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Everything posted by biaggio

  1. http://business.financialpost.com/investing/investing-pro/will-prem-watsas-650-million-bet-pay-off-if-it-does-fairfax-makes-109-billion "Will Prem Watsa’s $650-million bet pay off? If it does, Fairfax makes $109 BILLION"
  2. http://video.cnbc.com/gallery/?video=3000341008 Mark Fisher: Canadian energy on sale
  3. My 8% position has taken a beating here. To add to my possible confirmation bias: http://www.cnbc.com/id/102233663 http://www.bnn.ca/Video/player.aspx?vid=506243 Appreciate all the posts here. Very therapeutic. Keep posting.
  4. kevin4u2, thanks for the info. I am looking at this area because of the recent depressed pricing. I get the feeling that I should probably be avoiding this. So basically we should look at 2 basic things when looking at reserve reports: - Proven reserves - Capex spent vs how much 1P reserves are added--to see that they are spending money intelligently. One should pretty much ignore, or take it with a grain of salt everything else which requires various predictions/estimates. Looking at LTS, they have ~ 79 m barrels of proven producing oil with a F+D cost ~ $31 per barrel= $2.4b --> would others like CPG be willing to pay this instead of doing their own F&D (CPG historic F&D cost ~$24 ...but that was the past) vs LTS current EV=$2.3 b. All the other land , probable barrels are free options. At $4 per share, LTS is a better bargain then at $9 if oil prices cooperate. I can t see it going to zero. (It could be my blindness). If oil prices continue to be depressed or decrease more, they could cut the dividend to zero, cut their capital spending, and cut their operating costs...yes the share price would suffer. Who knows what oil prices will do. They might be up to $100 again. Its possible that prices will stay around $80...I would expect LTS and other companies to adjust to this if they want to survive. Just speculating. Again I appreciate all the healthy skeptism. kevin 4u2, ItsAValueTrap, is there a price or valuation where these types of properties would be considered for your portfolio.
  5. Valuetrap, thank you for your response. Much appreciated.
  6. Kevin I really respect your opinion. You are of the same opinion as value trap, another knowledgable poster here I am just wondering how you go about looking at these reserve reports? For others here, here is a report on reserves starting at the bottom of page 14. http://www.lightstreamresources.com/files/pdf/investor-relations/2013/2013%20Annual%20Information%20Form.pdf It seems that reserves are estimated by Sproule, who seems to evaluate most O&G properties that I have looked at. Maybe thats my problem I am looking at the wrong properties. Are these professional engineering groups in collusion with management similar to the financial auditor pre 2008. With the way things are working out I am really doubting myself. I have a very small 1% position but was thinking of adding. The whole reserve report seems to have a lot of estimates. Estimate for future prices, operating cost, etc...I understand how the NPV number can be BS . How accurate are the estimate of actual reserves in barrels of oil. i.e. if they say that they "probably" have 176 million of barrels of oil in reserve, do we care if its 125 or 200 million barrels....Ok I care, I would rather it be 200 but if you're buying all 178 million barrels for $2.26B ($1.5B in Debt + the rest in equity), that works out to ~$13 per barrel..that seems inexpensive. If they end up having 125 million barrels then that ends up being $18 per barrel...still ok assuming that they can still turn a profit I had assumed that the estimates were roughly accurate +/- 20%. The way I see it they are too good to be true. Yet I want them to be true. I really appreciate Kevin4u2 and value trap introducing some skeptism. Hoping to learn something. Hoping not to lose money.
  7. Potential catalyst= merger + acquisition by other oil + gas companies. Does it not appear that it is cheaper to buy these companies vs drilling for new oil. I am bracing for more price weakness until then.
  8. I don't know about LEG as compared to others LEG is smaller, less debt, probably more growth(i.e. easier to grow), low cost, does not have past management baggage but I think its reflected in the price difference versus the others. No dividend. Everything has been clobbered. Could be because I hold LTS, PWT that I like them vs LEG-- they seem to have a sustainable dividend + seem very cheap: LTS PWT LEG net back 50 39 57 2P 178 625 117.2 estBBL/d 40,000 103,000 23,000 Debt 1.5B 2.4B 0.815B #shares 200m 495m 199.7 EV $2.42B $5.75B $1.93B EV/2p $13.6 $9 $16.5 EV/1000bbl/d $60 $56 $84 Capex 500,000 820m 390 CF/S (2013) $3.43 $2.17 $1.51 Div $0.48 $0.56 0 Div yield 10 8.3 0 Share Price $4.60 $6.77 $5.59 Price/CF 1.34x 3x 3.7x Above retrieved from their most recent investor presentation. They could be wrong. The question is why might the market be right i.e. why are we wrong? I am willing to suffer in the short run. Does anyone else other Canadian oil & gas companies to compare to those above? "Be wary of the high cost associated with a low price" to quote one of the other posters on another thread + my new mantra. Numbers seem to good to be true, 1.3x for LTS??? vs a property they sold recently for 6.5x.
  9. http://www.forbes.com/sites/phildemuth/2014/09/19/charlie-munger-and-the-2014-daily-journal-annual-meeting-a-fans-notes/?partner=yahootix
  10. Earnings, restatement for PWT out http://pennwest.mediaroom.com/index.php?s=27585&item=135228 I quickly scanned above -->Cardboard and others here proven right, restatement a non event? To me it looks like operating results better then expected (or am I missing something?).
  11. http://money.cnn.com/data/fear-and-greed/?iid=H_INV_QL -interesting sentiment index that I have been following -index ( at 5 or extreme fear) => may be time to be greedy + review your shopping list
  12. good website for beginners: www.getsomeheadspace.com
  13. http://www.bakadesuyo.com/2014/04/how-to-motivate-people/ Thought this was good.
  14. Ericopoly's level of thinking is like Ph.d quantum physics vs my level of comprehension (grade 3 math). Found this good write up for the avg. folk - which will probably not give you the outstanding gains like Eric http://www.beyondproxy.com/thoughts-portfolio-construction/
  15. This makes sense to me. I feel like there is a good chance that George + Roberts can turn this around. I would like to see Roberts step in and buy some stock after latest sell off Like Cardboard or Alert said the new management is looking to do straight forward engineering not something high risk/highly technical. The assets are decent from what I understand, it was management that was the issue - hopefully these new guys will make it happen. Alert, I hope Cardboard triples his money from 11. Not unrealistic I hope.
  16. "Sure, but who am I? I was the idiot who bought an initial position in the $11 range and then doubled down at what looked like the low before the last few days…" Cardboard Don t be too hard on yourself Even the best stock pickers are only right 2 of 3 times. In the short run outcomes are mostly luck, good or bad. Hopefully you have helped some of the rest of us (and you 2) make a decent return over the next 3 years. I think you gave us decent info in your posts--thanks
  17. I am ok if they grow their inventory + production by spending the netback. To grasp the economic value of the company I guess I am trying to separate the capex into maintenance capex + growth capex in order to justify future share price. In other words if they produce a barrel of oil and net back $45 as in their presentation. They can spend say $20 on replacing the barrel they just used up and the other $25 on increasing their inventory. production and infrastructure => does this seem reasonable? If this is how it works then I can see why you would want to pay 5X operating cash flow because you spend half on maintenance and other half on growth projects (exploration, infrastructure) Oil and gas has to be a great business because many have made great fortunes from it. I would like to feel I am getting a great deal.
  18. Myth + Alert My concern would be how much is left over after replacing production drop. Would PWT be using up all the EBIT to pay for the DA of EBITDA i.e. is there something left over for shareholders. If there is not much left i.e. your spending all your fund from operation to replace the production drop, then PWT not worth as much as I thought . I like that they have a large inventory. (a hidden asset perhaps?) Can they turn it into cash in your opinion? I would not mind at all if they did not pay any of it as a dividend. If they can derive $45 from a barrel of oil i.e. netback. (would this not be funds from operation) Then they spend $20 to replace that barrel (finding and developing cost) Is there not $25 left available for dividend, debt repayment, acquisition, buyback, etc I am just trying to understand the economics of this industry. Sorry I don t mean to be obstinate.
  19. Thanks Myth for reply If you take a net back of $45 per barrel then subtract $20 per barrel to replace the barrel you sold for net back of $45, would what is left or $25 per barrel be FCF or cash available for dividends ,growth , debt payments or share buy backs? Otherwise No FCF = bad business and perhaps would be better off elsewhere
  20. I was impressed with Roberts. He seems to say all the right things (i.e focusing on free cash flow, investing capital in projects with highest IRR, not worried about just growing unprofitable daily volume to satisfy some folks in the market.) Don t know his track record, I hope he can execute what he says I have recently bought a small starter position Plan to add more if I see Roberts, or Rick George buying. It seems that the sell off in last couple days related to projected decrease in daily volume-volume decrease is as per there plan just coming a little sooner. Personally I have not done well in cyclicals or resource sector. Probably because I don't know what I'm doing. Have been enlightened by posters here and other threads Myth, Cardboard or others I would appreciate what you think of the following: Projecting 5 years down the road. They are projecting 125,000 barrels per day with $45 net back---that works out to netback of $2.05 B => $4.21 per share. If you subtract Finding and development cost of $15-20/barrel, does that give you a reasonable estimate of FCF ---is this right? I am getting a FCF/S=$2.34-$2.80 in 2018 If you give it a multiple of 10--> $23-28 share price + ~7% dividend while you wait at current price which works out to 30-35% per year return. It seems like a decent bet
  21. How Simplifying Your Investment Process Can Make You a Better Investor http://www.beyondproxy.com/investment-process/ -an interview with our very own James East (I do believe) by Manual of Ideas- another star on our board. Congratulation James! You sound like a wise sage by the way---good job. www.beyondproxy.com another good site to check out
  22. It would be interesting to know if GEICO was overvalued, as KO was in the late 1990s, at any point during those next 20 years after Warren sold GEICO. Thanks for posting quote from WEB. I think that even if GEICO was overvalued, it was small enough to scale + grow over 100X over 20 years =you can afford to overpay. i.e. if you overpay by 3-4 x intrinsic value and you make 20 x (by IV growing 100 fold over 20 years) that is still very good. The problem with KO is size. How big can it get. You re potential upside is limited.
  23. Bird,I don t know if these things are knowable. I don t think anyone knows, so it is probably not that important. This concept of expected valuation/probability is new to me. Obviously putting a probability on an outcome is more of an art + guess. Other outcomes may be a lot easier -example; probability that coke will continue to grow earning by x % and will be a great business in 10 years (because everybody knows this,it may not be very important either for the sake of making money, but to realize this) For the sake of (me) learning and discussion: In the case of inflation being >5% my possible out comes would be i >5% or ii <5% Seeing that I have no idea and have no insight I would use (what was recommended in book Thinking, Fast and Slow) the base rate as the most likely. http://4.bp.blogspot.com/-NQAuKUEl4Y0/T3EjXaTS-2I/AAAAAAAABUQ/k21b2SrBnZQ/s1600/U.S.+Yearly+Inflation+Since+1900.jpg it appears that inflation was >5% twelve times over last 100 years So I think that a probability of inflation <5% of 88% is as good as any Therefore probability of inflation >5% is ~ 12% is as good as any, possible but not likely. The second question re US dollar being a world currency: Possible outcomes- yes or No The base rate in my mind would be continuing the status quo especially seeing I have no special insight. If I had special insight or fact then I would adjust my guess accordingly. Intuitively I think it is likely and probable that US dollar will still be the reserve currency. I think its possible but unlikely that some other currency or basket of currency/commodities will be the reserve currency When I think that something is probable, I think that it is at least 51% probable. In this case I would guess that there would be more certainty and while it is probably not 100%, over short period of time like 20 years I will guestimate it at 95-99%. Bird, it may be more instructive to look at how we could use probability, mathematical/expected valuation in some stocks that have recently been discussed and are popular here- say BAC or MBIA or SHLD.
  24. They appear not to be updated---date says Feb 28 Why not just set up your own RSS and save in favourites, then you ll have from original filing e.g. feed://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001056831&type=&dateb=&owner=exclude&count=40&output=atom I spent a few minutes last night settting up several, for some of the funds recommended in one of the other threads (I think it was the "13F" thread)
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