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Schizas' Mailbag

Bankers Petroleum Ltd. facing a run Add to ...

Hi,

Is it too late to sell BNK? I bought it at $2.34 three years ago and watched it go up to $9.00 plus.

Thanks,

Jim

Hi Jim,

This will my fourth go at the shares of Bankers Petroleum Ltd. . The first was on an assignment from William when the stock was trading at $8.68 in January of 2011. At that time management had a stated goal of upping production to 20,000 barrels of oil per day by the end of the year. It was observed that the next test for the shares was resistance at $10.00. Unfortunately BNK failed that test.

More related to this story

The second analysis was on a request from Humayun when the shares were trading for $7.87 in May of 2011. It was advised that it was not the best time to buy given that there was a downtrend in place and trading volume was thinning out. Retrospectively that was the right call.

In September of 2011 Al asked me to examine the case for the stock when it was trading for $4.40. It was observed that there was no indication of a shift in momentum to the upside.

Sadly things have gotten worse. A review of the evidence will provide the facts needed to answer your question.

The three-year chart tells a romantically tragic tale for investors who fell in love and got married to the BNK story. Good loving gone bad! The big gap down to the $2.00 range came on May 14, 2012 when the company reported production at 13,297 barrels of oil per day. That is a far cry from the 20,000 management expected as an exit rate for 2011.

The six-month chart illustrates the resistance that the shares encountered along the 200-day moving average in February of 2012. The MACD and RSI also produced sell signals at that time.

To your question if it is too late to sell. I would say that there were plenty of opportunities and signals to capture profits and enjoy the rewards of a great pick at $2.34 back in 2009.

At this point the RSI is indicating that the stock is oversold but the MACD still hasn’t turned higher. With fund managers appearing to have thrown in the towel BNK is in the hands of retail investors. That could provide trading opportunities if you have the tools needed to do so successfully.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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