KAT Exploration Inc (KATX)

[Rick-UK]

The reason why we dropped from .252 to .119 in June...?

Some may recall that a couple of weeks back I hinted at some ideas I had as to why KATX dropped in price in June and said I would post those ideas if they turned out to be relevant. In fact I was glad I held back and waited for more data because it turned out that those ideas were probably not correct. My good friend Relikwie has done some great DD digging over the last few days and now we have additional information to review and this additional information helps us to determine what might have happened. Of course we can never know for sure, but the theory that Rel has come up with fits the facts very neatly. Here's the theory...

1. In November an investor with big pockets took around a 20m share long position in KATX

2. In December through to May this investor added to their long position, buying somewhere between 250,000 to 5m shares each month, leaving them with up to 50m shares in KATX by the end of May.

3. In June we hit this investor's target price of .25 and perhaps realising that there would be a delay of two or 3 weeks before any major announcements, he decided that it was a good moment to flip. He sold say half his shares (that's up to 25 million) on the open market. This helped to bring the share price right down to its low of .119.

4. When the share price fell to below say .125 this was the new target for our investor to buy back in. This of course helped raise the share price back up to our current level.

The above is of course just speculation, but the data that Rel found relates to the trading activity of a specific MM AUTO. Previously Rel and I had been looking at MURF, but Rel found AUTO and took a closer look and I have to say it fits the above scenario very well.

Trading figures for AUTO...

Nov 09 - 23.98m
Dec 09 - 09.87m
Jan 10 - 08.55m
Feb 10 - 01.02m
Mar 10 - 00.96m
Apr 10 - 01.21m
May 10 - 05.41m

TOTAL - 51.00m

Jun 10 - 25.43m

http://www.otcbb.com/asp/tradeact_mv.asp?SearchBy=issue&Issue=KATX&SortBy=volume&Month=6-1-2010&IMAGE1.x=0&IMAGE1.y=0

Of course this theory could be completely wrong. But it is at least a possible explanation, and I think this is useful to reassure longs that this sort of activity in no ways reflects upon the fundamentals of KATX. The fundamentals are still the same and to my mind are very strong. Of course if the above is true I admire whoever the investor is for their great insight - it's easy to be insightful after the event, far harder to get it right beforehand! :o)