NXS... another Lousy Share?

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gdd3

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Post Number: 451
Registered: 09-2002

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Monday, June 15, 2009 - 11:47 am:

Mr Peterloh(or anyone else)....Do you have any thoughts on NXS? Do you think this could be included in your group "Another Lousy Share" and just maybe, since its "re-introduction" back onto the ASX trading floor 2 weeks ago, has attracted good market interest as it appears to be trying to play "catch-up" to the rest of the market(and sector)move since the March lows?

At the very least it seems to heading towards the upper band of the 32c - 60c 9 month bottoming? pattern.

By the way, this one was my pick in Yogi's annual stock picking comp but had gone horribly wrong until last week's action.

Regards

Dolphin

peterloh

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Post Number: 3061
Registered: 03-2003

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Tuesday, June 16, 2009 - 05:33 pm:

Hi Dolphin,

I haven't traded this one for some time. I was lucky to get off it when I did. I normally called a share "lousy", a term given to one that had been performing well through out the years, but came out poorly during the year for whatever reasons, sometimes justified but at other times not.Some like BSL, ABC and OST were good performers in the past, but fell because of poor demand recently, not within their control, but have a chance to recover during the year. I thought they were poorly judged and it is my saying tongue in cheek, these shares are not as bad as they look now, and will have a chance to recover, so watch out. A challenge to those that say "why buy such a lousy share?".
So, dolphin, please tell me the reason, NXS was lousy, before and what made you change your mind now? It has been doing well the last few days, bar today, which is an exception.

cheers,

Peter

-------------------------------------------------
Disclaimer: Please note that comments made in this column is mainly for the interpretation of charts in technical analysis. It is not made in my professional capacity and should not be taken as advice.In my professional capacity I am only allowed to give advice on certain managed funds authorised by my license dealer.Any share discuss is for general interest and should not be relied on to make an investment decision.It is likely that I may own the shares that we discussed as a trade or as an investment. Please consult your stock broker or financial adviser in regard to your personal situation.

The views expressed here contain information derived from public available sources that has not been independently verified.No representation or warranty is made as to the accuracy, completeness or reliability of the information.Any forward looking information in this representation has been prepared on the basis of a number of assumptions which may prove to be incorrect.It should not be relied upon as a recommendation or forecast by the writer.

gdd3

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Post Number: 452
Registered: 09-2002

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Votes: 0


Wednesday, June 17, 2009 - 01:45 pm:

Thanks Peter for you concise/precise explanation on what you refer to as " another lousy share" and now, understanding your criteria, maybe I should withdraw my tag that NXS may qualify as one(I did place a question mark after my statement, though).

As for my reasons why I saw NXS as "lousy" before and why I see her as a potential good trade now I think you know that primarily my trade decisions are almost entirely based on technicals. Having said that I believe the two fundamental reasons I saw as to why NXS fell from its highs in June 08 to March 09 lows were that oil fell from its lofty highs ~ US$150/b to US$44/b taking with it price of LG's and associates, and also that NXS had a A$180mil debt sheet to deal with before moving forward.

Now since the March lows(and when NXS was "retired" from the ASX) the company has outlined their strategy going forward that has comforted my technical view of her(will elaborate on those technicals later). The Strategy Report designed to get NXS into a stronger financial position going forward included:-

1/...selling 50% of its Longtom project to Santos instead of relying on a capital raising issue. Longtom goes into first production this July and should provide a good long-term cash flow(A$70mil pa).

2/...A$100mil of the 50% sale of Longtom will be used to reduce its net debt back to A$80mil and the bulk of the remainder will help fund further works on it primary Crux project.

3/... keeping its existing 85% ownership of Crux, a world class asset, with 3 to 4 times the value of Longtom and an estimated annual cash flow of US$460mil from operation in 2012, plus its good "optionality" potential, was a vital part of the company's future survival and advancement.

4/...NXS's current share price is at a substantial discount
to its net asset value.

5/...the price of Oil and its associates has risen substantially since its March lows.

To the Technicals...in addition to the brief short-term info mentioned in my first posting above:-

1/...we have a potential triple bottom in place(say 31c)going back to its Oct 08 low. The last triple bottom in NXS was way back in mid 2005, also at about 31c.

2/...The volumes over the past 2 weeks have been at record highs and the share price has gone up. I include the record volume day on the 29th of May, the day NXS came back on the ASX was "hammered" initially, BUT 2/3 of that daily volume was traded between 31c and 30c, just above its actual low of the day at 28.5c, but where it closed(30.5c). It has not been back there since and after it broke above 33.5c big volumes have come in. I'm guessing the market place liked the report mentioned above!

3/...Sadly, any technical momentum oscillators other than very short-term ones have to be ignored as NXS didn't trade between March and May. I use to have a program that could extract such non-traded days so that you could rely on the accuracy of all your indicators, but I.C. doesn't have this capacity!

So there you have my opinion why I saw NXS as "lousy" and maybe now "on the mend"(yep, I'll introduce my own terminology).

Thanks again, Peter for your imput, good trading and lets see how NXS fathom's out.

Dolphin