Update on Centro (CNP) - Up 60% since my review 2 weeks ago

Centro Properties Group (CNP) jumped 71% yesterday on news from the Australian Financial Review (AFR) that it was believed to have received six offers, including from private equity firm Blackstone Group, Citadel Investment Group, Macquarie Group Ltd (MQG) and investment management group Lighthouse Partners. The offers were at up to around A$0.90 a share, the paper said.

Responding to a query from the stock exchange, Centro said in a statement it was unaware of any reason for the sharp move in its shares. It said it remained in talks with a number of parties and lender groups in relation to its recapitalization process, but the talks remained incomplete. "At this time, there is no certainty or assurance that these discussions will lead to a transaction, what form such transaction may take, or what value might arise out of a transaction, if any," it added

I had done a detailed review of the stock a few weeks ago, when it was at $A0.35. My final comment was "....the stock is worth a punt for the risk-loving investor and could have significant upside". Recent market volatility and the hit on my portfolio has been me much more risk averse and so I had not taken a position in the stock and unfortunately missed out on the gain. Was this mistake? Should I get in now? Read on.

Is it too late too get into the stock now?

If the rumors are true that offers for the stock are coming in at $0.90, then yes it would be great to buy the stock now as there is almost 80% upside. However what worried me was that the stock went up to $0.65 (by midday) and then fell 20% to close at $0.50c. Most of the gains yesterday were driven by speculation and further stock rises/falls in the next few days will be driven by the same forces. There is a good chance the stock will rise again tomorrow, given the rumor news is being reported in the AFR - a very reputable newspaper. So if you still want to get on the speculative bandwagon, and missed the earlier ride, then now would be the time to jump on. However, as the old saying goes - easy come, easy go. Any bad news will crush the stock price even more swiftly than the rise yesterday.

Am I going to buy some more? No. I was too risk averse when the stock was 0.35c, and I am not going to get in now with so much speculation driving the stock. I am tempted to have a punt though and if I had the cash to burn I would throw in a few dollars (at worst I can write it off as a capital loss if things go pear shaped). Overall though, I think there are far better and more stable stocks out there worth pursuing.

Related Posts:

- Reuters article covering recent news on the stock. My previous article is referenced at the end of the article!
- Recent Centro (CNP) articles at Finance ViewPoint