SCT Chart

[Steve]

Who can remember the 'distribution' value used when SCT was spun out of DON? Was it approx 89c?

[Snoopy]

Sometimes hard to intepret those SSH notices but it looks like the smart money in Walker Capital has been selling down a few more .... and prob Urghuart buying them unless Snoopy has beaten him to the draw. The SSH does seem rather similar to the previous one so maybe wrong - maybe just something to do with the ones they have some benficial interest in or something

Whatever at 154 the chart looking sicker by the day ..... but SCT must be so so so cheap at these prices ..... like The Warehouse roll back the prices special .... buy today at prices not seen since last century (well almost)

Have you caught up with this Winner?

"Walker Capital Management's founder and Managing Director, Stephen Walker, has joined Goldman Sachs JBWere Asset Management (NZ) Limited as the Head of Assset Management in New Zealand. All of Walker Capital Management's clients will be offered the opportunity to transfer their business to Goldman Sachs JB Were Asset Management on terms comparable to those they are currently on."

If you take a look at the performance of Walker Capital Management's main fund via the website

http://www.wcm.co.nz/

it has been dismal since inception in 2005. A 15% *total* return, with big losses more recently! I think I interpreted that graph right! Looks like Walker was concentrating on the 'industrials' which has (with hindsight) been a bad call. Although in fairness the decline in the share price of SCT has not been much greater than many other industrials.

I'm just reading between the lines here. But it looks like Walker Capital Management's main investment fund is effecitively in liquidation. Walker won't be spending much time on it now that he has a 'real full time job' and no doubt clients are voting with their feet wanting 'out', err their funds transferred.

A small fund selling a share in the top 40 can probably get out without causing too much attention to themselves. But try the same thing in a small relatively illiquid share, like SCT, and you will cause the share price to fall. *That* is why the SCT share price has fallen this year Winner. I think your 'smart money man' Stephen Walker is not quite as smart as you thought he was.

Mind you I am not saying that some of the SCT share price fall isn't justified. With the USD exchange rate looking to sit above 80c NZ, all exporters must be hurting. Watch for the share price bounce when SCT announce the dividend though.

SNOOPY

discl: hold SCT

[Phaedrus]

Looking at the long-term chart of SCT, one could say that the performance of this stock has been, umm, disappointing. There aren't too many stocks around that are below what they were in 1997! Nevertheless, we can learn something from such a chart.
Firstly, it can be clearly seen that while SCT has gone nowhere overall, it has had some really spectacular up (and down) trends on the way. - in fact, at one time SCT was my best performing NZ stock.
Secondly, note the points at which big ("smart") money bought into this stock, as marked by blue arrows. Without exception, these proved to be excellent entry points that were followed by substantial rises, generally outperforming other TA buy signals such as the trendline breaks marked by green arrows.
Thirdly, see how SCT is now at or near its historical long-term support levels.



Now, lets take a look at a shorter-term chart. Note big money getting out last November. See how, when the "smart" money was getting out, Snoopy was getting in, buying into an established and ongoing downtrend (blue arrows). To me, this is a perfect illustration of the folly of ignoring market sentiment and buying into downtrending stocks. The downtrend continued, but now that SCT has fallen to around its long-term support levels, buy signals are starting to appear - a 10% trailing short stop has been broken, for example (green arrow). Note that while the confirmed trendline and the moving average as plotted here have not been broken as yet, current price action is very close to both.



Snoopy and I both held SCT for years - the big difference being that I sold at the 2004 trendline break and haven't held since. Snoopy has held SCT for well over 10 years, didn't sell any at the trendline break, and has been buying during the subsequent downtrend.

This post is about timing. Snoopy will probably want to talk about dividends and liquidity, but these are side issues here, and have nothing to do with when this stock should be bought, sold or held.

After years of disagreeing with Snoopy as to when/if SCT is a buy, we are at last able to agree on timing an entry into this stock.

TA meets FA - at last!

[Snoopy]

Now, lets take a look at a shorter-term chart. Note big money getting out last November. See how, when the "smart" money was getting out, Snoopy was getting in, buying into an established and ongoing downtrend (blue arrows). To me, this is a perfect illustration of the folly of ignoring market sentiment and buying into downtrending stocks.

'Folly'? We both know who the smart money was: Walker Capital Management. We know why Walker was selling. He was in effect closing down his fund that owned those SCT shares as he has taken a job with someone else. Now I know you used the word "smart" Phaedrus, in quotation marks. But really, this is taking advantage of a distressed seller. I can't help the fact that Walkers general stock selection was so poor that his fund failed. But I can certainly take advantage of the situation, and that is what I was doing.

Now Phaedrus did you not write this just last October, on this very thread?

"So, you bought at $2 on Thursday eh Snoopy? Right on the break of the confirmed trendline! I'm so proud of you!"

How things now look different, with the benefit of hindsight!

Of course I know you, Phaedrus, would have sold out when this 'trendline break' proved to be a false dawn. But really I can't see a problem with accumulating some shares in a low liquidity stock like SCT on the way down. There really is no other way to do it if you want some reasonable volume.

The downtrend continued, but now that SCT has fallen to around its long-term support levels, buy signals are starting to appear - a 10% trailing short stop has been broken. Note that while the confirmed trendline and the moving average as plotted here have not been broken as yet, current price action is very close to both.

Snoopy and I both held SCT for years - the big difference being that I sold at the 2004 trendline break and haven't held since. Snoopy has held SCT for well over 10 years, didn't sell any at the trendline break, and has been buying during the subsequent downtrend.

This post is about timing. Snoopy will probably want to talk about dividends and liquidity, but these are side issues here, and have nothing to do with when this stock should be bought, sold or held.

With respect Phaedrus, liquidity has *everything* to do with it where SCT is concerned.

Today SCT closed up 6% at $1.40. My average buy price over ten years is $1.57. So I am down, (apparently), as the market closed today. But try to accumulate as many shares as I now have at $1.40. That $1.40 market price is transaction between buyer and seller *at the margin*. Try to buy tens of thousands of shares at that price, when typical liquidity is only a few thousand shares a day, and see how far you get.

Phaedrus I know you know all this, because of your own experience in reverse - selling out of SCT three or four years ago.

Now here is another lesson in liquidity. Last week I turned on my PC screen and saw sellers in SCT at $1.30, with nothing at all on the buy side. I pinched myself expecting the screen to change but it didn't. So I put in a 'silly' buy order at $1.20, not really expecting to get any shares at that price and ended up picking up quite a few shares! That is how you low liquidity can work for you.

After years of disagreeing with Snoopy as to when/if SCT is a buy, we are at last able to agree on timing an entry into this stock.

TA meets FA - at last!

I'm not so sure Phaedrus . I was going to wait until the SCT half year result came out before I bought again. Often when I make impulsive purchases like I did last week , I get into trouble because I didn't stick to my system.

The NZD/USD exchange rate has embedded itself at over US80c - an unprecedented level. It is just as well Chairman Marsh has retired. Because if he had had to give we shareholders yet another ear bashing on the perils of high exchange rates at this years AGM he might have exploded!

Down the track SCT is exposed to the 'sub prime' problem. If new home buyers are not ordering as many refrigerators and washing machines then that is an incentive for whiteware makers to cut back on updating their production lines in the medium term. If the production like market dries up, SCT could be in for a few very tough years. If this really is a 'perfect storm', there is no reason for even the lowest historic SCT 'support level' share price to hold.

I expect the SCT half year announcement is only days if not hours away. So all will be revealed in terms of the business outlook, and the share price will react one way or the other. You will then be able to announce Phaedrus that SCT has 'broken the trendline' one way or the other , and look smart. The problem is neither of us knows which way the trend line will break until after the half year announcement has been made to the market. And by that time the opportunity for us to benefit from that announcement will be gone.

SNOOPY

discl: hold SCT

[Snoopy]

I can't see a problem with accumulating some shares in a low liquidity stock like SCT on the way down. There really is no other way to do it if you want some reasonable volume.

With respect Phaedrus, liquidity has *everything* to do with it where SCT is concerned.

A big move with SCT on 8th January with the shares up 14% in a single day! No doubt that little move will attract some attention from the chartists, if not their chequeboks - yet!

However, if you look at the total volume traded we are only talking about 2750 shares! Not even enough dollar value to qualify you for the minimum brokerage rate at a full service broker. Most days of this year SCT hasn't traded at all. So I guess you could call yesterday a 'high volume' day.

Over the last year or so I have been trying to accumulate more SCT shares. In fact I have doubled my holding. So I guess you could say my strategy has been successful. Nevertheless it has been quite a painful process. I always buy at a nominated price- not 'at market'. On one occasion it took a week, on another nearly two to buy a couple of quite modestly sized parcels. When this kind of thing happens you know that you haven't been bidding too much!

Now here is another lesson in liquidity. Last week I turned on my PC screen and saw sellers in SCT at $1.30, with nothing at all on the buy side. I pinched myself expecting the screen to change but it didn't. So I put in a 'silly' buy order at $1.20, not really expecting to get any shares at that price and ended up picking up quite a few shares! That is how you low liquidity can work for you.

The market got even sillier since this point and I managed to get some more shares at 91c late last year. My average buy price is now $1.53, so I am down about 35% given yestreday's closing price. Ouch, although I do note that is less than the market decline over the last year. But am I really down 35%?

I talked to my broker on the market depth of this thinly traded stock. I found that if I wanted to rebuy my shares today I couldn't because there just aren't the number of shares I have already on offer, at *any* price. That is the problem with thinly traded shares. You can't take the market price too seriously as your own actions in buying and selling shares will move the market and render the 'market price' inaccurate. And the projected returns of trading systems break down when you cannot rely on the market price.

This then is a good lesson to traders as to why they should not buy SCT. But if the current market price represents real value (long term I think it does), why would you follow a method which tells you not to buy? This is why I don't trade myself and instead use an F/A strategy of accumulating on weakness. Roll on the next downtrend. I will be waiting there ready to stock up on more SCT shares.

SNOOPY

discl: hold SCT

[winner69]

The 10 year SCT very cyclical

Now could be a good time to buy

But then this was being debated at the start of this thread in 2004

[Snoopy]

The 10 year SCT very cyclical

Now could be a good time to buy

But then this was being debated at the start of this thread in 2004

Was it Split Enz that said "History never repeats"? According to Winner's chart, they got it wrong. But SCT is a very different beast compared to what that squiggly line was representing ten years ago: No Alvey, no Transbotics and no Robotworx back then. The Australian branch was a three person outfit showing people how to crush rocks.

The bigger the conglomerate, the smaller the effect on that squiggly line of any individual unit in that conglomerate moving that squiggly line going forwards. To repeat that historical pattern then all of those 'individual business unit ducks' have to line up. How likely will that be going forwards?

I can't leave the chart without commenting on the peak. That occurred following JBS taking a controlling stake, and subsequently one of the local institutions deciding they wanted a meaningful stake. The only way to do that with a low liquidity share was to pay 'the market price' and that ended up being something north of $3. Short of another institution wanting in, I don't see the share price of SCT rising above $3 again. If you lop the top off that last peak the pattern looks even more repeatable. Yet how good a business analyst is Tim Finn? Better than some here would give him credit for I think!

SNOOPY

[winner69]

Snoopy the thing that struck me with that chart that supposedly being a ’low liquidity’ it’s surprisingly ‘smooth’ (should have put a 200MA line on it) and it’s a beautiful 5 year cycle

But then should companies dealing in leading edge world class high tech stuff be so cyclical?

Suppose being cyclical is a result of failed strategies and poor execution.....so let’s have another go.

I found a broker research paper on Scott put out at the turn of the century ...so much potential.

[Bjauck]

An announcement was posted concerning a couple of new contracts including one with Little Swan washing machines in China. It seems to have attracted a bit of buying interest. If this were concerning one of the "more trendy" companies, there would have been a flurry of excited posts!

I don't know know just how significant these contracts will be in the scheme of things. However extra business is good, geo-political concerns notwithstanding.

https://www.nzx.com/announcements/365290

Disc. SCT Shareholder