10 replies to this topic

[hiker]

how would you manage this long trade if you had been in it since 1992?

http://bigcharts.mar...time=20&x=0&y=0

http://stockcharts.com/gallery/?aber

I am asking because a friend bought a fairly large position on my counsel in 92 and is now asking for guidance for an exit strategy excluding top picking as an exit strategy...I have drawn some channel lines on the long-term chart for ideas, etc. There is a cluster of support in the 34-38 range.

About Aber

Aber Diamond Corporation is a specialist diamond company focusing on the mining and retail segments of the diamond industry. The Company supplies rough diamonds to the global market through its 40% ownership in the Diavik Diamond Mine, located off Lac de Gras in Canada's Northwest Territories. Aber also holds approximately a 53% interest in Harry Winston Inc., the premier retailer of diamond jewelry.

co. website -

http://www.aber.ca/aberhtml.html

most recent earnings:

http://biz.yahoo.com...o117.html?.v=24

Edited by hiker, 22 April 2006 - 01:18 AM.

[thoughtpwr]

I can see why your friend is nervous about his profits, since its such a nice one. I use patterns to take long term opening positions, so when I look at this chart, I see the stock's previous top formations look like the one the stock is in right now. The voice inside my head is yelling sell! Then I thought about selling covered calls on the stock, but I see there are none, so that avenue is shut. At this point, I started asking myself am I a technician or a fundamentalist. The stocks move is clearly in parallel to the move in commodities, so from a fundamental side you have to ask yourself if you are convinced the gold and commodities markets are going higher or not? I think we are far from a top in that market, if anything I think we are going parbolic from here to a higher sustainable level. So is there any evidence that this time is different in the individual stock? For one thing the 22 week moving average is following the price on the current move up, which it did not do in the previous top in 1997. With the stock holding so well over the previous top, I am at this point convinced that I would hold this stock under the current conditions and give it the opportunity to move up. If I do the wave calculation, of the next peak of the current rally goes to (= 1.618 x first leg up + the last peak), I get a number like 52 as a target. I would be looking for a way to stay in this market as long as the stock was above 40. Unfortunately, it is far more likely that you are going to see some inconclusive jaunts downward to test support as it recently did right in this area. Therefore, I think if you are serious about staying in the stock and you have to use a stop, then I woul put a stop at 33.8 (below the whole number) and hope for the best. When I look at the fundamentals and use gold as a proxy for this stock, I would hold it, collect the yield that is a good one, and I actually believe that the real target (on a log plot) is another equal leg up from the 5 bottom of 2000, which is of an equal distance from the early 1990's bottom to its rise to 20. The log plot on BigCharts is screwed up, so I had to estimate the number. My estimate of your next target that your friend will want to sell at is about a factor of 100 up from 5.0. I am saying that this stocks target is 500, if the gold bull market is for real. I guess in summary, I am reverting to the fundamentals and saying that I would find a way to hold the stock from here as long as I say the move in gold hold and place a stop below 34 if I really was anal about my profit. An alternate way to handle the situation is to play it safe and take half you profits after making a gain of 16 or so, and hold the rest in the stock with a potential of another factor of 10-12.5 still in the cards if you are a gold bull. The problem is what do you do with the rest of the money? If you're going to reinvest it, I am not sure you would want to stray from the energy & metals sector anyway, so what would be the point? If your friend is not in uranium, I would consider placing the remainder in that market, but that would hardly be diversifying. If you're going to spend it, that's different. It's a great situation to be in.

[greenie]

how would you manage this long trade if you had been in it since 1992?

Typically, if I have a long term holding (3-4 years), I decide to sell them in the following way. Every 1-2 month, I search for what would be the best investment for another 4-10 years. If the one I have is not close to the top of the list, and I find wonderful value in something else, then I substitute the current holding by the new one. Sure, I may miss some blowout top in the first, but the risk level of the portfolio reduces.


Think in terms of probability. If in stock 1, there is 10% chance of rising 100 dollars in the next 2 months, that is equivalent to 100*.1=10 dollar rise. Now, if stock 2 has 50% chance of rising 30 dollars, it appears better.

[hiker]

you guys are great! Perspectives from other traders are most helpful...especially when considering an exit strategy for a long-held position. Your time and thoughts are much appreciated!

of interest because of the diamond sector connection is TRE.

http://stockcharts.com/gallery/?tre

I contemplate two things:

1. note how TRE volume and price advanced when the announcement was made about the kimberlite pipe discovery in December '05...this announcement followed earlier announcements....I posted this on 12/19/05 and I do not remember if the announcement was made the day prior or during that week -

"note 11 kimberlite pipes were discovered in recent drilling ops by TRE (the principal host rock for diamonds - six of which are brand new discoveries)"

2. How many companies with reasonably good charts are available for playing earnings growth in the diamond industry...ABER may be unique because it is both a miner/explorer and a retailer thru its Harry Winston stake:

retailers -


http://stockcharts.com/gallery/?tif
its earnings growth and stock price was hurt when it sold its stake in ABER

http://www.forbes.co...artner=yahootix

http://stockcharts.com/gallery/?zlc

http://stockcharts.com/gallery/?sig

http://stockcharts.com/gallery/?fnly

http://stockcharts.com/gallery/?nile

http://stockcharts.com/gallery/?dgse
7th in market cap size for jewelry retailers...$12.3M vs.5.2B for the leader, TIF

http://stockcharts.com/gallery/?odmo


http://stockcharts.com/gallery/?hotj

miners -

http://stockcharts.com/gallery/?mdm

Mountain Province Diamonds, Inc. engages in the exploration and development of natural resource properties in Canada. The company has working interests in the AK Property located in the Mackenzie District of the Northwest Territories, Canada. It has a joint venture agreement with De Beers Canada Exploration, Inc. The company was incorporated in 1986 and is based in Toronto, Canada.

http://stockcharts.com/gallery/?bhp
the world's largest diversified resources co.

3. Related 4/20 article on the world's strongest bull markets...diamonds not mentioned:

http://www.thestreet...=FREE&cm_ite=NA


Thanks again, and any further thoughts over time are appreciated. The pattern in ABER will speak for itself as it develops. $500 upside seems like a dream, but so did today's price for TIE in May of 2005 when the titanium sector heated up. Of course, crude oil and demographics in the airline industry have contributed to that run....The diamond biz has De Beers to thank for most of the "treasure" factor seen in diamond retail which benefits the miners. Perceived diamond scarcity is just that...supply and demand dynamics may be manipulated, who knows? There certainly is a scarcity of diamond miners available for trading on the US exchange.

from ABER's website..btw, RIO is the mine operator:

Aber's principal asset is its 40% interest in the Diavik Diamonds Project, located in Canada's Northwest Territories. Diavik is Canada's second diamond mine, and began producing diamonds in November 2002. Aber received its first share of Diavik diamonds in January 2003 and made its first sale in March. Construction of the project has taken three years and cost Cdn$1.3billion. At full production Diavik will produce between 6-8 million carats per year, or approximately 5% of the world's diamond supply.


Aber is a single asset company with no peer. We do not operate the Diavik Project. We are not an international, diversified mining company and we are not a small-cap exploration company. We are a company solely focused on the marketing of diamonds. Aber's market capitalization is, by a large margin, the largest in the world for a diamond-focused, public company.

The Diavik Project is a world class mining asset that will offer Aber and its shareholders a premium earnings stream. We intend to outperform our sector in returning value to our shareholders. At the same time, we recognize significant potential to grow the value of the company through staged participation in the world of luxury diamond jewelry brands. In a changing diamond world, Aber remains a pure equity interest in a uniquely profitable diamond orebody. Capitalizing on enhanced marketing opportunities. Redefining the value chain.

Edited by hiker, 23 April 2006 - 12:31 PM.

[hiker]

I have updated the post above, and this replaces it in its entirety...info has been added...Did I miss naming some miners or explorers?:

http://bigcharts.mar...time=20&x=0&y=0

http://stockcharts.com/gallery/?aber

There is a cluster of support in the 34-38 range.

About Aber

Aber Diamond Corporation is a specialist diamond company focusing on the mining and retail segments of the diamond industry. The Company supplies rough diamonds to the global market through its 40% ownership in the Diavik Diamond Mine, located off Lac de Gras in Canada's Northwest Territories. Aber also holds approximately a 53% interest in Harry Winston Inc., the premier retailer of diamond jewelry.

co. website -

http://www.aber.ca/aberhtml.html

from ABER's website..btw, RIO is the mine operator:

Aber's principal asset is its 40% interest in the Diavik Diamonds Project, located in Canada's Northwest Territories. Diavik is Canada's second diamond mine, and began producing diamonds in November 2002. Aber received its first share of Diavik diamonds in January 2003 and made its first sale in March. Construction of the project has taken three years and cost Cdn$1.3billion. At full production Diavik will produce between 6-8 million carats per year, or approximately 5% of the world's diamond supply.


Aber is a single asset company with no peer. We do not operate the Diavik Project. We are not an international, diversified mining company and we are not a small-cap exploration company. We are a company solely focused on the marketing of diamonds. Aber's market capitalization is, by a large margin, the largest in the world for a diamond-focused, public company.

The Diavik Project is a world class mining asset that will offer Aber and its shareholders a premium earnings stream. We intend to outperform our sector in returning value to our shareholders. At the same time, we recognize significant potential to grow the value of the company through staged participation in the world of luxury diamond jewelry brands. In a changing diamond world, Aber remains a pure equity interest in a uniquely profitable diamond orebody. Capitalizing on enhanced marketing opportunities. Redefining the value chain.

most recent earnings:

http://biz.yahoo.com...o117.html?.v=24

-----------------

of interest because of the diamond sector connection is TRE.

http://stockcharts.com/gallery/?tre

I contemplate two things:

1. note how TRE volume and price advanced when the announcement was made about the kimberlite pipe discovery in December '05...this announcement followed earlier announcements....I posted this on 12/19/05 and I do not remember if the announcement was made the day prior or during that week -

"note 11 kimberlite pipes were discovered in recent drilling ops by TRE (the principal host rock for diamonds - six of which are brand new discoveries)"

2. How many companies with reasonably good charts are available for playing earnings growth in the diamond industry...ABER may be unique because it is both a miner/explorer and a retailer thru its Harry Winston stake:


retailers in descending order of market cap -


http://stockcharts.com/gallery/?tif
its earnings growth and stock price was hurt when it sold its stake in ABER -
http://www.forbes.co...artner=yahootix

http://stockcharts.com/gallery/?zlc

http://stockcharts.com/gallery/?sig

http://stockcharts.com/gallery/?fnly

http://stockcharts.com/gallery/?nile

http://stockcharts.com/gallery/?dgse
7th in market cap size for jewelry retailers...$12.3M vs.5.2B for the leader, TIF

http://stockcharts.com/gallery/?odmo


http://stockcharts.com/gallery/?hotj


http://stockcharts.com/gallery/?amzn
Amazon.com retails loose diamonds, and offers a Diamond Search tool for locating diamond stones by desired characteristics....link to Search -

http://www.amazon.co.....oose_diamonds

article about Amazon's diamond biz -

http://www.auctionby...y05/m05/i05/s02


other smaller retailers not listed here

miners and explorers-

http://stockcharts.com/gallery/?rio

The Diavik mine is a joint venture with RIO which has the 60% remaining mine ownership...the mine has a 20-year life based on a resource base of 138 million carats.

Diavik Diamond Mines Inc. ("DDMI") is a wholly owned subsidiary of London-based Rio Tinto plc. Under Aber's joint venture agreement with DDMI, Aber pays 40 per cent of the Project costs and has the right to receive and market 40 per cent of the diamond production. The Diavik Diamond Mine is an unincorporated joint venture between Diavik Diamond Mines Inc. (60%) and Aber Diamond Limited Partnership (40%), a wholly owned subsidiary of Aber Diamond Corporation of Toronto, Ontario.


http://stockcharts.com/gallery/?mdm

Mountain Province Diamonds, Inc. engages in the exploration and development of natural resource properties in Canada. The company has working interests in the AK Property located in the Mackenzie District of the Northwest Territories, Canada. It has a joint venture agreement with De Beers Canada Exploration, Inc. The company was incorporated in 1986 and is based in Toronto, Canada.

http://stockcharts.com/gallery/?bhp
the world's largest diversified resources co.

http://stockcharts.com/gallery/?tre
mentioned above...precious metals explorer with some kimberlite discoveries

http://stockcharts.com/gallery/?DDN.V
explorer that says it is determined to find the next Canadian diamond mine
company website - http://www.diamondsn....com/s/Home.asp

DIEXF - another explorer's company website-
http://www.diamineex.../stock_info.php
----------------

Related 4/20 article on the world's strongest bull markets...diamonds not mentioned:

http://www.thestreet...=FREE&cm_ite=NA


The chart pattern in ABER will speak for itself as it develops.

The diamond biz has De Beers (privately held) to thank for most of the "treasure" factor seen in diamond retail which benefits the miners. Perceived diamond scarcity is just that some say. There certainly appears to be a scarcity of diamond miners available for trading on the US and Canadian exchanges.

------------

Diavik Mine Plan Update issued 4/17/06 -

http://phx.corporate...3529&highlight=

------------

posting the links below about the worldwide diamond market does not signify I am vouching for the validity of the info. contained therein:

http://www.debeersgroup.com/debeersweb

http://www.diamineex...mond_market.php


2000 article about De Beers -

http://money.cnn.com...urope/diamonds/

http://www.edwardjay...nd/prologue.htm

excerpt from the 2nd website link listed above -

Global Diamond Demand

In 1983, worldwide diamond Jewelry sales were $20 billion, today that figure is over $60 billion. Demand for diamonds globally continues to outpace the available supply. In the US, retail sales of diamond jewelry grew by 8.2 % in 2004 to $31.5 billion. That is an increase of $2.4 billion over 2003 sales, a sum equal to roughly 50 % of the countries annual engagement ring sales. This is the ninth consecutive year of growth in retail diamond sales. Fueled by strong sales in the U.S., which accounts for 50 % of the world market, total world diamond sales grew 8.5 % in 2004.

In China, where sales were $1.235 billion in 2003, experts predict the market will grow by at least 15-20 % per year. China should overtake Japan in the next few years and it is estimated that Shanghai will become a sizable trading center in the world's diamond processing and trading field. By then, in Shanghai alone sales revenue of diamonds and jewelry will come to US $3 billion- $5 billion, and the number of people engaged in the industry will rise to 100,000.

Because of the growing demand for diamonds and the limited supply, experts and retailers claim that wholesale prices are already up by a third since 2003 and De Beers raised prices three times at their diamond tenders in 2005.

According to James Picton, an analyst with WH Ireland, rough diamond demand is expected to grow 50 % by the year 2012. Prices will rise by one-third, he predicted, or the market would simply face a shortage of $3 billion, equivalent to the combined annual production of Russia and Botswana. (22) Retail diamond demand is expected to grow by at least 5 % a year over the next decade as new buyers from Asia purchase diamonds. That means that a mine equivalent to $500 million of diamond production must open every year for the next ten years to meet the increasing demand from consumers. Because it takes eight to ten years to get a mine into full production, a significant increase in exploration must occur to meet the increasing demand for diamonds.
another excerpt from the 2nd link -

Although Canada has become the world's third largest diamond producer, Canada's diamond mining sector is still in its early development. Some analysts predict that Canada will supply up to 50% of the world's gem quality diamonds in the foreseeable future.

[hiker]

http://stockcharts.com/gallery/?aauk

has an ownership stake in privately-held De Beers, which produces more diamonds than any other single mine owner worldwide

[SilentOne]

hiker,

The most objective chart is a long term log plot of ABER's stock price. The channel always rules. The trend is intact as long as the channel holds and there is no reason to think otherwise. The question always is where does the true channel lie? Until ABER breakouts for real, the true channel is still to be confirmed. Thanks to Steve Swink for his original chart. I drew in the green channel to update the chart.

Thoughtpwr's stop just under $34 is a good strategy. It may be at risk of getting hit on one final dip before a breakout. Or it may provide an objective exit until the stock's uptrend is firmly reestablished. But a breakdown of the green channel anytime in the future would be a big red flag. I personally don't think this will happen.



cheers,

john

[Jnavin]

Hiker, it's such a thinly-traded stock! Looks like it typically trades less than a hundred thousand shares a day. That's just too small.

[hiker]

John & John - your comments are very much appreciated! Thanks for taking the time. - Steve

[hiker]

5/2

note the importance of the price action test of the trendline on the Point & Figure chart in this chart gallery (add'l observation about the PnF chart is so far all that has developed is a 3-box reversal which is customary price behavior within a trend....until it becomes more) -

http://stockcharts.com/gallery/?aber

declining weekly volume trend so far...lots of chart work has been contributed about this stock at this other trader message board...the direct link to the ABER thread is below -

http://www.traders-t...showtopic=51730



------------

one of the few other pure play diamond miners and explorers with actual current production:


http://stockcharts.com/gallery/?mdm

recent test of $3.40 to 3.60 support zone held.... easily visible on the chart

this diamond miner/explorer has a different price direction for the moment, tho' note the declining daily volume trend on the current move...not sure how much that means since volume may expand on price advance above key higher technical levels