Posts from the ‘Oil Stocks’ Category

Oct 27

Scaling back on Rock Energy

Third short post summarizing some recent portfolio moves. First two are here and here.

Thoughts on Rock

Every once in a while you luck out and get in just ahead of the crowd. It doesn’t happen very often; usually you have to wait months before an idea begins to play out (ie. my extended comatose with Extendicare). So when it does happen quickly, you have to enjoy it.

I first bought Rock back in August in the $1.60’s. I added to it in the $1.80’s and again in the $1.90’s. Two months later its sitting at $3.35 and has been as high as $3.70. That’s quite a move.

Nevertheless, the biggest thing that has happened to the stock between then and now are people waking up to it being cheap (I am told that Keith Schaefer for one, a newsletter writer, has apparently said some positive things about the stock). And that gives me pause. Read more

Aug 31

8 Comments

Waiting for Novus and adding more Canadian Oil Juniors to the Portfolio (Pinecrest, Palliser)

I have been adding more Canadian oil junior positions.

If you recall, I started my endeavor into the domestic oils a month and a half ago, when I purchased Lightstream Energy and Penn West. That didn’t last long; I quickly jettisoned those names after doing more research, deciding that neither was particularly cheap, and recognizing that there were other, smaller names that were more attractive.

The first names I went with was Novus Energy and that was followed by Longview Exploration, and Rock Energy. Of the three I felt the most comfortable with Novus and made that position the largest. This week, an article came out in a Hong Kong paper (I believe if was the Economic Times) that Novus was about to be taken out by a Chinese company called Yanchang Petroleum (you can access the translated article here, and one version of the original here). The news was clearly leaked, Novus wasn’t ready for it to be released, and the stock has remained halted for the last 3 days.

If the article is to be believed, the value of the transaction is going to be a windfall for shareholders. According to the article the purchase price is $500 million, which after subtracting debt and accounting for stock options would still mean over $2 per share. Given that Novus is an 8% position for me, this would be a huge gain. Read more

Oct 1

Week 65: Doing the work

Portfolio Performance

The turn in housing

– Michael Burry – Scion Capital

The housing market has turned.

Being that it is a huge, lumbering tanker, it takes a long time to slow down and redirect. The changes happen slowly enough that you can miss them if you are focused on the wrong details (price increases and to a lessor degree sales increases) and not enough on the right one’s (inventory). All that matters is that prices are cheap, rates are low, and inventory has come down to levels that leave many cities firmly entrenched as sellers markets. Once buyers stop seeing themselves in the drivers seat, their attitude changes from one of waiting for a better buy to that of getting in before its too late. The vicious circle is replaced by a virtuous one, and sales and price increases will follow. Nothing lasts forever, and the US housing collapse didn’t either.

Falling inventories had to lead the housing turnaround, and that is what we are seeing now. Nationwide in August housing inventories fell from 8.2 months of supply a year ago to 6.1 last month.

Sep 29

1 Comment

Out of Arcan

I sold out of the rest of my Arcan position this week. I took the rest off at $1.18. This was after I had sold the majority of my position a couple weeks ago (September 11th) at $1.25.

I had difficulty making up my mind on the stock. The company could, get taken over any day for a premium, and if that happens I will be kicking myself. But I could also be sitting around for a long time waiting for that day.

I bought Arcan at $1.50 in July. Thus, I’m taking a loss of about 20% on the sale.

The deciding factor for me was this chart, from a BMO research note on the company released two weeks ago.