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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (25617)	1/5/2007 1:14:39 AM
From: Spekulatius	Read Replies (2) of 78666

VLO - added some more VLO today. it looks like I have the opportunity to establish a full position during the next few days. Some folks are talking about bargains in the energy sector. I do not think we are there yet. Most stocks are still above the October level (in particular the better names) but fundamentals in terms of pricing look worse to me. In particular I think that many NG stocks trade at or even slightly above NAV (CHK, EOG )and are not able to create shareholder value by drilling due to high service costs. Look at CHK, they are spending 25% more (despite their hedging gains) than their cash flow, issuing steady flood of debt and shares. Earnings forecasts for 2007 are below 2.50/share assuming no major changes in NG prices. Energy aside the markets are very boring. I am sitting with 50%+ cash around in my trading portfolio turning my thumps.

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