ORI

Why momentum is worth paying attention to, episode 1001. Orica (ORI) split off from the pack (cumulative total return) and from (arguably) closest domestic peer Incitech (IPL) for quite some time.

Basically, this just tells you that there is “something” to worry about, on an idiosyncratic basis, that is driving the stock, rather than being lost in just a sector wide consideration.

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You can then ponder what or why that is, how it aligns to your (presumably) previously established investment thesis, and then decide whether today’s update is the priced-in confirmation of that something, or if there’s more to come.

Certainly, if you didn’t know what was causing the divergence (an “unknown unknown”) you might hold off on doubling down, or adding to an existing exposure, until the momentum stabilised, or the “confession” of bad news occurs.

ORI hasn’t been one for us, and we’ve preferred to establish an exposure to IPL, but ORI is quite interestingly cheap.

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