Rotational buying pushes laggard stocks higher

Unusual stocks price upticks in several sectors including oil and gas that were seen over the past week showed long-term investors seeking second-best opportunities after filling their baskets with blue chips.

“Liquid investors are cherry picking the laggards of last year’s market in anticipation of greater economic activity this year after the quarantine restrictions in 2020,” Astro del Castillo, managing director of investment firm First Grade Finance Inc., said in an interview.

“This is called rotational buying, which is usual at this time of year,” Del Castillo added.

In the past several days, the Philippine Stock Exchange asked companies—engaged in oil and gas, mining, information technology and logistics as well as holding firms—to explain unusual price changes in their stocks.

One of these is Oriental Petroleum and Minerals Corp. (OPM), the price whose “A” shares rose within a few minutes in the morning of Jan. 18 by half to 2.1 centavos apiece from 1.4 centavos. The price of OPM’s “B” shares rose by about a third to 1.8 centavos apiece from 1.3 centavos.

This happened again on Tuesday, with the price of OPM rising one-third to 3 centavos a share from 2 centavos. Similarly, the price of OPM rose to 2.8 centavos from 1.9 centavos.

“[We are] not aware of any undisclosed information that could have triggered the unusual price movement,” OPM explained in both instances.

The Philodrill Corp. was also asked to explain. Its share price last traded at 2.8 centavos apiece as of this writing, from 1.9 centavos in the previous closing.

Philodrill said this might have been due to a disclosure it made on Jan. 15 announcing the Department of Energy’s green light on its status as operator of Service Contract No. 53.

SC 53 covers a prospective onshore natural gas asset on Mindoro Island. Compared to the Malampaya natural gas deposit that was estimated to have 3.5 trillion cubic meters, the Mindoro gas deposit is believed to be about 76.36 billion cubic feet.

The company said media reports of this disclosure could have triggered an interest in Philodrill shares that resulted in the unusual price movement.

“As you can see, the turnover [among these companies that unusual price movements] are not substantial,” Del Castillo said. “This is more about local—as opposed to foreign— portfolio managers wanting to improve their portfolios after going through the blue chips.” INQ