Golden Agriculture: Waiting to increase exposure.

Although I might not blog about it as much as before, regular readers of my blog would know that I like Golden Agriculture as I feel that CPO's price has only one direction to go in the foreseeable future. Golden Agriculture, amongst the CPO counters listed in Singapore, is the most levered to CPO's price.

I have been waiting for a meaningful pull back to increase my exposure to this counter. In an uptrend, it would mean waiting for a retest of supports before buying. The instances when I was impatient and when I chased prices higher were instances which I regretted, more often than not.

So, is Golden Agriculture in an uptrend? No doubt about it. When to buy more? Ah, that's the question that is more interesting for most people, I am sure.

If we connect the highs of 4 March and 11 April, we get a trendline resistance.  If we connect the lows of 23 Feb and 15 March, we get a trendline support. If we take a step back, we might see that this is an uptrending channel. If we look at the candlesticks, we see significant resistance at 72c and support could be found at 65c.

Price touched a low of 68.5c in the last session which is where we find support provided by the 50dMA. If this were to break, we could find the rising 200dMA tested for support and this is at 66.5c. Having failed twice as support before, it does not seem very trustworthy and people could possibly choose to err on the side of caution and wait for a retest of channel support which should approximate 65c next week. Buy some if the 200dMA should be tested (as a hedge) and buy more if channel support should be tested later? Sounds like a strategy I would employ.

The chances of price going lower are high. The +DI now coincides with the -DI and the ADX is under 20. There is no trend per se and we could see the Stochastics move lower to test its own trendline support. A bearish crossover on the MACD is a foregone conclusion while the MFI and RSI have broken their respective trendline supports. I will wait to accumulate at stronger supports.

Related post:
Golden Agriculture: Alarm bells aplenty?

Hyflux director divested all his shares!

Lee Joo Hai, a director of Hyflux, divested his shares completely at $2.18 per share in open market sale at own discretion on 15 April 2011. 

Total: 375,000 shares. 

As an insider, could he know something that we retail investors don't? Probably.





In my last blog post on the subject, I had mentioned that 

"the news that Hyflux is issuing preference shares with an annual dividend rate of 6% is somewhat surprising to me. In an environment of low interest rates, isn't paying a 6% interest a bit expensive? 

"It would only make sense to do this if borrowing from a financial institution would be costlier and it would only be costlier if the company and/or its business is perceived to be high risk."





Judging by how well the response is to the placement shares, which were 7x oversubscribed, I expect the ATMs to see long queues as people try to get their hands on some of these preference shares. 

Application closes on 20 April and the shares will start trading on 26 April. 

Good luck to those interested.

Related post:
Hyflux: 6% perpetual Class A preference shares.