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Stove

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    The Longleaf Way

    in General Discussion

    Posted

    This might deserve its own post, but here goes anyway.  Contango Oil & Gas (MCF) is spinning off its minerals exploration subsidiary.  The new company is prospecting for rare earth minerals in Alaska.  Lots of news lately about the concentration of rare earth element supply and its effect on the U.S. national security (upwards of 95% of current world output is out of China).  Press release:

     

    http://www.businesswire.com/news/home/20100930005480/en/Contango-Oil-Gas-Company-Announces-Distribution-Contango

    Good article on NFLX

    in General Discussion

    Posted

    Ok Harry, I see you're going to talk about whatever you want to talk about, which is as far as I can tell incoherent ramblings about 'risk control' and 'what people need to hear.'  You've said nothing of substance this entire thread.  Pardon me if I will abandon any further attempts to elicit an argument from you.  Clearly you're not getting it.

    Good article on NFLX

    in General Discussion

    Posted

    Harry,

     

    I don't think you understand the point here.  T-bone is asking you to lay out an argument for the long side case of NFLX.  This is in fact the opposite of confirmation bias.  So far you have avoided doing so.  You say that Tbone is a great example of how not to think.  What are you talking about?  Asking the other side to explain their position is exactly how you SHOULD think.  He (and I) want to hear your side of the NFLX argument, and on this front so far I have been dissapointed with your responses.

    The Longleaf Way

    in General Discussion

    Posted

    Bronco, yes I agree with you on that point.  CHK grew operating profit 10 fold from 2000 to 2009, while OXY just managed to double theirs.  However, along the way Aubrey (with the blessing of Wall Street) almost destroyed the company by leveraging to the hilt and going for broke on natty gas right before an 80% drop in the commodity price, all the while having knockout swaps that didn't actually protect any downside.  I don't know the OXY story that well, but I would guess they are more conservative.  :)

     

    Back to the actual stock price.  What you get in CHK is what you pay for: A risky, leveraged play on Aubrey being able to out-maneuver his competition in getting into the most profitable plays early.  In this sense he has done a great job so far, buying pieces of property for X than selling 20% of them for X.  Maybe he does deserve his compensation in light of these deals, but the model he created is the reason for the share's underperformance.  Stand up in front of a room right now and ask who wants to buy a leveraged play on natural gas that may have a bit more oil in the future, and by the way they need to sell $4 billion of assets immediately to pay for drilling costs.  People will run screaming for the exits.  As for me I like to trip these people on their way out as I buy their shares.

    All the negative news

    in General Discussion

    Posted

    Yes, corporations are running lean and mean, with profit margins near their all-time highs.  And yet earnings for the S&P are projected to grow at something like 15% over the next year.  This implies either continued record profit margins, which I suppose is possible, or increased revenues without eroding margins.  Both of these conditions seem wildly optimsitic in my view.  Blood is not in the streets, not by a long shot.  However, I've been in 70% in cash for 6 months and my trigger finger is getting itchy.

     

     

    Sandridge 2q results

    in General Discussion

    Posted

    I think its more of an issue that they bought Arena resources for something like $1.5 billion and they kept their production target for the year unchanged.

     

    They are actually less levered now but, as always, market wants growth.  Also, they took off natural gas hedges while at the same time reduced gas drilling, which is a mixed signal.

    Dell settlement

    in General Discussion

    Posted

    So Dell settled with the SEC yesterday for $100 over the Intel rebate mess.  Without the rebates Dell would have missed quarterly estimates every quarter from FY02 to FY06.  Michael himself is paying a $4 million fine and the former CFO $3 million.  I know this is old news, but why is this an FFH top ten equity position again?  This guy was taking bribes and calling it profits.  Has Prem ever discussed this publicly?

    under-covered O&G, mining Companies

    in General Discussion

    Posted

    I think what Montier is really saying is that the market is pricing in essentially flat commodity prices going forward, which would be the impetus behind 12% volume growth.  Predicting commodity prices over any period of time is crazy, and should not be attempted by analysts, or people.  But when the market chooses to tell me that copper will not fall below $2.50 for the next 10 years, I will gladly bet against it. 

    SFK pulp

    in Fairfax Financial

    Posted

    Uccmal - that was what I meant.

     

    Re: RBK - that would not be an easy problem to solve unless all those subsidy stop.

     

    During the CC, management mentioned that the two great negatives that greatly impact the profitablity of SFK are reversing:

     

    1. US sibsidy (helps RBK)

    2. High cost of Quebec wood chips. (helps NSBK)

     

     

    Stove - are you sure the biomass is same as black liquor? The management didn't mention this one on their call.

     

    2010 should be better than 2009 for sure. I am a buyer today *unfortunately, was a buyer yesterday as well*

     

     

    Yes it is biomass.  Its a byproduct of the pulping process and can be used to power the pulp plant.  The best part about closing the loophole is that the government says it will generate $24 billion over the next 10 years.  Apparently not giving handouts is now known as 'generating revenue.'  I've been generating revenue all day.

    SFK pulp

    in Fairfax Financial

    Posted

    The black liquor subsidy, or 'alternative fuel subsidy' was not renewed, and ended at the end of 2009.  However there is a biomass provision that could essentially double the subsidy.  there is a provision in the senate jobs bill however to eliminate black liquor from the biomass subsidy.  This would close the 'black liquor' loophole.

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