Losing Streaks

They say that 13 is an unlucky number. I don't know if this is necessarily so. But I do know that 13 is a really unlucky number for this Research House.

You see, in a 10 month period, I know this Research House to make 13 Buy calls on the same stock. Yes, THIRTEEN buy calls on the same stock! Not different stock.

And all 13 has high Target Prices. If the Analyst Target Price has came out to be true, then, you could have made spectacular gains! It was a wonderful dream. The minimum gain was 37%, and the maximum gain was 153%. Wow!

But of course, reality was harsh. The dream wasn't meant to be reality. It must have been very sad for the Analyst and his Boss.

You see, in his first initiation coverage report, the report was writen extremely well. 18 pages long. Anyone reading it will say it's written by an expert. Very persuasive arguments. Every potential problem that I could think of was anticipated and explained. In fact, problems that you don't even think about was raised, and explained. Anyone would say this demonstrates "deep insight" into the business. Beautiful charts. Solid tables and figures. And it appears to be very, very transparent. You couldn't argue against it. I remembered printing out the report (all 18 pages) and studied it in detail.

In short, I couldn't do half as good a job as he could. Honestly.

And the Analyst is persistent too. Maybe it was his Boss who forced him to be persistent. Or maybe, as the Share Price falls, the Company forced his Boss to be persistent, which forced the Analyst to be persistent. And that may be because the ultimate boss owns a lot of this stock. Company -> Boss -> Analyst -> Report. Or CBA. As simple as reversing the letters ABC.

His first report was dated 28 May 2007. His last report was dated 31 March 2008. 10 Months period. 13 Reports in 10 Months.

And I cannot describe his Track Record verbally. You must see the following table - line by line - for yourself here. And as you read each line, remember that the latest closing price is $1.71.



You may wonder why I'm writing this article?

Two reasons.

One, I had a really bad trading experience with this stock, and I want to share it with you so that hopefully, you can identify with my experience and seek ways to avoid it, or learn from it.

The problem started on 21 June 2007. I bought into the stock at $4.15. I really believed in the Analyst then, and since the Report Price was $4.48, with a Target Price of $6.15, I thought my Buy Price of $4.15 should be good. (maybe even got chance for 50% return if TP is achieved!)

And remember, I was 80% FA then and not afraid of paying for growth, if growth is achieved. The analyst painted the China and global potential, and I'm technologically challenged, and decide to trust this "professional"! After all, what did I really know about SON-this, SON-that? (smile) So, when the price fell the next day, I averaged down naturally at $4. So, my Buy Price was between $4-$4.15. I felt comfortable. Why? Because I studied the report religiously! I carefully read every single sentence, pored at every chart and tables. And based on his persuasive arguments, I couldn't come to any conclusion except the stock looks cheap right?

Actually, I then had a good experience with this stock. Soon after I bought it between $4 - $4.15, the stock rebounded and went up! I sold at $4.14 (relief sell), $4.40 (profitable sell), and $4.64 (even more profitable sell!). It was a profitable operation in just 2 weeks! I could do no wrong! And I "prudently" kept a small amount in anticipation of the stock split, and the stock consolidation. After all, the analyst said the TP is $6.15. That's still a long way to go! Why not keep some? I remembered feeling happy and optimistic then!

And then, as prices rise and then fall, I ignored the warning signs. The stock splitted, and consolidated on 13 July. Price fell. I re-read the report on 28 May to reassure myself. The analyst came out with a 2nd report and I read that even more thoroughly! (Yes, I was a diligent investor/trader). And felt reassured.

But I made the cardinal mistake of ignoring the warning signs. There were many and they were very loud, but I was euphoric with my other gains, that I just had to ignore all the signs. (smile)

And then, like a true FA investor, I averaged down! I bought more at 4.88 new price (= 3.66 old price - that's cheap right when you sold at $4.64 old price right?). And bought more at 4.46 and 4.10. And sold at 4.48. Then buy more at $3.7. And sold $4. And then buy more at $3.76. And sold $4. And kept some.

And I tell you, getting into a difficult spot and trying to trade your way out of it is extremely, extremely tiring emotionally.

And finally, out of tiredness, frustration, disgust, and when I started to become more dependent on the price charts than FA for timing my entries and exits, I sold all at $2.75 average price on 15 Nov 2007. From the charts, it was a breakout on the down side, after the last possible support was broken.

Interestingly, at the same time, the analyst thinks the Target Price should be downgraded from $8, but still thinks it should be $5.72 at the time. Or nearly 100% Upside should still be had if you still believe in the Analyst!!! Of course I had long stopped reading his report by then. And I was being generous too, because by then, he has made 5 wrong calls already. Consecutively. (of course, nowadays, I would act differently, but that's hindsight).

Long story short, I should have suffered a tremendous lost. After all, my initial foray was $4.15 old price, equivalent to $5.53 new price. And my final sale was $2.75 average. That's a loss of 50%. I should have been spanked well and truly with a 50% loss.

Looking back, you might not believe this, but from the first day that I bought the stock, to the last day that I sold the stock, my TOTAL loss is 1% capital. Yes. 1%. There were 3 reasons why it's not bigger. First, my initial foray was profitable. So, that cushioned the loss. Second, I had subsequent periods of profitable trading, which cushioned the loss further. Third and most importantly of all, even though the Analyst was persuasive, I followed my Money Management / Position Sizing rules. And when it reached 1% capital, I cut.

So, it was a good and fairly expensive lesson for me in $ terms.

So, you can say that I'm somewhat of an expert on this stock, and on this Analyst Reports. (smile)

The second reason for writing this article is a cautionary one for all readers. And I will touch only on the title which is "losing streaks"

My main question is - Is this a Random Event? Could the Analyst has gotten 13 wrong calls in a row simply due to a statistically random event. After all, we know that it is possible to lose trades 10 times in a row, just due to statistical fluctuations and nothing inherently wrong in a positive expectancy trading system.

So, my question is how difficult is it to get 13 Wrong Calls IN A ROW over a 10 months period? Is this possible at all due to random fluctuations?

Let's imagine an average Joe first with a 50/50 chance of getting it right / wrong. He knows nothing about stocks. He knows nothing about businesses. If he randomly choose a stock without looking at anything, then, the random chance of getting it wrong 13 consecutive times = (0.5) ^ 13 = 0.0001. Or 1 in 10,000.

Wow. Only 1 in 10,000? For comparison, the chance of an average 40 year old dying within the next year is probably much higher.

Now, this analyst and this company doesn't strike me as someone with only a 50/50 chance.

The local company - in their advertising, website, annual reports, everywhere basically - presents themselves as a professional company with a professional image. The reports written are so persuasive and clearly written by an intelligent guy. Surely, they must have an edge in Fundamental Analysis. Otherwise, why listen to them?

So, let's say their edge is 70%. 20% higher than the Average Joe. So, the odds of getting it wrong 13 times in a row now becomes = (1-0.7) ^ 13 = 1 x 10-7 or 1 in 10,000,000.

Wow! 1 in 10,000,000! Some thinks the chance of being knocked down by a Yellow bus in your lifetime is many, many times higher than this.

Do you think this losing streak is a random phenomena? That they are just so damn unlucky, that with their kind of luck, they would have made a killing by gambling?

Or is this a systematic, deliberate, carefully planned and thought-out issuing of "Analyst Reports"?

I don't know about you, but it is very hard for me to conclude that this is a statistically random event.

You decide for yourself.

Crude Oil is Still Trending Up: A Personal Commentary

Crude Oil hit a high of $139 last night (July 2008 NYMEX Light contract). I trust the following charts are self-explanatory.

Weekly Chart - July 2008 NYMEX Light contract.

Daily Chart - July 2008 NYMEX Light contract.

Comments

In the last 2 weeks (after hitting a peak of $135 and prices falling slightly), I mentioned in my chatbox that we should still regard crude oil as still trending up until we see some signs of weaknesses (e.g. not violating support at around $118-$119). Then, we would hit cautious mode, sell some / all, and reevaluate. As it turns out, the support was never tested at all.

The last 2 days gain had so much force, that it is still very strong. Yesterday's gain especially.

$135 resistance was broken quite easily.

Any competent chartist capable of drawing up-trend lines can draw several different types of up-trend lines that NONE of them will dare to say that this animal is downtrending.

Yes, it's exponential rise.

I believe most exponential rise will eventually crash - usually, it's just a matter of time. But the relatively recent entry of "index speculators" in the last 5 years has changed the fundamental game somewhat, that the previous $40 resistance 5 years ago has shifted upwards. It is estimated that "index speculators" purchase is almost equivalent in size to another China consumption in last 5 years.

In the mean time, exponential rise can rise higher than anyone can predict. At the time of writing, $150 looks more likely now, and even $200 is still possible and cannot be written off.

So far, still no definitive sign of slowing down.

However, one subtle difference worth monitoring is the long term contract prices (e.g. 2010, or 2015). Unlike May 21-22 rise which occured across most durations, yesterday's rise seem to concentrate at the shorter than longer duration. This may signal the return of the traditional speculators vs the index speculators.

Implications

With our recent fuel hike, if the up-trend continues, expect higher Petrol prices than $2.70 per litre.

Expect higher general inflation.

If Bank Negara and the banks do not raise interest rates, expect negative real interest rates which will get bigger. Expect to lose purchasing power over time from Fixed Deposits investment only.

Expect higher operating expenses for ALL businesses (such as those relating to fuel usage & general expenses).

Expect some businesses to not be able to pass on the higher costs than others, with harder profit squeeze (if there is any profit left).

Expect PETRONAS (as a direct producer of crude oil) to be the biggest beneficiary. I suspect, not inconceivable that Petronas gains alone will exceed all 100 KLCI stock components, although I haven't seen any calculations.

Expect TENAGA operating costs (Gas and Coal Costs) to rise further. It is unclear if TENAGA will be allowed another tariff hike after the one announced on June 5. It will be a record, if TENAGA is allowed another tariff hike even before the one announced in June 5 is implemented!

Expect O&G sector to eventually be relative beneficiary to other sectors, although remember, this is not a direct relationship. Remember, O&G businesses will also be hit hard by the higher general inflation and they are not immune.

Expect our own backyard CPO sector to also be a relative beneficiary to other sectors, since eventually, there will be some correlation (not direct link) to the crude oil rise. Note our CPO stocks are more affected by CPO prices than necessarily crude oil prices.

Expect sectors that uses relatively more energy (as % of net earnings) to be hit harder.

I am sure you can add on to this short list.

Good luck.

$56 Billion "Subsidy" : A Personal Comparison with KLCI

To justify its fuel hike, we've been hearing from the government in many places especially the Mass Media that the "subsidy" is $56 billion.

For example, this "factbox" by the Straits Times repeated the $56 Billion figure, when comparing Malaysia against other nations. http://www.straitstimes.com/Latest%2BNews/Asia/BgSty_244353_1.html

It is not my intention to list out exhaustively every single mass media source that quotes the $56 Billion figure. Even my previous article has links that mentioned that as well.

It's been mentioned so many times in the Mass Media, and yet Not Questioned, that perhaps some of us has gotten used to it.

We become desensitized to it, because No One questions it.

It just become another number.

So, let me put it in another perspective.

I have used this comparison in the chatbox, and when I did that, some were surprised by how large the number is.

As investors and traders, the KLCI (KL Composite Index) is an Index that we monitor daily and for some throughout the trading day.

The KLCI is an index that comprises of the Top 100 Companies listed in Bursa.

These include names like Sime Darby, IOI Corp, Public Bank, Maybank, HL Bank, Tenaga Nasional, Telekom Malaysia, Genting, Petdag, Petgas, KLK, Digi, Bursa, MAS, Airasia, Astro, BAT, BJ Toto, Gamuda, Maybulk, Kencana, etc. etc. etc.

The List is 100 names long. Yes, ONE HUNDRED. Not 5. Not 10. Not 20. But 100.

If you are using your fingers to count, you need to count it 10 times, since 100 = 10 x 10 and I'm assuming you are a normal person with 10 fingers.

Yesterday, I indicated that the total Market Capitalization for the KLCI is approximately $650 Billion.

Remember that the KLCI includes companies owned by our Country's Richest. Robert Kuok, Ananda K, IOICorp's Lee, Public Bank's Teh Hong Piau, Quek Leng Chan, YTL's Yeoh, Syed Mokhtar, Vincent Tan, Mahathir's son, etc. etc. etc.

The KLCI traded at a P/E of approximately 12 (at around 1260).

This indicate that the Total Net Earnings of all the entire KLCI components - i.e the Sum of All Top 100 Companies listed in Bursa - is equal to : $650 / 12 = $54 Billion per annum.

Err ... What??

Only $54 Billion?

The Top 100 Company listed in Malaysia has a total Net Earnings of less than the $56 Billion per annum subsidy figure?

Is Seng on drugs?

And the government wants to take ALL that away?

And in my previous article, "generously" gives back $5.6 Billion as Rebates. And as the government announces more "benefits", the amounts become smaller and smaller and soon, becomes smaller than $0.1 Billion?

Will they ever add up to close to $56 Billion?

And I don't see our mass media reporting that Rakyat has requested and demanded more Rebates and better Benefits than the paltry $625 for those who owns an "eligible" car.

And I don't see our mass media demanding our Ministers to also do something for those who don't own "eligible" cars / motorcycles, but will surely be very badly affected by the rising prices of goods and services that is certain to happen.

Have we really become desensitized to the size of the figures involved?

Think about how much the government is taking away.

Think about how much they are giving it back.

I am not telling you what to do. I am merely giving you the facts about the total yearly earnings of the Top 100 companies in Malaysia.

I am merely comparing that number with the $56 Billon reported.

Petrol Up 78 More Sen!

By now, you may have already heard that Petrol and Diesel will be increased at Midnight tonight.
- Petrol will be $2.70 / litre, up 78 sen from $1.92 currently (for ULG97).
- ULG92 will rise 74 sen (from $1.88 to $2.62).
- Diesel will rise by a whopping $1.00 (from $1.58 to $2.58).
This was announced by the Prime Minister in the mass media here (NST Online - http://www.nst.com.my/Current_News/NST/Wednesday/Frontpage/20080604171620/Article/index_html, Star Online - http://www.thestar.com.my/news/story.asp?file=/2008/6/4/nation/20080604175025&sec=nation).

Despite the substantial price rise, PM reiterates that petrol is still being subsidized. According to the Star here (http://www.thestar.com.my/news/story.asp?file=/2008/6/5/nation/21461533&sec=nation), "Prime Minister Datuk Seri Abdullah Ahmad Badawi said the new prices were still at a 30-sen per litre discount from market prices." This implies a "market price" of $3.00 per litre, at least at the time that PM made the announcement. The PM also announces prices to be adjusted monthly.

As a result of the "reduced subsidy", the government proposes to offer rebates to motorists (see http://themalaysianinsider.com/mni/78-sen-more-for-petrol-by-august.html). The proposed rebates are:
- Vehicles below 2,000 cc will receive a rebate of $625 per annum.
- Motorcycles will receive $120 per annum.
- These rebates will be rebated via postal orders.

Subsequently, someone attached in my chatbox the official Press Statement by the PM Office here (http://www.pmo.gov.my/website/webdbase.nsf/w_4?openForm&title=Latest%20Releases%20from%20Prime%20Minister&url=http://www.pmo.gov.my/WebNotesApp/Abdullah.nsf/hv_PMKiniSemasaNew/214AA70091D7F2534825745E003CA153)
The rules are more detailed. The motorcycle rebate for under 250cc is $150 p.a., and for those over 250cc is $50 p.a. or less depending on their road tax. I'm sure more details and clarification will emerge in future.

In addition to the Small vehicle & Motorcycle rebates above, according to DJ Malaysia (courtesy of fellow chatter "juicy" in my chatbox) and the Official Press Statement:
- PM: Road Tax will be reduced.
- PM: Power Tariffs Up 26% for Commercial Users
- PM: 30% Levy on Power Producers
- PM: 15% Levy on CPO above RM 2000 / ton
- PM: CPO Levy for Sabah/Sarawak at 5%
- Gas Prices raised substantially (e.g. Electricity Sector, from $6.40/mmBtu to $14.31/mmBtu, etc.)

In both the mass media, as well, as the Official Press Statement, the PM announces that "Govt to Get RM13.7 Bn Savings from all these Measures."

Further, according to Shahrir (e.g. Malaysian Insider above): "A new scheme ... had to be considered due to the escalating subsidy bill likely to top RM56 billion if world crude prices don't pull back from the current level of around US$130 a barrel. "

Further Shahrir (in Malaysian Insider): "The new subsidy scheme will save the government RM4 billion, said Shahrir."

______________

Now, my main point in this article is to try to approximately estimate (to the nearest 2 significant number):
1. How much Government has taken away (from these various measures in Red above).
2. How much the Government proposes to give back (from various measures in Blue above)
3. How much is actually the savings from 1. and 2.
4. And how it compares with what the PM reported to have said, which is RM 13.7 Billion and what Shahrir reportedly say is RM4 billion.

The approach taken here is similar to what analysts typically do in their Fundamental Analysis of companies, based on company published results. In this case, instead of companies, we apply it to the Government, based on what the Government has told us publicly.

So, for transparency, I will lay out my assumptions, and you can verify for yourself and see if you agree with my conclusions or not.

1. How Much Government has Taken Away

Firstly, note from above that this includes 2 types of items - those highlighted in Red, and those highlighted in Purple. For this article, I will just attempt to do a 2 significant figure estimate of the Red stuff only. I will ignore the Purple stuff in this article.

Well, according to Shahrir, the total Subsidy per annum is $56 Billion (which relates to the Red stuff only).

By raising Petrol from $1.92 to $2.70, government subsidy should reduce. The question is how much?

Well, we can roughly estimate this since we know that the $56 Billion subsidy relates to a market price of $3 per litre.

So:
- $1.92 to $2.70 : (2.70 - 1.92) / (3 - 1.92) x 56 = $40 Billion.
- $2.70 to $4.00: (3 - 2.7) / (3 - 1.92) x 56 = $16 Billion.
Total = $40B + $16B = $56 Billion.

In short, by raising petrol from $1.92 to $2.70, the gross savings is approx $40 Billion (gross = before deducting the blue items & expenses), with the government continuing to subsidize $16 Billion.

Note also that the $40 Billion figure is an under-estimation for the following reasons:

- The price rise in Diesel is much higher than Petrol, so, this should save the government more.
- I have not factored in the savings resulting from the other measures in Purple. These Purple items are not small items, but for the purpose of this article is not necessary to show that the Government numbers don't add up.

2. Cost of Rebates

Fellow chatter "starter" has sent to me the following statistics from the Road Transport Department on the number of cars & motorcycles in Malaysia.
- Number of cars = 7,386,134.
- Number of motorcycles = 7,942,707
- Total vehicles = 16,758,311 (which is larger than both above. Difference = 1.4 million vehicles)
Note that number of cars includes above and below 2000 cc. Number of motorcycles include above and below 250cc. But for conservatism, I have used all to over-estimate and be generous in the Total Rebate figure to be nice to the government.

So, Estimated Gross Rebate = 7.4 million x $625 + 7.9 million x $120 = $5.6 Billion.

Note that this number $5.6 Billion is relatively insensitive to changes in the exact number of motorcars and motorcycles. Feel free to change the numbers yourself. The reason it is insensitive is because the numbers $625 and $120 is small.

2a. Expenses

Since this rebate is via postal order and is done once a year for each individual when they renew their Road Tax, there will be some expenses incurred in doing so for the 15.3 million transactions.

Some of these expenses will relate to the need to maintain records, to make sure the right money goes to the right person, salaries, overheads, and everything which POS bill to the government, etc. etc. etc.

For simplicity, I am assuming that the cost per transaction is $20, from the start to finish.

I feel this is being very, very generous to the government, since bank transactions are typical just a tiny fraction of $20 per transaction, and we are dealing with very large volume of transactions conducted by POS (which should have the best economy of scale, although I'm realistic to know that POS might not be as efficient as banks).

So, a very generous estimate is $20 x (7.4 + 7.9)M = $306M

So, Total Rebate + Expenses = $5.6B + $0.3B = $5.9 Billion.

3. How Much Government Save?

Net Savings = 1 - 2 = 40B - 5.9B = 34 Billion

4. How Compare to What Shahrir Say?

Let me quote him again from Malaysian Insider - "The new subsidy scheme will save the government RM4 billion, said Shahrir."

Err $4 Billion Only???

How did he get $4 Billion?

I got $34 Billion. (from 3. above).

That's a difference of $34 Billion - $4 Billion = $30 Billion unexplained.

$30 Billion pergi mana??

5. How compare to what PM say

Let me quote the PM from his Official Press Statement: "Kerajaan menganggarkan sejumlah RM13.7 bilion daripada penjimatan yang akan diperolehi daripada penstrukturan semula subsidi petrol, diesel dan gas serta pendapatan daripada levi yang dikenakan terhadap IPP dan POP."

Note. He has not only included the Red Stuff but also the Purple Stuff.

Yes, in the Official Press Statements, there are other Costs.

These other Costs - in my judgement - is very small in comparison to the Purple Stuff.

But just looking at the Red stuff, already I get $34 Billion.

And PM's figure is $13.7 Billion.

Difference = $34 Bn - $13.7 Bn = $20 Billion

So, how?

$20 Billion pergi mana??

Why did the PM says the savings is so small, when simple estimations of the big ticket items show that there should be much larger savings to be had?

What possible motive could the government have to mention that the savings is so small?

Update: In this afternoon's discussion in my chatbox, "dorraidd" suggests that maybe, the figures relates to different time-periods. For example, the fuel hike starts from 5 June 2008. Whereas the Rebates is actually given out only from 1 July 2008 onwards. For this year, 1 April 2008 - 31 Dec 2008 period are eligible for rebates. "dorraidd" arguments is that since there are differing time period, there are simply "too many" assumptions that needs to be made.

My response is that in this specific case where the differences are already large and sticks out like a HUGE sore thumb, this is red herring:

1. Compare with Shahrir's number, he says $4 Billion, I get $34 Billion with $30 Billion difference. Can a few months time period gives such a large difference? Let's be generous and double Shahrir's $4 Billion number. You get $8 Billion. Still Big Difference.

Bottom line - to justify $4 Billion, Shahrir must address my article. He needs to make more data more transparent, and explain further.

2. If compare with PM's number, he says $14 Bn, I get $34 Bn, with $20 Billion Difference. Again, gap is too big when there are other Purple stuff benefits which I haven't added into the $20 Billion difference figure. And remember, in my rough estimations, I have been very generous to the government, so, $20 Billion difference could easily be Billions more. But I would like to invite dorraidd to lay out his calculations in a more transparent manner, and do what I do here if he wishes to present his case. It is important that we both are transparent, and not just one of us.

Notwithstanding this, comments are invited in my chatbox or here (if you don't have access to the chatbox, or want to leave a more permanent comment). Thanks.

Disclaimer and Conclusion

1. Don't automatically assume I am correct. Verify this for yourself based on data published by the government. Make sure you understand why and how I derive the differences. It's simple maths that involves basic addition, subtraction, multiplication and division. No calculus involved. But you need to be able to see the "big picture" and the "key concepts".

2. It is quite possible that with further data disclosed in the coming days, with additional benefits announced to the Rakyat, they may run into many Billions of $ and thus reduce the gap. I sincerely hope this happens. But if they did not, then, this is a serious national problem that goes to the highest leadership.

3. And since my main focus is to emphasise the importance of doing independent analysis/checks, and I am not a full time follower of politics, I may not be able to update my article. But I hope I have emphasised the importance of doing independent analysis, because if not, it is too easy for others with no sense of integrity or morals to cheat you in other aspects of your life.

PARKSON & A Position Size Idea in face of Uncertainty

This article is dedicated to “dorraidd” who discussed Parkson passionately with me in my chatbox today, and kindly urged me to cut loss. I thank you for your kind advice. The article is also dedicated to all readers who wishes to explore alternative, non-standard position sizing idea. A disclaimer: I don’t necessarily practiced it exactly this way, although I do own Parkson at the time of writing.

PARKSON (5657.KL) is a stock that is popular in my chatbox, especially amongst the “investors” such as “bullbear” and “cycle” whom some would say are “die-hard” fans of Parkson stock. Dali (chatter, blog owner of Malaysia Finance blog) also likes it from a business perspective in the past, although lately he has been rather quiet about this stock. Of course, a local fund manager has also touted this stock in the Star recently and in his advisory services for a rather long time. (http://biz.thestar.com.my/news/story.asp?file=/2008/5/29/business/21384745&sec=business) As for me, from time to time, when I have vested interest (such as now), I will write about the stock too (smile). So, do be aware the vested interests involved when you read the cbox, newspapers, analyst reports, etc.

Having said this, the reason why Parkson is highly favored as a business is quite easy to imagine. Think past spectacular growth results and exciting future prospects from the huge China retail population. Think China economic miracle, rapidly and continuously growing and unstoppable rich and middle class with greater and greater purchasing power over time, proven business model in China and scalability to other areas, think untapped demographics and the huge 1.3 billion population, non-saturation even over the next 10 to 20 years in future, etc. There are many, many better and more skillful writers who can paint a better picture about the future prospects of Parkson’s business, as well as its phenomenal past growth.

However, the truth is deep inside me, I am not 100% convinced with such stories. Why? Because Parkson trades at a high P/E and its price action volatile. I immediately think of Green Packet and Top Glove, both of which were previously high growth stocks and now got punished hugely when they don’t deliver the earnings growth. Green Packet more than Top Glove.

But I must also say, that unlike Green Packet and Top Glove, Parkson does have the unique China appeal, making its growth story more robust. (I think you can see how torn apart I am). The dilemma is China growth – if Parkson can no longer grow its earnings from such a huge market potential like China, then which company can? Of course, Parkson also has operations in Vietnam and Malaysia, although we know the earnings contribution from these 2 countries are small, and the vast majority (nearly 90%) is from Greater China alone. As a trader cum investor, the question is how to take advantage of current low price (Reference : $5.6). Is this low price an opportunity? Or is it a bear trap? Or is the low price going to become high price in future?

In this situation, I personally find it useful to look at the situation from as many perspectives as possible.

The first perspective I would start with is that of a chartist trader. He would look at this chart here:

And he would probably say “UGLY” – don’t touch it. Why?

Well, if one is a trend following trader (trend following traders typically want a go signal from either trend following indicators such as MACD, Moving Averages, or a bullish looking chart pattern), then, Parkson does not fit the criteria. MACD is still moving downwards. EMAs across many durations are pointing downwards, even a downtrend is visible since the peak on 2 Jan 2008. So, trend-following traders would probably wait for the downtrend trend to reverse itself first, before thinking of jumping in. These include break-out traders as well.

What about the “oscillator-type” traders who buys low and sell high within a channel? Well, in such a situation, the stochastics would clearly show “over-sold” conditions across a wide range of parameter, and such suggests possible “Buy”, although experienced stochastics traders know that in a prolonged downtrend, they can indicate “over-sold” for quite a long time. And trading a channel that is declining is not exactly high probability stuff. So, prudent oscillator-type traders would also probably wait for a little while first.

Even traders using candlesticks would also not consider touching Parkson, as there is simply no “reversal” signal yet.

In short, I would think 90% of the professional traders probably won’t touch Parkson at end of today, at 4.59 PM.

However, as usual, when the price of what is perceived as a wonderful business comes down, another group of investors starts to salivate and get excited. These are the true investors, who wants to buy when the price is low and when they think it is a bargain. The question is is it a bargain at $5.6?

There are many types of investors, but probably the largest group of investors are those who likes the Sum of Parts of Parkson. As you know, Parkson operates in 3 countries – HK, Vietnam, Malaysia, and the proponents usually – for simplicity – put a zero value for Vietnam and Malaysia operations for convenience, even though both operations are profitable. The reason is because the earnings contribution is small. Whereas for Parkson HK, it is listed in HK Stock Exchange, it’s a fairly liquid stock, and so, the market value of the stock is easily referenced. In fact, Parkson owns approximately 53.5% of Parkson HK, and so, at closing price of HKD61.5, and using an exchange rate of 1 RM = HKD2.45, yields a Market Value of approximately RM7.5 Billion. When divided by 1.04 Billion shares outstanding currently, this gives a Market Price of say RM7.2.

Now, this is not the only way to put a value for Parkson, since even amongst the Sum of Parts practitioner, there are a huge variation of practitioners. E.g. some would argue that since Parkson also have approximately RM500 M Redeemable Convertible Secured Loan Stock (or RCSLS) of which RM195M has been converted leaving RM305M left, which represents approximately 76M additional Parkson shares, the price should not be divided by 1.04 Billion but 1.11 Billion. This gives a price of say RM6.7. But I think this does not give credit to the improved Balance Sheet after such conversions, not to mention that when such loans are converted to stocks, there is no longer any interest payments which represents savings. So, I would still put more weight on RM7.2 figure than RM 6.7 figure. Perhaps there is a spectrum there.

But more importantly, the Sum of Parts valuation assumes that HKD61.5 is a true and fair value for Parkson’s business. Investors are generally longer-term and patient people, and the fluctuation, current market value is not often a benchmark that determines the value. Herein lies a paradox, in that Sum of Parts valuation uses Market Value, but they don’t want to use Current Market Value! One variation wants to use Target Price for Parkson HK, which again, varies by analysts but generally speaking, far above HKD61.5. Parkson HK price peak was HKD91.5, and today’s price is quite a big fall from its peak on 11 Dec 2007. Knowing how analysts operates, I wouldn’t be surprised if back in Dec 2007, their TP is higher and possibly close to HKD100, but after the huge recent fall, expect them to downgrade the TP lower but still higher than HKD61.5.

And then, there is the “fusion” valuers who combines both TA and FA to get an idea of the fair value of Parkson. But these guys are probably rarer (since the discipline is to differentiate TA vs FA in valuation, i.e. valuation typically do not incorporate TA price targets in their valuation) and doesn’t appear to influence large institutional funds based on past analysts reports that I’ve read.

Looking from the perspective of the institutional holders, again, most of the stories sold are based on valuation and its future prospects. TA is not ignored, but not used alone for long-term position type holdings. It is interesting that the most recent reference is a “left hand” selling to “right hand” at market price is around HKD67.45 transacted at end May 2008. Prior to that on 9 Jan 2008, they were able to place a block of 8 million Parkson HK shares out at HKD78.66, a considerably higher price than HKD67.45, but close to market prices then. The gap between HKD61.5 vs HKD67.45 and vs HKD78.66 is quite large, ranging from 9% to 22%. So, current market price HKD61.5 seems low, although market prices are still market prices. And because Parkson holds Parkson HK, the market likes to apply a 20% discount factor, although in the original reasoning to split Parkson business from LIONDIV, it is argued that such an exercise should “unlock” this discount factor. Still market forgets, and revert to applying the 20% discount factor, and then, change their minds and spikes up each time Parkson disposes its HK shares at market prices. Such is the fickle and nature of market prices.
In short, there is a wide variety of investors, but the general consensus amongst this group is that Parkson is looking cheaper as the price falls. Nothing surprising there.

So, for someone like me who sees both sides, it’s quite a difficult decision. Buy or don’t buy? And how much?

I think the decision is very much individual and depends on one’s investment objectives too. Also, the current political uncertainty, the after effects of Vietnam stockmarket/economic/currency collapse, the present unresolved US uncertainties, etc. means that whatever the decision is, it is vitally important to make sure that if one buys Parkson, then, the total risk of loss should be small when one cut loss.

In other words, what I’m thinking is is there a way to combine both FA and TA in deciding the position sizing?

Let me explain more.

Currently, one of the attractions of Parkson is that maybe, the Parkson HK price is supported at say HKD50, which is a strong horizontal support. There is another higher support at HKD59. If price is an indicator of companies health and smart monies understanding of company’s health, then, one could say that Parkson’s business may still be healthy if the price does not fall below HKD59 or below HKD50. In other words, one possible strategy is to cut loss when Parkson HK price falls below HKD50 say.

In other words, when Parkson HK price is “healthy”, then, any local Parkson price dips is seen as opportunity to accumulate but when Parkson HK price crashes, one cut loss.

Let say the risk of loss when this happen is preset to 2% capital. Let say for simplicity, capital is $1 million. In other words, in the worst case scenario, you cut loss and the maximum loss is $20,000.

The question now is at what price should one enter, and how much?

Now, at HKD 50, Parkson is equivalent to $5.88. So, the current price appears to be a bargain in this respect. So, can we design a buy in schedule so that at progressively lower price than $5.88, we would buy increasing amount, but below the stop loss price, we would sell out completely so that the total loss is only $20,000?

On the local charts we see Parkson have a support of $5. The 22 day moving average of the True Range for Parkson is around 27 sen. Let’s set the stop loss at say $4.7. Let’s assume for simplicity commissions is 0.5% per trade. Let’s say we want to progressively buy in more as the price falls, in 10 sen steps, from $6 to $4.8. And at $4.7, we will cut our loss and sell out and lose $20,000. The question then is how much to buy at each price? Let say at each price we risk $20,000 / 13 = $1,538. 13 because we note that there are 13 possible buy ins, from 6, 5.9, 5.8, 5.7, 5.6, … all the way to 4.8.

So, how much to buy in? Here is the full schedule:



Do try to study this schedule carefully since it's the heart of this article. This schedule needs interpretation. What it says is that at each price from $6 to $5.7, you buy 1,000 Parkson shares only. At $5.6 down to $5.3, you buy 2,000 shares. And at price 5.2 and 5.1, buy $3,000 shares. At $5, buy another 4000 shares. At 4.9, buy 6000 shares. At 4.8 buy 10,000 shares.

In other words, you scale your entry in. Buying much larger amounts as prices fall.

There are advantages and disadvantages with this approach. Start with advantages first.

1. As price falls, you buy more and at an increasing rate as price gets lower without exhausting capital.

- In fact, at 4.8, the buy is 10,000 shares, much larger than all previous buys.

- If local Parkson price falls to $4.8, then, you should own 38,000 shares in total at a cost of $196,277, or 19.6% capital.

- The average price paid is $5.17 after commissions, which is near the low. (do appreciate this difference, since the average price between 4.8 and 6 is 5.4, which is higher than 5.17)

- And if Parkson price recovers to $6, then, the gain is 16%, or $31.7k, or 3.2% capital.

2. Chances are (no guarantees) - you shouldn’t need to execute your stop loss at $4.7 if Parkson HK remains above HKD50. Of course, do use a different figure and recalculate all this so that syndicates to run your stop. Consider setting the stop higher, so that if they do run it down to $4.7, then, you can buy it back cheaper. Or alternatively, set the stop lower than $4.7 so that they won’t think of running the price down to $4. Basically keep them guessing.

3. Even if you need to execute your stop at $4.7, you have preset the maximum loss to $20k. In fact, it turns out that it is $18.6k, or just 1.86% capital.

4. The Reward to Risk potential is good – a respectable 1.7 times and this is already net of commissions. If the loss is not executed, and price recovers, the trade is profitable, with low risk of loss.

5. The small buys starting from $6 is designed to keep your "itch" to buy in check. Basically, you don't buy big at high prices, but small at high prices, and it scratches the strong itch to buy.

Some disadvantages:

1. Hard to understand and apply in practice at first. But like any new skill, once it is learnt, it becomes easier, and one day, 2nd nature. For someone like dorraidd, I think the schedule should be fairly obvious to him in an instant glance.

2. Possible Inefficient use of capital. If the price doesn’t fall to $4.8, but stopped at say $5.2, then, you haven’t bought the full 38,000 shares (or 20% capital), and you end up sitting on a lot of cash.

- Think a little bit about this.

- Is this good or bad in face of uncertainty?

-In fact, if price drops to only say 5.2 (and not the full 4.7), you would only accumulate 15,000 shares at the cost of 83k, with an average price of 5.53. So, just using 8% capital, keeping 92% cash when price drops to $5.2. And not executing stop loss at all if price goes up after hitting a low of $5.2.

This of course is not an exhaustive discussion about the pros and cons of the strategy, but it’s something for someone with sophistication like dorraidd to study and perhaps comment on.

Of course, the actual position sizing method I am using is different from the above. (smile) I can’t give away all my secrets right?

Happy Reading!

Disclaimer: As usual, buy/hold/sell at your own risk.

The Edge on AIRASIA

AIRASIA announced its Q1/08 earnings results last night.

Not surprisingly, The Edge carries an article on AIRASIA. (full article here - http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_37d9b33a-cb73c03a-18992130-69b8fc44) I must say I was very amused with its very impressive title "AirAsia 1Q net profit surges 86%".

After all, 86% growth is pretty impressive headline isn't it?

However, I should caution you that since AIRASIA's earnings results were already discussed in my chatbox in depth and quite passionately earlier today, I was personally not impressed with the number.

Why?

Because there were many reasons. But the simplest reasons are the Net Profit figure of $161M (or 86% growth over $87M prior year) includes the contribution of one-time foreign exchange gain of $86M, as well as a deferred tax item reported to be $52M in Q1/08.

(if you don't know where I obtain both numbers $86M and $52M, it is actually readily available from Bursa announcement. See below).

Simplistically, the Foreign Exchange Gain is what I would regard as an "exceptional item". Meaning, it is not normally regarded as a sustainable source of profit. In other words, it is not realistic to expect this source of profit (or loss) to continue indefinitely in every future years. So, most analysts exclude them in trying to understand its longer-term earnings position, because they can sometimes be positive or negative, but the normal expectation is that in the long run, they even out.

As for the Deferred Tax, well, this is a taxation item that in my opinion, is not directly related to the day-to-day management of AIRASIA (such as passenger loads, fare sizes, etc), but a taxation item. If I were to look at the strength of its business numbers, then, I would probably want to also consider the position Before Taxes for a balanced view.

So, if I were to take out both items from the $161M Net Earnings, then, I'm left with Q1/08 Net Earnings of $161M - $86M - $52M = $23M.

What? Only $23M?

I don't know about you, but $23M in 1 Quarter for a coy the size of AIRASIA with a market capitalization of $2,500M seems small. Some analysts would disagree with this analysis, saying that Q1/08 earnings hardly matters since AIRASIA is an explosive growth company, and the earnings in the initial years are going to be small. I have a different opinion, but here is not the place to discuss this view in detail.

But rather, my main point in writing this article is to observe and examine how a reputable business newspaper like The Edge would report AIRASIA's latest results. In particular, will it refer to the One Time Foreign Exchange Earnings of $86M? Will it refer to the Deferred Tax of $52M? Or will it just sensationalize AIRASIA's Net Profit figure of $161M?

What do you think?


___________

30-05-2008: AirAsia 1Q net profit surges 86%

by Lim Shie-Lynn

KUALA LUMPUR: AirAsia Bhd’s net profit for its first quarter ended March 31, 2008 (1Q08) surged 85.6% to RM161.28 million from RM86.87 million a year earlier on the back of a 31.74% jump in revenue to RM535.16 million from RM406.23 million. The increased earnings were due to the low-cost carrier enjoying higher passenger volumes and fares.

Passenger volume grew 21% in the first quarter, while the average fare was 10% higher at RM189 compared with RM171 a year earlier. “The higher average fare achieved reflects the robust demand for our services and maturity of certain routes in the network,” AirAsia said in a statement to Bursa Malaysia yesterday.

AirAsia’s seat load factor for the current quarter had declined 5% to 72% from 77% a year earlier on significant capacity addition, initial underperformance of new routes and some routes experienced decline in load factors due to specific local issues such as snowstorms in China.

It also said the Thai operations had improved since it received five new Airbus A320 aircraft as passenger flows had increased while load factors edged higher with better yields.

“The Thai operations produced earnings before interest, taxes, depreciation, amortisation and rent (EBITDAR) margin of 7% in the current quarter. The management is confident that Thai AirAsia is in the right path to capture passenger growth, enhance efficiency with the Airbus A320 aircraft and produce consistent profits,” it said.

Its Indonesian operations had made improvements on its passenger flow following its route network reorganisation exercise. However, it added that the rise in fuel prices affected Indonesian operations severely as the company was operating with Boeing 737-300 aircraft.

“The Indonesian operation is due to receive the Airbus A320 aircraft in the later part of the year, and economic benefits of the A320 aircraft will soon be enjoyed by the Indonesian (operations),” it said.

...

___________

So, how?

What did you think of the reporting by Lim Shie-Lynn on AIRASIA's latest earnings?

Should one goes out and buy AIRASIA just because The Edge says that its Q1/08 Earnings has surged by 86%?

And what about the reason for the 86% growth - "The increased earnings were due to the low-cost carrier enjoying higher passenger volumes and fares"

Is the main reason for the increase really due to higher passenger volumes and fares? Or is it due to the increase in Foreign Exchange Gain? And the increase in the Deferred Tax?

Personally, I was very dissappointed that Lim Shie-Lynn did not refer to the existence of the One Time Foreign Exchange Gain of $86M.

Further, I was dissappointed that the writer didn't consider the Before Tax position also, to provide some insight into its business operations results.

Whilst the article mentions a lot of details - passenger volume, average fare, robust demand, maturity of certain routes, seat load factor, capacity addition, under-performance of new routes, Thai operations, Indonesia operations, blah, blah, blah - it failed to mention the 2 most important items (to me) in Q1/08 earnings, which is One Time Foreign Exchange Gain of $86M and Deferred Tax of $52M.

So, how?

Are both items simply not important in explaining the 86% growth?

Should / can one trusts newspapers without independent analysis?

For that matter, should / can one trusts any analysis by anyone (who may or may not have vested interest) without independent analysis?

On this note, I wish you Happy Investing.

Cheers!

Disclaimer: I do not have either long nor short positions in AIRASIA. You buy/hold/sell at your own risks.

Why I like EPIC

It's been a long time since I last posted an article in this blog. Personally, I prefer to chat in my chatbox, but since a few people has asked "Why EPIC", I thought I pen my thoughts here for future reference.

Firstly, a Disclaimer: I own EPIC, EPIC is a low volume stock at the moment, so, if you buy EPIC and cause its price to rise, you may be buying off my hands ... so, if in doubt, best to avoid this stock. Nevertheless, you may find the discussions and reasonings beneficial, and it may be useful to you to trigger other ideas about other O&G stocks.

Ok. Well, if you've been following the chatbox, you will know that I've been quite bullish on Crude Oil for quite some time. Here's a reason why:



This is a weekly candlestick chart of NYMEX Crude Oil (Light). As you can see, there was a strong resistance back in 2006 and 2007 when Crude Oil failed to break $80 in mid 2006, and fell to a low of nearly $50 in early 2007. Subsequently, it tried again in late July and failed temporarily for a few weeks, before surpassing $80 in Sep 2007.. Even after surpassing that, it hesitated and took quite a long time (several weeks), before conclusively breaking out above that. And note that after that, there is a "double bottom" around Nov 2007 and Feb 2008, before shooting up to close at nearly $120 last night. A lot of effort has been extended this week, perhaps we might see some pullback in the next coming weeks, and it is still important to ensure that this charts makes higher highs and higher lows, but one thing which seems safe to say is that we are unlikely to see US$80 price for perhaps the entire 2008 year, if not longer. In fact, there are 2 other higher support levels, the first around the double bottom area (say $86), and the next at around $98-$100 level, so, in my opinion, it would take a dramatic and serious bad news to see Crude Oil retesting the US$80 level again.

Ok, that's the TA observation, but there are also some fundamental reasons why I think Crude Oil will also stay high for the rest of this year.

1. Weakening US$ trend. As we all know, the Feds have been cutting interest rates, and everytime they do that, the attractiveness of the US$ bonds and assets in general falls. This is bad news for the US$ currency.

2. Crude Oil contracts as hedges against weakening US$. It's becoming obvious to me that when US$ starts to weaken, Crude Oil contracts in US$ rises. Increasingly, funds are using Crude Oil contracts as hedges against their US$ positions. Since US$ is a global currency used everywhere in the world, one can only expects large usage of crude oil contracts as hedges. The Fed rate cuts are not going to reduce these hedging activities.

3. Speculative activities. There is no doubt that when something like this happens, hedge funds behave like vultures looking for prey. Often, their activities fuels and escallates the trend further.

4. Demand factors. In the latest figures for March, Chinese Demand for crude oil reached a record 4 millions barrels per day (bpd), and diesel imports quadrupled ahead of summer Olympics! There is still strong and booming demand for crude oil.

5. Supply jitters factors. Some examples are security issues in Nigeria - recent attack on the pipeline disrupted 1/5th of Nigeria's export flow. Recent attacks on Japanese oil tanker near Yemen - not much damage, but contributed to the jittery sentiment. Potential shutdowns of 200,000 bpd at Grangemouth refinery in Scotland as the unions plan to strike for 2 days, Etc. Etc. Etc. Again, when markets are like this, these sort of news do not help.

In short, when you look at both the fundamental factors and the technical factors, the outlook for crude oil is still bullish this year. Prices never goes up in a straight line, we can expect pullbacks, but the longer-term trend is up. As they say, you want to trade with the trend.

Ok, so, that's the story with Crude Oil. Bullish for this year. But why EPIC? Why not something else?

Well, if you followed my writings in the cbox, there was that "something else", and not just one stock. When trends first start, it pays to trade with the leaders as a general rule. So, what were those leaders? Well, SAPCRES comes into mind, and many of you probably have seen me Fu-Yoh-ing many times as prices keep going up from $1.31 onwards :-) And SAPCRES has done very well, going from $1 to $1.67 at lunch time. That's an amazing gain of 67% and a tremendous amount of energy has gone into this stock. Does it mean it will end? Well, that's hard to say. I still have SAPCRES at the time of writing, bought at various prices on the way up, but when we look forward, it's hard to say that we are going to see another 67% gain from $1.67. In other words, the easy gains have been had, and now, probably it will get harder.
So, this naturally lead to the search for the "2nd tiers", or the "laggards" - those O&G stocks which hasn't yet moved up much. Now, this is a trickier proposition, because laggards don't always follow. In fact, when the underlying moves are weak, laggards usually don't move much. However, when you look at the strength of the Crude Oil moves (see weekly timeframe chart above for Crude Oil), and when you look at how much the O&G leaders have moved, these are NOT small moves, but MAJOR moves. And if these Major moves are sustained, experience tells us that usually, the "2nd tiers" will eventually move. Of course, the risk is that if these moves are not sustained, and even if the leaders themselves fall, then, the 2nd tiers may not move up much. But they are unlikely to fall down much too, as they have not risen by much.

Now, this question about rising and falling by much or little needs some objective measurement. There are many ways to do this. One way is to compare the size of the fall of stock prices from the peak to the low, and to then compare how much the stock prices have gained from that low.

So, taking SAPCRES and closing prices as example. Sapcres reached a peak of $2.59 (closing price) on 26 July 2007, then, fell to a low of $1.02 (closing price) on 17 Mar 2008, before rebounding back by nearly 65% to $1.67 (lunch time today). In proportional terms, Sapcres has regained 41% of the fall from the peak.

As for EPIC, EPIC reached a peak of $3.20 on 26 July 2007, then, fell to a low of $1.67 on 10 Mar 2008, before rebounding back by nearly 18% to $1.97 (lunch time today). In proportional terms, EPIC has regained only 20% of the fall from the peak.

You can see that both numbers for EPIC - 18% regain vs 65% regain for SAPCRES, and 20% vs 41% shows that EPIC is not a leading O&G stocks like Sapcres. Sapcres is leader, EPIC is laggard. But if the high crude oil prices story remain good for the rest of this year, then, maybe, from a forward looking perspective, it might just be a matter of time before the 2nd tier stocks starts to follow. IF this happens, then, you might find EPIC returns to be more interesting from a forward looking perspective, due to its current "lower" price.

Technically, chart-wise, EPIC price chart has that familiar W "double-bottom" shape. It looks like it's about to break-out / has broken out, although the volume isn't terribly convincing. This morning, the stock price inched forward, and now may be a good time to publish this article From a fundamental perspective, EPIC isn't too shabby either. Just a few stats and comments.

1. Last TTM (Trailing 12 Months) Earnings = $30.7 Million, representing 299% growth over the prior year. That's nice to see, and when Crude Oil prices rise further, one can only be optimistic that the figures should eventually be higher than this.

2. Last quarter earnings annualized is $6.8 M x 4 = $27.2 Million. I normally look at this figure and compare against 1 to see if there might be signs of slowing down, and there seems to be a slight indication there, indicating that EPIC might not be "risk free". In fact, there is no such thing as a "risk free" stock.

3. Using 1, EPIC trades at a P/E of 10.8, using $1.97 price. This is actually quite reasonable and not expensive at all for an O&G stock where the sector trades at a much higher P/E.

4. EPIC has a nice Net Cash position of $80M at last Balance Sheet date. That's nearly 47 sen per share. Again, it doesn't guarantee anything, but it's a nice head start. The Net of Cash or the Business P/E is priced quite attractively at around 8, making it even more attractive.

5. Naturally, if you glance at the Annual Reports, etc., you will see quite optimistic statements about the company's future prospects. As usual, exercise your own discretion since such statements coming from such sources are naturally optimistic.

In short, both technically and from a fundamental perspective, these are some of my reasons for favoring EPIC. I actually hold a number of O&G stocks, and EPIC is just one of them. However, since I've been asked about the reasons why I like EPIC, I'm writing it here for my own convenience. Again, this is not a Buy Call, just sharing with you some of my reasons with my own reasoning. If you decide to trade the stock, don't forget your Stop Loss. As usual, pay attention to the Position Size (don't be too greedy, but don't be too fearful either). And always remember that stock prices never move up in a straight line. Be prepared for pullbacks, and know how you will react in advance to both price increase and decrease in future.

Good luck!

Disclaimer: As usual, buy/hold/sell at your own risk. And I own EPIC, so, don't be surprised if I sell when you buy! :-)