Sumatec - What is the end game of TSHS?

Sumatec is arguably the most attractive stock to watch for the last 2 months. In fact, this counter has hogged the limelight for quite a long time last year. I'm intrigue by the story behind the huge surge in price and trading volume of the company so I try to look back when and how Tan Sri Halim Saad (TSHS), man of the hour, came into the company. Is going to be a long post so just bare with me here because is a long story.

On May 30 2013, Sumatec announced that the company proposed reduction of 21 sen of the share capital comprising ordinary shares of 35 sen to 14 sen a share. Then it would issued 335 Million new ordinary shares of 14 sen to 'selected investors' at 17.5 sen a share. After that it would proposed renounceable rights issue of up to 2,722,220,957 new Sumatec shares with free detached warrant (Warrant-B) with every 41 rights for every 10 shares with every 1 free warrant for every 4 rights subscribe. For details of the multi-proposal, you can refer to Bursa on this link :

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1304189

The 'selected investors' that involved in the private placement of total 335 Million shares at 17.5 sen a shares that mentioned above comprises of :

TSHS - 150.4 Million shares with total amount to RM 26,320,000 

Chua Ma Yu (CMY) - 30 Million shares with total amount to RM 5,250,000 

Corston-Smith Asset Management (CSAM) - 59.6 Million shares with total amount to RM 10,430,000

Tekad Mulia Sdn Bhd (TMSB) - 95 Million shares with total amount to RM 16,625,000

So from here we know how TSHS came into the picture. CMY, the co-founder of RHB Bank is of course very well known in local investment community. One can easily find a lot of information on the tycoon by just googling the web. CSAM  is a mystery since they are fund manager that acting on behalf of their client which they never reveal. TMSB is an investment holding company. You certainly needs to remember this name because it will appear again later in this article.

So from total 335 Million shares, TSHS got 44.9%, CMY 9% , CSAM 17.8% , TMSB 28.4%. I will collectively called them 'TSHS group' from here onward, of course I'm not saying they are actually a group or act in concert, is just that it makes it easy for me to analyze. (Better to have a disclaimer!!!)

TSHS group then subscribe the total rights entitled to them which amount to 1,373.5 Millions rights (41 : 10) at 17.5 sen a share with total 343.375 Million Free Detached Warrant-B (WB). After the rights subscription, the group holds total 1,708.5 Million shares + 343.375 Million WB with total cost of RM 298,987,500 or  average cost of 17.5 sen a share and all WB for free. 

The abovementioned corporate proposal is a regularisation plan to revive Sumatec by using the proceed from the private placement and rights issue to buy Rakushechnoye Oil Field (ROF) in Kazakhstan. COG is a company that held the concession to ROF and it is a subsidiary of Markmore Central Asia BV (MCA). MCA in turn is owned by MELL, a company with 2 director which were non other than TSHS & Abu Talib bin Abdul Rahman (ABU). Please remember ABU because he is a very important figure that will appear again and again in this article. Mell is wholly owned by Markmore Sdn Bhd which is control by TSHS with 99.99% & ABU with 0.01%. (Yes, it clearly shows that who is the BOSS). Chart below clearly stated the inter-relationships of all the companies and peoples involve.

Under the Joint Investment Agreement (JIA), Sumatec will act as contractor to concession owner COG to develop the oil field under Production Sharing Contract (PSC) until 25 Aug 2025 which first 2 years Sumatec will get all the profit while 3rd years onward will be 50:50 between Sumatec & COG. 

Under the terms of JIA, Sumatec would paid a signature bonus of RM 31 Million, Cost Reimbursement of RM 263.5 Million and refundable performance deposit of RM 124 Million which is deducted from future oil royalty as well as USD 5 royalty per barrel to COG. Total initial outlay will be RM 418.5 Million. 

Thus, basically TSHS need not pay a dime for Sumatec shares but by indirectly swapping it with the oil field concession and with some RM 280 Million spare cash since his portion of investment in Sumatec only cost RM 134.25 Million. 

So, how good is this oil field? Here is the estimated oil reserves :

mmboe - Million barrel of oil equivalent

Proved reserves: 22.4 mmboe, Probable reserves: 99.7 mmboe, Possible reserves: 209.6 mmboe

Ya, proved reserves only constitute to 6.75 % of total estimated reserves and PROBABLE + POSSIBLE reserves constitute the rest of 93.25%, WOW!!!

It certainly needs to be very 'Probable' and very 'Possible' to justify the investment of Sumatec. 

How is the performance of this oil field? Well, to date, the oil field has contributed RM 4.852 Million and RM 7.237 Million respectively for the last 2 quarters. It is certainly not much but is enough to lift the company from PN17 status. Granted, the profit might increase further with more oil well in production but Sumatec certainly needs to hurry up because they only enjoy full profit for 2 years then it will only be 50% from 3rd year onward. 

So, up till now, TSHS got some RM 280 Million cash + 767 Million Sumatec ordinary shares total amount to RM 356.655 Million (with last closing price of 46.5 sen) + 154.175 WB total amount to RM 60 Million (with last closing price of 39 sen) in return for his concession in an oil field that yield total RM 14 Million for the last 6 months. NOT BAD!!!! Isn't it? Oh ya... the oil field has potential..... so we can't value it that way. TRUE? I think I better leave it for you to judge since I don't know how to value PROBABLE & POSSIBLE PROFIT.

If you ask me how much is the entry cost of TSHS investment in Sumatec, I think on paper it is 17.5 sen a share with free WB. In real term? I seriously don't know how to calculate. 

So what now? Sumatec again proposes another rights issue with free warrant at an indicative price of 40 sen. you can read more about the proposal from my previous post : 

http://randomtrading.blogspot.com/2014/08/sumatec-good-news-or-bad-news.html

so I'm not going to too much details of the proposal here. The proceed of the rights issue is to actually buy an oil field instead of JIA or PSC. The propose acquisition of the oil field cost USD 350 Million and will be satisfied by cash and shares. Some 727,272,727 shares will be issued to one of the vendor ABU and TSHS will subsequently buy all the shares from ABU for 55 sen a share. YESYESYES!!! this ABU is the same ABU that mentioned above. Still remember our ABU? May be is just a coincident the both gentleman have the exact same name. It could be. The total payment to the vendors are USD 99.45 Million + 727,272,727 shares to ABU and USD 95.55 Million to one Dr. Murat Safin. (Both can scream HUAT AH.......) 

So on paper, TSHS is actually pumping more money into the company by subscribing the rights issue entitled to him for RM 153.4 Million + purchase from ABU for RM 400 Million. Since TSHS is going to buy at 55 sen a share even after the rights issue, so what are we waiting for?????

OHH!!! But wait, What IF........

Just HYPHOTHETICALLY says...... if TSHS & ABU are actually same interest party!!! I'm just saying hypothetically, I'm not saying it is. (I have made my disclaimer here again). Under this scenario, they actually get the USD 99.45 Million (RM 318.24 Million with 3.20 currency conversion rate) to subscribe for the rights issue of RM 153.4 Million with some RM 164.84 Million pocket change and the RM 400 Million is just left hand in, right hand out! NICE.... So what is TSHS investment in Sumatec shares this round again??? Under this scenario, I will say.... looks to me is free capital outlay again in exchange for another oil field. How good is this oil field??? just refer to my previous post from the link above then you know what is my opinion on it.

Under this scenario, if he subscribes for all the rights issue entitled to him (he already undertaking them) ultimately TSHS will possess 1877.8 Million shares of Sumatec ordinary shares with 154.175 WB and 383.52 Million new warrant (WC) + FREE CASH of total RM 280 Million from 1st round and RM 164.84 Million from 2nd round which total amount to RM 444.84 Million. The price for all these assets is just 2 oil fields with HUGE PROBABLE & POSSIBLE RESERVES!!!! 

How committed is TSHS in this company? On paper he really invest a lot..... The truth...... 

The only question I have in mind is what is his end game? He certainly can't sell any shares in open market or even marry deal since investors will see it as sign that he is bailing out. So how this will play out. Honestly do he needs to sell to make money from this 'investment'? To me he already made plenty. That's why I don't even want to mention how the share price perform in this article because I don't think it matters too much to him.

He is not selling but someone does :

Source: i3investor.com

Yes, is a long list. To save your trouble, the 3 repeated names Chan Yok Peng, Tekad Mulia Sdn Bhd (TMSB) and WAN KAMARUDDIN BIN DATO' BIJI SURA @ WAN ABDULLAH  share the same address. I made some rough calculation, they collectedly disposed off some RM 72 Million worth of ordinary shares and RM 24 Million of WB.

What is TSHS end game??? I don't know. Is he in this company for long term? May be!!!

Anyway I'm just going to say HUAT AHHHH...... TSHS & HAPPY MERDEKA TO ALL!!!!

Sanichi - FA, TA or MBA???

Sanichi, the stock of the day yesterday. Top traded stock with some 239 Million shares traded. The share price of the counter has soared from around 8 sen to peak around 13 sen before traded ex-rights issue. After the share go ex, it suddenly jump from 10.5 sen to closed at 14 sen and even touch 15 sen yesterday. The warrant-B of Sanichi go even ballistic, rose from 6 sen to peak at 13.5 sen and finally closed at 12.5 sen. It is 100% gain in just one day. What interesting is what actually push the stock to higher than before the rights issue went ex. Can you use Fundamental analysis (FA) or Technical analysis (TA) to explain this? Apparently not, only MBA can explain this. What's MBA? It is my own acronym for Market Buyer Analysis. What you need for MBA is to scan through the market and see WHO BUY WHAT. The main reason behind this is that MARA institution bought into the company after the rights issue went ex at average 11.2 sen. Currently they hold 18 Million shares or 5.14% stake in the company. Well, I guess fellow investors, traders and punters must think that since they 'invest' in PDZ at 18 sen and the share went on spike to peak at 42 sen, an 233 % increase, this time they went into Sanichi at 11.2 sen, it should easily reach 26 sen by early next month. I think a name is just what it needs for stock catalyst. Mind you, news is that MARA might further increase their stakes in the company. NICE......

Whoever hold the shares and subscribes for the rights issues must be laughing all their way to the bank now. That's why the share price soared just before the right issue ex. As always, someone knows something that we don't. 

To be fair, they do mentioned that they intend to move into property development by acquired a piece of land in Malacca for RM 7.7 Million. Is this the catalyst? Emm... personally I don't think so.

So, FA? TA? , Nah... I think better go MBA!!!

Sumatec - Good news or bad news?

Sumatec finally reported its latest quarter earning of RM 6.7 Million profit. It is the 3rd consecutive quarters of profit thus it might be enough for the company to apply for the uplifting of PN17 status. It is a good news for Sumatec but is actually much expected by everyone thus I think there is nothing surprise here. The more important announcement is instead the multiple proposal which include the right issues as well as the offer for sale and among other things. The full announcement is here :

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1725733

From the proposal, the most significant thing is the propose rights issue of every 1 right for every 2 shares with an attached warrant. The indicative issue price is 40 sen, derived from the 13.6% discount of theoretical ex-price of 46.3 sen. The proceed from the rights issue is for the propose acquisition of oil field in Kazakhstan. Basically the rights issue is not necessary a bad thing for 'long term' shareholders that believe in the prospect of the acquisition and willing to 'invest' even more money into the company and trust Tan Sri Halim Saad (TSHS). But for those that just looking to trades for short term profit, especially those with margin, this is certainly not a good news. This is even worse for those holding the existing warrants of the company since they are only entitle to the rights issue after they decide to convert their warrants. Warrant-A today closing price is 44 sen with a 32 sen exercise price which add to total 76 sen a share while Warrant-B closed at 44.5 sen with exercise price of 17.5 sen which add to total 62 sen a share. Of course the warrant holders can decide not to convert the warrants thus exclude themselves from the rights issue but this will hugely dilute their shareholding in the company. If they choose to convert and subscribes the rights issue then they will have to fork out substantial amount of money into this investment. One needs to seriously believes in the company or TSHS in order to do so.

The silver lining for the shareholders and the warrants holders is that TSHS seems going to invest even more money into this company. First, he is going to undertake the whole rights issue that he is entitle to. Currently he has 767,040,000 shares in the company thus he will undertake 383,520,000 rights with indicative price of 40 sen a shares which works out to be RM 153.4 Million. Then he will acquire the entire 727,272,727 shares that issues to one of the vendor for the proposed acquisition as a way of payment at 55 sen a share which amounts to RM 400 Million. Total money that he is going to pump into the company will be RM 535.4 Million. It is certainly a very big investment. He must really believes in this company.

The proposed acquisition is not exactly straight forward. The company that has the rights of the oil field is Buzachi Neft LLP, but the acquisition is not for this company instead is a company called Borneo Energy Oil & Gas Limited. Borneo is a company that only incorporated in Aug 2010 with only 2 directors with a share capital of USD 100. The company is an investment holding company that holds 100% legal & beneficial owner of the participating interest of the Buzachi Neft. Below is the financial status of the 2 company:

Borneo financial statement (source: Bursa Malaysia)

Buzachi Neft financial statement (source: Bursa Malaysia)

Yup! Both are loss making company even Buzachi Neft is producing oil at this moment. The commentaries part even stated that the auditors has declared in emphasis of matter relating to the losses, shareholders' deficit, net current liabilities recorded and breach of covenants/terms of bank loans. All these factors may cast significant doubts about Buzachi's ability to continue as going concern but for the management of Sumatec, since the SPA is free from all indebtedness so it should be alright. But what about continuous losing even producing oil? Putting so much money into a company with records like this seems risky, don't you think? I guess they must see and know something that I don't.

Buzachi's estimated oilfields reserves (source: Bursa Malaysia)

Total proved and producing reserves is 4.33 million barrels of oil (MMbbl). Proved but undeveloped reserves is 10.92 MMbbl, probable reserves is 53.62MMbbl and possible reserves is 28.85 MMbbl. So total is 97.72 MMbbl. A lot right? But PROBABLE & POSSIBLE (I really like those words) reserves is 64.47 MMbbl or 66% of the total reserves. WOW!!! How probable & possible these reserves is? I don't know, I hope they know. As for the proved but undeveloped, can they provide an estimated figure as to how much it needs to spend to get it developed and start to produce? 

Well, after all these facts, is it a good news or bad news for Sumatec shareholders? I guess if you believe in TSHS then it could be good news, if not then the acquisition is something you need to digest before decide to dump even more money into the company. I suppose TSHS would not want to jeopardize his own name and risk his fortune into something he is not comfortable with unless he has other agenda or plans. Does he?

Tomorrow Sumatec certainly will be an interesting counter to watch. To buy, to sell, to hold, to convert or to subscribes, is all too complicated!

IFCAMSC - IF the operating performance can sustain!

Chart : IFCAMSC daily chart as of Aug 27 2014 (source: ChartNexus)

IFCAMSC a unique software solution company specializing in the property industry with a unique name. The counter recently attracted a lot of interest from local investment community which saw its share price rose from 8 sen to closed at today 39 sen in just 5 months time. The almost 500% gain is seriously eye popping and most people starting to wonder whether this is just another short-live pump and dump kind of thing or a serious sustainable growth story. Unlike most of the recent hot stocks that bank on rumours or 'news' of RTO, venturing into 'attractive' industry and etc, it is a sound company with an easy to understand business. The company with a net cash of some RM 30 Million (6.7sen/share), directly benefited from the implementation of GST (clients' system upgrading) and highly potential overseas operation (especially in China). Last quarter earning is the best of the company history with EPS of 0.67 sen. Annualized EPS will be 2.68 sen. With today closing price of 39 sen, it is currently trading at 14.55 PER ratio based on the annualized EPS. It is not too expensive considering the net cash of 6.7 sen per share. 

The question that I have in my mind is that, is the earning of the last quarter sustainable? Base on the previous quarters or last few years earning for that matter, the current share price of the counter certainly can't be justified. Thus the sustainability of the earning performance will be crucial. I'm no expert in software solution business thus I'm not sure whether upgrading system for GST is a one time thing or a continuous operation. If is just one time thing, then whether the earning can be sustained will be an issue after most of the current clients finished upgrading. The management seems very optimistic with the future of the company and expecting overseas operation to be robust for the rest of the year. Well, judging on the rapid rise of the share price, can we afford to wait for next quarter earning to decide whether to buy or not? If the earning is not sustainable then how? I guess is just a big 'IF' for now.

Olympia - 2nd Wave in the making!

Chart : Olympia daily chart as of Aug 27 2014 (source: ChartNexus)

Olympia Industries today saw its share price rose 3.5 sen or 20% from its previous day close to closed at 21 sen with some 56 Million shares traded. The sharp rise in share price couple with the spike in volume could be the signal of the start of the 2nd Wave. So far there is nothing change in term of fundamental of the company other than a revaluation gain of RM 430,304 from the revaluation exercise. Personally I don't think it is worth mentioned at all base on the amount of just RM 430k. Thus always trades with extreme cautious when comes to stocks without sound fundamental background.

The Controversial of Proprietary Trader (PT)

Proprietary Trader (PT) aka stockist are day-traders that employed by brokerage firms to trades on their behalf. They don't have clients and they make their own decision on which stock to buy or to sell. Some of them have the privileged of short selling but they always have to cover back their short position on the same day. The recent meltdown of the market on Aug 20 has put some spotlight onto the PT as they have been accused as the main contributor to the abnormal volume traded of the market as well as the meltdown of the market. Well I would like to lay out some facts regarding PT after I read the Star article on Aug 23:

- PT has one big advantage over retail trader, they trades with no brokerage fees but only the stamp duty and clearing fees to Bursa Malaysia. It is one advantage but they are employed by the brokerage and need to share their profit with the brokerage and has to absorb all the losses themselves thus I believe it is a fair arrangement. Retail investors not only do not need to share their profit but the capital gain also exempt from taxation. From what I know, PT do have to pay tax for their profit. Thus I believe the advantage do comes with a price.

- As for massive volume traded by PT, their jobs is to move in and out within the same day thus the only way to make money is to trade with volume or else with the tight daily range of local stock, it is impossible for them to make money. Again, the bigger volume they trade, the bigger risk they took as well thus it is a double sword thing. They can make big bucks but they can loss big bucks too. Don't you think?

- Do we need PT in the market? Well, I do believe that for every healthy market, there must be a market making mechanism in place so that buyer and seller can execute their trades with minimum spread. PT act as a market maker, provide necessary volume for retail investors and traders to buy or sell with ease. They also give the market some vibrancy to attract retail investors and traders into the market. Without PT, it is safe to say that our market will be as dull as some of our blue chip and mid cap stocks that hardly traded. Do we want a dull market like this?

- Was PT the sole contributor to last week abnormal volume? Well, from the star article, we know that the retail participation is huge with close to 40% of total volume traded compare to just 25% previously. Which means retail participation do play a big part of it.

- The article also did mentioned that there are few stockist 'gang up' to short sell certain counters to cause panic. Firstly, the acts of a few rogue traders can't represent everyone in the same position. Secondly, if they were to short sell certain stocks with fundamental, I'm sure there will be buyer support the stock and these short seller might end up cover their short with higher price and loss money. Thus the meltdown of certain stocks could due to their own fundamental weakness and the short selling activities is just simply accelerated it.

Personally, I think that as long as these PT behave according to rules and regulation of Bursa, I don't think they are a threat to the market. Unless they are breaking rules such as involve in market rigging and manipulation then they should be punished for that. Every PT are registered with Bursa thus the authority can and should subpoena their trading records regularly to make sure they are acting by the laws.

As a trader myself, I certainly hope that our market is vibrant and active. If I feels that particular stock is too hot and bubbly, I will choose to stay away from it. All the decision I made has nothing to do with whether PT exist or not. If PT breaks the law, then they should be punished like every one of us, if not, they are just another player in the market like us. This is just my view.

SHH - 2nd Wave in the making?

Chart : SHH daily chart as of Aug 22 2014 (source: ChartNexus)

SHH Resources is a holding company that through its subsidiaries engaged in manufacturing wooden furniture. The wooden furniture are mainly export to the US. Last few years has been difficult for the company due to the weak economy recovery of US. But things are improving over last few quarters as US economy recovery has start to gaining momentum. With higher payroll and lower employment rate, the US economy seems heading to the right direction. It is reflected on the performance of SHH as the company has been profitable for the last 4 consecutive quarters. With higher demand from US couple with stronger US dollar vs RM, the prospect of the company is quite optimistic. In addition, SHH is a net cash company with minimal borrowing thus it can rewards its shareholder with dividend if the company able to maintain its current operating performance.

The improved operating performance didn't go unnoticed. The share price of the company shoot up from around 60 sen to peak at RM 1.05 end of May this year . The spike in share price even drew an UMA from Bursa. After the spike, the share price has seen consolidating around 96 sen. Last Friday the counter shoot up again with significant volume and break its previous high of RM 1.05 to closed at RM 1.08 . This could be the signal for the start of the 2nd Wave. SHH is a thinly traded stock thus the share price can be moved with slightly huge volume. I think the counter is likely to have another good run. 

Gamuda - Constructing new high!

Chart : Gamuda daily chart as of Aug 22 2014 (source: ChartNexus)

Construction outfit Gamuda has seen it share price hits new high again to trade around RM 4.95 for last 2 days. After it broke its horizontal resistance line at RM 4.88, the counter seems ready to break another important hurdle of RM 5 round digit resistance. The recent announcement of land banking activity south of KL has augurs well with fellow analysts. The 1,530 acres land with a price tag of RM 12 psf is likely to be developed into a new township that will keeps the property division busy for years to come. For its construction division, the MMC-Gamuda KVMRT JV is set to receive a payout of over RM 4 billion for its role as project delivery partner for the ongoing Sg. Buloh - Kajang MRT project. The JV also will be front runner for the second MRT line (Sg. Buloh - Serdang - Putrajaya). In addition, Gamuda is also believe to be leading the pack for the 2 key components of Penang integrated transportation plan that cost over RM 5.5 billion. With all these excitement, I believe that the counter will break its RM 5 mark and continue to march forward for new high.

Perisai - Broke its 3 years uptrend line

Chart : Perisai daily chart as of Aug 22 2014 (source: ChartNexus)

Perisai has seen steady rise in its share price for the last 3 years from around 50 sen to peak at RM 1.70 . The rise of the stock price is back by the excellent earning of the company operation for the last 2 years. But things has changed for the last 2 quarters as it deeps into the red for the 1st quarter this year while only registered a paltry earning of RM 961,000 for Q2. This is mainly due to the company was unable to secure jobs for its two major assets that are currently sitting idle. The managing director did mentioned that the company has launched its first jack-up rig and it will start contributing RM 20 Million revenue to the company from August to the end of the year. The share price has reflected the lackluster performance of the company and seen broke its 3 years uptrend line. It is crucial for the company to be able to secure jobs for the idling assets as well as generate new revenue from the drilling business, or else it could be the end of 3 years run for the company's stock price.  

Cuscapi - Bearish breakout

Chart : Cuscapi daily chart as of Aug 22 2014 (source: ChartNexus)

Refer to the post dated Aug 9 2014 : Cuscapi - Breakout Soon! , I have anticipated it would be a bullish breakout but now it seems like a bearish breakout instead. Unlike many other counters, the counter didn't rebound from the selling of Aug 20. The immediate horizontal support line will be 0.34. It is crucial for the stock to stay above this immediate support line, if it break the 34 sen support line, it is most likely fall further to test its 3 year uptrend support line.

One hectic day! - To sell, to hold or to buy? Be a chicken to run or risk to be KFC?

Well, today is certainly an unusual day and a hectic day for fellow traders, punters, investors and remisiers. New record of an eye popping 7.6 Billion shares traded today is just something that we never seen before. Certainly the selling down of the penny stocks across the board, certain stocks such as Sumatec, PDZ and Marco was hit the hardest, has left most of the people wonder what's their next best move will be. As you go through the forums, most of the people are looking for direction whether to hold, to sell or to buy. 

As I mentioned, What's goes up, must come down. Sumatec from 26 sen to 62 sen is enormous so this correction is certainly long overdue. As for PDZ, 16 sen to 40 sen in 3 weeks time is just unsustainable. The question here is that is today plunge down a healthy correction for more sustainable run or the end of the bull market for bursa penny stock. The sell down across the board could be due to profit taking activities couple with margin calls for traders with high margin ratio that trigger by the substantial fall of Sumatec and PDZ. 

Well with more than 7.6 Billion shares traded today, I have to say this is something I never seen before. If you have position then please be alert and keep monitoring the market to feel the sentiment. Contra with high margin is certainly not a wise choice in market like this. As a trader, you should not get panic and emotionally crash by the market. Just follow your plan, if you are wrong, cut your losses asap to save yourself for another fight. Discipline and calm is what a trader needs most. Remember, a successful trader is not define by one trade or a day of trades but a long sustainable career. Thus don't let one mistake cost your entire trading career. 

To be the so-called chicken to run away or risk to be Kentucky Fried Chicken is something dear traders need to think about. Again, trades with your plan, make decision in a calm and rational fashion is the way to stay in the market for long term. 

Updates on several posted counters: PDZ, Ecofirs, Cliq, Takaso, Daya, Sumatec, Gpa, Marco

Chart : PDZ daily chart as of Aug 19 2014 (source: ChartNexus)

Refer to PDZ - Sky is the limit!!! , honestly, when I said absolute ride I certainly didn't expect this magnitude of the sharp spike of the shares price. It really caught me by surprise. We are talking about almost 100% increase in less than 2 weeks. Looking at the chart, it is really scaring. What's next? I have no clue. The only thing I know is that what's goes up, must come down!

Refer to Ecofirs - Break new high , after breaking new high of 32.5 sen, the stock keep trending higher steadily. Looks like there is still rooms ahead.

Refer to Is time to 'Cliq' , looks like the counter still unable to breakout its asymmetric triangle. The management hinted in recent interview that the company is zooming into 2 possible deals but nothing concrete yet. Looks like there still be a while before this counter move.

Refer to Takaso - Bullish breakout , after it broke the 30 sen horizontal resistance, the counter steadily move upwards and just shy off is next resistance at 39 sen. As always, trade with caution!

Refer to Daya - 'Reach' for rebound? , apparently the IPO of Reach Energy is not enough too bring the stock higher. This is mostly likely due to the continuous selling by one of the major shareholders. I think the stock will be difficult to move higher than its resistance at 34.5 sen probably until the selling by the major shareholder is done.

Chart : Sumatec daily chart as of Aug 19 2014 (source: ChartNexus)

Refer to Sumatec - New high and how high can it go? , after it broke the 52 sen resistance line, it keep going and broke its historical intraday high of 56.5 sen. The momentum seems really strong and there is no sign it is going to stop any moment soon. But again, is just like PDZ, it is scaring to look at the chart.

Refer to GPA & Marco - Tan Sri Robert Tan Hua Choon story may not end yet! , after broke its resistance line at 14.5 sen, GPA keep going up and close at 18 sen today. Apparently pork chop has turn into a nice steak! As for Marco, after it broke its 20 sen resistance line yesterday, it further shoot up today to closed at 23.5 sen. Well, certainly you can't undermine any of the Robert Tan's counters at the moment.

Symphny - 2nd Wave in the making?

Chart : Symphny daily chart as of Aug 19 2014 (source: ChartNexus)

Symphny share price spiked from around 12 sen to peak at 30.5 sen immediately after it announcement of the propose RTO by Ranhill Energy end of March this year. The share price has seen retreated and hovering around 22 sen lately. After the 1st Wave, the counter took a long time to consolidate. Today the counter rose 2.5 sen or 11% to close at 25 sen with significant volume. There could be the sign of the start of second wave. Immediate horizontal resistance is at 27 sen, if the counter can break this resistance then there is a good chance the 2nd Wave will come and bring the stock to test its previous peak of 30.5 sen. Stay tune and ready to ride the wave!

Asiapac - Breakout ascending triangle

Chart : Asiapac daily chart as of Aug 19 2014 (source: ChartNexus)

Asiapac has since doubled its share price from around 16 sen from December last year to around 31 - 32 sen. Today it rise another 3 sen or 9.68% to close at 34 sen. As a result, it broke its ascending triangle horizontal resistance line at 0.315 convincingly with significant volume. In fact it hits top ten of the most active stocks with some 94 Million shares traded today. This is a bullish sign that probably indicates there could be another good run ahead. Judging on the market sentiment on penny stock, the momentum could be substantial. Should keep an eye on it.

Insas - 3rd Wave in the making?

Chart : Insas daily chart as of Aug 18 2014 (source: ChartNexus)

Insas has rise from 50 sen to around 1.30 in the span of 1 year and go through 2 Waves and 2 Consolidation phases in the process. The counter has consolidate around 1.20 to 1.30 in its latest consolidation phase. Judging on the trend, it is most likely to breakout its horizontal resistance line at 1.33 very soon. Once it breakout, there is a good chance the stock will stage for another wave. I smell something.....

Dnex - Bullish breakout! What about Censof?

Chart : Dnex daily chart as of Aug 18 2014 (source: ChartNexus)

Dnex today rose 3.5 sen or 11.29% to closed at its multi-year high of 0.345 with significant volume. As a result, it broke its strong horizontal resistance of 0.34. The counter has been tried to breakout this resistance for few times for last 3 years thus the breakout today may leads to strong run ahead. It is certainly worth to keep an eye on the stock.

Chart : Censof daily chart as of Aug 18 2014 (source: ChartNexus)

Censof is the major shareholder of Dnex with close to 40% shareholding. The counter has retreated from its peak of 65 sen on November 2013 to consolidate around 47 - 50 sen for the last 6 months. It is interesting to see whether the momentum of Dnex will lift Censof from its current consolidation phase.

Stay Tune!

Reach - Initial Public Offering or Internal Party Organizing?

SPAC is a wonderful thing..... for the promoter, initial investor and of course selected investors including the so-called cornerstone investor that can get the share directly by private placement. Take the latest SPAC IPO, Reach Energy for example.

When I went through the prospectus of the IPO, I'm quite puzzling about the allocation of the shares available to the public. Basically there are 1 Billion shares issued with 1 Billion free warrant attached with it. What makes me baffling is that 980 Million of those shares are applicable to 'Selected Investors' which include cornerstone investors. Looks, 98% of the 'Public' portion goes to the 'Selected Investors' and the pathetically 20 Million shares are allotted to the 'Real Public' like you and me. Seriously, only the meager 2% are offering to the Malaysian Public and you call it IPO. Why don't you guys just ask another 'Selected Investor' subscribe the rest and keep the company private for your club members. The 42 times oversubscribe is just another joke. Why did our authority allow this blatantly abuse of IPO a green light. You know what is the worst part of it? There is moratorium on the promoter and initial investor BUT NOT THE 'SELECTED INVESTOR' & CORNERSTONE INVESTOR!!! WHY? Ohh... because they are deem to be pubic allocation so no need for moratorium. WOW!!! NICE!!!

Then, who is these 'selected investors'? I don't know because I can't find any of that information from the prospectus. If any one knows please let me know. Also they didn't mentioned the criteria to become 'selected investors' because I believe the real public really want to know so that we can qualify ourselves to become 'selected investors'. Why Bursa didn't compel them to disclose the information of these 'selected investors' since they take up almost all the IPO's shares? Are they related to the promoters or initial investors? Don't you think it is important since if they are related then there is a very high chance they can circumvent the moratorium to make a quick bucks out of it. Why the Minority Watchdog didn't bring the issue to the authority?

Further breakdown of the shareholding of the enlarge Reach Energy as below:

Reach Energy Holding (Promoter) - 20%
Daya Material (Initial investor) - 1.74%
Selected investors - 76.7%
Real Public - 1.56% (Who ever successfully subscribe this portion can consider themselves extremely lucky)

Then below is the effective cash cost per shares for the various shareholders: (This is mind-blowing)

Reach Energy Holding (REH)
113.6M shares + 113.6M Free Warrant (FW) @ 0.045
142M shares + 142M FW @ 0.099
Total cost RM 19.17 Million for total 255.6 M shares + 255.6 M FW

Daya Material (I will just provide the cost directly instead of showing the calculation)
Total cost RM 20 Million for total 22,222,225 Shares + 22,222,225 FW

Selected Investors & Real Public cost is RM 0.75 per shares + FW

So just take the closing price of 1st trading day, Reach - 0.705 & Reach WA - 0.225

Paper gain for :
REH = RM 218,538,000
Daya = RM 666,667 ( not so much, probably that's why its share price fall)
Selected Investors = RM 176,000,000 (ohh ya! this is not paper gain since they can actually sell it)

Real Public = RM 900,000

Ya. They do gave the reasons to justify why the promoter should allow to have that potential gain :

1) They invested RM 10M before the IPO so if IPO failed to go through then they will have to absorb the lost. (basically they are telling us that they make a bet of 10 M for potential of more than 200 M)

2) The remuneration of the management team came from the fund that promoter put in, not the public subscription money. But they forget to mentioned that the management team is actually the promoter so the money is just left hand out, right hand in. So, where is the risk?

3) In case they failed to make QA within stipulated time, they might not get the pro-rata refund from the trust money. Well, since they already cycle back their initial fund from the remuneration, I don't see they have anything to lose at all.

Ya, I forget to show you the management team remuneration package: (I purposely took off their names)

So, whether they are justified to allow the potential WINDFALL or not, I leave it to you to make your judgement.

That's why to me, SPAC is the most brilliant invention of modern stock market.

Series of shrewd corporate moves by Robert Tan

The recent spike of the share price of several counters that link to Tan Sri Robert Tan has makes the low profile tycoon came into the limelight of local business world. Here are some his latest moves :

First the tycoon disposed of his PDZ shares to MARA institution for roughly 47 Million. Personally I think is a good cash out from the loss making company with a good selling price of 18 sen per share considering the share only trade at around 8 sen per share early this year.

Then there is the GBH deals that saw the tycoon shifted the company's prime land asset to his another company Keladi and selling off his shares of GBH for not less than RM 2. (This is because Dynac's proposed RTO will trigger the Mandatory General Offer for the rest of GBH shares at a price of not less than RM 2 according the proposal) GBH ceramic business is not too exciting thus one can't help to wonder that the sole motive of the tycoon bought into this company in the first place is this piece of prime land. This is an excellent move which not only the tycoon didn't lost control of the prime land, but he will be able to offload his shares of the remaining GBH that without the prime land to Dynac at a price of not less than RM 2. Currently the share price of GBH is hovering around RM 2.20, if he offload his remaining 119 Million shares at this price which means he will be able to walk away with almost 262 Million cash together with that prime land. What a genius move. Remember, the share price of GBH is just hovering around RM 1.30 early this year before the spike of the price. Can it be any better than that?

Keladi is a cash rich company and will have no problem financing the purchase of the land with internal generated fund. After the purchase, the company will be transform from a low-medium cost housing developer to a luxury residential project developer. If there is a need for cash call in future to fund the development of this prime land, the tycoon can easily increase his stake in the company through private placement with the almost 300 Million that he cash out from PDZ (47 M) and GBH (262 M)

So after these genius moves, does the tycoon has more to come? The 3 other listed entities: Jaskita, Marco and GPA all have clean balance sheet with minimum debt. In fact Jaskita and Marco are net cash companies thus make them a great RTO target. Thus it is interesting to see whether there will be any further RTO involves the tycoon's entities.

Also, don't forget the tycoon's another listed entity FCW which involve in property development. Since Keladi and FCW have the same business nature, may be there is a possibility that the tycoon might further streamline its business by merging the two company.

One can't help to admire the team behind the scene that help the tycoon put those deals together. It is certainly interesting to see what is the next move by the tycoon.

Jaskita - Another Robert Tan's stock on the rise!

Chart : Jaskita daily chart as of 14 Aug 2014 (source: ChartNexus)

When I last posted on Robert Tan's staple the other day (GPA & Marco - Tan Sri Robert Tan Hua Choon story may not end yet!), it is my mistake to left out Jaskita. Well, most of the time this counter was traded with little volume thus not really an exciting counter to monitor. May be things will change this time. Yesterday the stock saw some 5 Million shares traded and close 1.5 sen higher. 5 Million might be too little to mention for most of the active stocks but it is certainly significant for thinly traded stock like Jaskita. 
Like most of Robert Tan's counters, Jaskita has been rising steadily from around 14 sen to 21 sen yesterday. The immediate horizontal resistance line is 21.5 sen which is just above yesterday closing. Thus I believe there is a high chance that the counter will break the resistance line and probably stage for a good run in next few days. Volume is always the key to breakout so if the counters able to stage a bullish breakout with significant volume then it might be a good buying opportunity. Unlike many active goreng stocks that losing money, Jaskita is actually a fundamental sound company with consistent earning and dividen. Thus it is interesting to see whether the tycoon has any plan for this low profile counter. Stay tune!

PDZ - Interesting MARA's off market trade

It is interesting that MARA decide to sold off 5 Million shares after just acquired the shares some 4 months ago. With their entry price of 18 sen, the disposal of 22.5 sen which resulted in a 25% return in 4 months seems make like a good trade for any trader. But the fact is MARA is an institution that many believe would be in this for long term or some bigger motive than just looking to make some quick bucks on short term trading. Of course, the 5 Million shares that disposed is only a small fraction of its 261 Million shares thus the disposal might not means anything at all. Some more the buyer of the shares is not known at this time thus is immature to make any conclusion. Well today is another good day for the counter which close 1.5 sen higher. May be MARA will be tempted to sell some of the shares at this price to make a good profit for themselves! I certainly will!

GPA & Marco - Tan Sri Robert Tan Hua Choon story may not end yet!

Chart : GPA daily chart as of 13 Aug 2014 (source: ChartNexus)

GPA is another company of the Robert Tan staple. The veteran has made himself quite a center figure lately with the counters that link to him such as PDZ, GBH and Keladi. Another 2 listed companies that link to him are Marco (with the famous Casio watch franchise) and GPA. GPA has been trading higher since early this year from around 8 sen to close at new high of 15 sen today. It is a remarkable performance albeit didn't attract as much limelight compare to PDZ. Judging from the chart, base on my 2nd Wave Anticipation concept (do refer to my previous posts : Second Wave Anticipation , Second Wave Anticipation II) I believe the counter will stage for another run after it broke it previous peak of 14.5 sen. Until this point, there is no obvious catalyst announce for this counter but judging on the recent restructuring of the tycoon business, there may be something on the card. RTO, assets injection and any other kind of corporate news might be the silver lining in this counter. Do keep an eye on it. I believe something is brewing. May be pork chop (as GPA in cantonese) could turn into to a steak!

Chart : Marco daily chart as of 13 Aug 2014 (source: ChartNexus)

Aside from GPA, Marco also another Robert Tan's counter that worth to take a look. The counter's price has trending up nicely from May 2013. Currently the counter trades at 19 sen which is just below its previous peak of 20 sen. There could be another good run if the stock able to break its 20 sen mark.

Certainly, there could be much more to come from Tan Sri Robert Tan.  

Daya - 'Reach' for rebound?

Chart : Daya Material daily chart as of Aug 13 2014 (source: ChartNexus)

Daya material today broke is horizontal resistance line at 34.5 sen to close at 35 sen with significant volume. It may be a bullish sign for the counter to rebound from its slid from peak of 45 sen to 28 sen. The disposal of shares in open market by one of the major shareholders, Dato' Mazlin, is believe to be the main contributor to the slid. But the stock has seen rebound from the low of 28 sen to close at 35 sen today with just 2 days before the IPO of Reach Energy, a SPAC that Daya hold 1.74% of the enlarge shareholding. The public portion of the Reach IPO has been oversubscribed by some 42 times, it is reasonable to say that the opening price of the stock should be substantially higher than the IPO price. With all this factor in, if Daya able to hold on to its 34.5 sen horizontal line, I think there is a good chance it will ride on the Reach IPO's momentum to stage a significant rebound and may be looking to challenge its previous peak of 45 sen. Having said that, Dato' Mazlin still has some 117 million shares of the counter and who knows when he will decide to sell again. Still Daya is looking to 'Reach' for rebound.

Sumatec - New high and how high it can go?

Chart : Sumatec daily chart as of Aug 13 2014 (source: ChartNexus)

Sumatec close at new high today at 0.54. The fortune of this PN 17 company (soon to be lifted) has been turn around with nothing short of a magic. From the almost worthless stock before the entry of Tan Sri Halim Saad till today, I have to say it is breathtaking just to look at the chart. It broke the horizontal resistance line at 52 sen yesterday and close just short of the historical intra-day high of 0.565. It is certainly not too far away. Personally, I feels that how high this counter can go is very much depends on how much story Tan Sri want to tell us. Assets injection, assets acquisition, technical collaboration or even merger & acquisition are all very interesting stories. Well I think only he knows how high it can go. For traders, it really test your guts to follow. Isn't it?

PDZ - Bull run never die

Chart : PDZ daily chart as of Aug 13 2014 (resource: ChartNexus)

My last posting on PDZ is just 4 trading days ago (PDZ - Sky is the limit!!!), the counter move another 7 sen or some 34% higher to close at 0.27 today. Seems like the UMA not only didn't stop fellow punters, traders and investors from the stock but steer even more buying interest to the stock. Early believer should already laughing all the way to their bank now. I guess the question now is that will the rally ever stop. Judging on the momentum and the volume that traded for the last few days, it is obvious that the stock doesn't seems like going to slow down any moment. But savvy traders and punters should always wary about stock that has run so fast in short span of time. Watch out for any weakness in momentum or bearish signal ahead for profit taking. Until then, for those that went in early do enjoy your sweet ride and may be some champagne popping too!

UMA - U May Act!!!

Recently met a friend of mine over a tea, during our conversation I asked him what he think about a stock that recently been issued a UMA  (Unusual Market Activity), His respond was : what you said? UMA? Is that suppose to means anything? As the matter of fact, recently most of the stocks that been slapped by an UMA seems undeterred by it at all. Counters such as Guoco Land, Ijacobs, BHS, Narra and most recently PDZ are all trending higher after issued an UMA by Bursa. Well, may be is time for the regulator to review their course of action on regulating the market. Till then UMA looks like U May Act to me.

BJ Corp - Value Trap!

Berjaya Corp is a conglomerate that needs no further introduction. I'm just simply going to list down some of the estimated value of its subsidiaries base on 2013 annual report to demonstrate how undervalue is the stock.

Listed Companies (% hold by BJCorp) (Market Cap in million as of Aug 11 2014)

Berjaya Toto (48.64%) - 2,498.35
Berjaya Philippines (88.26%) - 1474.56 (currency conversion rate of RM 1 to 13.72 peso)
Taiga Building Product, Canada (39%) - 31 (currency conversion rate of 1 CAD to RM 2.92)
Berjaya Media (13.39%) - 15.74
Silver Bird (14.35%) - Neglect-able
Informatics Education Ltd, Singapore (28.38%) - 78.7 (currency conversion rate of 1 SGD to RM 2.56)
Magni Tech (23.32%) - 77.92
TMC Life (27.36%) - 105.37
Atlan Holdings (26.30%) - 306.86
Berjaya Food (64.87%) - 510.39
Berjaya Land (54.67%) - 2312.46
Berjaya Assets (16.38%) - 150.41
Berjaya Auto (50.48%) - 1036

Total - RM 8,597.76 Million. May be we take a 30% discount due to holding company, it is still RM 6,018.43. Divide with the total outstanding BJCorp shares of 4,151.61 mil, net value per share will be RM 1.45

Honestly, to get the exact enterprise value of BJCorp is seriously out of my knowledge due to complexity of the structure of the company. But after looking at these numbers, I suddenly have this wild thinking. If some one is to spare me a RM 3 Billion, I would like to privatize the whole company at RM 0.70 per share for total RM 2.91 Bullion. After that I find buyers for shares of BJToto, BJ Philippines and TMC Life (receive general offer anyway) for around RM 4 Billion to return the borrowed money with interest then I should get the rest of the conglomerate for free. Nice....

Here are some of the notable subsidiaries that are not listed:

Cosway (HK, Malaysia and other countries), Berjaya Books (Borders) , Inter-Pacific Securities, Berjaya Capital, 30% of Berjaya Sompo Insurance, Kenny Rogers, Jollibean Food, Wendy's restaurant, Papa John's Pizza, Berjaya Air and whole bunch of properties, resorts, golf courses and hotels and much much more subsidiaries. These are the assets that I have no clue how to value but I'm certain it worth a lot of money.

So with all these assets, why BJCorp only trade at around RM 0.50 which is substantial discount to their value? Honestly I really don't know. In fact I hope that some one can enlighten me on that.

Chart : BJCorp daily chart as of Aug 11 2014 (source: ChartNexus)

In addition, BJCorp has been aggressively buy back their own shares which to date amount to some 150 million shares or some 3.6% of total outstanding shares. Which means another 3.6% discount if the treasury shares were to cancel.

Under value? I don't know, but to me it seems like a Banyak Jus Corporation.

Takaso - Bullish Breakout

Chart : Takaso daily chart as of 11 Aug 2014 (source: ChartNexus)

Condom maker (together with other products) Takaso Resources is on the move again. Today it convincingly broke its horizontal resistance of 0.30 moving towards its next resistance at 0.39. Personally I feels that Takaso is only suitable for those has really high risk tolerance. Do trade with extreme caution!!!

Scientx - probably another good run

Chart : Scientx daily chart as of Aug 8 2014 (source: ChartNexus)

Scientx is an Industrial product company that mainly manufacture packaging product cum property developer. Its share price has seen triple from around RM 2 some 3 years ago and break the RM 6 mark on Aug 8. This morning the share price trend higher again and looks like going to stage for another good run. Various price target has been set by brokerage firms from RM 6.34 to RM 7.19. It should hit that range very soon. Should hold on to the stock for further upside. Cheers to the shareholders!

Is time to 'Cliq'

Chart : Cliq daily chart as of Aug 8 2014, (source: ChartNexus)

After the recent announcement of Sona Petroleum qualified acquisition (QA), Cliq Energy is the only SPAC that yet to finalize a QA. If fact, the trading volume of the counter has shrink considerably and overshadow by the likes of Sona, Daya and the sizzling Sumatec, all with the same O&G theme play.

But take a closer look at the share price, despite the recent slid, it is still staying above the uptrend support line and form an asymmetric triangle. I believe it is worth to keep an eye on the stock for any bullish breakout from the current triangle. I'm confidence that the management will be able to make a QA within the stipulated time to take the company off the SPAC status.

With Reach Energy, the biggest SPAC to list on Bursa, IPO coming this month, may be is time to 'Cliq' again. May be a double 'Cliq'.

PDZ - Sky is the limit!!!

Chart : PDZ daily chart as of 8 August 2014 (source: ChartNexus)

PDZ's momentum still very strong and close 10 cents higher on Friday while local bourse saw huge selling pressure on blue chips that leads to KLCI lost 27.45 or 1.47%. The breakout from the 0.185 horizontal resistance seems very strong with consecutive 2 days of closing high on significant volume. 

Then there is the well-known Tan Sri Halim Saad apparently coming into the picture according to Focus article this week. Well, I guess there is no such thing as too much good news. 

How high would it goes? who knows! First you have the MARA institution, then the legend and couple with the O&G theme. Well, looks like the perfect recipe for an absolute ride. Anyone?

Cuscapi - Breakout soon!

Chart : Cuscapi daily chart as of August 8 2014 (source: ChartNexus)

Cuscapi share price has form a very nice asymmetry triangle for the last one year. I feels that the breakout will come very soon and is most likely be a bullish breakout that give the stock another strong run. A strong breakout with good volume might be the sign to jump in.

PetGas - End of 3 years party?

Chart : Petgas daily chart as of August 8 2014 (source: ChartNexus)

Petgas share price has enjoy 3 years of good run from around RM 9.50 to RM 25 but the good run may have comes to an end on August 8 2014. The share price fall RM 1.12 or 5.05% to close at RM 21.08. The fall not only broke its uptrend support line but also the immediate horizontal support line around RM 21.40. Is time to take profit and Ciao!

Second Wave Anticipation - Part II

Chart : Example of Second wave anticipation, PDZ chart as of August 7 2014 (source: ChartNexus)

The concept of Second Wave anticipation theory is base on my hypothesis on the behavior of stock operator and first movers. My hypothesis goes like this:

- During the flattish phase, the operator or some would like to call them insiders, were accumulating the shares of the underlying counter. They might just accumulate 500,000 shares or 1 Million shares up to few million shares a day without attracting any attention. This phase could last for months until they were able to accumulate enough shares.

- There could be 2 scenarios when the operator decided to start the 1st Wave. First is that they have collected enough shares and is time for them to 'advertise'. This is to generate enough volume to attract the attention of fellow traders and investors. Second scenario is that they were unable to accumulate enough shares by passively queuing at the buyer side due to most of the seller at this level has been absorbed by them. Thus there is a need to mopped up the shares at the higher price level and in the process flush out more seller ('long term' shareholders that trap by high entry price that hope to get a way out) so they can accumulate more. 

- The consolidating phase after the peak of 1st Wave is the time for the operator to further accumulate shares that sold by sellers that jump in at the peak of 1st Wave and decide to cut loss and 'move on'. I found a lot of investors like to sell their shares when the share price become flattish with minimal volume. Their view is that the stock has no more story and is time to close position and move on. But this is exactly the time for the operator accumulating their shares and position themselves for the next wave.

- 2nd Wave came soon after most of the sellers at the consolidating phase has been absorbed by the operator. There could be numbers of cycle of Wave-consolidate-Wave depends on the appetite of the operator and the ability of the operator to offload their shares.

- The profit taken phase of the operator is likely to came in 2 forms. First will be an ultimate Wave that contain absolute massive volume that caused by an influx of huge bulk of new buyers that allows the operator to offload enough shares to walk away with significant profit. Second form will see the shares trading at  rectangular range bound phase that no longer see new Wave with higher peak and higher consolidate phase.

Chart : Example of rectangular phase (source: ChartNexus)

You can never ride on the 1st Wave unless you are the insider. Clearly I'm not thus I only aiming to join from the 2nd Wave. We certainly can't afford to accumulate all the flattish share price's stock in hope to ride the 1st Wave, can we?

Profit taking for outsiders like us is when the new Wave's peak is not higher than the previous Wave's peak or the price fall below the previous consolidating phase.

Sound interesting?

DISCLAIMER : The concept mentioned above is just a dumb hypothesis and certainly untested. It might as well be a fiction. It is by no mean represent the stock operators' behavior or saying that stock operator even exist for that matter. You are advised not to take it too seriously and is just for fun sharing. As I said , it is just a fiction.