Friday, 12 February 2010

KDD trading update

KDD is a small one of my holdings and one of the more exotic. A company in Africa that owns a large diamond mine but does not really have the money to start it up on its own and get it going. The Diamonds in the mine are estimated to be worth well north of a $1 billion dollars though. Analysts have the share priec fair valued at 37p - current price is under 14p.

This week there has been an statement saying that they are in early takeover talks. Rumours say the offer could be 22p. The price of KDD has shot up on the news and then fallen back.

This morning there is a good timing opportunity to buy in at this low price. The chance of a bid at 22p leaves a 50% profit possible within a few days, yet also the downside from 14p if nothing happens is unlikely to be more than 3p - not great, but still a good long-term bet. Of course, trading short-term and ending up with long term holds is the way lots of people get poor share trading. Still, this is a clear opportunity.

10 comments:

Anonymous said...

have you bought today? Would a better strategy to be to wait one or 2 days more as the lack of news will push price further downwards.... risk that you miss the boat but possible you make 3p extra?

CityUnslicker said...

Anon - I have a holding at 14.3 myself froma few months back.

You may be right given market rumours and China interest rates today; BUT if news is over the weekend then the gap up on Monday will mean you miss out.

Steven_L said...

Hmm, a billion quids worth of diamonds no one has ever seen, a hole in the ground, an African mining company that no one wants to lend money to, rumours of a takeover...

If someone got on the blower to me and said he'd received a phonecall along these lines I'd be emailing him a link for reporting boiler room scams.

Anonymous said...

I don't honestly understand the attraction of diamonds as an investment.

The thing is with diamonds, intrinsically, they aren't worth a lot. I mean, we can make synthetic diamond reasonably cheaply, so why the premium on 'natural'? And its not like carbon is in short supply (unlike the precious metals which there is an obvious finite supply off....).

So, any reason I am missing for speculating on diamond mines?

regards

jon

p.s. very good blog this - thanks!

DomDom said...

Pardon my ignorance but is this not share ramping?

CityUnslicker said...

ok ok, I take on board what you think, no more of this from me!

James Higham said...

You're allowed a bit of ramping on a blog, no?

CityUnslicker said...

hmm, depends on your view JH. Some seem to think just mentioning shares is ramping!

Anonymous said...

Please keep mentioning shares! It's up to the people who visit whether they use your comments as a catalyst for their own investments or not...

roym said...

er dom dom, this is CU's blog that you have come to. surely a posting like this is there to merely provoke discussion about the company itself and trading strategy. its not exhorting you to take a second mortgage out and stick the lot on.

my advice to you is to put KDD on a watch list and see how it plays out over the next 6-12 months.

@CU, i actually stumbled across you guys when searching for share discussions a couple of years back. since realised its very difficult to find sane conversation on this sort of thing so please keep it up! if emed goes the same way as mnr and iae, i'll have to send you a bottle of bolli!