Thursday 29 June 2017

I Have Sold Out of PEEK, Bought More FGD and PKK

In a world where I have limited resources and opportunity costs, I have made a difficult decision today. I have sold my PEEK shares in favour of buying more FGD and PKK. As I have mentioned in the past I have flipped some PEEK shares for FGD before, but today was the final trade. With the trades made today I believe I have more shares and warrants in FGD and PKK than I ever have before, or at least very close to that.

PEEK's financials came out yesterday and they were within my expectations for a startup mobile app company in its second, third and fourth month of operations. The revenue came in a bit lower than I expected and expenses higher, but nothing egregiously bad. This has much more to do with FGD and PKK tanking than anything PEEK has done.

Like I said in a world where I have limited resources I have to take into account opportunity costs. My reasoning for selling PEEK shares to buy FGD and PKK is as simple as this:

My target on PEEK is $3.00 versus a stock price of $0.88. That's 3.4x upside.
My target on PKK is $0.50 versus a stock price of $0.06. That's 8.3x upside.
My target on FGD is $5.00 versus a stock price of $0.41. That's 12.2x upside.

PEEK could very well go to $3 and as long as the other two follow suit on my targets I make money and I am happy. One could argue that since I am most bullish on FGD that I should put every penny into there. I still need some diversification. Some people might say "why don't you take out a loan to buy more of these stocks if you're so confident". I've already done that and in fact recently got an increase to my line of credit.

Another factor that weighed into my decision is that FGD and PKK are consistently communicating with shareholders. I have voiced my concern before about companies needing to release press releases detailing their financial results. Both management teams at FGD and PKK have taken to my advice. PEEK has some good KPI metrics but they are buried in its MD&A filed on SEDAR. It's not my responsibility as a shareholder nor any other shareholder's responsibility to push how great these metrics are to other potential investors.

I'd like to semi-apologize to anyone who read my stuff on PEEK and my $3 target and bought in at a higher price. I say semi-apologize because I am not nor should anyone else be responsible for your own trading decisions, and I believe I fairly qualified the risks. Also, there is nothing to suggest that at this very early stage PEEK cannot get to $3 upon further business execution. I didn't sell because I think it's going to zero. I sold because PKK and FGD have headed towards zero much faster than I ever would have thought and I'm taking full advantage of the situation. So you can either hold out to make some money, try your luck with PKK or FGD which I think have higher upside at this stage or sell and buy something else and never listen to my advice again.

Still, it sucks if you bought in at something like $2 and are holding a 50% or higher loss. I have been there before so I can understand your misery. In an ideal world all three of these stocks would have hit my targets on them by now and we'd all be celebrating.

I fully intend to get back into PEEK at some point in time. If FGD or PKK rise so the upside ratio between these three stocks becomes more aligned, I will reverse the trades I've done today. I still hold IOM which has been saving my portfolio over the summer so far. If that stock moves over $5 in short order that may be where the source of cash comes to reload on PEEK (or conversely, if these stocks continue to tank for no good reason and IOM stays where it is or higher). Good luck to those who continue to hold.

By the way, I wasn't the one who sold down to 83 cents. While I was writing this blog I saw it tank and thought to myself "ah shit, people are going to blame me for that".

EDIT: Yes I still hold SCG as well.

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