Calandra and IVAN make Barron's
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As a measure of how dramatically the speculative impulse has been rediscovered, just take a look at the daily roster of most-active stocks from last week, a predictably inert week for most of the big, important stocks in the market.
Ivanhoe Energy has lately spent plenty of time on the list of most-active Nasdaq Small-Cap Market issues. It's a Canadian company with little revenue, some exploration assets in California and -- here's the part that gets the crowds buzzing -- in China. The stock changed hands under 50 cents on Memorial Day and has shot to 4.35, with average daily trading volume of 11 million shares, more than 10% of the public float.
The company is backed by Robert Friedland, a Canadian mining billionaire who also chairs an affiliated company, Ivanhoe Mines, which has had a similar run based on excitement of Mongolian metals prospects.
Friedland, one of the better known mining promoters in Canada, once ran into regulatory friction related to environmental concerns at a Colorado project several years ago.
Ivanhoe Energy now has a market capitalization of more than $600 million. Revenue over the last three quarters has come in at less than $8 million. Production from the highly touted Chinese properties has run about 500 barrels a day.
The fevered action in Ivanhoe shares has been abetted by recommendations from Thom Calandra, a writer of a market newsletter and a commentator for CBS Marketwatch. Much of the bull case hinged on a possible investment in Ivanhoe's China operation by CITIC, a Chinese government finance operation. That investment came about last month -- but at $20 million for a 40% stake in the Chinese unit, it valued that business at just $50 million.
Season Lightly: Seasonal Thanksgiving-week strength held to form in light holiday-depleted trading, as the Dow industrials ended a two-week skid by rising 153 points.
Clandra discloses in his reports that he owns Ivanhoe Energy shares and traveled to Beijing and Mongolia courtesy of Ivanhoe Mines.
One investment manager who is short Ivanhoe Energy believes the stock "is the ultimate example of what we're seeing in the market," where flimsy companies and hype are driving stocks to wild levels. He believes even if "everything goes right" and the China production reaches 14,000 barrels a day by 2005 or 2006 (an estimate repeated in articles by Calandra), it computes to about seven or eight cents a share in earnings for Ivanhoe .
As if the traders flipping the stock every day are truly interested in earnings, or in a two-year time horizon.
MORE FAMILIAR THAN STORIES OF bountiful oil wells in northeast China are the enduring tales of life-transforming technological changes that float even the most marginal players. |
