Petrobank Energy and Resources is currently oversold

Jan 3rd, 2011 – Comment

If you ignore your money it will go away.

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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.

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Hi Lou,

Please help if you can.

Last week I watched in horror as my PBG holding tanked 45%. I was unable to find out why??? No news anywhere. You folks didn’t bring it up and I grew frustrated. Still no news on why it tanked. Please shed some light on this stock.



Hi Dave,

I last looked at Petrobank Energy and Resources Ltd. (PBG TSX) on November 29, 2010 for Cris. At the time it was mentioned that PBG intended on spinning off its holdings in Petrominerales Ltd. ( PMG TSX). On December 21, 2010 it was announced that the spin off would involve shareholders of record receiving 0.614 shares of PMG for every share of PBG that they owned up to the ex- distribution date of December 29,2010. 

The market value of your shares in PBG went down but you gained shares in PMG. My back of the envelope calculation indicates that as of December 31, 2010 the value of one share of PBG and 0.614 of a share in PMG is $45.61. The reorganization of PBG hasn’t cost you anything but now you have to make a few decisions. The charts will provide some guidance in the process.

The three year chart depicts the new level support for PBG  at $25.00 without its stake in PMG. The RSI indicates that the stock is currently oversold and has lots of work to do before it can start to make a move higher.

The six month chart illustrates the oversold situation as demonstrated by both the RSI and the MACD. The management team at PBG has secured $200 million in credit to advance the case for its efforts through PetroBakken Energy Ltd. ( PBN TSX) and its THAI heavy oil combustion technology.

At this point there is an opportunity in a stock that has been oversold as a results of a reorganization.

The six month chart for PMG  indicates that it has met resistance at $35 and needs a good push to break above that level. PMG is now a self directing enterprise and needs to be monitored to see if it can add value to its shareholders.

I would also suggest that you need to increase the attention you are paying to your money. If you use the tools available through you can quickly check the news stream for stocks that you own. As I teach my students at Sheridan Institute in Oakville treat your money like a pet. You would never ignore your pet so don’t do it to your money. If you ignore your money it will go away.

Lets make it a MASSIVE 2011!!

Happy Capitalism!

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