I was hoping I could get your thoughts on Element Financial.
Thanks for the assignment. Element Financial Corp.(EFN TSX) is the latest venture from entrepreneur Steve Hudson who was behind Newcourt Credit Group which was sold in 1999. EFN is self identified as one of leading independent equipment financing companies in North America. The company has made a number of acquisitions most recently closing a $570 million deal to buy GE Capital’s Canadian Fleet Portfolio. EFN seems to be following essentially the same buy and grow strategy that Hudson used at Newcourt. In addition the company has announced a number of transactions to fund their purchases which can be seen as a vote of confidence from investors.
An analysis of the charts will form the basis of my thoughts on how best to proceed with these shares.
The two-year chart tells the tale of a stock that has been very generous to investors over the last ten months. The shares had built a base at $6.00 starting in August of 2012 and then began an advance in December. The move took the price to a 52-week high of $13.54 on August 13, 2013 which was as good as it got. The shares have pulled back and tested support along the 50-day moving average. The question that remains to be answered is if the stock will start another up leg?
The six-month chart has a number of interesting patterns worth mentioning. The first is the test of support along the 50- day moving average in April that set up the move to the 52-week high in August. In addition the MACD and the RSI both generated buy signals in April adding another level of confidence for investors looking to go long. By August however the momentum indicators were telling us that the stock was about to take on some selling pressure which took the price down to $11.70 on August 28, 2013.
Currently the shares are moving higher in an effort to start another leg of this advance. The MACD and RSI are currently indicating that the move off of $11.70 is not yet finished.
Make it a profitable day and happy capitalism!