Thursday, November 25, 2010

OnlyDoubles Profit Spotlight for November 25th, 2010

Hello and welcome back to CRI's OnlyDoubles Profit Spotlight.

Here you will find past OnlyDoubles trades that have been recently closed. This blog's purpose is to update the public on recently completed OnlyDoubles trades as a demonstration of the model and a teaser to get you to subscribe. If you would like to learn more or subscribe (for real time access to OnlyDoubles NewTrades) please visit our Subscription page.

Continuing our theme of Uranium in particular and energy in general (please refer to 1st 2 wks of 'Q410 Report for more on expected sector out performance) our latest position to double in value is THC.V (Thelon Capital). 
THC over the past 6 months 

THC over the past 3 years

THC first came to CRI's attention when the stock was rolled back during the spring of 2010. With less than 10 million shares outstanding the company did a financing at $.11. to both clean up the company's debt and give it some operating capital. At the time the company had substantial assets (specifically uranium and diamonds) and was trading at .3 price/book value per share. The low share count, the lack of debt and the substantial asset base made the stock a good fundamental candidate, it was just a question of when to pull the trigger.

The position was put on in the middle of September based on a technical breakout (when price broke out from a very tight double bottom formation) at $.14 with stops just below support at $.11. As well as the price breakout, volume and momentum confirmed the breakout. The price of THC has moved higher on several developments over the past six months. The acquisition of a coal deposit in Tennessee and the general revaluation of uranium related assets in particular. So much so that a rational investor ought to think about taking some profits. 

A simple time tested rule when investing simply states that one should always sell half a position when it doubles in value. Other than taking a nice profit (and putting a nice smile on everyone's face), this rule forces you as an investor to act in an algorithmic fashion. This takes the emotion out of the equation. And whenever you take the emotion out of the investment process life becomes a lot easier to deal with...
What one does with the remaining position is up to you. The significant volume that came in today coupled with the still dramatically cheap valuation (.6 price/book) on this little company leads me to believe that we shall see higher prices to come. Should the stock double again I will look to sell some more of my remaining free shares...

...speaking of you know which market CRI's OnlyDoubles is trying to take a position in right now? Seems to me it's worth $100/year subscription to find out....

That's all for this issue of CRI's OnlyDoubles,
Brian Beamish FCSI