COA - Coats Group plc (formerly GPG - Guinness Peat Group Plc)

**limegreen** · 14-04-2005, 11:19 AM

I'm er, frankly shocked to be posting this. I don't even usually bother looking much at GPG. It's sort of ideal bottom draw investment territory. However, it's been looking a little sicker than usual of late. It's broken a long-term uptrend (after breaking a steeper one a year ago). It's through a major level of support at 2.20, and appears to be testing 2.00. It's through a 150 moving average, and the 365 moving average, which over a longer time frame would have served an investor well, is around 1.98. The OBV is also trending down for the first time in a decade. All in all, not such a great prognosis.
If it closes through $2, I think I'll have to seriously consider selling.

DISC: surprised

**Phaedrus** · 14-04-2005, 07:32 PM

Limegreen, my GPG chart is essentially the same as yours. I don't see much scope here for alternate conclusions, so am surprised that you asked for my take on this. The only thing I would have added to your chart is a big red circle to draw attention to the big OBV drop on 21/1/05. On Balance Volume is usually a leading indicator and that was certainly the case here - this was some weeks before the price headed South.

The chart below shows the following 6 indicators :-
Trendline
Relative Strength Index
Moving Average
Trailing Stop
Directional Movement Indicator
Relative Momentum Index

The remarkable thing about this chart is that all six indicators triggered a Sell signal at essentially the same time. It is qiute rare to get this level of consensus using such a range of different indicators. Equally remarkably, their Buy signals were also in very close agreement.
I'm surprised that you are still holding!

**k1w1** · 14-04-2005, 09:04 PM

Can I say as a fundy that I have major reservations about this stock and have exited. Currently it is a punt on the Coates turn around turning around.Historically with these guys this has always been a good bet.

However past performance as we know is no guarantee as to the future.There is not enough information in the public domain to test the validity of the positive noises coming from GPG management. A number of stockbrokers are also positive that Coates is currently undervalued. So they still have the confidence of some market watches.

This is an overpaid group of managers in a company with poor corporate governance. Recently the report card has had more fails and bare passes than we like. In NZ neither Turners & Growers or Tower have been outstanding turnarounds. Capral Aluminium has hit unexpected problems in Australia and its CEO has been sent packing. Other smaller Aussie investments are doing even worse. No longer is GPG investment a reliable guide that a current market turkey will fly.

Dividends are paid by inflating the amount of scrip available. Printing their own currency really as very little actual cash passes from management control to shareholders.Fine as long as you retain the confidence of the market.But should there be a change of sentiment there is a huge number of shares washing around out there.

Maybe Coates is the big bet that will rebalance the books. Maybe it isnt. How are you supposed to you know ?

**Gryffyn** · 15-04-2005, 08:59 AM

k - hardly overpaid given the returns to shareholders to date. What would you base their pay on?

**limegreen** · 15-04-2005, 10:30 AM

quote:Originally posted by Phaedrus

I'm surprised that you are still holding!

Thanks for that. I think my TA is improving, but what I lack at the moment is discipline!! I've managed to make two very judicious sell calls in the last couple of months (NOGOC & FTX), both of which have saved me a mint (Huge thanks to you!). However, in each case, I've been a little slow to take action, leaving it for a couple of days to a week to make sure that my indicators really really are broken.

This is further exacerbated because GPG is my oldest holding (since '98) and the second stock I ever bought, and leaves me with a very young looking portfolio. It's treated me very well in that time. So perhaps, rather like your sale of SCT, I didn't want it to be true/struggled to believe it. Additionally, I've always had problems charting GPG (it misbehaves on bigcharts), plus it's treated me so well, that I haven't bothered to chart it very often.

Thus, I'm now left to consider whether i should see if support at $2 holds, or make a late exit.

**Sideshow Bob** · 15-04-2005, 10:58 AM

Limegreen,

Thanks for your charts (and those of Phaedrus), which always find informative as a TA know nothing.

Notice that you have indicated the 1:10 bonus issue. Looking at the charts and past share price performance, wouldn't it be worth holding until after this, which is in about 5-6 weeks? Or do all the other indicators mean should sell anyway? Would have thought might have to take this into account.

Cheers
SSB

**Ted2** · 15-04-2005, 10:59 AM

LG

I have similiar sentiments. GPG has been so good to me that I think I have had (and probably still do have) blind faith in Sir Ron, Tony et all, that they know far more than I do, and that their track record is so good.

Still, is their drop any more than the overall market? Are they just a result of the overall sentiment at the moment?

But if GPG is solid, Coates should be a good bet, and that it's only going down because the whole market is, a sell should still be considered because you can always buy back in when the signals are better?

Is this exactly what Phaedrus proves to us time and time again?

P - are you still holding most of your stocks or is the overall market trend reason enough to have got rid of many, even if there is no other reason for a particular stock going down than just being a victim of the overall market?

If what I think I'm saying is right, and if anyone can understand it, it seems that this is the perfect time to see the absolute merits of TA and Phaedrus's knowledge.

Yeah?

Cheers
Ted

**limegreen** · 15-04-2005, 11:40 AM

Ted,

Interesting points. GPG has dropped more than some of the other stocks I hold. For example FBU only dropped around 10%, plus it was performing more strongly. GPG has been having a weak-ish year anyway. After all, the price is now the same as it was this time last year. If you sell, buying back in is always an option, and most of the triggers that GPG has hit are quite long-term indicators.

One of the only disadvantages I can see from selling is the DRiP. We've all got a few more shared coming out way in another month. On the other hand, if the price is $1.80 in another month, I think I'm a little less worried about that. EDIT: I've just read the annual report. I think you can elect to receive the divi as cash until early May, if you're worried about brokerage on selling the DRiP proceeds

Bob, the annual split doesn't really have any material effect, other than to keep the stock appear cheaper. You'll also notice that the previous two years, it's had no consistent effect on the share price.