AN ANNOUNCEMENT was released shortly after 10am last Friday from Morgan Stanley, one of the oldest and well regarded financial institutions in the business.
It said they had cut their price target for the Macquarie Group by 18 per cent to $76.50 a share. At the time Macquarie shares (ASX code MQG) were selling for only $73.16. An hour after the announcement, MQG had fallen another dollar.
Either the news from Morgan Stanley was old and out of date (MQG were around $82 at the start of January) or the MS team thought Macquarie below $72 was the bargain of the month.
Or they simply got it wrong. Forecasting share prices is not easy, as The Punter knows to his cost.
The advice wasn’t much help to The Punter, keenly watching the MQG shares fall and his $71 sell option rise nicely. By lunchtime on Friday the shares were down 3.5pc and he had more than doubled his money.
Options, especially short term options, are extremely volatile and risky. The Punter lost his nerve and sold.
Meanwhile, he decided to lay more than $2,000 in concrete by buying 30,000 shares in Eden Energy (EDE) at seven cents each. Eden began life as a clean energy hopeful but its fortunes are being transformed by a spin-off from the energy side. Carbon nanotubes, produced by Eden as a by-product of its hydrogen, can be added to concrete to make it significantly stronger and more durable. Eden has received its first two commercial orders, and is pressing ahead with the construction of a commercial-scale facility in the US.
The Punter wishes he had bought the shares in the middle of January for around 4.5c. He did look at them, but shied way because at the time Eden was optimistically trying to raise money by offering shares at 5.5c and he wondered if the company would get the cash to build the factory.
However, the directors and Tasman Resources (TAS) own half of Eden, and took up their entitlements in full.
• The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.