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Tuesday, August 15, 2006

Trading: Magnum

Yesterday, I made a speculative move that was opposite with my overall strategy; I bought in additional 3000 units of Magnum @ RM2.07! I made this decision when I noticed that Magnum price has dropped as much as 6 sen from last week closing price at noon. Without second thought, I called my remisier to place the order.

The reason for this is I believe Magnum price still has a lot of room to increase from its current level, supported by share buyback activity of the company, which has >RM700 million of cash in spare. When I made my portfolio update last week, I observed that Magnum was offering RM2.04-2.10 on Friday. I reckon RM2.07 is still a fair price for which Magnum is willing to support. This is further confirmed with the move of Magnum yesterday, at RM2.07-2.10. I understand that this speculative move is very risky, as I have no idea how is the valuation of Magnum compare to BJTOTO at this current price. My purchase of Magnum is purely base on speculation that the price will be further pushed up and also hoping for a windfall like special dividen to be announced. Hence, I quickly make this write-up to note down all my thoughts now for my own reflection in future. Whether this will end up to be a winning or losing move, it still serve a lesson to me. Indeed, I have taken the precaution and limited the purchase to 3000 units, which I have thought earlier to buy 5000 or 10,000.

Technically, like OSK has published, Magnum price is on bullish trend in my opinion, with supporting level at RM1.95. OSK has put an immediate target price of RM2.25 and RM2.45 for longer term. Although I really hope that it will be true (and think it will for once), but I am afraid to believe even 50% of what OSK has recommended, especially on a buy call. From my past experience, 9 out of 10 of their analysis missed, and missed a lot hell from what they have estimated!

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