Market Rider: More stock plays
People mistook September to be a bad period when it actually turned out to be a good month. October also appears to be turning out to be something different.
Equity markets worldwide traditionally consider October to be a bad month. In the United States, it is regarded as “the month of market crashes” after three major disasters in the history of its stock market occurred in October.
Interestingly, Samuel Langhorne Clemens, the American humorist better known as Mark Twain, appeared to be familiar with the notoriety of the month, too. Possibly an active trader and investor in his time, he also commented (in part) that “October … is one of the peculiarly dangerous months to speculate in stocks…”
He made this fascinating remark in his novel “Pudd’nhead Wilson,” which appeared in serial form from 1893 to 1894. The novel is about “a young lawyer (David Wilson) who moved into the fictional Missouri frontier town of Dawson Landing on the banks of the Mississippi River in the first half of the 19th century.”
Local town folk in the story misunderstood his “clever” remark, and he was branded “Pudd’nhead Wilson,” a nitwit.
Major US disasters
The first stock market crash that hit the United States was on Oct. 29, 1929, at the beginning of the Great Depression. The Dow plunged 12.8 percent that day. In the following days, the market eventually lost about 90 percent of its value.
The next was on Oct. 19, 1987, more popularly known as the “Black Monday.” This was more severe than the crash of 1929. According to accounts, “the crash began in Hong Kong and spread west to Europe.”
“The Dow lost 22.6 percent of its value in one day. It was estimated that the stock market lost US$1 trillion in value over the next few weeks (after October 19).”
I was already in the stock market then. It was at this time that regulators “instituted safeguards to help prevent, or at least slow down, markets in free fall. At certain percentage of price loss in a stock during the trading session, the exchanges will halt trading.”
The trading halts called by regulators will “range from an hour or more.” In extraordinary situations, trading may be “suspended for the rest of the day.”
The third is the market meltdown of October 2008. “The S&P 500 was down by more than 27 percent at one point of the month.” Investigation reports say that “the problem of this market crash started months before, but October was the worse month.”
There is no question that these three market disasters inflicted considerable damage to investors. The one in 1987, however, is said to have “provided a unique buying opportunity.”
The opportunity offered by the latest market meltdown is yet to be seen. Stock prices have risen, but are presently facing some resistance due to weak economic and financial conditions in the US and Europe. But for the fact that markets the world over were able to display strong capabilities to survive market disasters, better economic times will augur well for a certain market runup.
APM play
Doing exactly now the kind of stock play contemplated when the market comes around in the future is Alcorn Gold Resources Corp. (APM). Like First Gen Corp. (FGEN), which I wrote about last week, APM burst into market play and interest recently. On August 29, the market price of APM was doing between P0.017 and P0.018 a share.
APM was formerly Alcorn Petroleum and Mineral Resources Corp. that was incorporated on Jan. 19, 1988. Back then, it was “primarily engaged in the exploration, development and production of oil, gas and metallic and nonmetallic reserves.” It was listed at the bourse on Sept. 26, 1988, under the trading symbol “APM,” which it uses up to now in the trading of its shares.
The primary purpose of the company was amended on Oct. 8, 1999. Stockholders transformed the company into a holding firm, “which shall pursue investments not only in the oil and mineral exploration and production sectors but in other business sectors such as energy, utilities and other industries that will fit the company’s objectives.”
In this connection, the change in the company’s corporate name also signified the change of controlling parties. As reported, the current board members are: Eduardo Hernandez (chair), Leonardo B. Dayao (president), Angel Uy Tan, Lucio L. Co, Jaime S. de la Rosa, Robert Y. Cokeng and Oscar S. Reyes (independent directors).
Obviously a plain member of the board only in the above report, the company is said to be controlled by Lucio L. Co.
On the PSE website, APM is said to be both “a major and minor partner in several consortia exploring for oil in various petroleum concession areas. Among the company’s oil interests is Service Contract 14 (SC14) in Northwest Palawan, which includes the West Linapacan Oilfield of SC 14, whose production is temporarily suspended.”
The company “also holds two approved exploration permits for gold and copper properties located in Albay and Iloilo. The company is now preparing for a comprehensive project information education and communication campaign among local communities.”
Last Friday, APM opened at P0.058 and closed at the session’s high of P0.075. This meant that its price went up by 29.31 percent in only a day. It was only on October 2 that the price of APM noticeably started to actively move. Its price then traded between P0.021 and P0.023. Volume suddenly increased that public participation has obviously set in. Total trading volume for the last two years paled in comparison to APM’s daily trading volume last week.
Bottom-line spin
According to the PSE website, “since the oil production suspension, APM had no principal products or services for the past three years, indicating the relative contributions to sales or revenues of each product or service.”
Based on that, “APM has an EPS (earnings per share) of P0.000086 for the year ending 2012 and an interim (first semester 2012) earnings report of P0.00002 per share.”
It has “a free float of 40 percent; an outstanding shares of 127.5 billion, of which 70 billion is listed.”
Above all this and despite an earlier disclaimer, APM is rumored to become the holding company of Lucio Co.
(The writer is a licensed stockbroker of Eagle Equities Inc. You may reach the Market Rider at [email protected], [email protected] or at www.kapitaltek.com.)
