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Oct 21, 2009

Analysis of Ivanhoe Energy and UTS Energy Corporation

Taking a short break from gold stocks, I consider moving to energy ones.
Today it’s Ivanhoe Energy vs UTS Energy Corporation. Which one to chose for a short play?

Comparison chart for 5 years shows that overall UTS is a much better performer.

Price wise: October 21, 2009
UTS.TO trades at CAD 2.18 (- 0.06), IE.TO trades at CAD 2.73 (+ 0.02).

IVAN (Ivanhoe Energy traded on US Market) shows a 220% increase in short positions, with 0.3 days to cover. In my books that would translate into a bet that the following days the security will drop. Meaning that for a short play UTS.TO seems to be a better option.
On the daily chart, MACD is moving down on histo negative as well.
As a stock market newbie I got burnt a few times but one thing seems to be pretty clear: never bet against shorts.
As much as I dislike them I have to admit that most of the time they are doing their due diligence with regards to securities and more often then not, betting against them it’s not wise.
The old adage holds true: If you can’t bet them, join them.
I would not go that far as joining them, but I would avoid taking position in a security heavily shorted.

In conclusion: for a short and safe I would go with UTS, waiting for clarification on the pull back experienced today.
Ivanhoe Energy it’s still a good play before the shorts make their move or when it’s time for them to cover position.


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