5.14 Build Out Draw Schedule. The Borrower shall install the COES Installations in accordance with, and subject to, the Build Out Draw Schedule. In addition, the Borrower shall have installed no less than four (4) COES Installations (in addition to the Utica System) on or before June 30, 2008 and no less than three (3) additional COES Installations on or before September 30, 2008.
5.15 Compliance with Projections.
{To say it short these paragraphs say the money we use has to remain within 10% of projections for building the COEs.}
5.16 Minimum Production. Each COES Installation shall produce no less than an average of 1,250,000 gallons of corn oil each year.
The Annual report is due out at the end of this month. If you have been reading this blog past the headlines - you know that we have taken the 15 day extension 4 of the last 5 years. That gives us an 80% chance of an extension in my book. Since we are faced with no news from the company this week and a shortened trading week - I thought a review of what to expect - in the run up to the annual - historically speaking - is in order. {Ever since last fall, when I assigned Mrs. Skunk the wood stove duties , I have had time to ponder the bigger questions. Like what has PPS for GERS looked like over the last 5 years during the 30-45 days run up to the annual report?} This is not the same company it was five years ago - nor 4,3,2,or even 1 year ago. We have all read the warning that "past performance is not a guarantee of future results"
(Remember this warning applies to shorts as well as longs). But history being one of the few tools we have to work with in these circumstances -lets take a look - then you can decide how - or if -to use it. The data I used were the closing price on three days in March: 10,20,30 & three days in April: 10,17,20 for each of the past five years. If the sample was not a trading day - I used the next day. I picked the 17th since it is normally the first day posted and traded on the annual.
The first thing one cannot help but notice is the tremendous price decline over the past five years. This should not and cannot be ignored if one is going to understand this stock and the current psychology behind it. The $80.00 adjusted share price on 10 April 2003 as compared to the present .10 PPS should be a cold slap in the face to anyone who thinks this stock poses no risk. A stock is rarely valued correctly in the market at any instant in time. This is why liquidity is important. The market pendulum tends to swing past the absolute price in one direction or the other. Selling when it is overpriced and buying when it is under priced allows smart traders and investors to make money. It would be hard to imagine someone arguing today that the $80.00 adjusted PPS in 2003 was not an extreme overvalue. But it would be absurd to argue that only because the value of a stock was overvalued at one time - it is overvalued now. I believe that the .10 share price we see today is extremely undervalued and that is partially related to the previous extremely overvalued position it once held.
The second thing I noticed was a 100% 'er. In every single year (including this year) the price dropped ('03 stayed the same) between 10 and 20 March. In three of the five years if one bought on the 20th of March and sold on any of my three sample dates in April they would have come out ahead. Picking the 10th of April as the sell date they would grossed 125%, 16%, 78% for the years 2006,04 and 03 respectively. Picking the 17th of April as the sell date they would have grossed 487%, 5% and 38% during the same years. What about the other two losing years you say??? Well if they bought on the 20th of March and sold on the 10th or the 17th of April they would have lost 58% in 2007 and 13% in 2005.
The third thing I noticed was volatility. This stock moves during the next 30-40 days. Two years (07,05) it suffered through a gradual decline. '06 and '03 it went up. Two years ago it went up very significantly from a pre-report dip. In '04 it waffled both up and down. If you trade, these could be good days ahead. If you invest - do you think the stock will move off these previously tested lows? If you answered no - then why are you holding it? Skunk has answered these questions for himself. In this dip Skunk filled his long term position goal for GERS. Due to my interest in the stock and its potential, Skunk has also taken a small trading position as well. The Skunk will treat these positions differently. One is strategic and long term, the trading position is short term.
SKUNK's "Trading Posts"
Once again I throw my better judgement to the winds (afraid it ain't the first time). I will post my trades 
in the right hand column of my blog. I guess how near the top may have to do with how good I am doing. I will try to post them as close to real time as possible - I do have other responsibilities - but the trades will go up at least prior to the next day's trading. This is not an effort to have you make the same mistakes as I - It is done for your amusement and the possibility of my own financial reward. I will attempt to do this for a month and then re-evaluate my effort. Do not confuse my buying or selling of my trading position as a recommendation for you to change your long term position. I think the tides a'rising - this is just a chance to play in the surf.
in the right hand column of my blog. I guess how near the top may have to do with how good I am doing. I will try to post them as close to real time as possible - I do have other responsibilities - but the trades will go up at least prior to the next day's trading. This is not an effort to have you make the same mistakes as I - It is done for your amusement and the possibility of my own financial reward. I will attempt to do this for a month and then re-evaluate my effort. Do not confuse my buying or selling of my trading position as a recommendation for you to change your long term position. I think the tides a'rising - this is just a chance to play in the surf.Skunk's Grade:
During this part of the Blog I self grade myself for my predictions from last week. I wish I could give myself an incomplete since I nearly nailed the drop at the beginning of the week. Yet I also called a swing north later in the week. That swing north never had a chance to materialize during the holiday shortened 4 day week. Here is part of what I predicted FOR LAST WEEK:
". . .expect to see a significant move in one direction or the other soon. I am calling it for this week - with a slight dip before a smash through the .20 cap that has kept us trapped below it since the .24 close on 20 Feb. I see a quick tip of the hat down to as low as .13 early in the week."
It was not a tip of St Pat's Hat to the lows - it was more a formal Japanese bow at the waist - but I did get the timing & direction for the initial move right. I had been talking about a move coming into place for weeks. Only now do I find out that in Japan, (20March) Vernal Equinox Day (春分の日 Shunbun no hi) is an official national holiday. I was looking East for an analogy - when I obviously should have been looking west. I promise to spend less time with the bird entrails and more time studying the international calendar. The Skunk thinks the second half of his prediction will still come about this week - and explains some reasons why in the weekly "forecasts" below.
Skunks Grade:Actual/Predicted/
Trading Range .10-.16/.13-.25/ Close on the bottom C+
Trading Range .10-.16/.13-.25/ Close on the bottom C+
Above .20 None/Two/ D- Got it wrong again
Friday's close .10/.24 F How can it be anything else?
Best Buy .10-12/.13-.14 B+ Considering we started at .16 not a bad prediction
Giving myself a few extra credit points for calling both the initial move and the direction in the PPS - Skunk will give himself a C+ for the week. (Maybe I should start? grading on a curve?)
FORECASTS**For the week of 24 - 28th March
The volume midweek was massive as we had an ol'fashioned wash out. We got rid of some tired sellers with about 500,000 shares traded in a single day. If you are into trend lines - bring up a chart for the last year with daily volumes. Draw a trend line on volume tops starting around last Thanksgiving through this week. Notice it tags at least 7 volume tops. That note, plus the annual and the 1st quarterly '08 coming up - I expect to see some heavy volume for the next 30 days. Along that trend line - we could easily see volumes of 750K in a single day. We have not seen these heavy volumes since the run up to a dollar (adjusted price) last June or since the run up to the annual in 2006. I expect the heavy volumes to continue as we move off the lows.
We have now tagged the bottom bollinger band. This is a sign of a relative low. What normally happens now is the price either walks down the lower band or it starts a move towards a tag of the top band. I see the top band coming down to meet the price - so I predict the price moving north and trading as high as .19 this week. I see a slower repeat of the early Feb move. To review: As late as 12 Feb someone bought shares for 10 cents. As early as the 15th - three days later - some shares sold for 40 cents. I do not see this next move being quite so dramatic - but part of a broader based move off the lows to greet the annual report - something we have seen over the years.
A note on the Level 2s at the end of the week. We had a pretty good spread at the end with a bid just over a dime and the ask close to .13. Normally I would attribute this to a market mover looking for sentiment - but less than 2200 shares traded in the last 3 hours. The sellers had only 10,000 shares offered at .13 or under - with the next shares jumping up all the way to .18. The buyers had some 20,000 backed up ready to buy from 10-10.5 cents. This lends credence to my theory that the washout is nearly done. We had plenty of people willing to buy for a dime - but the dime sellers have dried up.
The bottom we formed on the 7th-12th of February has so far proved stronger than the wash out. If we can hold our ground for a day or two more - then we may have finally established a firm bottom under this stock. We have not yet closed under a dime - and a dime is just as good a place as any to dig in. For now GERS may only be a double digit midget - but remaining above a dime is both a technical and a psychological win. We will see how right I am this week.
Weekly Forecast 24-29 March '08
Trading range .9 -19 with no closes below a dime.
Best Buys .11-.12 Only a few sellers left at a dime or below.
Closes above .20 none - Will have to wait for another week.
Friday's close .17 - That is one big percentage jump.
Significant Events Ahead: I expect some kind of PR this week. We have an 80% chance we will see a request for extension on or about 30 March 2008 rather than the actual report. If the extension is used the annual report would then be filed and posted about 15-17 April. 1st Quarter 2008 will be reported by May 15th. This has been timely in the past. It will come only 30 to 45 days after the annual report.
Long Range Forecast:
$12.50 Share Price in FEB 2010**
That's right - that is over 120 times today's price.
Skunk has no stinking reason to change his long range prediction. Long range predictions are not based on daily market trends but on the value of the stock based on expected profitability. How I came to this number is explained in blogs below. Expect the number to be further refined as information is gleamed from the before mentioned, upcoming annual and 1st quarter reports.
**Note: I am a shareholder - I do not work for, nor do I receive any direct or indirect payment from GERS or anyone associated with them. (But it would be Kapitalist Kool if I did) I will not intentionally mislead - but I can be wrong (ask Mrs. Skunk for specific frequencies) - so do your own due diligence - and take responsibility for your own financial decisions - good or bad. And some good garage logic luck to ya.
Posts
No comments:
Post a Comment