Good time to take profits on PNP

[adriandunn]

PNP trading at $7.10 (CDN) right now, which I suspect is a pretty good exit price.  If I were long, I would be selling my whole position, although I am a pretty frequent trader - longer term holders would probably do well to sell 1/3 to 1/2 of their position with the goal being to buy it back below $6 once they release their quarterly earnings in a few weeks.

[Sagi]

I wish I could get out of my position but my average is at 9.75 so I need to wait and hope that the stock continues to move up but I doubt it very much looking at todays opening of below 7.0. I am beginning to feel that this stock is going nowhere and its turning into a hold for the time being. Why isn't it moving up considering the various oil and gold positions its holding.
SAGI

[davidslane]

I think the best way to look at PNP is as follows:


-- If PNP's holding companies are worth a, b and c, then PNP should be worth a + b + c (taking into account the percentage of a, b and c PNP owns of each company and then add them up a*% + b*% + c*% )

-- If PNP's holdings go up 10%, then PNP should go up 10%

-- Now, the problem is that over the past few years, when PNP's holdings went up 10%, PNP went up 20%.  So, PNP was no longer worth a + b + c (but a lot more)


Meaning, PNP's NAV was way too high compared to the value of its underlying holdings.


So, PNP was and is still worth too much.


The question you must ask yourself, "is the money that I have in PNP now be better if it was invested in other companies (such as some of those that PNP owns)".  I would say yes.  The only reason not to sell is if you have a short term gain and don't want to take the tax hit.  Then I would hold.


But you must never look at a loss and say I can't sell because I want to get back to even.  Every investment should be valued on whether that investment money would be better off somewhere else regardless of loss or profit (except for the tax issue on profits as mentioned above).  But never hold a losing position if you think that money would be better played elsewhere.


But do hold losing positions if you think the stock went down do to panic selling and is over sold and should bounce back hard (like what happened in August).

[adriandunn]

Davidslane makes some very good points.  Your entry point is meaningless when making decisions whether to sell a stock, other than for tax considerations.  Having a loss is a great thing, you want to realize that loss and so reduce your tax bill for the year.

In this case, you could (if you wanted to), buy PNP back at $6.16 at the close today if you had sold in the last two days somewhere north of $7 - this is a savings of well over 10%!  If you can consistently make over 10% a *year* you will be a rich man, let alone in 2 days.

However, I would still wait until somewhere in the 5s before reestablishing a position in PNP if you really like it.  Personally I would not be buying it until the 4s, but that's me, I'm a pretty big sceptic on this name, and don't trust Sheldon to do right by PNP investors, he's in it for himself and runs his company like a leveraged commodities hedge fund with commensurate gains for himself.

[john77]

My understanding is that you are selling for a tax loss, if you buy-back within a certain period of time (30 days according to my memory, but I don't know because I don't buy/sell based on taxes unless there is no way around it) then the loss doesn't count.  However, at that rate, gaining or saving 10% over a few days, who cares about the tax implications.

I made the mistake of buying PNP on it's first breakout past 7.00. This was two days ago I believe, and I waited until it came back down to 7 to buy. I got "lucky" being able to toss it out for a small profit the next day. I will probably buy again around 5.50 or 6, depending on how U's do along side PNP.

I have been looking at silver stocks but am locked-and-loaded on U's now. I am thinking about the ETF for silver, although I would wait for a pull-back within its channel.

[davidslane]

If you want to make the big bucks, go for leverage and buy junior resource stocks instead of the underlying metal.

Meaning buy silver stocks instead of the silver ETF.

I'll suggest:

SLW
SSRI
MVG
PAAS
HL


When gold hit its high of $887.50 in the early 1980's, silver topped out at $50.  Silver is just $15.30 right now.  That means that silver (the most manipulated and held down commodity on the planet) could really run high!



I also would suggest folks who consider themselves as beginners to hold and not time and trade.


Buy on pull backs like today and hold!!!

Skim profits off at high points (Jan. 2, late April and Labor Day [US]) and buy on pull backs.


If you hold stock shares long enough, the profits you pull out periodically will be long term capital gains (selling shares held over 1 year --- taxed at 15% instead of your normal rate around 30%).



As for US tax law, there is what is known as the wash rule.  You lose the tax loss if you buy a stock back within 30 days BEFORE or 30 day AFTER you sell.

So, you can buy more shares of a stock and in 31 days sell the original shares (if you want to keep the stock but realize the tax loss) or you can jump dump it.  But if you dump your shares, you can't buy it back for 31 days!


Final note: this pull back may last into the end of next week and options expiration.  Any chance of a big crash/correction  for the rest of 2007 will occur in the next 7 business days.  I would be careful buying anything until these next 7 days work themselves out!


The US Fed meets again on Dec 11 and WILL cut again!
We'll rally from then on, but until then, and especially over the next 7 business days, expect extreme weakness and be careful how much you buy.


Buy on pull backs, but buy just a little each day in case the market keeps going down!!!

[john77]

Does anyone who still subscribe to TDL know when the next one is out?

[myst]

16th november.....

[adriandunn]

Surprised no comment on this yet - Pinetree's earnings were out after the close on Monday, and they were predictably bad.  NAV is down to $4.05 / share, and they also deleveraged themselves quite a bit during the last quarter, selling an additional $160M or so of their investments on top of their investment loss.  I knew they probably had margin calls, but I am surprised at the extent to which they deleveraged themselves, they basically unwound all of their margin - a prudent move, although it will limit their exposure to the sector upside now.

I'm kicking myself for not shorting back when it was $7 just over a week ago, but hadn't looked into when their earnings were due to be out.  I'm definitely hopping in if it gets over $6.50 though, representing about a 60% premium to NAV (far less than it used to be, but I don't think we will ever see the 100% NAV premium this stock used to have.)

So who is buying it up today, sending it up 10%?  Again, I think this is a good opportunity for longs to do some selling, as $5.80 is a pretty good price for an investment firm with assets of $4.05 / share.  Eyeballing the gold, uranium, and base metals charts from Sept 30th until now, I don't think their portfolio has appreciated much,  maybe by 5 - 10% at the top end, meaning their NAV *might* be $4.50 by now.  Even Noront is only about 25% above its September close.

We'll see what happens from here, but it will take nothing short of a commodities miracle before PNP goes through $10 again, and if I had a loss in the stock, this is as good an opportunity as any to take the tax loss for the year to offset any other gains, or future gains.

[Depleted]

You are probably correct, I am only going by my chart, and it shows me a  pennant formation, within the current uptrend that all began aug16. The slowly decreasing volume from aug16, to me, shows compression/consolidation Am I misinterpreting the last 3 months as a consolidation? I don't know the numbers, but I see a possible upside breakout developing past the upside resistance of 7.50 ish. Is this not a shake-out of the stockholders from 7.50 and down? Looks to me like they are cleaning up the weaker stock...hmmmm..I don't know... ...thoughts?

[adriandunn]

Don't know if anyone took their profits in PNP back around $7, but if you did... this is looking like a good price to get back in, trading $3.77 CDN right now.  It may go as low as $3, but short of a further meltdown in the juniors, I think your downside is reasonably limited at the moment.

Of course, if Sheldon has been up to anything shady, possibly even cooking the books, then all bets are off, but no one can predict this.  Personally I'm picking up a small trading position, as I like the volatility in this name, and it is back to its August lows.  Technicians may like to wait to see if the lows hold, but I think you lose out on a good portion of the upside by waiting (but may also be taking on more risk.)

[richmanch]

It looks like it's creeping past those August lows. What's your opinion if it breaks it cleanly? If it goes to 3? A few others are in this same position.

[sunseeker]

Adriandunn

No I didn’t take the profit. I let it slip.

Unlike last year, and up to April this year  where PNP figured  highly in my portfolio (as you already know I have you to thank for that) , I only have a small percentage of it now (getting smaller). I am only using it as part of my strategy to cover the juniors. The bulk of my uranium portfolio is now with Geiger Counter PLC.

Your opinions rearding PNP are uncannily accurate. Do you have any opinions elsewhere?
Your posts are quality, but could do to be more prolific (I am beginning to catch you up).
I have come to regard you as a bit of a good luck charm since April. So the more posts the better.

Best wishes to you, and your family.

[Depleted]

Thanks Adrian...I did dump my PNP way back at 6.79, when you said to, and I am glad you did. I was just lucky to get out. I picked up some MGA only on the fact of recent insider purchases, and as you said,  with PNP today, approaching Aug16 lows. thanks again for your insight, and sharing it with us all.

[JDH]

I haven't owned Pinetree for many months.  According to their web site, their Net Asset Value per share on September 30 was $4.05  (http://www.pinetreecapital.com/financial.asp).  It closed today at $3.75.  Of course the public companies it invests in have also declined, so it's NAV is probably lower than $4.05 today, but at least it is now trading at a more realistic price.

Pinetree closed at $4.08 on August 31, so obviously this is more than a retest of the lows; this is now the low for the year.

Interestingly, it made a low of $3.75 on August 16, 2006, the exact closing level of today.

I am uneasy with management, so I have no plans to do significant buying.  However, if you want some risk in your life, this would be as good a buy point as any.