anything to discourage speculation.

Therefore, my job here is to post all the "reply to unusual price movement" by the corporations, their responses, and a follow up post to confirm and validate if the movement was indeed, just unusual, or whether or not there was something else to it.