My stop-loss was hit, so I'm out. Will look for a it to hit around $2.40 (as seems to be where it has turned previously this year - June & Sept) before getting back in.
With more International flights coming into NZ should we not see this as a positive for AIR, they are going to be flying around NZ in AIR planes I imagine, we should be thanking AA for dropping a whole lot of potential customers on our doorstep !
With more International flights coming into NZ should we not see this as a positive for AIR, they are going to be flying around NZ in AIR planes I imagine, we should be thanking AA for dropping a whole lot of potential customers on our doorstep !
Well, that trade done with. Let the first breach of the stop loss go and (fortunately) it recovered but a 2nd breach can't be ignored so out they went with a 10% plus profit in a few weeks.
New strategy as of yesterday morning: That $3 barrier appears to be real, irrespective of the wonderful fundamentals. It is a while since the good news has been known and it hasn't pushed the price beyond it - the market rules. If the fundamentals are so great then no doubt in a month or 2 something will drive the price to $3 - and if that happens a certainty to go way higher. So strategy was wait or the $3 breach and then buy and reap the rewards then.
Revised strategy as of today: Heck 265 is 'cheap' relative to 300 (13% gain possible) so another trade is on the cards. It all depends on the opening action today. Even if 300 is real resistance still a decent margin to be made and believing the hype it can'tgo much lower than current price. And of course I have a bit more to play with after taking profits.
Good stuff eh
Last edited by winner69; 12-11-2015 at 08:44 AM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Well, that trade done with. Let the first breach of the stop loss go and (fortunately) it recovered but a 2nd breach can't be ignored so out they went with a 10% plus profit in a few weeks.
New strategy as of yesterday morning: That $3 barrier appears to be real, irrespective of the wonderful fundamentals. It is a while since the good news has been known and it hasn't pushed the price beyond it - the market rules. If the fundamentals are so great then no doubt in a month or 2 something will drive the price to $3 - and if that happens a certainty to go way higher. So strategy was wait or the $3 breach and then buy and reap the rewards then.
Revised strategy as of today: Heck 265 is 'cheap' relative to 300 (13% gain possible) so another trade is on the cards. It all depends on the opening action today. Even if 300 is real resistance still a decent margin to be made and believing the hype it can'tgo much lower than current price. And of course I have a bit more to play with after taking profits.
Good stuff eh
So a winning strategy of nervous nellie combined with true believing? I am still in, will let this play out for a bit.
Well, that trade done with. Let the first breach of the stop loss go and (fortunately) it recovered but a 2nd breach can't be ignored so out they went with a 10% plus profit in a few weeks.
New strategy as of yesterday morning: That $3 barrier appears to be real, irrespective of the wonderful fundamentals. It is a while since the good news has been known and it hasn't pushed the price beyond it - the market rules. If the fundamentals are so great then no doubt in a month or 2 something will drive the price to $3 - and if that happens a certainty to go way higher. So strategy was wait or the $3 breach and then buy and reap the rewards then.
Revised strategy as of today: Heck 265 is 'cheap' relative to 300 (13% gain possible) so another trade is on the cards. It all depends on the opening action today. Even if 300 is real resistance still a decent margin to be made and believing the hype it can'tgo much lower than current price. And of course I have a bit more to play with after taking profits.
Good stuff eh
Just a suggestion but perhaps a bit of reverse logic might be helpful in terms of fundamentals--Go back just a bit over a year ago when it was under $2 and have a close look at what has changed since then (not saying nothing has--just a basis for research)--more medium term -go back to June and research what has changed--how much has management changed--how much has stategy changed--How much has the potential market changed.
The third one needs to be looked at closely as like most businesses sales is the bottom line. How much bigger has the market(people flying)gotten as compared to the loss to other airlines(on long haul) and will the domestic market make up for this (assuming the numbers will increase by alot) Is there more money in long haul or domestic.
What % of customers go for the flying experience and what % for the price (if the latter is the vast majority then how much revenue would be lost matching prices)its gets complicated because it may be minimal if planes are full.
And then the other thing to consider other than fundamentals is market sentiment (thats a hard one as sometimes it bears no resemblance to logic)-but the SP did take a dive in June at the mention of this new competition and now it has come to pass.
It was also on the news last night ,mentioning the drop in SP.(will that spook or make it more attractive as a bargain)
I dont know the answers to many of these questions but I would think it would be helpful to know--Its to easy to say its undervalued or overvalued.
To my simple mind it appears that they had a pretty sweet deal before with their routes but now they will have to work harder for market share.
They can still be a great outfit and get a bit less of that market share so its not only about AIR as a company.Guess thats the free market.(some are probably miffed at the Gov. regulators for letting the others in-especially as the gov. owns a large chunk of AIR)but it was probably unavoidable.
There is one hellava spread (and big numbers)on the debt chart so could be an interesting day.
The above stuff is just an attempt to think outside the box for those who have been involved for a long time as its sometimes possible to be in the AIR bubble (not to be confused with a market bubble) We learn lots of things about the company,new planes,etc,and have seen the bounce,but in doing this it is possible to become just a bit cut off from how the general public engages with the airline.
Or today might be the bounce that continues business as usual......Its hard for me to imagine the SP will go back to where it was with the new situation--the real question is where it will settle as the new fair price.
Disc,-Ive intentionally left out the question marks as Ive found it unsettles which is not my intention.
American airlines entry was widely speculated on after their announcement that they were looking into the route in June and brokers have already built this into their models with a consensus fair value of $3.03.
Brokers have also built into their models a big ramp up in oil prices for Fy17 and beyond which hasn't happened and isn't looking likely to happen at this stage.
I doubt brokers have built into their sales models the two new routes AIR is widely speculated to announce soon.
AIR is a well managed company with a very modern fuel efficient fleet. They have new routes to Housten and South America starting next month.
Broker models generally have the airline settling down to around 35 cps earnings in a so called normal year FY18. This is without any of the super profits of low oil and lack of competition on the LA route.
The 10 year average PE for AIR is about 10.5. People will have a wide range of theories about how they value AIR now but I will stick with my base case theory that its worth at least 10.5 times 35 cps = $3.67.
I'm not a trader and don't want to be seen as such so I'm in for the long haul on the above basis and note that its widely anticipated there will be a special dividend in FY16 so I expect a gross dividend yield of circa 12% average of the next few years, inclusive of special(s). I am happy to hold. http://www.4-traders.com/AIR-NEW-ZEA...407/consensus/
It's quite possible that there may have been some mis-reporting / journalistic licence ? re the fare war regarding AIR dropping its fares to LA to $499. A one day special on Grabaseat does not constitute a general cutting of prices like what's being implied in some media reports. I just went on AIR's website to have a look at prices in June-August 2016, (which is around when AA will start flying so you'd think the prices would already be down if AIR had cut them like what's being reported), and the cheapest price I could find was $860 per person each way.
No question there will be a hiss and roar around the time of AA's entry but I predict airfares will quickly settle back to sustainable and highly profitable level's. AA are using 787-8's with only 220 something seats on board so they're obviously a generous pitch / width seat configuration and you can't fly aircraft with lightly loaded seat configuration at giveaway prices for long.
AIR currently constitutes 17.5% of my portfolio which is right at the upper end of what I'll normally go too. That said If the SP does anything further that's really dramatic I won't rule out topping up further and taking advantage of exasperated or tired shareholders / traders.
Thanks Roger.
You know more about the internal workings of the airline than I.
Im just a bit miffed about whether the brokers knew and accepted that the new competition would definitely happen, and how they went about estimating how many sales (if any)would be lost to the other airlines.
By not knowing this,it seems it would be a hard job coming up with the 35cps.
I suppose this is a debate for the more short to medium term holders or those considering when to enter.
For a long term holder who is satisfied with the company,and confident of its long term goal,then agreed,no need to panic(If your thinking of topping up however it would be relevant to consider short term issues occurring outside the company itself,and its effect)
This appeared to be the situation Winner was wrestling with.
In short--what are the odds of another dip to 2.40 as has happened twice since June.
Agree with you there Roger, don't think the latest announcement has 20-30c impact on sp, its all bit overreaction in my opinion. In times of panic people tend to loose focus on other things like the new routes to be announced soon, new services to begin next month and purchase more flights for domestic routes. All this only further reiterates what they said at ASM just a little while ago. Just a shame that people of short term memories. By all means, competition is good but AIR has plans in place to combat that loss with other plans as mentioned.
Originally Posted by brend
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