Bottom Fishing

[themickey]

Time for an update.
The markets have been a bit nasty lately for stock trading which is not ideal for buying long and bottom fishing.
As for ZIP, I hopped out at 92c on 20th May for a loss and has since fallen to a low of 43.5cents, currently at 77cents.

I've kind of lost interest in ZIP for the meantime mainly because it's carrying huge debt.

Anyhow, my mind has wandered over onto different trading things, along with the fact my trading style method and algos have morphed yet again to a different style.

So I'm thinking quietly to myself we might be approaching a market bottom and this might be a good time to consider throwing out the line again and see if I can hook a big bottom fish.

So last week 14th November I set a hook into MFG.AX at $10.27

What I found of immense joy was a media article which came out on Nov 15th absolutely trashing MFG.
I get a real buzz when the media sink their fangs into a stock which is on it's proverbial knees, I all see is "BUY SIGNAL!"

News

Death of Ferdinand Magellan in battle with warriors of the Visayas - Illustration from 19th century. Via Getty

The dire straits of Magellan: Without Hamish Douglass, is MFG doomed to life all at sea?
News

November 15, 2022 | Christian Edwards
https://stockhead.com.au/news/the-d...sh-douglass-is-mfg-doomed-to-life-all-at-sea/

If you thought the Nasdaq jumping 7% late last week was cute, how about shares in Magellan Financial soaring some 10% before lunch on Friday?!

Via Google Finance
As the history books show, on September 20, 1519, five ships carrying about 270 screaming Spaniards led by explorer Ferdinand Magellan left the port of Sanlúcar de Barrameda sailing west — and just kept going.

Fast forward 500 years and, to be fair, if that original epic journey was tough, then October – nay 2022 – has merely been a continuation of those struggles in what’s been an absolute blood fest for the Hamish Douglass-less Aussie team at Magellan Financial (ASX:MFG).

The dire straits of Magellan

We love drawing and old sailing stuff. Unattributed sketch of the Straits of Magellan, probably by a pirate. (1885)
…240 men began Magellan’s voyage around the world… only 18 finished it’ – (Nat Geographic) – Granted special powers and privileges by the King of Spain, talismanic explorer Hamish Doug… I mean, Ferdinand Magellan led his Armada from Sanlucar de Barrameda, southwest across the Atlantic Ocean, to the eastern coast of South America, and down to Patagonia…

UBS: A fundamental turnaround for Magellan appears years away
It’s not been a season of riches for listed fundies by any stretch of the imagination.

What we’re calling the ‘equity de-risking’ abandonment of the listed fund manager sector has been a cruel time for the formerly formidable names of Platinum AM (ASXTM), Janus Henderson, T Rowe Price and Blackrock, which have all seen their stock price defenestrated between about 35% to 40%.

Unfortunately for the troubled Magellan, those numbers are admired with some greed and much envy.

Via Google Finance
It’s been tough sailing at MFG by comparison.

Via Google Finance
UBS notes that while the Aussie subsidiary of Florida-based global wealth advisor GQG Partners (ASX:GQG) marked its second month of outflows, they reckon the bulk of the lately hit listed asset managers “were more insulated relative to Magellan and Platinum, both of which saw much sharper impacts with net outflows experienced sector-wide as client de-risking continued.”

UBS says structural outflows are the problem for both MFG and PTM and they’re pretty much likely to be “persistent and painful”, (whilst GQG, for example) should see a quicker return to normalised inflows once cyclical de-risking abates, which UBS assume occurs into 2023.

“On investment performance, GQG remains the standout given energy exposures while MFG/PTM underperformed,” the investment bank said in a note to clients late last week.

Key Man Risk: Abandoned ship?

I shall call this… The Peaceful Sea.
…Despite a series of storms and mutinies, the expedition – led unerringly by Key Man, fearless helmsman, Hamish D… I mean F Magellan… successfully passed through the Strait of Magellan into the Mar del Sur, which Ha… Magellan renamed the “Peaceful Sea” (the modern Pacific Ocean).

Of course, the bleeding over at Magellan comes from more than just structural wounds – or as several analysts have put it the headline drama of MFG co-founder and part-time legend Hamish Douglass flogging shares can’t be a welcome sight for investors.

 

[SoyUnGanador]

LOVE bottom fishing, even though it gets me burned a lot.

Been averaging into VALE for awhile. Up a good bit.

I need to read this whole thread.

Mickey, when you bottom fish, do you study the company extensively? Their financials, their reports, when their debt is coming due, how their cash flow is looking and what problems they might have meeting debt payments, etc. etc.? I've always thought that if (i) you have time to do this kind of thinking about companies, and (ii) the market does get valuations wrong sometimes because they are moody bitches, then you really could make some money over time with a Buffet like style. Sadly, I have no idea if (ii) is really correct, and I lack the time for (i).

 

[themickey]

LOVE bottom fishing, even though it gets me burned a lot.
Been averaging into VALE for awhile. Up a good bit.
I need to read this whole thread.
Mickey, when you bottom fish, do you study the company extensively? Their financials, their reports, when their debt is coming due, how their cash flow is looking and what problems they might have meeting debt payments, etc. etc.? I've always thought that if (i) you have time to do this kind of thinking about companies, and (ii) the market does get valuations wrong sometimes because they are moody bitches, then you really could make some money over time with a Buffet like style. Sadly, I have no idea if (ii) is really correct, and I lack the time for (i).

Firstly my style is I like buying cheap, so I don't like chasing stocks which have already run.
There are exceptions to this, for example its nigh on impossible to buy cheap or bargain lithium stocks. But, pullbacks is generally what I seek.
Fundamentals, yes I generally look at net debt, revenue, net profit margin, price to revenue, price to earnings, how many shares on issue.
I also like to look at DOM ratios, how many buyers vs sellers but this gets tricky due to the heavy weight of day traders.
So I like to marry a bit of TA to FA in decision making.
But ultimately, king of everything is sentiment.
That is how is the market behaving, how is the sector behaving, how is the stock behaving.
With MFG atm, imo, it's very high risk.
I can see the weekly bars are rolling over into an upward trend, but the one big red flag imo is there is no double bottom, last week was the low at $8.98 so this calls for tight stops.
We'll see how this coming week goes, I'm not confident this trade will work out, actually I think the trade will fail and me bailing out. Saying that, trading is counterintuitive, when I'm confident often I get failure, when sceptical (as in this case) often it works out going on up.
Anyhow, $10 is a major round number, that's another reason in my decision, I'll let the week coming play out.

Weekly bars beginning to roll over.

PS: I'm playing a dangerous game with MFG where I'm hopefully getting in ahead of sentiment.

 

[themickey]

Sold MFG @ 10.01.
2.5% loss.
Not happy with the wishy washy price action, will wait another day maybe if something else doesn't come along.
The market is turning red.