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Setting the Katter amongst the pigeons

by The Wrinkle | September 3, 2010

If you believe the pundits Mr. Abbott has shot himself in the foot with his dodgy costings and the odds on the election have reversed with Labour at $1.50 and the Coalition on $3.00. Still as some quip said today with the “Katter amongst the pigeons” who knows.

The markets as usual seem to have moved on, and we’re back to the old familiar tussle with the economic bears and the corporate earnings bulls. Those of us with a smattering of an economic background are likely to remain concerned well into the foreseeable future, and whether the raft of cheap money currently available in the US will end up sooner or later in some new bubble.

The best way out is steady, sustainable growth from “main street” the alternative is a Japan like slow down that mires the US economy for years to come. The former is what the earnings bulls (the Wrinkle included) are betting on. There is a raft of money currently sidelined, recent investment levels in commodities are the highest they have ever been since just prior to the Lehman Brothers collapse.

Accordingly if confidence does return to the equity markets, the potential is for a strong upswing later in the year as the parked money moves into equities. If we can pick up to and restore April levels the base will be there for future growth. However I wouldn’t be calling this just yet, the bear/bull tussle is far from over.

In terms of the Wrinkles long term picks through this blog, they are currently a very mixed bag as you’ll see from the table below.

Date Code Name Price Then Price Now
% Change
End of Day High End of Day Low



Golden Gate Petroleum








Ceramic Fuel Cells














Golden Gate had to cap one of the wells it was drilling due to high pressure discharges and abandon it. This has impacted on its share price in the short term, and the Wrinkle would suggest the stock is well oversold at these levels. The fall in share price post April also killed the takeover of Pass Petroleum (a private company) who is now merging with another associated company (via shared drilling rights) Verus Investments (VIL). Once this is complete the Wrinkle wouldn’t be surprised to see a merger between CFU and VIL in the next 12 months, particularly given the shared drilling interests are likely to end up being shared production interests.

Ceramic Fuel Cells has had good regular news, and was building a nice base at the 20c plus mark until it recently announced a 1 for 6 capital raising at 18.5c. The market hasn’t viewed this offer well, and has marked the stock down to its offer price. This overhang should resolve itself during September and the improvement in CFU’s order book will likely see its share price strengthen from late September on.

Viralytics as discussed at the outset will see its share price drift due to a lack of liquidity and then burst strongly to the upside if there are positive announcements in relation to its FDA trials. The Wrinkle still believes that any purchase of this stock at sub 4 cents is a good buy, however you need to accept the speculative nature of the stock and the technology behind it.

Overall the Wrinkle hasn’t changed his positive view on all three stocks, and likewise his shareholding level in each of them has remained constant. Please remember these stocks were given as potential “slow burners” with strong upside bursts. Another six months of monitoring should give us a better idea of how accurate this premise was.

Have a good week, and going out on yet another limb, the Wrinkle wouldn’t be surprised to see the Wallabies win on Saturday night.

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