BUY PANIC

PJC

I averaged in some PJC (13) earlier in the morning which appeared to be a mistake here. I thought the market over reacted this morning for a piece of insignificant news, and there is a smell of panic and it could bounce back for a TRADE. I guess I was wrong based on the pricing (12) now, but I think more on timing than on instinct. I have a hard time to believe that it will go down further from here. At this level, I believe the downside risk is limited. These guys have a reputation as good operators, although most investors have given up on these guys. They need one decent quarter to change the heart and perception.

I am a bit of upset of myself for missing the small print of Moody’s downgrading. I guess the concern is that it may breach its financial covenants in the November quarter. The risk is increased significantly if balance sheet is in question. Am I compounding my earlier mistakes? This starts to look like a BLOWUP candidate for this year. Abandon the ship now? The lessen: RUN NOT WALK! I still say my idea was correct, (BUY PANIC), but my timing was off.

On the conference call, it appears to me that the management is slightly more confidence than they were in last quarter conference call and it clearly indicated that there were no additional bad news hidden (breach of covenants, further decline of SSS?). In fact, I sensed that its SSS for the month of October, which will be released next week, could be slightly better than expected. If that is the case, today’s 10% decline clearly would be over-reaction. The change is also unrelated to Moody’s downgrade announced last night. It was purely a coincident.

FCE.UN

I also disposed my position of FCE this morning. The earnings were in-line, but bond yield is up. FCF does not look good, not to mention the political risk.