Mergers, acquisitions & rumours

It's good to be back after having travelled for business for more than two weeks. During my absence, a lot has happened to certain funds that I discussed some time ago. Especially news on ABN Amro, Iberia, Gold Reserve Inc, Crystallex, Beacon Power Corp and Ahold is worth mentioning. First of all, I indicated last year that ABN Amro would certainly be subject of takeover talks as the banking industry consolidation in Europe would start to take off. Earlier this year, it was rumoured (on advice of certain shareholders) that ABN Amro could be split up, unlocking value for the shareholders themselves. This was later denied by CEO Rijkman Groenink, who stated that this would certainly not be the preferred option. Then came rumours of a merger with Barclay's Bank, possibly creating Europe's second largest bank after HSBC. This rumour actually seems more than just a rumour and has a reasonable chance of success. The share price went up quickly from EUR 27 to EUR 32 and might even go a bit higher as a deal gets closer. This jump will however not influence the performance of my list of stock picks I had cashed ABN Amro at EUR 28. Then there were takeover talks regarding Spanish airline company Iberia. It was rumoured that Lufthansa was willing to pay EUR 3.90 and that several other groups were interested in buying Iberia, including British Airways and Texas Pacific Group. Iberia was on my list of stock picks but was taken off when its price target of EUR 3.30 had been reached. In January this year, I wrote about Gold Reserve Inc and Crystallex having great potential based on the high likelihood of obtaining permits from the Venezuelan Government as well as the low valuations of both shares. On Wednesday, both shares jumped, but are still very far from reaching price targets set for this year. Now that the major risk of not being able to obtain permits has been eliminated, I see no reason for the low valuations of both shares and it should therefore be expected that both shares will rise further, supported by higher prices for precious metals. Beacon Power Corp rose from USD 0.82 to USD 1.02 last Thursday on news of a successful outcome of its flywheel technology field trial tests. This should be seen as a significant milestone towards further growth of the company's sales. In my opinion, this development stage company has some serious potential that most investors have yet to find out about. The stock has dropped back to USD 0.83 after its rise but has now continued its upward move and may be expected to come up with further good news on its technology in the near future. Finally, Ahold has moved up from EUR 7.50 to EUR 8.50 this month on the expected sale of US Foodservice and Tops Supermarkets in combination with the grocer's low valuation. In addition to that, there were some rumours of Ahold being a potential acquisition target. So I am happy to see that most of my predictions seem to be coming true sooner or later. My list of stock picks may not be as successful as my 'mining fund', but 10% ROI in three months (on average) isn't bad at all, is it?

Bullish on zinc? Mining stocks aren't the only option.

I hadn't expected to get the opportunity to post during my absence, but I had some spare time in the morning here in Kuala Lumpur and decided to go online in my hotel room. Upon checking the performance of the basic materials sector, I came across a remarkable company this morning. North American Galvanizing Company (AMEX:NGA) caught my eye as it is not a mining company (which I would typically be looking for). It is a company that use zinc for its galvanisation processes. As a result of growing zinc prices, the company has booked tremendous growth in the past years. Its sales more than doubled in two years and EPS are ten times what they were two years ago. And all this is down to higher prices for zinc. Even though this may not be your most logical stock pick, zinc bulls might want to think again. NGA trades at a P/E of 8.9 and is therefore much cheaper and a lower-risk option than most mining companies, whilst the effects of rising zinc prices on sales are quite similar. Technically, the stock also shows a positive outlook. The downward trend of the RSI in the weekly chart has been broken with support around 40, which means that the stock might be bottoming now in a longer-term bull trend. Considering the company's growth in the past four years, this is a very affordable stock. Keeping in mind the bright outlook for zinc prices, I will add NGA t my list of stock picks at a price of $5.18 with an $8.00 price target for end 2007.

Two weeks of absence...

Tonight I will be travelling to Asia for business and I will be away for two weeks. Chances that I will be able to find the time to post some words are minimal and therefore you are likely to see two weeks of silence. However, I will be back in time to provide you with an end of March update on my favourite stock picks, my 'green picks' and my 'mining picks'. Knowing that I might not always be able to trade in the coming two weeks, I had to rearrange my portfolio a little bit. As such, I sold Euro Ressources at a loss (1.05 (1.23)) and Yamana Gold at a profit (14.35 (9.78)). I bought BCON at $0.89, URZ at $4.48, ELR at $9.73, ORM.IE at EUR 0.185 and RNO at $3.27. I kept all my other mines in my portfolio as well as my long position in gold with an automated stoploss at $624. This might seem somewhat risky, but I am confident that gold has bottomed and that from here the direction will be upward. One thing you might have noticed is that I am adding alternative energy stocks to my portfolio. I was a previous holder of ESLR and I am still a great fan of this solar energy company. Thankfully, I sold at $15 previously and had the chance to get in at a much lower price. I expect the previous high to be taken out in 2007, but more about this when I return. Till we meet again!

A new virtual alternative energy fund is born

Everyone always aims to find the hypes in the global stock markets. In the eighties, Japan was hot. In the nineties, you had to have tech stocks. Then came metals & mining and several others have passed that may have not been as significant, but were certainly worth the money. When reading financial websites, there's one sector that keeps coming back: alternative energy. It's no secret to anyone on this planet that something needs to happen about the way we pollute the environment and our atmosphere by consuming more and more energy per capita. Emissions are a big issue, ethanol is so hot that there are actually fears of grain, corn, soy & sugar becoming too expensive for third world countries. Friends and family members might already start selling you fuel savings pills and even your little village grocer starts selling LED bulbs. Clean & green is hot and it wil remain hot for years to come, if the stock market experts are right. Well, I'm gonna take that challenge and give you five alternative energy stocks. Let's see if they can outperform my stock pick portfolio or even my mining portfolio. Here's the first five (I might add more in a while) : Evergreen Solar (ESLR - US$9.46), Beacon Power (BCON - US$0.90), Pacific Ethanol (PEIX - US$15.40), Distributed Energy Systems (DESC - US$2.89) and SolarWorld (SWV.DE - EUR 57.57). Now let's see how sunny the future is for these green stocks. Investing in these companies almost makes you feel as if you're doing something good for Mother Earth!

An early March update...

Another month closed and it is therefore time for another update on my favourite stocks. Even though my stock picks are only up 3.5%, so far they do outperform pretty much every index around the world!

Date	Fund	Purchase	Current	ROI%	Target
18Dec2006	Aareal Bank	35.50	35.40	-0.3%	44.40
13Dec2006	ABN Amro	24.10	28.00	+16.2%	28.00
16Feb2007	Ahold	7.97	7.56	-5.1%	10.00
16Nov2006	Banco Pastor	14.15	16.85	+19.1%	18.00
27Nov2006	Capitalia	7.00	6.62	-5.4%	8.50
19Feb2007	Companhia Vale	$35.90	$34.10	-5.6%	$55.00
12Jan2007	Crystallex	$3.12	$3.04	-2.6%	$6.00
24Jan2007	DRDGold	$0.83	$0.80	-6.0%	$1.10
21Dec2006	Fiat Group	14.50	17.79	+22.7%	19.33
12Jan2007	Gold Reserve	$3.94	$4.46	+13.5%	$12.00
10Dec2006	Hagemeyer	3.64	3.58	-1.6%	5.00
16Dec2006	Iberia	2.81	3.30	+17.4%	3.30
28Nov2006	Ormonde Mining	0.24	0.19	-20.8%	0.40
7Dec2006	Rhodia	2.60	2.65	+1.9%	3.20
30Nov2006	SolarWorld	46.10	54.58	+18.4%	69.12
2Dec2006	Vallourec	204.00	187.33	-8.2%	250.00
				+3.5%

All stocks in euro unless mentioned otherwise. Stocks in bold have been sold as target price has been reached.

Markets plunge; metals join in on the fun

It is now 11pm Amsterdam time and what we have whitnessed today is not something we see every day. I bought two puts on the Dutch AEX index on Friday and sold them today, after which I bought one single put 490 (March series) later on the day at a lower price: Eur 1.85. Certainy not a big investment, but then I do not hold an impressive track record with options. I therefore tend to be very careful when trading with options. Closing price of my put was Eur 3.40 with an AEX some ten points below yesterday's close. After European equity markets closed, we whitnessed the American indices being slaughtered, taking commodities along. I got worried about my mining stocks as the mining sector is among the hardest hit of all sectors today. Thankfully, someone posted some comments by Jim Sinclair, who had already said the following - one day before this slaughterfest: "At first the equity market breaks would bring in temporary sellers of gold. However, quite quickly thereafter and most certainly when the US Dollar also gets hit, gold will steady and start its move to all the Angels." Thanks for those words of hope and wisdom, Mr Jim Sinclair. As for tomorrow, I will watch the indices closely and I will specifically watch the RSI level of the AEX, which will be critical. If the RSI in the daychart breaks through 40, we are seeing a bull market turn into a bear market. Good luck to all and don't panic.

Enter DRDGold, Exit Gold Reserve

The past few months have been very good for my portfolio. With a ROI of 62% since September, it's certainly been the best five months ever. But the months from April until September were not particularly good, which has once again taught me a lesson about the importance of timing - even in a secular bull market. Today, I decided to sell GRZ at $4.87 (purchased at $4.05; it is still in my list of stock picks for the long run) and use the money to benefit from the improved technical picture of DROOY. In addition to the technical picture, the fudamental picture looks brighter, too. DRDGold subsidiary Emperor Mines announced on Friday that it saw a significant increase in its mineral reserves at its Porgera Mine. A statement on the update of DRD Gold's reserves can be expected in the near future. As far as I can see, this is the first significantly positive news in years after having seen the stock plummet to a price below one Dollar. I added DROOY todat at $0.87. Price target remains $1.10 for 2007, which I hope to see in the first quarter of 2007 on rising metals prices.