Thursday, May 22, 2008

CKX Land Mysterious Price Spike Explained

The mystery of CKX Land has been solved. On Tuesday, CKX Land (CKX) spiked up in price from $13 to $24.50 per share leaving me flabbergasted and a little wealthier. I dumped my entire position and then watched it fall back to the $14 range. So what’s the answer to the mystery? It’s an oil and gas company!! Every small cap energy stock out there spiked up in price. It was my mistake to try to find a fundamental reason behind it. Oh wait...the price for an asset always reflects its fundamental value, doesn't it? There's never any speculative money pushing the price up above its intrinsic value? No way, that couldn't happen.

Here are some others that spiked up. Most of these I have never heard of and none of them I own.

Blue Dolphin Energy Co.

BPI Energy Holdings

Tengasco Inc.

Venoco, Inc.

Samson Oil & Gas Limited

Fieldpoint Petroleum Corp.

Now my two favorites:

Mexco Energy Corp.

Pyramid Oil Co.

So what's the point of this diatribe? A stock can trade above its true or intrinsic value - it happens all the time. A cynical value investor like myself would say most of the time. So why can't a commodity trade above its true or intrinsic value?


Anonymous said...

why did i read this? this article has no point.

Eric J. Fox said...

Dear Mr. Anonymous...I am getting tired of having to explain things to you. The point of the article is this:

An asset can trade above its true value, and usually does. When this happens investors become more skeptical and then bulls start to invent fundamental reasons for the price increases. I used the stocks in my post as an example of outrageous price spikes. Also, MXC is down 28% today, PDO is down 23%, and FPP is down 18.5%. You get it, now?

CoveredWriter said...

Mr. Fox!

I want to thank you for such a wonderful posting...
Very very helpful indeed :)

happy shorting!