Beyond The Fringe

You are The Wheel of Fortune

Good fortune and happiness but sometimes a species of
intoxication with success

The Wheel of Fortune is all about big things, luck, change, fortune. Almost always good fortune. You are lucky in all things that you do and happy with the things that come to you. Be careful that success does not go to your head however. Sometimes luck can change.

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In an atypical idle moment, we throw the net tarot for our particular card - it is most suitable for the yearly stockmarket tax loss slump period.

While a couple of our delightful speccies are taking somewhat of an uncharacteristic walloping, other have remained satisfactorily firm, which with luck means that during the recovery to come they should do remarkably well. Still others have zoomed due to great news - CXY and BPH stand out. NAV is consolidating above the $1 mark which augurs well. Not being able to restrain our glee, we’ve picked up more EVZ, BLR, SNU, INL and APG during their current, respective weaknesses.

We expect THX and BPO to prosper shortly - THX has bounced nicely already. The overall standout with *very* interesting potential is OCO, which today announces a large offshore shark wants to gobble 75% of the company and closes up .001 at 6.8c - we’re at a nice premium to our last buy price of 4c.

Under the terms of the Proposal, FCP will take a significant shareholder stake in Oriel,
following execution of a subscription agreement, for FCP to invest and secure a 75%
equity interest in the Company, at a share value to be agreed, subject to shareholder and
regulatory approval. Oriel shall also seek shareholder approval to change its name to
“FCPB Investments Limited”.

At what price, one wonders? Our feeling is we may well receive a buyout or buyout/new shares offer well in excess of today’s close

Subsequent to the strategic investment, FCPB Investments Limited shall act as a primary
investment vehicle for FCP Brencorp and associated ventures in Australia. Its investment
strategy shall focus on investments in China and Asia in the following areas:
1) Financial Services
2) Logistics and Transportation
3) Retail and Leisure
4) Other high growth opportunities in China and Asia

In order to execute such strategy, FCP will assist FCPB Investments Limited to raise funds
of approximately AUD $100 million to AUD $200 million for its investment pipeline in
China, Asia and Australia.

Regarding Oriel’s subsidiary in China, BilltoBill: FCP will bring strategic benefits through its network and a number of related
investments in the payment sector, such as Oncard (ASX:ONC) and Customers
(ASX:CUS); FCP shall provide additional funding to BilltoBill through FCPB Investments Limited
to further accelerate its dynamic growth; and FCP intends to continue with the current executive management team.

So it might be very very good, or of course, very very bad if all is not as it seems. That is the nature of the wheel of fortune with speculative small stocks where generally we do amazingly well. Thus if the fortune cookie crumbles into a pile of excrement, as with AWS (cursed be its code), we would be insulting the goddess and inviting hubris if we did not simply accept our comparatively minor losses and soldier onward and upward.

So we’ve been busy. Working. Building. Dealing with immense toothache - why is it the pain stops after one makes the dreaded appointment? Blogging out at Blogshares (which is partially work-related as we survey the machinations and constructions of the blogiverse in all its manifestations). We must have checked out a couple of thousand or more twaddly, whining, dorky blogs now to help clean the rather useful Blogshares index of rotting blog corpses. At this point we’ve collected a truckload of literary and stockmarket blogs.

As the Aussie stock market enters its usual tax loss doldrums, we desultorily survey the real market for some superduper bargains. APG, with BHP now holding an interest, has fallen as the profit-taking traders maul the share price. We are waiting to feast with the other remoras near what we suspect may be the bottom. Our banquet on EVZ a couple of days ago was most satisfactory as was our BPO gulp at 4.6c. EVZ actually breached our projected bottom at 55c yet we are happy with our haul. We now have our beady eyes fixed on BLR and SNU, our little U beauties, for some more accumulation opportunities.

We’re cashed up for the TRF Ironclad float, though with the drop in TRF’s sp, we might do better picking up some more TRF rather than waiting for the Ironclad floaties. Another attractive possibilities is LRL - trading below 60c at the moment.

For some idle fun and relaxation, here’s an amazing site, Flickrvision where one can watch the depressingly plebby drones of the internet upload their mostly ghastly photos to Flickr in real time.

Last week, our little water recycling star performer Envirozel (EVZ), which we recommended in September last year as a solid buy at 19c, revealed its latest acquisition - Young steel construction private company, National Engineering - yet another stable, thriving business with an attractive operational record. National’s revenue contributions will bring EVZ to within $30m of its projected target of $100m per year revenue.

Following the announcement, EVZ Executive Chairman, Gordon McKern gave a most encouraging, almost fatherly presentation on Boardroom Radio.

Some of the points he made were:

• National Engineering is different from the previous two acquisitions as the vendors were not running the business. Positively, there’s a very competent general manager at National Engineering who is staying on.
• National doesn’t compete with existing EVZ businesses - and other EVZ businesses have a need for structural steel which National can provide.
• National’s location in Young, NSW now gives EVZ a geographic reach as far as Queensland.
• EVZ is maintaining its performance. 3.5 average adjusted EBIT purchase price will be paid for National - more or less on par with the other two. The purchase will be made with a combination of debt and cash - and there’s room for more leverage on the balance sheet. Commonwealth Bank is very supportive.
• Revenue is on track for $70m - 75m - Gordon suggested they will achieve $100m well before the end of 2007.
• At Young for ASX ann, Gordon addressed the National employees, offered employment, explained the deal to the workers - employees were very buoyant about the new owner.
• Gordon highlighted that one of EVZ’s main assets is now 370 employees, every one of them a skilled operator, - to him, the crux of the whole game.

We love his attitude, and his thoughtful, pragmatic approach to EVZ’s strategic acquisitions. Will the next acquisition be in Queensland?

EVZ closed on Friday at 59.5c - the new floor may become 56c. With bipartisan support for water efficiency measures, EVZ is in an excellent position to benefit from additional infrastructure investment. Wise Owl has an 80c price target in 2007 - it may even do better after its half yearly in our opinion, if it can increase the number of contracts it presently enjoys. We don’t see why it won’t, and will be watching it closely for more accumulation during the imminent tax loss scramble season.

Countless times during our long and profitable investment career, our political judgment has been invaluable in helping us make accurate market predictions, enabling us to pick trends well before they are common knowledge and every man and his dog is on the gravy train. A current example is the certainty we had that the ALP conference would lift the no new mines ban yet not back nuclear power stations. We lined up our U investments accordingly, choosing only shares with interests in South Australia, the Northern Territory and overseas. Our knowledge of the loosening of political control in China and subsequent market relaxation encouraged us to lash out with our investment in OCO, now paying off. Likewise with that goldie of goldies, LRL and the enticing LYC.

Without a political perspective refined and polished in debate with others, one flies in a fog.

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Another lovely day chained to the computer, reading through a staggering plethora of quarterly reports as they hit the bourse and watching for the market response we predicted to the ALP’s loosening of the reins on U mining.

SNU begins a rally up to 42c and then is squeezed back down to close at its opening price of 38c. Someone is definitely accumulating in our opinion - the pattern is clear - place a sell order a few cents higher than the current ask in order to scare the market to sell beneath and keep the buy orders off the screen. The share float gave most folks only 12000 shares - yet the capping parcels are much larger than this - the first significant cap at 41.5c is an average parcel size of 41,500 shares. So it’s either someone who has accumulated a lot more since the float or possibly the large existing holders angling for even more of the cake. The next substantial holders notice will be *very* interesting.

STOP PRESS: Just heard on ABC News, Mike Rann intends to fasttrack a hundred U projects in South Australia. Woohooo!

Similar games have been played with INL for months. Today, the game was exposed by a very positive quarterly report which showed that there had been no sell downs from the top 20 shareholders and several had increased their holdings since December. During the quarter, the vituperative flak directed at the company by disgruntled shareholders played straight into the hands of accumulators (including us) and whoever was doing the manipulation. We’re extremely pleased with this quarterly, which demonstrates the company is on track, is profitable and is preparing to ramp up its processing operations smoothly. 40c may not be too far off once the sentiment under which it has languished dissipates sufficiently and the company produces according to its projections.

Narrow range capping has also been evident of late with BLR, which looks like it has potential to be the best runner this week. Its announcement of a very pleasing significant increase in U JORC resource didn’t hit the market till 3.30pm so the market reaction will doubtless flourish tomorrow. Open over 30c possible?

With a large part of its goodies in the Northern Territory, NTU climbed, closing 7c up at $1.50. The incipient options issue may not affect its price much at all. Its quarterly revealed the company is cashed up with $7.6m in kitty with a projected $2.7m exploration expenditure on the Gardiner-Tanami Super project for 2007.

TRF finished the day at $1.42, recouping most of the ground lost last week after its Wilcherry U and Ironclad float announcement. We’re eagerly awaiting more information about the Ironclad float, which may provide some handsome profits to priority holders like ourselves.

And that’s not all folks!

Next we have THX, which really shone today, breaking out on decent volume from its previous narrow range in the low 50s to close at 61c - up 11%, with its delicious oppies at 40c. Multibagger coming up! Was the enthusiasm due to the promise of its NT U tenements or the vaunted nickel production at Copernicus starting May 08? Or the Lamboo platinum? THX has a swag of attractions, and one can’t help feeling management well and truly know what they are doing with its prospects. Of all our resource holdings, THX feels like a super winner and has since we began to accumulate in the middle of last year.

NAV is looking terrific too - closing at 77c on its way to the dollar mark sooner than one might have expected on a very positive quarterly. Who would think NAV would outperform CQT, which made only a 1.5c gain today, closing at 74.5c. Our sleeper goldie, NWR, is still snoozing at 34c. We’ll wait for the Blue Spec JORC increase mid year. Blue Spec East results are expected mid May too. The company is cashed up with $6.9m in kitty. For some reason NWR seems to be counter-cyclical - performing when all else sleeps. Our little vampire share bearing Lassiter’s lost gold teeth?

APG released a fairly low key quarterly. All appears to be going to plan with BHP and APG is to proceed to build a medium size demo plant at Newcastle which should pull in interest as it proves up its process to scale. One Steel - tick - China Gold - tick - and Horsham - tick. With any luck there’ll be a steady stream of news to sustain the share price during the traditional low period of the year. If there is any weakness, this is one share we will have no hesitation in accumulating.

Phew! tomorrow will be exciting too - waiting for revelations from EVZ - capital raising, rights, options, divvy or another acquisition? the company should be pretty well cashed up through its current workload earnings so it’s all good.

The numbers have lined up for Kevvie to remove the Labor no new mines policy at the National ALP Conference this weekend. A rodent wedgie over the issue seems unlikely now - the prime miniature will have to focus on bribing families in the budget and attacking Labor’s IR and economic policies.

Led by Anthony Albanese, the left estimated yesterday it would only muster votes from 180 of the 397 delegates.

“Rudd will get up and that will be good because Albo will get to run his line and Rudd gets to come in and show what a strong leader he is by spearing the left in the ribs,” a left faction source told Fairfax newspapers.

“Everyone goes away happy.”

A senior Labor frontbencher who will vote to abolish the policy was similarly resigned.

“There will be a stage-managed debate on a couple of issues and the leader will get everything he wants,” the source said.

The Northern Territory looks somewhat more tenuous than South Australia, with Northern Territory’s Federal Member for Lingiari Warren Snowdon arguing against lifting the ban, at odds with Northern Territory Chief Minister Clare Martin who is backing Kevvie’s stance.

Thus, tomorrow we’ll look at grabbing even more SNU, positioned as it is in South Australia where Mike Rann backs more U mining adamantly. Could SNU do an NTU? Drilling starts in July. Another 8 bagger would be very pleasant.

Following our premonition on Tuesday, at last INL seems like it’s on the turn. The quarterly report will probably come out early next week. However this report may not contain all the earnings from shipments, so it is possible there may be a dip again. We’ll hold on and watch closely, as a brief dip to 14.5c may not be out of the question if there’s nervousness following the quarterly’s release.

This is the week Kevvie’s fortunes will be decided. If he can’t swing the National Conference in favour of whacking the no new mines policy, the rodent will be in like Flynn with a walloping wedgie. While Garrett and Albanese continue to fight the good, if completely misguided, fight, Kevvie is confident.

Why aren’t these well-meaning twits discussing and extolling Synroc as a means of safe waste disposal? Whorestralia has a sublime opportunity to value add to U exports by insisting that waste be returned to sender for a non-negotiable fee, for processing and safe burial.

Perhaps Garrett and co would prefer we all choke - there’s no way solar and wind can fill the vast energy needs of China and India, particularly considering the number of reactors already under construction and those projected to come online in the next few years. And fat chance of stopping dirty brown coal exports with Beattie’s gungho attitude. Thirty years ago solar and wind might have been a realistic mass alternative, but that chance has long lapsed. Do Midnight Oil use biodiesel/solar/wind to power their amps? Noooooooo ….

We bunker down with our safe Wyoming BLR holding while sweating on the South Australian SNU and TRF, and Northern Territorian NTU and THX. Today we drop KOR in disgust after they announce they are rescinding their 2 for 1 in specie floaties for shareholders - the carrot turned into a turnip. In effect, the company misled the market. Will they be disciplined? Pigs would fly sooner. Them’s the breaks.

INL drops to 15c. Someone is still pushing them lower, so we’ll wait to pounce on more if the opportunity presents. At least the rabid greenies can’t object to a company that’s cleaning up tailings dams.

With the water crisis worsening, and EVZ commensurately prospering, the rodent gives us a preview of his next fear campaign - we’re all gonna starve, folks, if the rains don’t come. Git down on yer knees and pray, says the fat rat. Luckily, we have enough pumpkins and bananas to trade with our veggie growing friends - and since our shire has kept its trees, we still have plenty of rain. We were well aware many years ago the Australian environment was incapable of supporting its existing gobbling, guzzling, land-ravaging population in the long term. The long term has turned out to be the short term. Another year of drought and the country will really have to think hard about sustainable population. Death to economic rationalism and its sick worship of perpetual economic growth fuelled by taxpayer-funded breeding frenzies!

We’ve had two days of amusement watching disgruntled Jervois Mining shareholders lose their recent gains after a snippy and occluded JRV announcement described its reasons for rejection of INL’s friendly merger offer. To the ASX’s discredit, this ann was not marked market sensitive. After the rejection, Intec sold its holding in JRV down to 8.33%. Since the silly, erroneous report in The Australian yesterday, it is possible that INL sold down a whole lot more JRV today, when over 99m shares changed hands. Given JRV’s attitude, we would have … and 2 - 2.5c is still a handsome profit on INL’s 1.16c purchase price of its JRV shares.

Whilst INL has chosen not to respond directly to JRV’s shirty ann as yet, an email purporting to be from Philip Wood to a shareholder was reprinted on several Oz stock forums.

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Time to assess the treasure in preparation for reorganisation in view of serious impending opportunities. SNU floats on Tuesday, and we’ll be trying to buy as many as we can cheaply. We feel multiple bids might be in order to maximise our chances of increasing our holding as swiftly as possible. Seems as if most SAU holders, like us, had their requests for entitlements cut back, so we project a massive immediate demand. SAU is now a 3 bagger¹ for us, and it should follow the lead set by SNU.

We will also be taking advantage of our 2 for 5 new share offer to top up our lovely AVX holding. AVX, currently a 6 bagger plus for us, may well be able to fasttrack their Phase 111 trials given their HIV drug’s incredible success in previous trials to date. Then there’s their VRI drug to consider as well. The third opportunity comes with KOR (2 bagger), which will be offering a priority entitlement to their float, where we will already acquire a free 1.6 to 2 share interest for every KOR share held.

Other little darlings this week include TRF (5 bagger), which has performed stunningly on its desk top study projections. U results are expected very soon. We’re hoping for $2+ after this news. Then there’s NTU (3 bagger), for which we await our free oppies.

We missed out on acquiring some MKY, which has U tenements in Queensland, where Beattie is sounding positive about allowing mining. There are gaps to be filled in the MKY chart, and thus we’ll be watching it closely for opportunities.

APG continues to look healthy, consolidating this week around 16c (4 bagger). On firm news about BHP’s interest, it will skyrocket.

¹ “Bagger” = Number of multiples on original price.

And we’re off to a great Monday morning start, with the SAU SNU float closing early heavily oversubscribed. We have strong premonitions of a very exciting listing, and hope we do receive our total priority shareholder allocation.

The market heads up after an initial small downward push - the chart target for today is 5890.

Chartists of BPO look like they are right at this point about this week being *the* week for a push to the next level. Early trading has gobbled up to 3.8c. Once 3.9c is taken out, there could be a sustained climb to 4.5c. For breakout, BPO has to crack 4.1 and hold. By the end of the day, some sneaky trader dumped several million, dragging the price back down at close to 3.6c, VRAP around 3.8. We may obtain another top up at 2.8c yet.

APG *has* broken out though. 20c annihilated and an assault now on 20.5c. Leak of fabulous BHP news?? Ranging between 19.5 and 20.5 now. Ends up closing on a very healthy 20c!

NAV announces some excellent drilling results - on the rise again. It remains to be seen whether the current share issue erodes any gains.

However, the Ides of March approach - superstitious traders may take early profits this week!

Last week, as Fringe’s neurones grappled with flu fallout, we kept our investment activities under careful restraint despite the plethora of tempting opportunities presented by the correction. Our sole accumulation, apart from a large cheque mailed off for the exceedingly attractive SNU floaties, was some SMN at 22c. We first bought these at 11c a while back after noticing the outstanding potential of their technology and some judicious, handsome insto share purchases.

Structural Monitoring Systems is a great little Aussie achiever. Happily, it was announced last week, their CVM technology is to be included in the Boeing Common Methods - NDT Manual.

Rumour is that the managing director is in London before going to Germany to see Airbus, with an investor roadshow coming up in March to coincide with the Avalon Airshow.

There is some debate whether the current correction is over - some bulls consider it but a brief hiccup in the continuing bull market. Others foresee more volatility and consequent opportunities in the months ahead, whilst bears, as ever, are joyously imagining a serious crash in the offing.

We’ll continue to collect investment shares which are likely to do well regardless of fluctuations. This week we are studying CXY with its promising clean coal technology which may provide a very useful transitional facility and achievable political compromise for the environmentally disastrous dirty brown coal industry.

Speaking of green energy, there’s a very helpful GREENE thread happening over at HC on all the relevant Australian companies. Be there or be square!

What a week of stock triumph this has been! Not only does BLR go through the roof, giving us a nice 4 bagger if we so chose, and we don’t, but our little modest star, TRF defines a sizeable high grade magnetite resource. It closes today at 63c which makes it a 3 bagger for us and more if those lovely free oppies were thrown in. Unfortunately we failed to accumulate more BLR before they ascended out of the 19 - 20 range and will have to wait for a possible drop back. Doesn’t matter, we already have plenty.

We have been accumulating a terrific swag of INL in preparation for their march north during this year as reports of squillions of dollars of payments for their zinc concentrate, for which they have a couple of years forward contracts sewn up with the Chinese, roll in month after month. They may also announce international deals pretty soon too for their vibrant technology. We are hoping for a tripling of the sp by the end of the year at least, and at best $1 may be breached. Fortunately we managed to buy some at the almost low of 18.5 as the POZ hit its nadir, more at 20.5 and even more at 21.5 today.

We have shed some of our not-so-well performing stocks at this point, including UCL, BAR and ASU. We are somewhat regretful about losing ASU as it will probably come good in the near future. UCL was sold at a loss, yet we now don’t have to worry about the effect of war or the foibles of the Iranian govt on this share. The proceeds will be well applied to the forthcoming SAU/SUL and KOR floats, which new stocks will doubtless double, more than justifying our portfolio reshuffle. To add some more spice, we rebuy some WMT at 12c, which happily closes this afternoon at 13c - looks like it might follow the BLR example, so we may as well jump in.

BPO vindicates our accumulation the other day at 2.9c, with a close at trading halt of 3.7c - fingers crossed in excitement about what news is in the offing. Shall we trade some on open or not? AWS is still in suspension, pending a deal with a miscreant who has snaffled 4 hundred grand odd and has to pay it back. This will be sorted soon, we hope.

EVZ seems to be being accumulated assiduously by someone/s - doesn’t breach its new range yet, but we can feel upward movement on its way. The half yearly is due out on March 1 - this could, if a divvy is declared, double the sp.

AVX is holding its ground nicely round 60c - Phase 11b trial results out soon - and there is a decent volume traded every day. Institutions are taking positions well and truly.