CHK, EEE, UNT, HEC, MEXP, RRC, and MDR
double-plus-good:
I wonder if you have an updated Altman view on Chesapeake [CHK].
I had promised DitchDigger an update when the last Q was published, but haven't had much time to follow through. However, I have taken the time to update my model this morning, and I just posted a summary of the numbers on my thread (#reply-12192166). Unfortunately, I don't have enough time to post details of the entire model's output. If you'd like, I can send you a copy of my CHK spreadsheet by e-mail. Just let me know via PM.
Suffice to say that, while the absolute Z-score is still quite low, the improving trend tells me that CHK has definitely turned the corner. Nevertheless, sustainably high commodity price levels are still critical to the long term success of their turnaround.
I note that you also hopped into EEE. Hard to say for sure the knife has finally hit some support, but it appears that all the news is out and any further selling will be of the tax related variety. I'll assume you applied Altman to 88 as well or you wouldn't have taken a position.
Yes, I doubled down on Canadian 88 Energy (EEE) at US$1 5/16 on Thursday. While I've analyzed EEE through my Altman model (Z-score = 0.98, "Near Death"), this is strictly a takeover play for me... nothing more, nothing less. I'll be very surprised if EEE is still operating as an independent entity, with substantial ownership in the hands of Greg Noval, the current CEO, in 6 more months. The financial community hates Noval, for a variety of reasons, justified or not, and the company is currently trading at US$1.38 (C$2.03), which is less than 33% of its estimated US$4.37 (C$6.55) NAV. Recent production levels have sucked -- no doubt about it -- but they have a great collection of assets that other players in the industry would love to control. The company is very much in play, and competitors are sniffing around. I am confident that it will get taken out soon. I have no doubt that EEE will be acquired for less than its NAV, but anywhere north of US$1.75 (C$2.63), and I'm in the money. I am also confident that any takeover offer which takes control away from Noval could easily double the company's share price, maybe not immediately, but within six to 12 months.
IMHO, EEE is a perfect candidate for a golden hook. I feel the same way about several other E&Ps (e.g, HEC, MEXP, and RRC, each of which I hold long in my portfolio). I also feel the same about MDR, although that is the only oil service stock I currently hold long. Each of the above "Dogs of the Patch" (I prefer to call them "puppies" <g>) could very easily double in the next 6-12 months. JMHO.
I'm also curious if you were the one who mentioned UNT recently.
That wasn't me. The only thing I know about Unit Corporation is that they recently bought Parker Drilling's lower-48 land drilling rigs. Sorry I can't help you any here.
I'd be curious to get an Altman perspective on one that caught my eye last week. Valence (VLNC)...
Any discussion about Valence Technology (VLNC), which I analyzed on my thread back in March (#reply-8542306), here on this thread would be strictly off-topic. Therefore, I will limit my comments to a simple, on-topic, valuation comparison to McDermott Industries (MDR). Valence has a current market cap of $354 million (32.397 million shares X $10 15/16) with $389 thousand in revenues and a $3.9 million net loss for the last six months. McDermott, on the other hand, has a current market cap of $488 million (59.542 million shares X $8 3/16) with $1.243 billion in revenues and a $23.661 million net profit for the same period. Obviously there are other things going on in the background for each of these companies, and the technical picture is quite different than the fundamentals. Nevertheless, given the fundamental valuation alone, which of these two stocks (VLNC or MDR) would you be more comfortable holding long? And which would you be more comfortable shorting? Nuff said. ;-)
Razor |
