AIR CANADA(AC.B)

[daniody]

    sorry.
    I replied your email directly. But i got an reply telling me that you could not receive it.
    I bought 5200 shares ac.b and i still hold it.
   The price of gas decline greatly.The price of AC.B decline greatly,too.
    I simply can not accept it. I am waiting and waiting.
    If you want to make money,buy LCC(USA) OR UAUA(USA).
   

[garilou]

Hi Daniody,
Long time since I heard from you!

 

I bought 5200 shares ac.b and i still hold it.

 
 You started this topic so long ago!
 I do not know when you bought your shares.
 On August 23, I told you :
"... in the coming weeks, you might see some waves that you won't like :-)"
 As I look at the chart, I see that if you bought them then, you sure have had roller coasters
 
 But you still hold after Friday's big drop?
 
 Air Canada has lost a lot of money when they tried to hedge on fuel between $90 and $95 a barrel.
So even if the fuel's price has gone down, they won't be able to profit from it, they will have to honour their contracts.
Air Canada has now a very serious liquidity problem.
 
 But as I see, you have a special affection relation with this stock.
 So I guess I won't try to convince you to sell...

On my side, I've been shorting all summer, and traded only for very short periods, never held more then a few days except for one that was protective.
 I am just starting to buy again, but oh! as carefully.
 It's been a long time since I've stopped having any kind of love-hate relations with my stocks.
 I "run the wave" as they say.
 
 Good luck, I guess you have a good stomach 
 
 Louise

[daniody]

I made some money by LCC(USA) AND UAUA(USA).I bought and sell some LCC and UAUA in the past several months. That is why I hold AC.B.
Some times i am too smart, some times i am too stubborn.
Please do not short AC.B, let it be.
By the way, when will those stupid 'contracts' end?

[garilou]

Hi again, Daniody,

You seem to have had a big hope on Airlines in those time!
And I guess I should have listened to your advice, with LCC and UAUA: at least for a few weeks, you probably had a nice gain if you got out early enough. But I needed to stay at cash in my US portfolio, to support my CND and USD shorts.
I have tried to buy a stock that had so superb fundamentals: I loss and it was gone the very next day!
The markets were too scary. I'll try it again in a few weeks.

===============================================================
As for the hedge contracts from Air Canada, I think I did not express my-self properly, or answered to fast.
They probably got rid of them a while ago (I hope).

When you "play" in the commodities, well for AC it was not a speculation thing, they really needed the fuel, (not like if I bought or sold concentrated orange juice  or Soy bean oil contracts), it is said to be at the same time a very risky but possibly very lucrative game.
(Although 99% loose...).
Because of the leverage effect.

Let's say AC bought Oct 08 contracts somewhere between Oct 07 and mid Jan 08 (the period they oscillated between 90 and $100) it was certainly a good idea, and the other airlines probably did the same, when people saw the rise and thought it might go as high as $200 a barrel.
They probably made a lot of money until July, because of the leverage effect (when you buy a contract, you pay only 10%  of the price.), they cash in every day quite well.
With commodities, it is not like stocks, where you pay when you buy and what ever happens until you sell in only "paper" gain or loss.

Apart from the leverage effect, it's the same when I short a stock: I cash in or pay more every day -it is said the "mark-to-market" adjustment - depending if my stock went lower or higher on that day.

But if you look at the price of the Oil contracts ( http://futures.tradingcharts.com/javachart/CO/A9 ) between January and July, it had 5 upward peeks.
I never believed what the analysts kept saying during the upward movement: all the reasons the evoked to explain the rise: not enough resource, increasing demand and so on: it was mostly a speculators move, but they were helped a lot by all those "rational" explanations.
Except that for speculators, the 5th peak is a sell signal.
What your LLC And UAUA probably did, is that they sold their contracts pretty fast.
But why did not Air Canada sell right away?
Why do you think that the Royal Bank did so much better then the other banks: they hire the most experienced commodities traders in the world.

I do not know, maybe AC held too many contracts, I'm not in their heads.
But if they kept their contracts (they could have sold them any time), but like you do with AC, they kept "waiting and waiting", assuming that the price would go up again, instead of "riding the wave".
I guess that by now they have sold them, but every day between July and the moment they sold, they had to pay their losses daily, what explains the liquidity problem.

Now might be the right time to buy oil contracts again, because oil seems to try to go up again, because it has reached the April 07 support. If I were in the commodities, I sure would wait to be sure it's not only a support testing, or do very short trades: it will probably go into the "trading phase", oscillate between $60 and $70 for a while and then.. ?

You tell me: "Please do not short AC.B, let it be.".
With the few shares I could short, I would not make a big difference.
Shorters never do a big difference, (because they are a minority) they just sit and wait, except that they are more alert and faster in their moves (so watching the sorters moves can be a good indicator too.)
Look what happened with the US short ban: did the financials go up?

I tried to short Moody's but it was refused, they had just been added to the short ban list.
I shorted TD twice during that time, with reasonable profits (not as good as my 2 shorts on IBM!that was a good slope!)

But back to AC, the peak in AC.B shorts happened somewhere between Sept 15 and Oct 1st.
The shorters have been covering since then (good point for you  ) 

So I shall wait little bit, but sorry, yes I might short it.
So the day when you jump for hope because the price goes up, think that I might be shorting that very same day  .

Because the problem with Air Canada is not only the oil price: usually a report like they did does not have a long term effect: the market prices it right away.
The investors are not looking at what happened, they are looking at what they think will happen.
Your UAUA has a consensus buy recommendation, although it had a -464.6% drop for the current fiscal year, but a 122% increase is foreseen for the next fiscal year.
AC also has a buy recommendation, with "only" a 53.7% increase (but still non profitable)
The market trend does not follow analysts recommendations: there is a middle term upward trend on AC: might go up to almost 7$.
But if it ever reaches that price,  I am pretty sure that after that it will drop down A LOT!

With the coming recession, people will try to avoid expensive trips, and will turn to cheaper transporters or avoid travelling if they can.
As the markets will start to move up a little bit, investors will turn to more promising stocks.

Want to know my prediction for tomorrow (Monday)?
In a normal market, I would say a High between 5.40 and 5.45 and a Low between 5.15 and 5.10.
But as I told Jeff yesterday, if I am right, you deserve me an applaud!
But the high could be a little more if the last shorters have not covered Friday.

OK, that was my daily stock analysis: I try to do one per day  .
I did not do all that just for you, or for the fun of arguing:
[You could read my exchanges with Jeff about NGX (http://www.superstockpicker.com/forum/index.php?topic=756) ].
I love doing that kind of research.(Unfortunately I could not short his NXG, it is now too low, i doubt my broker would allow a short in a stock worth less then 1$.

Between you and me, on the short term, I think your better off with AC then he is with NXG, except that he seems a little less in love with his stock, and I am pretty sure he won't hold as long as you did and maybe will.

But even if it does not sound like this, be sure I respect your choice!
Some people are long term investors, and do not mind taking "paper loss" for a while, if they really think that they will be winners in 5 years or so, and they are most of the time right  if they base their choice on sound fundamentals.
Except for my RRSP, I am discovering that I am more a trader then an investor: I like the adrenaline of it, and a day without a trade is a boring day. Many many years ago, when I was still with a traditional broker, he (and then his daughter) tried to stop me, that I was taking too big risks (like shorting a gold stock while gold was having a tremendous upward trend, and I won!), and I said: if it was not that, I' ld be betting on horse races: well they have had me lose a lot of money! Especially the one they referred me to for the US stocks.

But it looks like in the past weeks, good fundamentals helped almost no stock (apart for a few recent SSP choices, even if SSP moves are strictly based on technical analysis).


Good luck,

Louise

[garilou]

Hi Daniody,
On my turn, I sent you a private message on SSP message centre, a few days ago.
Since I did not receive any reply from you, I guess you did not receive it, as I did not receive yours.
Louise

[rockland]

Hi everyone,
I'm new here. I own a little bit of Air Canada's stock, but not even a 1000 shares. I don't have much to offer, but just wanted to say that I think this room is great.In my humble opinion, I wouldn't touch it if I didn't have Air Canada's shares already. Today AC.B has plummeted for another 18%, so I'm thinking to buy some more to offset some of my losses. I really hope the current price is not the "peak" for the rest of the year

[garilou]

Hi rockland,

Welcome to this Forum.

Just a small comment on your choice:
There is a rule that I've really paid to learn:
One should never buy more of a stock that is plummeting, especially in such a bear market!
Since yesterday at least, AC.B has absolutely no support!
Hold if you still "hope"... but that is also not quite right.
You say:

I wouldn't touch it if I didn't have Air Canada's shares already

This is such a contradiction: buy more of something you would not buy at all!
Buy more when it has regained a real upward trend!

On the stock markets, one does not "hope", one just takes note of what happens.
What is one's "hope" worth against millions of other's opinions?

Read my (maybe too long) comment to Daniody: I was pretty much off....
And if I planned to short the stock, I thought I would do it later.
Now that it's under $3.00, it will be hard.
I missed it, I just take note of it, and turn the page.
My motto: "Stock that you do not own never hurt you!"

This is MHO,

But I keep wondering why people come to this forum and do not try to go with SSP recommendations.

Louise

PS: just read a funny news:

"Globe says Air Canada staff told to try smiling"

[rockland]

Hi Louise,
Thanks for your genuine opinion!
I was in a dilemma when I said I was thinking of buying more of this stock because I wanted to sell it in my heart, but the current price makes me sad if I sell it (I wished I sold in last week). That's when I had the thought of buying more to offset my position. Now after reading your reply, I know I need not to waste my time in this stock anymore. I will find a proper time to sell it.
I really wonder what Air Canada's fair value is at this moment   Wish I knew how to do estimate it, hehe.

By the way, I didn't know there's such a thing called SSP recommendation (too new to here, but good call. I'll check it out!)

[garilou]

Hi again, Rockland

Happy if I helped make a difficult decision.
Proper time to sell?
After such a huge drop, tomorrow could be somewhat higher at some time. Place right now a sell order between 3.05 and 3.10, good for a few days (you can always change it), and place a stop order at today's low.
And if you see that you could have got a higher price, do not be sad, you'll be happy when you see it fall still more!


You ask yourself:

I really wonder what Air Canada's fair value is at this moment?

The answer is simple: it is it's market value. 


You know what I do (or used to, because I've past that stage), when I had a hard time taking a loss: I started right away to look for a stock in the same price range that seemed to be more promising, and I bought it.
But in the moment... it's hard to find.

Louise

[rockland]

Louise,
Thanks again. I'll "implement" the strategy you recommended tonight.
By the way, I was searching for the link about SSP's recommended stocks but didn't find it. Do you mind telling me where the link is?
Merci 

[garilou]

Hi Rockland,
Since we are getting out of topic, I replied to you in another Board:
Get started with SSP's strategy. 

Louise

PS tu écris : "Merci". Es-tu francophone ou bien écris-tu ça pour me faire plaisir?

[daniody]

The teachers keep saying it is very important to maintain the CREDit.
Maybe Air Canada sell-off overdone is because of lack of credit.

"Montreal-based Air Canada has hedged 49 percent of its fuel requirements for the rest of the year at oil prices that average between $94 (U.S.) and $101 a barrel".
Maybe lots of AIR CANADA's employees will lose their jobs because of the hedged contracts.
There are many,many,many working familys.


How could those so-called experts make decision like this?Did  those guys who sign the hedge contracts say sorry?Did they hesitate for a moment before they sign it?

[garilou]

Hi Daniodi,
It's easy to make a judgement looking backwards: in that time, so many people "sent" the oil price at $150 to $200 a barrel.
Yes, maybe they had not hired the best traders or counsellors.

But did the executives of Fannie Mae say "sorry"?
They knew pretty well that they were doing something that could ruin the lives of thousands and thousands of family, and for sure the less fortunate and educated ones, because no one somewhat wealthy would have bought a house with a mortgage higher then the value of the house with an open interest rate!

These people are much more "guilty", because they did that out of greed, and to my opinion, deserve to go in prison. But no, they went away with "golden parachutes", and the US administration helped them first, before they thought about helping the families, and all the americans (and indirectly the whole world) must pay in their place.

Whereas Air Canada did that in order to protect it-self: had the fuel really gone that high, many employees might also have lost their jobs.

But if you are still talking about Air Canada, I wonder
1. if you kept your shares after we discussed that matter,
2. if you have private links to Air Canada.
I know those are none of my busyness, so feel free not to tell me "in the open".

Louise