San Gold is finally seeing some market capitulation on the back of disappointing forward looking statements.
I have been in and out of San Gold over the past months and have pretty much stayed clear since it traded back at the $0.75/share range.
Today I decided to re enter a trade at $0.46 after a market drubbing in the past 2 trading sessions.
The short strokes for the sell off is no real production growth guidance for 2013 and no reduction in cost either. I think San Gold has had a history of missing guidance and finally the market is throwing in the towel.
Judging by the trading activity it seems some fund managers are getting off large positions through Stonecap Securities. It always amazes me how often you see fund managers buy at the top and sell at the bottom. Since fund managers are performance driven they often chase markets, all for an expensive management fee to boot.
On January 1st this year San Gold traded at $0.80/share giving the Company a market cap of $268 million today San Gold has had 42% knocked off their capitalization. As of today San Gold trades at a scant market cap of $154 million, well within a hostile take over range.
One has to go back to a 5 year chart to see if San Gold has traded below $0.50/share so any purchase here in the $0.40 range has had all the risk taken out of it.
A familiar pattern is to expect 3 days of down trading before a bounce, I expect some follow through selling pressure in the first part of tomorrows trading day and that should exhaust most sellers.
Perhaps management has decided on a strategy of under promising and over delivering going forward. If they have it will take some time to regain their creditability.
I am looking for the dead cat bounce trade on San Gold and will look to see if an exit trade can be had back in the mid to high $0.50's
San Gold 5 year chart.
I have been in and out of San Gold over the past months and have pretty much stayed clear since it traded back at the $0.75/share range.
Today I decided to re enter a trade at $0.46 after a market drubbing in the past 2 trading sessions.
The short strokes for the sell off is no real production growth guidance for 2013 and no reduction in cost either. I think San Gold has had a history of missing guidance and finally the market is throwing in the towel.
Judging by the trading activity it seems some fund managers are getting off large positions through Stonecap Securities. It always amazes me how often you see fund managers buy at the top and sell at the bottom. Since fund managers are performance driven they often chase markets, all for an expensive management fee to boot.
On January 1st this year San Gold traded at $0.80/share giving the Company a market cap of $268 million today San Gold has had 42% knocked off their capitalization. As of today San Gold trades at a scant market cap of $154 million, well within a hostile take over range.
One has to go back to a 5 year chart to see if San Gold has traded below $0.50/share so any purchase here in the $0.40 range has had all the risk taken out of it.
A familiar pattern is to expect 3 days of down trading before a bounce, I expect some follow through selling pressure in the first part of tomorrows trading day and that should exhaust most sellers.
Perhaps management has decided on a strategy of under promising and over delivering going forward. If they have it will take some time to regain their creditability.
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