CVI 0.00% 0.3¢ cvi energy corporation limited

why i invested in cvi

  1. 46 Posts.
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    Hi everyone
    There seems to be a lot of conjecture over whether CVI represents a stock with the potential to give you good returns on your invested dollar . There is a mix of emotionally charged , intelligent , desperate , hopeful & uncertain points of view and sentiments posted on the CVI thread - probably more emphatically than any other stock talked about on HC. I think a lot is expected of CVI - and it has been that way since it began its run up to 39 cents in November last year . I have held well before then and while I don't enjoy it retracing and going through pull backs in its share price I am in for the long term , where lies I think the relationship between how people react on this thread . If you are trading in and out ( and good luck to those who make money out of doing this) then your mood will reflect the ups/downs & uncertainties of CVI's SP - personally I would be chewing my fingernails off using that strategy but that's me . None the less a lot of people on this thread seem concerned about short term price movements & while I appreciate the chartists interpretation of where the share price may be heading imminently next week or next fortnight , its next year I am more interested in . I think CVI is behaving shareprice wise like most shares that have moved through the sub-prime crisis & now find themself in a much more uncertain market than the bull run of 2006-2007 . Having said that though in terms of the resource sector it seems demand growth still far outweighs supply growth and for oil , iron ore , gold , platinum , coal and copper its all systems go ( give or take the odd correction in prices).
    This pretty much brings me to why I have invested in CVI - a company positioned in the right sector at the right time. I understand sovereign risk is an issue & I admit it made me hesitate a little before buying in but it is an element of uncertainity I am prepared to accept for potentially a significant reward .
    Currently Angola has a BB (Stable) sovereign rating which is defined as :
    " Capacity and committment to honour obligations currently but susceptible to changes in economic climate "
    Below BB sits :
    B "Capacity and commitment to honour obligations currently but very susceptible to changes in economic climate."
    CCC "Questionable capacity and commitment to honour obligations. Patchy payment record."
    CC "Somewhat weak capacity and commitment to honour obligations. Patchy payment record. Likely to be in default on some obligations."
    C "Weak capacity and commitment to honour obligations. Patchy payment record. Likely to be in default on significant amount of obligations."
    D "Very weak capacity and commitment to honour obligations. Poor payment record. Currently in default on significant amount of obligations "
    I think you would be getting shaky pushing the buy button somewhere between B and CCC ! Countries that currently sit on the same BB rating as Angola include Bosnia , Macedonia , Morroco , Mozambique , Nigeria , Panama, the Phillipines & Romania to name a few . Clearly you could argue different political forces exist in these countries .
    When you look at Angola politically , the legislative elections scheduled to take place on Sept 5th - 6th of this year are expected to be won by the MPLA (The Popular Movement for the Liberation of Angola - Party Of Labour) which has ruled since independence was achieved in 1975 . No signs of uprising or civil war for 6 years. The presidential election in 2009 is expected to be won by the current President - JoseEduardo dos Santos . No guarantees but some semblance of stability evolving to the outside world.
    Economically EIU quotes :
    "With oil production set to continue rising against a background of high oil prices, strong economic growth is set to continue in Angola over the forecast period, averaging 21.4% in 2008 and 10.4% in 2009.
    Sustained high government spending and buoyant domestic demand are expected to keep inflation high, averaging 12.4% in 2008 and 12.2% 2009.The rapid increase in oil exports and high international prices are forecast to keep the current account in surplus, rising to a peak of 35.7% of GDP in 2008, before falling international oil prices reduce it to 26.2% of GDP in 2009 "
    It's a risk but any spec share starting out is. I feel CVI has positioned itself very well and with the $1.1 billion in place & the claw back provision it has with Pensador it is strategically placed to grow exponentially in wealth over the next 2 years . Common sentiment is the resource sector will be running strong for at least that time . The only thing with exponential growth is it takes a while for the momentum to build and you can see the impatience in some of the posts on the CVI thread . Understandible - I'd like my investment to multiply in value by 10 times in the next two months ( or double in the next two minutes !) but its not going to happen . I think once you have made the decision to get on board here - patience will be your best friend .
    I'm not suggesting you could draw a parallel bewteen Fortescue and CVI but a couple of points to consider - when Fortescue first established itself back in 2003 it was considered a penny dreadful amongst a pack or minor resource hopefuls and its price wallowed accordingly for a couple of years around 20-30 cents , give or take a few cents. In 2005 it identified a significant iron ore deposit at Cloudbreak and by August 2006 had settled an amazing $3.2 billion capital raising and a $2.7 billion debt underwriting which saw the share price head to around $1 ( or $10 back then pre consolidation). A year later it had steadily gained 150% and then woosh , the rest is history . I know - different country , different Sovereign risk etc but if the status quo remains in Angola stability wise then you have CVI on a similar road to FMG - some very exceptional proven and potential resources with a very significant $1.1 billion underwriting to ensure these resources can be extracted and turned into what I see as enormous revenue earnings . Just my take on it and the reason I am happy to stay put and support CVI's evolution .
    I wish you all success with your investments and leave you with just one question - Have i Gone over the 20 word limit ??
    Cheers , Wardy

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