Yesterday, I met up briefly with some friends. It was a very invigorating experience as we talked about value investing. When asked if there was a stock which I thought would pass any fundamental analysis on both quantitative and qualitative aspects, without hesitation, I said "Marco Polo Marine".
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| Massive shortage has resulted in a 15% to 20% AHTS charter rate premium in Indonesia . |
I have blogged extensively about Marco Polo Marine's business and why its stock was undervalued and how, even now, it is inexpensive. However, Mr. Market is a sentimental being and how he feels is more important than how he thinks. So, can we tell how Mr. Market feels about the stock?
I have mentioned about the glaring negative divergence in the chart a few times before and how anyone who should buy in then should be cautious enough not to throw in everything including the kitchen sink.
Since touching a high of 45c a share, the stock price has been drifting sideways with immediate support at 41c. Although volume is necessary to push price higher most of the time, it is not necessary to have volume to see price weakening over time, and volume has been very thin in the last month or so.
So, is this a good time to buy more of Marco Polo Marine's stock?
Although valuations are still very undemanding, I get the feeling that Mr. Market is waiting for a positive catalyst which could give the stock price a sugar rush.
In the meantime, we could expect some long holders to sell out their positions. Are they wrong to do so? Well, they could have found better places for their money or they could see with more clarity than I could that stock price is going to suffer a significant decline. Or they could have simply lost patience. There are so many possible reasons.
I like to think that a sideway movement in an uptrend is more bullish than bearish. When there is sideway movement, I like to look at the Stochastics which, in this case, seems to be turning up in oversold territory. Also, as the stock price formed lower highs, CMF has formed higher highs which suggests to me that smart money is still flowing into the stock even as its price seems to be stuck in the doldrums.
I told my friends that we should be brave and be invested. However, we should have a war chest ready. We could see share price lowering to test supports at 41c, 40c or even 39.5c where the rising 100d MA is approximating.
Having said this, there is no guarantee that supports would be tested. So, if we are still waiting by the side, this is a possibility that we have to accept.
Even though I have strong conviction, I remain pragmatic and if things should go awry, I have the resources to ride through the rough patches. Stay invested but stay prudent.
Related posts:
1.
Stock picking: Spotlight on Marco Polo Marine.
2.
Marco Polo Marine: Insider buying continues.
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