Dubai Investment Group realized their mistake, finally

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Oct 02 2007
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Have you been going against the tide by investing in cheap but not performing stocks? Did you buy for the sake of buying without doing any homework to study a company’s fundamental, technical and its management team? If you try to argue that you’re actually trading or investing the contrarian way by doing so, then you might want to find out the real meaning of contrarian investing.

Whatever it is I hope you didn’t get yourself into trouble by trading junk stocks. Just which stocks are junk stocks? You need to do indepth study to find that out, although I hope there’re more useful tools or comprehensive and integrated databases which can retrieve relevant information for investors who wish to have a high-level glimpse of a particular stock. It would be fun to have such system at our disposal so that we can make intelligent investing decision – with lightning speed, don’t you think so?

PECD – Junk Stock to Avoid

Anyway, one of the junk stocks that FinanceTwitter had identified back on 22th June 2007 was PECD Berhad (KLSE: PECD, stock-PECD Junk Stock to Avoidcode 5093). If you missed that article, go and find out why you should run away fast from PECD stock. When even PECD’s contractors cried foul over debts not paid, you should think twice about investing in this stock. And if PECD’s own CEO (chief executive officer) Rosman Abdullah himself is not too sure when and if the company can actually turn around, you should think thrice.

FinanceTwitter wasn’t impressed when PECD reported that it was tying up with Dubai Investment Group (DIG) back then to undertake construction and property development projects. Slightly more than 3-months after the tie-up, DIG announced today that it is not proceeding with the proposed tripartite 200 million dirham (RM184.94 million) joint venture project to recapitalise PECD Bhd’s Dubai outfit, PECD LLC.

DIG-PECD partnership broken, finally

PECD confirmed it had received the intention letter from DIG but the obviously surprised-PECD is seeking clarification on the termination as no reasons were given. What could be the main reason(s) that prevent DIG from working together with PECD? Although FinanceTwitter would not blink once in surprise of whatever actual reason(s) resulting from DIG’s latest move, the basic fundamental of how the company’s (PECD) business was being drive does not augurs well for any partnership.

To think of how Malaysian ruling party United Malays National Organization (UMNO) trying to bailout PECD by pumping money for a 25% stake is simply outrages. And when even state-controlled and cash-rich Petroliam Nasional Bhd (Petronas) couldn’t stand how PECD tried to claim US$200 million (RM700 million) from it in cost overruns for a project to build a marine terminal in Sudan, there’s no single reason why DIG should even spend a minute talking to such company in the first place. Fortunately its’ better to discover such problem now rather than late as it would equals to “dumping the money into the sea.”

Anyway for Punters to make money?

Regardless of how junky a junk stock is, there’re always punters flying around it. While the return might be good, the risk is equally high. One of the method to trade or punt around such stock is to study their technical chart.
PECD trading chartFrom the 200-day moving average, PECD is still in bearish mode – meaning professional or long-term investors are ignoring it, not that there’s any justification to go long in the first place. However from the resistance and support level, you might be able to scalp some profits in between provided there’re volume.

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but if election is annouced… this counter is a good bet.

haha you sure know which counters to punt zewt … in fact when election is announced, you can just blindly enter any of the GLC or the ruling party linked counters, especially those penny stocks …

cheers and thanx for dropping by …

[…] Dubai Investment Group realized their mistake, finally […]

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