no_free_lunch

I agree with everything you said SmallCap. No reason it can't go much lower. I also agree with kevin4u2 on the rising productivity in the US. It is undeniable when you look at the trend of rising production over past 5 years with no concurrent increase in drilling platforms. Despite all of the talk of the producers having to drill like mad just to counteract the high depletion rates, the numbers indicate that productivity is well ahead of the depletion. I should have looked into this more closely before. Basically it doesn't look good. The only positive I see is that the entire media lately is attaching to the idea that there will be an oil bust so maybe it's overdone in the short-term.

OAK Howard Marks, relatively cheap, some hedging as they will do best during times of distress. I think stock is down right now because the dividend has been low for past few quarters. It is basically a bet that divvy will bounce back at some point. Certainly not my most researched stock but come on, it's Howard Marks!

Wow! Thanks for the detailed response. I actually did read your previous emails, that is what got me to the point of trying to understand their financials. :) However I am still very stuck at valuing the company. At this point I can't find their NAV estimates looking through their historical reports. All they talk about is the investments they have made and the amount they are managing in the various funds. I have seen the current estimates on the link you provided but that only goes back to December 2013. I basically am trying to figure out how they pegged NAV in the 2006-2008 time-frame as a comparison.

ap, How do you calculate NAV on this one? It looks like the balance sheet has equity at under $2B but then they have this thing called Capital per Share which is at $52.77. Also, everything is now expensive so I am still interested despite the NAV surplus. Do you have any idea of what the discount/surplus to NAV was back in the 06-07 time frame? Or I can just calculate myself if I could figure out how to do so.

It's .2->1 so your IRR is 400%.

To me that actually sounds rather bullish. :) Just more evidence that most companies have not really bought into the recovery. Since recessions are generally caused by excess, and companies aren't investing, maybe that will push off the next recession even longer.

Also, isn't a fixed asset allocation kind of market timing as well? I mean you are talking about moving funds from 1 ETF to another, from the ETF that has gone up to the ETF that has gone down. So that implies that the ETF which has gone down is a better deal than the one that has gone up. So once your accept that, why not just buy cheaper ETF's to begin with. I think the main poitn you have regarding passive investing is you need to stay fully invested. I will agree to that.

I guess I am just trying to move my value investing from stocks to ETFs. I figure that if value investing works at all (I believe it does) then why can't I apply it to ETF's. So to apply it to ETF's I look for what is out of favour and cheap. Throw in the small-cap phenomenon which has substantial data behind it and you get indexes like XCS. I found some data on small cap canadian companies goig back to late 80's and they have actually had decent results. Even in the 90's the stocks did well and that was not the best time for commodities. This is not some index which is going to 0 unless the Canadian economy goes bust. If that happens, even the larger more established indexes will get cracked as well when the pain hits the banks.

I hear you, I have a tendency to oversimplify. What I am suggesting could take several years to play out if I'm even right. Still just look at the companies in the oil patch that you are familiar with. What do you think will be happening to their capex next year? In general how easy will it be to raise funds next year? I just don't see drilling going up from here and this is in spite of the issues with the decline rates. The natural gas price was a result of the fracking boom from what I understand. There is just more natgas as a by-product than people know what to do with and they generally aren't even drilling for it. I think it just shows how wildly unpredictable commodity prices can be and how many variables there are. The thing is, those variables can go either way.

RSP is a good pick, it's just not very cheap at the moment. I have been thinking of GVAL, just haven't been able to pull the trigger.

I bought into the ishares small cap index today (xcs.to). It is down over 25% from where it started in 2008. It looks like it is actually cheaper based on P/B, P/E, dividend yield than the larger TSX ETF's. For comparison, the dividend yield is around 3%, while the Russel 2000 is at 1.3%. There is about 15% exposure to oil so it is not completely oil driven but no doubt a knock-on effect will occur in the canadian economy if oil prices stay subdued. I am hoping in the long run it will do well.

Will the recent surge in US domestic oil supply really continue at present prices? If nobody is making money then that should have some impact on production. There was already concern that with the high decline rates that shale would peak in the next couple of years, this should accelerate that process.

Does anyone know what this is about? It's the first I have heard of it.

zachmansell, I don't understand the point you are getting at with the small caps. Are you talking about small cap indexes in general or small cap investments of fairfax? Could you elaborate?

The logic is sound but the timing is tough. I have been investing for over a decade and I swear, ever since I started people have been making the same types of arguments about Japan. I guess it could collapse at some point but be careful. Don't they call this trade the widow maker?

Thanks Eli, Packer.

I am looking to get a lot more passive with my investing. While I love the game, I simply can't justify the amount of time I have to put in to beat the market. I am thinking of just putting everything into ETF's and being done with it. That being said, even investing in ETFs I don't want to be completely passive. I have seen the Horizon Kinetic comments on potential dangers of ETFs and would like to keep a bit of a pulse on things. Does anyone have any recommendations on good resources, something comparable to this site, but with an emphasis on ETF's?

Where are they giving monthly updates? I don't see it on the site.

What are you adding to? My only holding in the space is Manitok, but I am always looking for other candidates.

Anyone have any thoughts on the COO being fired? From the little bits and pieces I know of the company, it was essentially the COO & the CEO who started the company back in 2005. The COO brought over the operations team that has (presumably) been instrumental in their success to date. To me, the COO being let go is a mark against the company. Don't get me wrong, it's just one of many variables and I'm still super-bullish but I wish I had more insight into what was going on there. Hopefully it was just a disagreement on strategy and not something related to exploration/production.

Sunrider, Yeah, insider information in Canada is crude, this is how I look it up: 1 - For canadian insider trading go to SEDI, specifically this page: https://www.sedi.ca/sedi/SVTReportsAccessController?menukey=null&locale=en_CA 2 - Click Insider Transaction Detail and then Next. 3 - On the next page there is a dropdown below the text 'Identify insider or issuer'. Select from the dropdown box 'Issuer name'. In the text box beside it, type in 'Manitok'. 4 - Click Search at the bottom of the page.

Thanks gordoffh. I read the article and thought it was fantastic. I like the CEO's style, he strikes me as very open and long-term focused. Just a few quotes: I like above, how he just bluntly states the facts, no managerial BS, just "we let him go". I probably have confirmation bias going right now but the more I research this the more I like it. If there is a dip I am buying more.

http://www.albertaoilmagazine.com/2013/04/manitok-energy-talisman-foothills/

Thanks Cardboard. I figured there was some metric I was overlooking. Perhaps the one saving grace on reserves is they hold some 300k acres undeveloped land. When I was looking at other firms that is a substantial amount, there are firms 10-20x their market cap with only 2-3x the land.

Manitok has a presentation on their website, looks like it must have been put up in the past week or so. A number of interesting items in it, one of the more important to me is that their buybacks continue. From Nov 8, 2013 to June 17, 2014 they have repurchased 8.5M shares, or about 12% of the company. This is partially offset by 1.7M options exercised. However, I don't really view the options exercising as material since they were already in the diluted share count. On page 6 of the presentation they break out their past and future production forecasts. There will be a dip in Q2 to below 5,000 BOE as a result of selling 800 BOE (I need to get a handle on what the disposition was about). They are still forecasting in excess of 7000 BOE in Q4. We will see. They are forecasting to end the year with net debt of $60M versus FFO of $70M which if you look at most peers is extremely low. Many peers have debt 2-3x FFO whereas they are less than 1. This matches their historical record as well since they have consistently kept debt well below FFO. Albeit, in prior years they did issue shares to fund operations. However, this year they have been buying back stock. I find it incredible that they are growing (well forecasting growth) while buying back stock and at the end of the day the debt multiple will still be one of the lowest relative to peers. They forecast $70M FFO, versus a market cap of $170M, so are trading at 2.5x FFO. It just seems incredibly cheap when larger peers trade at 5-10x FFO. It's possible I am just missing something here but that multiple seems far too low. Presentation is here: http://www.manitokenergy.com/files/file/manitok-corporate-presentation-2014-06-20-v006-final.pdf Obviously I am a huge bull on this one. At some point, certainly if they can get to the 7,000 BOE they should graduate into the larger & higher valuation camp. If that happens, with the low debt and ability to continue to grow it could be a multi-bagger. I really need some sense knocked into me on this, seems too good to be true. Why is it so cheap?