At what price should I buy or sell?


Emeterio Sd. Perez

THE daily market quotations of the Philippine Stock Exchange (PSE) list individual trades on 20 mining stocks. At the top of the alphabetical list, according to market symbol, is Atok Big-Wedge Co. Inc. (AB) with 953.963 million listed common shares, which represent 37.484 percent of the company’s 2.545 billion outstanding common shares.

On April 4, Atok’s share price closed trading at P11.80. It fell by P0.30 the following day to close trading at P11.50 apiece.

In a filing, Atok said it spent for “exploration, development and environmental cost” a total of P5.708 million over a five-year period – P515,975 in 2012; P165,150 in 2013; P2.457 million in 2014; P1.594 million in 2015; and P976,428 in 2016.

Atok had nothing to show for 2017. “The company is currently not operating a mine or oil project,” it said in the same filing. “In the event that it does, all necessary pollution control and environment protection will be set in place.”

At end-2016, Atok, which belongs to the group of companies controlled by businessman Roberto V. Ongpin, reported a deficit of P510.589 million.

As Atok’s majority stockholder, Boerstar Corp. holds 1.775 billion common shares, or 69.75 percent. At a market price of P11.80 per share, Boerstar still enjoys a paper wealth of P20.945 billion although poorer by P0.30 per share, or P532.50 million on Tuesday’s closing price of P11.50.

Buy or sell?

An investor gets either poorer or richer on paper depending on the market performance of his or her portfolio. But this is not the problem that one usually encounters when dealing with a particular stock such as Atok. Rather, it is the decision that he or she has to make: sell or accumulate more Atok shares?

The dilemma worsens when he or she sees Atok’s price fall or go even higher in every trading session. Again, the question that he or she asks: Will I sell or buy more?

Not a few investors are caught owning worthless stocks after holding on to them for a very long time. One stockbroker was asked how long it would take him to make them rich, if not very rich. Can he do it in two weeks?

Apparently, his clients did not know much about the stock market. Oftentimes it is perceived to be the “in” place for gamblers, when it is not. They had the wrong impression of the marketplace. One can lose so much in a single session and ask: Is it time to cut losses?

For illustration only

By the way, I am using Atok’s market profile only to illustrate the unpredictable price behavior of listed stocks.

Nobody is certain about the direction of the market. Even professional stock analysts do not have the answer if they are asked about the market behavior of a particular stock. By refusing to even venture a guess, they are only acting in accordance with the standards set for them by regulatory authorities.

By regulatory authorities, I am referring to the Securities and Exchange Commission (SEC) and the PSE. The latter, though, may have lost its regulatory functions for being one of the 300 or so companies whose shares are listed on its own board.

At this point, it is up to SEC officials to closely monitor listed stocks not only for their market behavior, but more importantly, for their compliance with the full disclosure rule. They might want to educate public investors on possible omissions committed by listed companies. Has everything taken up in a board meeting been properly and completely disclosed to the public, such as by posting the directors’ decision on a corporate issue?

Finally, I am reiterating a suggestion I made so many years ago when I was still a beat reporter covering the SEC and the stock market. Why not put up a separate department within the commission whose task will be to scrutinize every filing posted on the PSE website?


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