Having been a long term holder of Turkcell (NYSE:TKC) & having written about it here on my own blog & Seeking Alpha on a number of occasions, I hadn’t thought recently about an article on the subject. However, a few things in the past week have brought it to the forefront of my mind & a conversation with a contact yesterday peaked my interest, so have been doing some back research & looking a little more intently at the action over the last week.
As (hopefully) anyone that is reading this article knows, Turkcell is the market leader by subscribers & mobile revenues in it’s domestic market, with more than 36.3 million users, or 60%, whilst competitors Vodafone & Avea (Turk Telekom) have 24% & 16% market share respectively.
Last week along with 15 of the country’s major banks, Standard & Poors upgraded TKC‘s long term foreign currency rating from negative to stable. TKC has also been a pretty strong performer this year, hitting a low of $11.15 in March up to a high of $18.09 on Wednesday (of which more in a moment). Looking at the long term chart, it’s been a pretty good trend all year, adhering to it’s 20 day SMA, albeit with some volatility coming in in the last two months or so & also increased volumes being traded since August.
Recently we have seen some interesting sell activity in the stock, with plenty of unnatural selling pressure on Monday 21st September, when more than 75% of the daily trades on the NYSE for TKC were sells, against an exchange average of 48%, this is the first thing that caught my eye, but dismissed as housekeeping & profit taking, which is understandable.
This was then followed by two straight days of reasonably heavy buying, followed again by some sustained selling pressure on the 24th September, again followed by heavier than normal buying again. On Monday this week, we saw this activity starting again,out of 120k TKC shares traded 94k or 77.85% were to the short side against an exchange average of 47%. Then yesterday, we saw TKC share volume shoot to nearly 2.3 million shares traded & the stock dropped $0.90 or 5% in an hour. OK, the markets took a tumble yesterday all over, but this is unprescedented for TKC since February this year.
People may be getting nervous on emerging & developing markets & admittedly, we have seen increased volatility coming in in the last 20 days trading, however, Turkcell registers normal daily volumes of of circa 660k shares traded, yesterday we saw 2.273 million shares exchanging hands.
Looking historically at TKC from a technical perspective over 2009, whenever we have seen volatile activity as above, it has been a precursor to another leg up in the stock, as per the chart below.
On the basis that it has just been upgraded on a long term basis, it’s major shareholder is Sonera BV (Telia Sonera of Sweden) & it has just launched 3G along with a raft of new services, I’m a perma-bull on this stock. I spent quite a bit of time researching yesterday & was not able to come up with one single reason why TKC has sustained such a beatdown, I can only surmise that some speculation has been going on in Hedgistan & expect to see another brisk leg up. Correspondingly, yesterday I added 50% to my position at 17.01 & am quietly confident we will see $20 in quick time.