Official Short-term Investments Thread

[Feruk]

Originally posted by davidI
QEIII and the fiscal cliff make me worried about US$ stocks.
QEIII does worry me, fiscal cliff not as much. They're gonna have to cut spending one way or another. If I had a choice, it'd be defense spending, which is what the fiscal cliff takes a huge chunk out of (granted not only). QEIII worries me because it does seem like it's priced in.

[chibwack]

TLM has been the general consensus in my circles as china's next best bet. Then again its also up ~22% since the announcement so seems like a lot of people are betting on that. Then again I'm no expert.

[davidI]

Originally posted by Feruk

QEIII does worry me, fiscal cliff not as much. They're gonna have to cut spending one way or another. If I had a choice, it'd be defense spending, which is what the fiscal cliff takes a huge chunk out of (granted not only). QEIII worries me because it does seem like it's priced in.

I don't mean fiscal cliff as far as them being unable to avoid falling off it, but more all of the politics that will be around it and the market volatility leading up to it (akin to what happened with the last time they were approaching it and unable to come to a deal until the last minute).


Originally posted by chibwack
TLM has been the general consensus in my circles as china's next best bet. Then again its also up ~22% since the announcement so seems like a lot of people are betting on that. Then again I'm no expert.

I recently saw an article on how much cash Chevron has been sitting on and would not be surprised to see them take a run at someone. I'm not sure what Talisman looks like from a valuation perspective right now, but I could certainly see their assets falling in-line with Chevron's...

[TomcoPDR]

Anyone in Centric Health? CHH.T

[Feruk]

Originally posted by TomcoPDR
Anyone in Centric Health? CHH.T
My opinion from quick look off TSX: Market cap $112M, debt $216M. Made no money last year. Two red flags. Now they're issuing another $25MM in debentures? Pigs! Even if they had a "great story", or "great prospects", the risk is too high for me. I'd much rather wait and buy them at $3 when they have a real balance sheet than risk a penny right now.

[dawerks]

Everyone is iphone this iphone that, but CRUS slid back. I will never ever understand Mr. Market :)

[nonofyobiz]

What do you think about PRTN? I read about it on from this penny stock newsletter. I'm just starting out in this so I don't really know how to analyze stock picks yet. lol

Should I be leery of these newsletter publications?

[borN]

Edmonton Par diff to WTI has drastically contracted - back around the $92 mark now. Most producers in the O&G industry (primarily the small/mid caps) should be entering a ton of hedges. With a locked in high realized price, hopefully we'll see some gains in this sector by year end!

[davidI]

Originally posted by nonofyobiz
What do you think about PRTN? I read about it on from this penny stock newsletter. I'm just starting out in this so I don't really know how to analyze stock picks yet. lol

Should I be leery of these newsletter publications?

Yes. I'd be leery of all penny stocks.

[Feruk]

Originally posted by nonofyobiz
What do you think about PRTN? I read about it on from this penny stock newsletter. I'm just starting out in this so I don't really know how to analyze stock picks yet. lol

Should I be leery of these newsletter publications?
Leery of these newsletter publications? Yes. PRTN, yes. They look like they're doing clinical trials in hope of getting FDA approval for some drug to treat hot flashes in menopausal women. I know nothing about (a) hot flashes, (b) menopause, (c) women. I do know it's all on whether they get approval. If yes, you make money. If no, stock goes to 0. Extreme risk.

[msommers]

Originally posted by Meback


Why, whats the news in regards to this?

Nothing in particular, just consistently see them as top daily gainer/losser so if you're market savy or just willing to take a stab (super risky) might be worth your while.

TLM does seem like a good candidate and I want to get in with them but I think their price is too high right now.

[Feruk]

My guess is it's partially priced in. No announcement = stock takes a dive. Take a look and see what happened to SCS when they didn't wind up getting sold.

[msommers]

^^RE: TLM?

I would have been willing to opt in when it was 12.00-12.50 but now...no thanks.

Funny enough, I saw SCS took a bit of a jump today. A lot of companies on my oil/gas portfolio have been slowly creeping up over the last week or so. Now is a good time to think about adding them if that's your game.

Been pretty sucessful over the last 2 weeks with day trading, lets hope it works out and I can buy myself something nice at Christmas :D

[Feruk]

Yep TLM. Last few days have been great for commodity stocks as QE3 was announced. I've gotten more careful about the risk involved in commodity stocks and only hold a couple names. I've been buying Canadian banks (TD, BNS, CM, BMO) for a long term hold instead and playing the American housing recovery & dividend capture games (WY, AGNC). If I add to oil & gas it'll be more into NVS or buying LEG or WCP. Still my favorite 3 names.

[msommers]

Amazing how much DTX has gone up since I was started watching them last year.

[Red@8]

I've never traded options before. Was going to do my first US options trade yesterday. Noticed that BMO is charging me $388 per trade. Is that normal? Hoping to get some insight from you guys. At almost ~$800 for a buy and sell combined that commission is really killing my profit margin.

[haunt]

Any thoughts on HPQ? Undervalued?
They're looking to make a push in the mobile device market?

[borN]

NKO's up big over the last 7 trading days. The story took as big of a flop as any in 2011/12, but it's up from the ~$9.50's to almost $15.00 today. Potential short term catalysts include the maturity of its convertible debentures in October (so probable refinancing; might pop if it's HY debt which is expected), and the negotiation of Indian natural gas prices above the current $4.20/MMbtu.

Be warned though - lots of volatility in the stock so possibility of momentum loss is there...

[themack89]

Originally posted by haunt
Any thoughts on HPQ? Undervalued?
They're looking to make a push in the mobile device market?

Everything is always funnier in hindsight.

[TomcoPDR]

Originally posted by themack89


Everything is always funnier in hindsight.

Lol you just had to rub that in eh lol

[themack89]

Originally posted by TomcoPDR


Lol you just had to rub that in eh lol

Haha yep. I just hope he didn't pull the trigger, it's not like I want him to lose money.

[cloud7]

This HOD/HOU play have been really interesting these past week or so. Gotta love the fluctuations on every little news out there.

[Meback]

Potash corp is up 13 percent. Anyone know what is going on? No news about it over night, but my bank rolll just got alot fatter !!!

[Meback]

Fuking bullshit. I just fucking updated the browser and its up 20 cent premarket. Fuk google finanace... When i saw it it was up 5.43 this morning i havent slept since 4 am. got ghosted. :nut:

[davidI]

I don't currently trade on the NASDAQ but am thinking about starting after visiting a Whole Foods Market here in New York (which was absolutely packed). I can see the company taking off big time and being quite defensive through any bumps ahead. Not sure I'd get in at this level, but I'm definitely going to start watching it and looking into trading on the NASDAQ.

[Feruk]

Originally posted by davidI
I don't currently trade on the NASDAQ but am thinking about starting after visiting a Whole Foods Market here in New York (which was absolutely packed). I can see the company taking off big time and being quite defensive through any bumps ahead. Not sure I'd get in at this level, but I'm definitely going to start watching it and looking into trading on the NASDAQ.

Not at these levels, I agree. Great concept, but they're trading at 70X+ P/E. Lots of better American plays.

[davidI]

Originally posted by Feruk


Not at these levels, I agree. Great concept, but they're trading at 70X+ P/E. Lots of better American plays.

There is so much room for growth I think that P/E may be justified, though I haven't done a full analysis of the financials yet myself. Check out the chart.

[themack89]

Any of you guys ever read black swan by nicholas taleb?

[borN]

Originally posted by themack89
Any of you guys ever read black swan by nicholas taleb?

Yeah. Unfortunately, I didn't like his writing style, so it was a very hard read (and I don't even think I finished the book)...

[themack89]

Originally posted by borN


Yeah. Unfortunately, I didn't like his writing style, so it was a very hard read (and I don't even think I finished the book)...

Important thing is you tried.. I'm about half way through it, completely mind blasted.

Its just a reminder as to why I don't put too much weight on any quantitative analysis because everybody has the exact same information. And there's the Black Swan effect.

To me this stuff has really just boiled down to having an escape plan if things go sour, which usually involves optionability and lowering your VaR.

The "analysis" most people do on stocks reminds me of the 1001 Days of the Life of the Turkey. :D

[nonofyobiz]

I have a question about making trades on Questrade. If anyone uses it and can help please PM me. Thanks.

[davidI]

Originally posted by nonofyobiz
I have a question about making trades on Questrade. If anyone uses it and can help please PM me. Thanks.

I use QT for some stuff. Feel free to PM me your Q. There are also forums available on QT that you can probably search.

[ZenOps]

Google GOOG just got twacked on the back of the head. Down 9% in 10 minutes.

IBM also on a second down day...

This could be it. If anyone has the nickel balls to short IBM from $200, now would be the time.

[93VR6]

Originally posted by ZenOps
Google GOOG just got twacked on the back of the head. Down 9% in 10 minutes.

IBM also on a second down day...

This could be it. If anyone has the nickel balls to short IBM from $200, now would be the time.

What the hell are you talking about!?

[Feruk]

If you de-Zenops the post, he's talking about the hit Google took today because someone released their quarterly results early and they were not good.

[93VR6]

Originally posted by Feruk
If you de-Zenops the post, he's talking about the hit Google took today because someone released their quarterly results early and they were not good.


Ya, I saw that, I was more referring to the "this could be it" sentence he threw down.

[Feruk]

Oh that's probably the usual babble. "Currencies are about to become worthless, start melting your nickel down."

[ZenOps]

I wouldn't say that. If the stock market crashes, commodities including silver, nickel, copper, etc.. will all crash with it.

At least in spot price. As for actual availability, it will start to disappear as commodity houses go bankrupt (there have already been the two notable commodity house bankruptcies MF global, PFG, and to a lesser extent, Peregrine)

If the Comex declares bankruptcy is basically all over, thats when you call the death of the dollar because there is no physical goods to peg it against anymore (corn, peanuts, metals, etc.) IE: A dollar usually only becomes worthless when there is nothing to buy with it anymore. As long as there are million dollar pennies and $120 million paintings, the US dollar will still have value.

The US dollar in nickel form, is perhaps the strongest currency I've ever seen. It costs them 11 cents to make one afterall. Thing is, each person only has $8 worth. It would be like having peanuts at $100 per ounce, but each person only has a spoonful. Realistically, if the US went back on a metal dollar, they would currently have enough in nickels and pennies per person - to buy 4 gallons of gasoline, and then they would be bankrupt. Its borderline insane to even contemplate the scale of this.

The Japanese Aluminum yen is craptacular. The Euro in nickel form is also crap.

Although at this exact point in time, it would be much safer to short IBM than silver - if one were to assume a market crash. Sub $1.25 per pound lobsters and sub-$25,000 porsches, also possible in a deflationary crash.

Its actually silly to even think about melting nickels, its worth infinitely more in a recognizable coin form. Noone would melt their car down for the $13 per ton in iron it contains. I believe its actually toxic to melt nickel and zinc. The chances of someone opening a backyard foundry for nickel is basically zero (risk to health is too high)

[ZenOps]

BTW: Since this is a car enthusiast forum, I can understand how people would not believe that a new Porsche might be $25,000.

If you can produce a nickel for 11 cents and yet sell it for 5 cents, that is a deflationary effect in itself. One does not need to actually make profit in fiat US dollars, but the period of selling below cost usually does not last very long.

A 6-digit Porsche can absolutely be sold for $25,000 if someone is in a deflationary spiral. A $200,000 house in Detroit a few years ago goes for $8,000 nowadays. A million dollar house in California definitely can be sold for $80,000 if people continue to burn all their life savings on gasoline. Man made it to the moon 40 years ago, but now the best we can do is a guy freefalling from a balloon.

Everything is pointing to deflation (and what usually tends to happen right after that, is excessive inflation)

[themack89]

It's great you have a theory, but trying to time it is a fools game and you know it.

[ZenOps]

Isn't everything in life a gamble.

There have already been localized pockets of deflation, the Detroit housing market, Maine lobster, North American natural gas.

People try to time a market buy and sell for profit, how is trying to time a deflation and inflation for profit any different?

We are actually at a crossroads here where there is a potential for a currency collapse as well. There hasn't really been a currency collapse of large significance in the world since the 1945 to 1948 years. I'm not a doomer, but anyone can see the possibility. Probably Yen, maybe Euro, and even the US dollar.

It perhaps the most important of all to keep an eye on a potential dollar collapse because if it does happen, any percentage you have made in electronic or paper dollars in the last decades will basically mean absolutely nothing. Just like China in 1948, you could have had 3 million Yuan, by 1949 it would have had the purchasing power of 1 Yuan (3,000,000 to 1 devaluation)

Its important for people to know the proper steps to take if there is a currency collapse, as there may be as little as hours to days to take action. It would be just like a fire, people would be scrambling over each other not knowing what to do.

The first thing I'd suggest any stock market player does is determine how long settlement dates are (4 days is too long) and whether or not the bank has the power to put holds on it in case of bank closures or holidays.

[themack89]

Exactly you just reiterated what I said.. Timing is impossible, and evidence of this is that nobody can do it consistently and accurately. Instead I resort to the next best alternative, which is lowering your value at risk and making sure you have an exit plan (You mentioned having an exit plan in your post just now, maybe you are smarter than I thought you were).

Keep it in perspective though. Those Black Swan events, though seemingly improbably (and so many people are going to call you crazy in lieu of reality) you should always be ready for them; but don't turn your life completely upside down for it... Unless, of course, it's your trading and investing style to have minimal success for extended periods of time and then you get a huge pay day when the shit hits the fan.

If you are super scared, I think the only reasonable approach is hard assets which will still be demanded by 'somebody'. Preferably an asset that can be easily separated and exchanged in partitions so you have some flexibility to chip away at it (e.g. an oil reserve or fertile farm land as opposed to a house). If it were me I'd go for an energy source, people love energy.

[davidI]

Here's a good article that somewhat deals with timing and how hard the market can be to play. It raises a few points about a 'permanent fund' I'd like to read up more on too.

http://seekingalpha.com/article/949001-almost-no-one-makes-money-from-the-stock-market-alone

[themack89]

Originally posted by davidI
Here's a good article that somewhat deals with timing and how hard the market can be to play. It raises a few points about a 'permanent fund' I'd like to read up more on too.

http://seekingalpha.com/article/949001-almost-no-one-makes-money-from-the-stock-market-alone

Do people actually still just buy equities straight up with no leverage or any derivative support?

[roopi]

Originally posted by themack89


Do people actually still just buy equities straight up with no leverage or any derivative support?

Yes

[ZenOps]

Most markets only make money for the traders who take a percentage. They make money on the buy or sell.

Currency converters are the exact same, they take a couple percent either way, but they never really lose as long as people keep on converting.

Its the same with lawyers and lawsuits, as long as people sue then countersue, ad infinitum - its basically always the players that lose.

Someday I do assume that it will eventually fall apart, I mean really - its like burning $100 in gas to make $98... Unsustainable. But hey, while its still going - let the good times roll. And if they stretch it out sooo far that I'm long gone before the SHTF scenario, all the better.

Always have an express line to the exit door however. And never underestimate the anger of youth if they start pointing fingers.

[ZenOps]

BTW: Depending on what economic theory you believe, a currency collapse is inevitable. Just like an Earthquake, if its been a century since the last one, you are more than likely overdue for the next one.

No paper money has ever survived the test of time. Chinas currency has collapsed many different times in history. Sometimes they are hard crashes, other times softer.

It might not even be triggered by a black swan (like WWIII) it may just simply be human nature of the way we interact in a system that does not require actual productivity to gain fiat dollars.

IE: At this particular point in time in the US, its much more advantageous to try and get six-digits in debt and then declare bankruptcy, then to save a box of pennies or a barrel of oil. Consumption to prosperity (the Donald Trump style of economics), which can and does work, but only for so long because eventually you can only export the inflation for so long as others starve on your bankruptcy.

[ZenOps]

-

[dawerks]

A little help fellas? :)

I am unsure about NVDA. I have some shares, and I'm not sure what to do with it. My gut says to buy more. Other than that, I am looking for an unbiased 3rd party info or review on it.

Maybe my vision is clouded because of my CRUS score, but I would like some 'independent' views on it (good or bad!)

Thanks!

[borN]

A lot of downward pressure on oil sand equities over the last few days. Oddly enough, Edmonton Par is currently trading at a premium to WTI, whereas a month ago it was at a significant discount. This would be a good sign for domestic producers; however it isn't looking too good for oil sand players right now...

Some significant points:

1) Western Select is trading at a significant discount to Edmonton Par - last checked it was around the ~$59 mark (the differential of ~$30 has only been reached probably around 5 times over the last 5 years)

2) Transportation issues still are abundant. A lot of companies are increasing its supply faster than what's available by pipe. Even though some producers are switching to rail car, there's still a huge glut in what producers are sending out of AB.

3) A lot of east coast refineries are going to be shut down in the short term due to Hurricane Sandy. With distillates trading below the 5 year range, there should be a bullish trend in the short term.

4) A few refineries in PADD 3 with coking capacity are putting heavy demand on heavy oil; currently, there's a lot less light sweet oil being imported into PADD 3. This is going to cause Louisiana Light Sweet (LLS) to be priced at a discount to Brent... We'll see where heavy oil demand goes.

Might be time to purchase some oil sand names... If I were to put money on a company, I think MEG is positioned well right now - just not sure when to buy!

Closing prices:
MEG - $36.00
CVE - $34.60
COS - $20.60
PXX - $3.38
STP - $1.34
IE - $0.66
SU - $33.10
CNQ - $29.78

[effingidiot]

Originally posted by borN
A lot of downward pressure on oil sand equities over the last few days. Oddly enough, Edmonton Par is currently trading at a premium to WTI, whereas a month ago it was at a significant discount. This would be a good sign for domestic producers; however it isn't looking too good for oil sand players right now...

Some significant points:

1) Western Select is trading at a significant discount to Edmonton Par - last checked it was around the ~$59 mark (the differential of ~$30 has only been reached probably around 5 times over the last 5 years)

2) Transportation issues still are abundant. A lot of companies are increasing its supply faster than what's available by pipe. Even though some producers are switching to rail car, there's still a huge glut in what producers are sending out of AB.

3) A lot of east coast refineries are going to be shut down in the short term due to Hurricane Sandy. With distillates trading below the 5 year range, there should be a bullish trend in the short term.

4) A few refineries in PADD 3 with coking capacity are putting heavy demand on heavy oil; currently, there's a lot less light sweet oil being imported into PADD 3. This is going to cause Louisiana Light Sweet (LLS) to be priced at a discount to Brent... We'll see where heavy oil demand goes.

Might be time to purchase some oil sand names... If I were to put money on a company, I think MEG is positioned well right now - just not sure when to buy!

Closing prices:
MEG - $36.00
CVE - $34.60
COS - $20.60
PXX - $3.38
STP - $1.34
IE - $0.66
SU - $33.10
CNQ - $29.78

I'm not entirely sure why the producers have been busy building up production capacity, but completely ignored transport capacity over the last 10 years. The quality of strategic planning in downtown boardrooms is extremely pathetic - the small-minded "grab what you can NOW and run" redneck mentality doesn't really help. Great job, guys: you've locked yourselves into a market which is projected to become self-sufficient within the next 5 years (it wouldn't be so bad if there was any excess transport capacity, but the way things are now, expanding production will put even more downward pressure on realized prices) and building new pipelines is going to cost several times more compared to what it would've cost 5-10 years ago :facepalm: Of course, given the current state of global economic affairs, the risks are a lot greater now too. I think we're in for a major downsizing: first, they'll start cutting drilling/construction budgets (already happening), then they will move on to scaling down production from existing wells. Fun times ahead.

[davidI]

^Both ENB and TCP have been trying to build pipeline capacity. I don't think anyone expected the government to slow them down as much as they have.

Besides, most projects are still economic and using your same argument, may cost 5-10 times more to build years from now.

[dawerks]

CRUS obliterates earnings. Back to 3 and then 4 bags for me.

NVDA headed the other way though, hmm. Thinking of buying more.

[dawerks]

CRUS got beat today!! I will never understand the market :)

[davidI]

I'm starting to watch TLM. If it finds a bottom, I think there will be a nice pop if / when the CNOOC and Petronas deals get approved. It's just a watch list addition for now though. Gotta take a harder look at their financial position.

[Feruk]

Thoughts on COW (iShares Global Agriculture Index Fund)? Looking at seasonality till December.

[KappaSigma]

Donnycreek with another large Montney well.

This sucker will be taken out in 12-18 months IMO.

[Red@8]

Originally posted by davidI
I'm starting to watch TLM. If it finds a bottom, I think there will be a nice pop if / when the CNOOC and Petronas deals get approved. It's just a watch list addition for now though. Gotta take a harder look at their financial position.


I've got TLM on the watch list as well. I've had some really bad timing on my energy plays this year, so I'm playing my trades super cautious right now.

[TomcoPDR]

Originally posted by davidI
I'm starting to watch TLM. If it finds a bottom, I think there will be a nice pop if / when the CNOOC and Petronas deals get approved. It's just a watch list addition for now though. Gotta take a harder look at their financial position.

Got outta TLM around $13.80. So relief

[Feruk]

Bought a bunch of TBE today. Their capital efficiencies are DIRT cheap. They just spin off tonnes of cash and pay a 6.5% dividend monthly! Gonna sit in this one for years to come hopefully.

[Red@8]

Originally posted by Feruk
Bought a bunch of TBE today. Their capital efficiencies are DIRT cheap. They just spin off tonnes of cash and pay a 6.5% dividend monthly! Gonna sit in this one for years to come hopefully.

You mean a 6.5% annual dividend that is paid monthly. Oh man, I totally read your post as a 6.5% dividend per month.

[Hi-Psi]

Originally posted by Feruk
Bought a bunch of TBE today. Their capital efficiencies are DIRT cheap. They just spin off tonnes of cash and pay a 6.5% dividend monthly! Gonna sit in this one for years to come hopefully.

I really like them as well and have held them for a while, wish I would have got in it a couple years ago when I was originally started watching it though.

[Feruk]

Originally posted by Red@8
You mean a 6.5% annual dividend that is paid monthly.
Yeah, that was poorly written on my part. So many good deals among oil juniors right now... RPL just announced they'd start paying an almost 10% dividend, these guys at 6.5% with low execution risk, and WCP will likely declare a dividend soon too.

[dawerks]

Waa! I made over 100% profit on CRUS, and I feel terrible!!

I got stopped out for a 2 bagger, but easy come easy go! NOW it can rebound, but it's going to be without me. I ot greedy and I thought it was going to be a multi bagger.

Comes at an awful time as I have a grip load of capital gains already and I was hoping to carry this forward to next year (off by a month). Double waah!

First world problems! :)

[davidI]

Originally posted by davidI
I'm starting to watch TLM. If it finds a bottom, I think there will be a nice pop if / when the CNOOC and Petronas deals get approved. It's just a watch list addition for now though. Gotta take a harder look at their financial position.

Looks like the CanAccord Analysts are thinking along the same lines...

"Thursday, November 8, 3:42 PM Talisman Energy (TLM +1.4%) shares are ripe for investment following a recent slide, Canaccord Genuity believes, seeing TLM as a beneficiary if a positive decision is made on takeovers of Nexen and Progress Energy, especially if new rules are "relatively benign when it comes to a company with zero oil sands exposure and assets mostly outside of Canada, like TLM."

[ZenOps]

Just a warning about stocks, The US fiscal cliff is coming, while it means a whole bunch of tax laws are coming in, perhaps the most important to someone in the stock market is this:

http://www.businessweek.com/news/2012-11-08/obama-victory-leads-wealthy-to-make-quick-pre-2013-moves

US Capital Gains

"An investor who sells $100 of stock with a cost basis of $20 in 2012 would see proceeds -- after capital gains taxes -- of $88, according to an analysis by J.P. Morgan Private Bank. Next year, if Congress doesn’t act, earnings from the sale would drop to $80.96 if rates rise to 23.8 percent. That means the stock price would need to rise by at least 9 percent for an investor to be better off selling in 2013."

There may be many waiting right to the wire to sell off in Dec to avoid losing an instant 9%.

If Romney were in, he would have probably stopped this "initiative".

[borN]

Originally posted by Feruk

Yeah, that was poorly written on my part. So many good deals among oil juniors right now... RPL just announced they'd start paying an almost 10% dividend, these guys at 6.5% with low execution risk, and WCP will likely declare a dividend soon too.

Yeah a ton of potential value with some juniors right now. TBE is a pretty solid pick if you want to get consistently paid - a sustainability ratio under 100% is always a good thing, however I'm not sure what it'll be for Q3/Q4 due to the Waseca acquisition. I actually know quite a bit about RPL...it was about time a company acquired assets in the Bakken and made it a small growth dividend player. Most people thought it'd be Novus...

I'd strongly consider taking a look at Manitok and Bellatrix if you're looking at junior E&P's.

[ZenOps]

Osisko OSK got hammered today, down 7.5%.

Only 36,440 ounces of gold for the month of October. Terrible.

[borN]

Originally posted by ZenOps
Osisko OSK got hammered today, down 7.5%.

Only 36,440 ounces of gold for the month of October. Terrible.

It isn't hammered because of its throughput. It got hit because it acquired Queenston at a significant premium. Not to mentioned the acquired company has no near term production and it was an all-share transaction, making it pretty dilutive...

[canadian_hustla]

so whats going on with the people with CDN mutual funds?

Stay in the market, or GTFO?

Just curious as I hold a bunch which are getting hammered.

Thanks!

[dawerks]

Obama. Worst President ever. I think people in the US are waking up and realizing that the honeymoon is officially over and they are FUCKED for 4 more years.

I am getting very pessimistic about the market and unwinding some US trades. Nice run on some but there's no real reason to buy anymore.

Maybe RIM.TO but that's it :)

Unless they pump another trillion or two into another QEx

[Red@8]

I've got a lot of stocks on my watchlist that are setting new 52 wk lows the past few sessions or pretty close to their 52 wk lows. I assume I am not the only one.

Whats the consensus? Anyone bargain shopping yet or still on the sidelines?

[roopi]

Originally posted by dawerks


Maybe RIM.TO but that's it :)



I've been in this since $6.80 and it's had a nice run over the past month. I've sold a bit but holding on to the majority. :thumbsup:

[Sugarphreak]

...

[Type_S1]

Originally posted by Sugarphreak
I've been doing a bit of bargain hunting, looking for some longer term performers though. With Black-Friday right around the corner I think Canadian retailers might be a good one to grab as they will probably see epic Q4 results this year. US retailers.... not so much.



Two new phones are coming out in Q1, both supposed to be running BB10... I am sure the Apple and Driod bias testers will pronounce them massive failures as usual, but I am looking forward to it and I think other BB users are as well. I need to replace my 9780 this upcoming spring.

Agreed with the Canadian retailers. Could be a good short term pick up.


but lol....you still use blackberry? :rofl:

[Sugarphreak]

...

[roopi]

Originally posted by Sugarphreak


Yep.... love having a keyboard as I can rail off e-mails quickly, it integrates with my work calander seemlessly, and BBM is faster and more reliable than text messaging (and free). Plus I picked up a couple of playbooks for super cheap and the bridge between them and phone works awesome. Probably the best part is my battery life lasts a week with moderate use with no touch screen.

Completely agree with all of this. When I was in HK/China last week it was amazing at the phones I was seeing in peoples hands. It seems the majority of business users had a BB and everyone else had some sort of Samsung/Android device. Didn't see alot of iPhones at all.

RIM has definately lost market share in NA for the average user however they still have a large business customer base and has done a good job in developing markets.

[dawerks]

I bought RIM yesterday and Today. I made money of the last dead cat bounce and I'm planning to hold till January release (maybe sell on news etc).

The only problem I see is that there is ALOT of sellers waiting in the wings so it might have some strong headwinds to fight. Just about every single major and minor Canadian mutual fund had RIM.TO in it so just wondering how the fund traders are going to 'trade' it as it goes up.

Hope they are not selling their remains on the way up :)

[roopi]

Originally posted by dawerks
I bought RIM yesterday and Today. I made money of the last dead cat bounce and I'm planning to hold till January release (maybe sell on news etc).

The only problem I see is that there is ALOT of sellers waiting in the wings so it might have some strong headwinds to fight. Just about every single major and minor Canadian mutual fund had RIM.TO in it so just wondering how the fund traders are going to 'trade' it as it goes up.

Hope they are not selling their remains on the way up :)

Good timing since it's looking to be a good day for RIM. I think this is just the beginning with this one.

[dawerks]

Couple of nice days with RIM. :)

CRUS came back to life after APPL jumped, but I'm not buying. I will buy APPL if there is another gift pullback but I think I missed this train.

[Sugarphreak]

...

[Type_S1]

Originally posted by Sugarphreak


Yep.... love having a keyboard as I can rail off e-mails quickly, it integrates with my work calander seemlessly, and BBM is faster and more reliable than text messaging (and free). Plus I picked up a couple of playbooks for super cheap and the bridge between them and phone works awesome. Probably the best part is my battery life lasts a week with moderate use with no touch screen.

Brings me back memories of my BB. I do miss the full keyboard, great email system & BBM but BBM became useless when my list of 150 people dwindled to under 30 when the Iphone 4 was released.

Iphone needs to steal BB's email capability.

[dawerks]

Another nice day for RIM!

I think the fundies are waiting and not selling, hopefully it turns out to be another nice Canadian stock that all the Fund Managers can buy again.

[Rat Fink]

.

[davidI]

A good article by Keith Shaeffer (Oil & Gas Investment Bulletin) on these dividend paying juniors:

The leading Canadian junior oil companies are doing whatever they can to create value for their shareholders.

Three of the top junior oil companies in Canada are turning away from high growth and into dividend plays this morning. These are all well-respected, leading junior management teams. One was no surprise, and one was a big surprise.

Whitecap (WCP-TSX) announced on Tuesday night—but management had been broadcasting their intent to the market for several months. This 15,000 bopd oil producer will yield 6.8% based on Tuesday’s close and grow production by 3-5% per share per year. They are 49% hedged at $100/bbl and have net debt of $335 million on a $450 million debt line.

The big surprise was the merger between Pinecrest (PRY-TSX) and Spartan Oil (STO-TSX). Pinecrest was THE market darling from late 2010 through 2011, trading near $400,000 per flowing barrel at one point (vs. a peer average of $75,000), but the stock has a miserable chart in 2012.

The PRY/STO merger will have 9100 bopd of 90% light oil, net cash of $35 million with a $225 debt line, and a sustainability ratio of just over 100% (dividends + drilling costs / cash flow).

Investors have to wonder—if the companies considered to be the best producers are having a hard time creating shareholder value to the point they feel the need to change, what does that say for everyone else in the sector?

And is this new business model sustainable? Is size, income and slower growth the answer for these companies and their shareholders? It hasn’t done much for dividend payers like Enerplus (ERF-TSX), Bonavista (BNP-TSX) or Pennwest (PWT-TSX).

With uncanny timing, Canadian brokerage firm National Bank (who have the best and humorous daily energy letter in the country) issued a small report yesterday outlining what they think will work for junior growth companies turning to an income model. They’re a little self-evident but here it is:



























Any failure in any one of the 8 components could cause dividend cuts... which are painful.

This move does have some risk here—growth via acquisition is now their mantra. These companies need the institutions to support their stock and give it a premium valuation over other juniors—or else they can’t buy anything accretively. They still have to show great capital efficiency—meaning they have to bring a lot of oil out of the ground real cheap—cheaper than the next guy.

The market doesn’t pay for just size or growth; it pays for accretive growth.

Personally, I don’t see a sub 5% yield on a junior stock with a sustainability ratio near 100% (capex + dividends / cash flow). There is still a treadmill of production—fast declining wells—they have to deal with, and now they have a big chunk of their cash flow going out the door every month. Cost discipline is key

The results of this trend so far are mixed—Twin Butte (TBE-TSX) has enjoyed a nice chart since it transformed into a dividend payer last year—but Renegade Petroleum (RPL-TSX) has been treading water in its share price since it announced it was turning to income.

Both new income companies (WCP and PRY) have a large drilling inventory—years—and upcoming potential from waterfloods where costs are only $10/barrel vs. $35-$45 for primary production. But they both have high payout ratios, which will make them vulnerable to commodity price swings. And again, they both have very highly respected management teams.

Here’s my quick take on these two new companies:


Whitecap

Shares Issued 127 million

2013 cash flow $240 million

2013 Capex $152 million

2013 dividend $0.60/share or $76.2 million

Yield from Nov 20 6.8%

Capex + dividend $231.2 million

Sustainability ratio 95%


LIKES


-low decline rate—under 30% on production



-49% hedged at $100/bbl on oil



-38% hedged at $3.26/mcf gas



-cheap wells give them flexibility if commodity prices turn down



-waterflood potential


DISLIKES

-still a high sustainability ratio (arguably best in the group)

-market hates any debt right now—they have $335 M on $450 M line

PINECREST

Shares Issued 513.4 million

2013 cash flow $200 million

2013 Capex $130 million

2013 dividend $79.6 million

Yield from Nov 20 8.3% or $0.155/share

Capex + dividend $231.2 million

Sustainability ratio 103.8%

LIKES

-high netback over $60/bbl

-low debt—0.2x cash flow

-waterflood potential

DISLIKES

-high sustainability ratio over 100%

-high share count—over 500 million—that’s a lot of volume needed to trade up

-not much production hedged yet

-40% decline rate—high

BACKGROUND

Stepping back, the junior sector has been adapting to several changes in the last 12 years—both geological and business.

The end of income trusts—no more easy exit strategy/buyouts

The shale revolution

Super low natural gas prices. Juniors are still in a “hangover phase” from when the Canadian income trust sector was raging in the last decade. (American readers: income trusts=MLPs, roughly speaking.)

Management teams didn’t have to build companies anymore, they only had to build “plays”—one area of decent production growth and suddenly they could get bought out much sooner, and for a lot more money, than they ever could before.

The income trusts traded at a premium to the market in a low yield environment. Then a financial genius came up with the idea of paying monthly dividends, not quarterly, and valuations really ramped up. Income trusts could buy anything and it was accretive.

Before the income trust game, there were intermediate producers in Canada—those between 10,000-30,000 bopd. They either turned into trusts or were gobbled up by one.

Junior teams came to have a much shorter time horizon in their public-company-building visions.

As the income trust game ended over the last few years the shale game kicked in—especially up until April 2010. As investors realized the low-risk development potential of tight oil plays after discovery, there was a series of buyouts by companies like Crescent Point (CPG-TSX) and Petrobakken (PBN-TSX).

But the change was that these plays are incredibly expensive, with wells costing $3-$10 million. A lot of money needed to be raised—and shares printed—to pay for the acquisition and development of these new tight oil plays like the Cardium, Bakken, Slave Point and Beaverhill Lake.

And then after the market thought Petrobakken overpaid for three Cardium juniors, the M&A game slowed down a lot.

The end result after billions thrown at tight oil is that only a few companies have enjoyed strong per share growth in production and cash flow.

And even fewer companies are getting rewarded for it. Charts like DeeThree (DTX-TSX), my #1 junior producer pick for 2012, are very rare.

Now, on top of all that, the market has started to factor in lower oil prices next year for both American and especially Canadian producers. The American benchmark WTI price is $23/barrel below Brent pricing in England. Canadian, Bakken and now Texas oil prices are $10-$20 a barrel below WTI—and with clogged pipelines and refinery shutdowns, that could play out throughout 2013. (Canadian heavy oil is almost exactly half the price of Brent today.)

If you consider it takes an average $40 to produce a barrel of oil, a $9 reduction in oil price from $90-$81 is only 10% drop in revenue, but it’s an 18% drop in profit.

What we’ve seen in the markets lately is the generalist institutional money—especially in the US but also Canada—leave the junior oil sector. Growth and good management is not getting rewarded.

So maybe income and good management will. Is this a sustainable business model now? Other dividend payers like Petrobakken, Pennwest, Enerplus, etc. are down in share price this year. Time will tell.

But I think it’s a major turning point for the entire sector.

[e36bmw///]

nm

[roopi]

Originally posted by dawerks
Another nice day for RIM!

I think the fundies are waiting and not selling, hopefully it turns out to be another nice Canadian stock that all the Fund Managers can buy again.

$11.73 high today and alot of volume in the first hour. Looks like there was another upgrade on the stock today. :thumbsup:

[dawerks]

Originally posted by roopi


$11.73 high today and alot of volume in the first hour. Looks like there was another upgrade on the stock today. :thumbsup:

Blingos!!

Much more satisfying watching an old Canadian dog rise up again! Good buy for you, almost a 2 bagger! Looks like a multi-bagger over the long term.

I will have to wait a bit but I'm pretty sure I will get 2 bags out of it as well :)

[roopi]

Originally posted by dawerks


Blingos!!

Much more satisfying watching an old Canadian dog rise up again! Good buy for you, almost a 2 bagger! Looks like a multi-bagger over the long term.

I will have to wait a bit but I'm pretty sure I will get 2 bags out of it as well :)

I'm sure you will. I'm riding this one out for a while. I'm sure we are due for some down days but overall this should keep rising until the release date (unless they blow/delay that). Then I don't even want to see what happens.

[in*10*se]

Originally posted by davidI
A good article by Keith Shaeffer (Oil & Gas Investment Bulletin) on these dividend paying juniors:

The leading Canadian junior oil companies are doing whatever they can to create value for their shareholders.

Three of the top junior oil companies in Canada are turning away from high growth and into dividend plays this morning. These are all well-respected, leading junior management teams. One was no surprise, and one was a big surprise.

Whitecap (WCP-TSX) announced on Tuesday night—but management had been broadcasting their intent to the market for several months. This 15,000 bopd oil producer will yield 6.8% based on Tuesday’s close and grow production by 3-5% per share per year. They are 49% hedged at $100/bbl and have net debt of $335 million on a $450 million debt line.

The big surprise was the merger between Pinecrest (PRY-TSX) and Spartan Oil (STO-TSX). Pinecrest was THE market darling from late 2010 through 2011, trading near $400,000 per flowing barrel at one point (vs. a peer average of $75,000), but the stock has a miserable chart in 2012.

The PRY/STO merger will have 9100 bopd of 90% light oil, net cash of $35 million with a $225 debt line, and a sustainability ratio of just over 100% (dividends + drilling costs / cash flow).

Investors have to wonder—if the companies considered to be the best producers are having a hard time creating shareholder value to the point they feel the need to change, what does that say for everyone else in the sector?

And is this new business model sustainable? Is size, income and slower growth the answer for these companies and their shareholders? It hasn’t done much for dividend payers like Enerplus (ERF-TSX), Bonavista (BNP-TSX) or Pennwest (PWT-TSX).

With uncanny timing, Canadian brokerage firm National Bank (who have the best and humorous daily energy letter in the country) issued a small report yesterday outlining what they think will work for junior growth companies turning to an income model. They’re a little self-evident but here it is:



























Any failure in any one of the 8 components could cause dividend cuts... which are painful.

This move does have some risk here—growth via acquisition is now their mantra. These companies need the institutions to support their stock and give it a premium valuation over other juniors—or else they can’t buy anything accretively. They still have to show great capital efficiency—meaning they have to bring a lot of oil out of the ground real cheap—cheaper than the next guy.

The market doesn’t pay for just size or growth; it pays for accretive growth.

Personally, I don’t see a sub 5% yield on a junior stock with a sustainability ratio near 100% (capex + dividends / cash flow). There is still a treadmill of production—fast declining wells—they have to deal with, and now they have a big chunk of their cash flow going out the door every month. Cost discipline is key

The results of this trend so far are mixed—Twin Butte (TBE-TSX) has enjoyed a nice chart since it transformed into a dividend payer last year—but Renegade Petroleum (RPL-TSX) has been treading water in its share price since it announced it was turning to income.

Both new income companies (WCP and PRY) have a large drilling inventory—years—and upcoming potential from waterfloods where costs are only $10/barrel vs. $35-$45 for primary production. But they both have high payout ratios, which will make them vulnerable to commodity price swings. And again, they both have very highly respected management teams.

Here’s my quick take on these two new companies:


Whitecap

Shares Issued 127 million

2013 cash flow $240 million

2013 Capex $152 million

2013 dividend $0.60/share or $76.2 million

Yield from Nov 20 6.8%

Capex + dividend $231.2 million

Sustainability ratio 95%


LIKES


-low decline rate—under 30% on production



-49% hedged at $100/bbl on oil



-38% hedged at $3.26/mcf gas



-cheap wells give them flexibility if commodity prices turn down



-waterflood potential


DISLIKES

-still a high sustainability ratio (arguably best in the group)

-market hates any debt right now—they have $335 M on $450 M line

PINECREST

Shares Issued 513.4 million

2013 cash flow $200 million

2013 Capex $130 million

2013 dividend $79.6 million

Yield from Nov 20 8.3% or $0.155/share

Capex + dividend $231.2 million

Sustainability ratio 103.8%

LIKES

-high netback over $60/bbl

-low debt—0.2x cash flow

-waterflood potential

DISLIKES

-high sustainability ratio over 100%

-high share count—over 500 million—that’s a lot of volume needed to trade up

-not much production hedged yet

-40% decline rate—high



just want to note that WCP's D/Cf ratio is 1.3 for 2013 lower than the peer average of 1.7. (see page 17-18)

http://www.wcap.ca/uploads/Presentations/Nov_21_12.pdf

even at $70 oil and $3 dollar gas the ratio is only 1.57 which is still less than its peers. The sustainability ratio also is only at 107% at those prices. again with their peers average at 124% at current prices.

Not a lot of cons for WCP...

But for the PRY/STO

sustainability is already above 100% and thats not even at $70 oil and $3 gas. They will struggle just like PWT if oil drops. and same w/ their debt ratio.

Also word on the street is that this deal came through on a whim over like 2 weeks, and is a total surprise. Not much thought, due diligence, or modeling has been probably done compared to the not so surprising WCP dividend model.

a very big difference is the hedging for 2013/2014 that WCP has over PRY/STO and RPL. Even a big drop in oil doesn't hurt WCP nearly as bad as the other co's because of the hedges already in place. Look at each of their sensitivity models in the presentations or analyst reports... its a significant portion of cashflow.





Anyways.

also a good read about the changing of junior E&P co's.

http://www.calgaryherald.com/business/energy-resources/Juniors+getting+bigger+technology/7591026/story.html

[dawerks]

RIM has $4/per share in cash, no debt. It was an incredible bargain, but it still is a good one even though it's up almost 50% in a short span.

The problem is that tech companies get ZERO credit for having money and no debt, it's so strange. Banks, oil companies etc carry higher valuations with insane levels of debt and companies like APPL trade at a PE of 12-13 with zero debt and BILLIONS of dollars in cash.

Bizzaro world. Anyways, massive day for RIM!

[davidI]

Originally posted by in*10*se


just want to note that WCP's D/Cf ratio is 1.3 for 2013 lower than the peer average of 1.7. (see page 17-18)

http://www.wcap.ca/uploads/Presentations/Nov_21_12.pdf

even at $70 oil and $3 dollar gas the ratio is only 1.57 which is still less than its peers. The sustainability ratio also is only at 107% at those prices. again with their peers average at 124% at current prices.

Not a lot of cons for WCP...

But for the PRY/STO

sustainability is already above 100% and thats not even at $70 oil and $3 gas. They will struggle just like PWT if oil drops. and same w/ their debt ratio.

Also word on the street is that this deal came through on a whim over like 2 weeks, and is a total surprise. Not much thought, due diligence, or modeling has been probably done compared to the not so surprising WCP dividend model.

a very big difference is the hedging for 2013/2014 that WCP has over PRY/STO and RPL. Even a big drop in oil doesn't hurt WCP nearly as bad as the other co's because of the hedges already in place. Look at each of their sensitivity models in the presentations or analyst reports... its a significant portion of cashflow.

Anyways.

also a good read about the changing of junior E&P co's.

http://www.calgaryherald.com/business/energy-resources/Juniors+getting+bigger+technology/7591026/story.html

Solid post. I'll have to take a further look into WCP.

[Feruk]

Originally posted by dawerks
The problem is that tech companies get ZERO credit for having money and no debt, it's so strange. Banks, oil companies etc carry higher valuations with insane levels of debt and companies like APPL trade at a PE of 12-13 with zero debt and BILLIONS of dollars in cash.

Difference is in oil & gas money on the balance sheet = ability to drill and make more money. Oil will always be worth something. For a tech company, sure they can put some into the business, but it doesn't guarantee future growth. Tech companies can have billions on the books, but if they can't grow their sales, that money doesn't do much for them.

[dawerks]

Except that oil stocks have those reserves fully valued into their stock price. And that the price of oil is always x = unknown. Same for tech stocks but in my opinion it's not worth chasing oil unless you are going to hold it forever.

Tech = easy money (but that's what I said in 2000 as well) :)

Old habits die hard I guess. Bought more on the RIM dip, couldn't resist!

[roopi]

Originally posted by dawerks
Except that oil stocks have those reserves fully valued into their stock price. And that the price of oil is always x = unknown. Same for tech stocks but in my opinion it's not worth chasing oil unless you are going to hold it forever.

Tech = easy money (but that's what I said in 2000 as well) :)

Old habits die hard I guess. Bought more on the RIM dip, couldn't resist!

Nice call with a minimum 10% gain overnight. :thumbsup:

This thing is so volatile it's hard to watch. :nut:

[icky2unk]

moved some money into RPL at 2.17.

[in*10*se]

^good call great dividend yield at that price.

[KappaSigma]

I continue to add to my DonnyCreek position. Basically playing the Montney storm. They continue to add land and de-risk it.

Painted Pony jsut bought I believ 25 net sections of land with a tiny bit of production for $108MM; works our to about ~5K an acre...

Donnycreek has something like 160 net sections or ~100K net acres...

For them its all about derisking now; considering there market cap right now is below $100MM

[chibwack]

Originally posted by KappaSigma
I continue to add to my DonnyCreek position. Basically playing the Montney storm. They continue to add land and de-risk it.

Painted Pony jsut bought I believ 25 net sections of land with a tiny bit of production for $108MM; works our to about ~5K an acre...

Donnycreek has something like 160 net sections or ~100K net acres...

For them its all about derisking now; considering there market cap right now is below $100MM
Where do you find out about these land purchases? I've been trying to follow these things but can't find much online

[KappaSigma]

Originally posted by chibwack

Where do you find out about these land purchases? I've been trying to follow these things but can't find much online

Pinated Pony had a release today about raising some capital and also the land purchase.