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If camp-builder forecasts are right, the next few years will see the oil sands bed count in northeastern Alberta climb over 75,000 - equal to the current population of Fort McMurray. (Jeff McIntosh/Jeff McIntosh for The Globe and Mail)
If camp-builder forecasts are right, the next few years will see the oil sands bed count in northeastern Alberta climb over 75,000 - equal to the current population of Fort McMurray. (Jeff McIntosh/Jeff McIntosh for The Globe and Mail)

Schizas' Mailbag

Time ripe to break camp on Horizon North Logistics? Add to ...

“Hi Lou: On Sept. 10 you updated an article on Horizon North Logistics which sounded favourable. Then after several analysts initiated coverage on it with targets of 9 to 10 dollars I bought some at 8. It has since drifted steadily down to $6.30 and lower with good volume. On November 28 it traded almost 900,000 shares.

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“I am torn between selling or holding or even averaging down so would really appreciate your current outlook and any news you may have and do you think the 3 per cent plus dividend is safe? Thank You, Jack.”

Hey Jack, thanks for the assignment. There appears to be some confusion about the feature that you have cited from globeinvestor.com. When there is a notation that there has been an update to a written piece on globeinvestor.com it simply means that links to new information have been added that might be of interest to investors.

The original post on March 14, 2012 contains the information available at that time and the advisement that there were updates does not imply that additional analysis had been conducted. When I undertake a subsequent examination of a case it incorporates all the new information obtained on that day and serves as a back test on the original analysis.

In summary the post you read on September 10, 2012 was the same analysis from March 14 with no new insight. The updates mentioned were simply the addition of new information from other sources but not additional input from me.

That having been said, the March 14 study was in response to Barry who wanted to know if Horizon North Logistics was a buy. The research conducted on his behalf when the shares were trading for $5.98 indicated that the stock would experience a pullback but that it offered an opportunity to buy high and sell higher.

Another run at the charts will provide greater depth to help you decide if it would be prudent to hold or sell. Never average down.

The three-year chart indicates that the stock did pull back after March 14 and tested support in the $5 range that had held all through 2011. By May of 2012 the selling had abated and the stock caught a lift to the 52-week high of $8.49 reached on October 05, 2012. Worth noting are the signals generated by the RSI and MACD in August indicating that the strength of the advance was weakening providing a call to action for investors who know how to read the signs along the trail.

Currently the shares are holding onto support along the 200-day moving average and in the $6.25 range which has held through 2012.

The six-month chart provides a close-up of the signals generated by the RSI and MACD in October indicating that the advance that started in May was running out of gas. What is of interest is that the selling that began in October didn’t happen all in one day. There were plenty of opportunities to get off the ride and preserve capital. The October 31 release of Q3 results that missed street forecast for the first time in eight quarters was also noteworthy. As we say in my house ” Guys in the know, know!”

Currently the shares have caught a bounce off $6.25 and the MACD and the RSI are indicating that the shares are moving out of oversold territory. As to your question I think you should continue to hold with this caveat, if it fails to hold at $6 hit the silk. Having said that, it sounds like you want to sell and when that is evident I always recommend going with your gut. You can always get back in once there is stronger evidence of an advance. As far as the sanctity of the dividend, I know of no metric that I can use to determine if the board of a company will maintain a payout to shareholders.

Make it a profitable day and happy capitalism!

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

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