WAF valuation, page-197

Hi Romacker, At the risk of stepping on Esh's sensitive toes please allow me to summarise how I see things given I have already broken my rule of not getting involved.

My read: Esh is bullish, is long, likes the fundamentals, sees the sovereign risk as not much worse than it was many months ago and the same as it was early Jan after local violence, has a high cost average now well under water, thinks manipulators have been pushing the price down for an ultimate cheap takeover offer, will buy more if they get ridiculously cheap because he is already full and nerves might be shot.

I am clearly not a "master planner", "apologist" or "rationalist" for anyone but myself. I am long, bullish on the risk/reward value proposition and encouraged by the reality vs perception of an increasing terrorist violence risk discount. I see the latest drop in price based on the Canadian killing as not representing any change to the Jan 3 violence that dropped the price below 25c and only a small change on the Burkina Faso discount WAF has always had and will always have. I have bought this sell down and will buy more at 20c if it gets there based on my own personal plan and risk tolerance, but I am not confident it will get there and so I have started buying now.

It is very important to understand that fundamental value and market price are very different things. In the short and medium term the price is reflective of the balance between buyers and sellers, whether that be driven by over all market conditions, commodity prices, company specific news/events, large holders wanting in or out, manipulation by larger funds for their own profits and purposes etc. Always be very clear when you buy something if it is a long term investment and you are willing to ride the ups and downs until fundamental value is ultimately realised, or if you are looking for a trading profit over a shorter period of time and don;t want to locked up in WAF for years. Fundamental value counts for little in the short term.

Technical analysis (TA) can be very helpful in picking entry and exit points in the short term whether looking to for a long or short term investment. I'm not a TA expert but long experience has taught me that the players look at suppoort resistance prices as targets and when enough people all look to the same targets they become somewhat self fulfilling. In the case of WAF a weekly chart back to 2014 is



Esh says 19c, I see 20c as the next and a substantial long term price support back to 2014 but lets call it 19 bid, 20 ask is the next long term TA price support level. The price top and long term resistance should it ever get back there is 45c. Many TA guys adhere to 'price retracement' percentages to look for support levels on price pull backs. Usually price replacements are measured from the base of the last up swing and things can get detailed and complicated, I'm a simple guy and so I look for simple and obvious technicals. For example, a pull back to 50% of the last major price high is a nice round number that represents a substantial price re-rating and obvious place to buy and find support with other like minds. That would be 22.5c which just so happens to be the current price and my latest buy price.

Why would I buy at 22.5 if long term support is at 19/20c and the downtrend is strong and downward momentum seems to be heading inexorably towards it? As previously mentioned, picking market bottoms is a difficult business and I would rather get set at a very good price above major support than get too cute trying to pick the bottom and miss out completely. I will not buy all my shares at first but maybe two thirds this close to what I consider great fundamental value and long term price support. The fact all major cap raises are out of the way is a large green light to me and reduces the incentive for sellers to sell down further and re-fill at lower cap raise prices.

My advice is always work to a plan having first looked at the fundamentals, the technicals, what your time frame and risk tolerance is knowing the price can keep falling a lot further than most people think. Read as much as you can about your investments, read HC but understand the site is clearly biased to long term believers and bullish opinion, learn to separate sound analysis from worthless opinion, follow posters that get it right more often than not or at least make good sense. 

In terms of WAF specifically there is obviously one or a number of large holders wanting out and has been since the last cap raise. Too many reasons to speculate the who's and why's but only time will tell if their desire to get out and need to push the price down in doing so has provided a longer term bargain buying opportunity or was a value trap into further bad news, gold price crash or whatever might cause fundamental value to fall into the new share price lows. The junior end of the market is more gambling than investment after all.

Good Luck