New Positions

I finally bought NNRI which has been heavily pumped by Stocktiger. I got in at $1.23 as both a trade/investment. I'll have a stop in place for most of my shares should we violate the double bottom at $1.15 on the daily chart. If we rally to the upside, I'll be scaling out into resistence. Even though stochastics are not oversold, I'm betting that we will bounce off the rising stochastics trend line. Also, I'm seeing positive divergence in the MACD and RSI as well so on a technical level, I expect at least a short term rally. For me anyway, I see 9% downside risk with huge upside in my trade so I like the risk-reward.

I got hit again at $0.405 in PYR.V and don't mind the stock going lower and hitting my next bid level. Of course going up would be fine as well. My stop loss is 50%, but the upside target of 500-1000% makes up for risk. Also dipped my toe into Holloman Energy, HENC, at $0.51 at the close today. Last week I scooped up some IV.V at $0.54, now $0.61, and I am still holding all my shares in that one. I like the basket of junior oil companies I've acquired and I still have a lot of wiggle room to invest more should the opportunity present itself.

Holloman Energy is definately an intriguing company with enormous potential. Their probable/unrealized reserves are valued at $2.3 billion according to one analyst http://www.stocksjournal.com/PDF/HENC.PDF and their management team looks very savvy. They have been forecasting 1500-2000 bopd by the end of 2008. With a current market cap near $70 million, it is trading at an enterprise value ratio of 1. With a huge interest in the Australian wells, I think the company could trade at a premium and I would agree with the analyst in her valuation. The company should be worth $100-300 million ($1-3/share) depending on how well management delivers on their guidance. However, their plans do not look very visible and as a skeptical investor, I am cautiously optimistic of them actually reaching their targets in such a short timeframe. I would also feel more comfortable if they were to move to a more regulated exchange. Pyramid Petroleum has more upside on a valuation basis and is fast money, but Holloman Energy I think has more upside past 5 years and could offer similar returns. I'm going to play it like NNRI and sell most of my shares should my stop get violated and perhaps accumulate more at a lower price.

For all those whose convictions are being tested, I wish you the best whatever happens. Stocks are always a gamble, especially small caps on the bulletin boards, and you shouldn't bet what you can't afford to lose. Always have a game plan and execute it no matter what. As a contrarian investor, I like to go against the grain and bottom fish when perception is depressed. I've found out that message boards provide a good consensus of this. When everyone is a bear, that's when I go long, but only if I like the fundamentals and potential catalysts that can turn the stock around and squeeze out shorts. Of course I am wrong at times, but my risk-reward is easily defined as long as I execute my plan which includes a stop loss. I only have to be right roughly 20% of the time if my risk-reward exceeds 1:5 to being break even or up. The market owes us nothing and the only thing that matters is price.