Sunday, November 29, 2015

.How a Stock Pump and Dump Really Works?

I Am not sure if this how operators actual work but worth the sharing. You guys decide. 

You may have seen a stock pump and dump underway the last couple of months in the Bursa Malaysia stock market for any number of small cap and medium cap companies. 

The whole reason behind a stock pump and dump is for the stock pumpers to profit.

These pumpers – some persons, or some group, buys shares in a company.

They promote this stock to other investors.

The share price rises due to the other investors buying the stock and then pumpers unload their shares at a premium to other investors.

5 Steps In A Stock Pump and Dump

Step 1 – The Bait
This is the first step where the pumpers share the “good news” on a stock they bought earlier.
They spread the good news via personal emails lists, stock forums, money magazines, social media, words of mouth (via broker) or even go as far as getting the newspaper to write an article on this.

During The Bait stage, some popular sentences you always hear -
“The company is negotiating some hundreds of millions ringgit projects”
“The stock is undervalued and have huge upside potential”
“The stock is dirt cheap … you don’t want to miss out when the ‘good news” come out …. soon!”
“The stock is 20 cents with the target price (TP) of $1.20 …that’s a 500% gain!
Could this possibly be true?

Step 2 – The Rally
During this rally phase, the stock will start moving aggressively with the people who got the “good news” buying and pushing up the stock price and daily volumes 5 to 10 times higher than when the first “good news” posted as the bait was released. 
And every day, for the next week, next two weeks, next month, you’ll see those same subject lines with the same calls to action: Buy, buy, buy…good news coming soon! Target price $1.50 …. jump in now!
And if you’ve already bought, the goal is to get you to buy more.

Step 3 – The Sell Off
The stock pumper generally refer to this as a “temporary profit taking.” In other words, they’re blaming a group of investors taking some profits who are driving down the stock prices.
However, the more likely culprit here is that all those pumpers who bought up million-plus share positions early on and are starting to dump their shares onto a very artificial market.
Unfortunately for the other hapless investors, most of those shares were sales executed by these pumpers as the stock plummeted below the price where most of them bought in.

Step 4 – The Rebound
Eventually, with enough work, enough spam, and enough new names pouring in thinking they are getting a bargain, the selling tide abates and the stock moves up again.
During The Rebound, popular sentences you always hear -
“The stock is a bargain at this price, buy now before it move again!”
“The stock is technically oversold and ready to resume its rally!”
“I just bought 300 lots at this cheap price.Getting ready for the bounce.”
In the next couple of days, the price does indeed recover, maybe as much as double from its sell off lows.

Step 5 – The Demise
In this stage, the stock slowly drop and keep dropping for weeks and months till all the selling dry up.

There is no more “good news” or is usually the case, no news on the stock at all.

All the stock pumpers have left the stock and they are promoting a new hot stock to new investors.

All we know, based on the pumper’s subject line, was that any chance for more gains on the stock pretty much went up in smoke the moment they came out with a new stock pick.

Legitimately promoting stocks is accepted, ethical, and if done right, profitable for everyone – investors and owners alike.
However, an evil cousin of legitimate promoting is a stock pump and dump.

Designed to be little more than a short-term artificial boost to the share price of a stock, stock pump and dump generally last only as long as it takes for those who financed the pump to sell their shares on their unsuspecting fellow investors.
Don’t be fooled by these stock pump and dump scams in the stock market by learning how to invest wisely on stocks.

Monday, October 19, 2015

'Like' - KMLoong

To cushion against the volatility of CPO prices, some plantation companies have diversified into the more stable milling business. One such company is Kim Loong.
The Johor-based company trades at a relatively undemanding P/E of 13.3 times and 1.6 times book (16 Oct 2015). It has net cash of RM248.1 million or 79.7 sen per share, which translates to 28.4% of its RM874.6 million valuation (16 Oct 2015).

Because of its stable milling business, Kim Loong is able to consistently pay dividends. Since FY2011, its payout ratio has ranged from 50-70% of net profits. The company paid a special dividend of 10 sen per share in August 2015, bringing total dividends to 23 sen in the past 12 months.

Kim Loong owns 14,901ha of planted oil palm land in Johor, Sabah and Sarawak. 91.1% of its trees are mature and should provide stable fresh fruit bunch (FFB) output moving forward. Its three mills processed 1.2 million tonnes of FFB in FY-Jan2015 — 3.9 times what the company’s estates produced. The mills also boast an above-average oil extraction rate of 22.4%.

For 1HFY2016, Kim Loong’s profit before tax (PBT) from its upstream activities slumped 41.7% y-o-y to RM24.4 million on the back of lower FFB prices. However, PBT from milling was steady at RM27.1 million compared to RM27.3 million in the previous year.

This highlights the defensive nature of Kim Loong’s business model. In addition, it should also benefit if the rally in CPO prices (Sept – Oct 2015) is sustainable.

Moving forward, Kim Loong plans to develop 2,067ha of land into oil palm plantation in Sarawak pending approval from the state. Construction of a fourth mill should be completed by 2017, which will boost its milling capacity by 300,000 tonnes a year.

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