₪ David Pescod's Late Edition March 14, 2007
NEW CENTURY FINANCIAL (NYSE:NEWC) $0.675
How about this for a business plan folks? Let’s start a
bank and loan money and mortgages to people with bad
credit ratings, oops! Make that imperil credit ratings and if
we have a tough time getting them to take our mortgages,
heck—we’ll give them a deal where they don’t even have to
put any money down to buy that house!
Of course the bad news is that some people might decide
to get a few months free rent out of this and the worst
that can happen is a nasty little letter will be sent their way.
This made no business sense to us either and we are
just wondering why we didn’t short a couple of these subprime
lenders that are making the news in the United
States over the last few days.
According to Bloomberg, the delinquency rate for subprime
borrowers has been climbing for most of last few
years and the number of subprime borrowers who have
fallen behind on their mortgage payments was the highest
in four years and also foreclosures on all types of loans
have hit an all-time high.
New Century Financial would have been one of the best of
the obvious shorts.
DIAMOND TREE ENERGY (T-DT) $2.89 -0.02
We keep mentioning that we are raising funds from
the mining sector to step into the gassy sector, but the
gassy sector just keeps getting cheaper. They seem to
be having a three for one sale with the natural gas
stocks, but we are going into spring when gas prices
could even get weaker. When you look at the chart of
many of the gassy stories, there just seems to be no bottom.
Today Diamond Tree Energy comes out with some of
their financials and an update on the company and they
show a nice increase in company production, but the
market doesn’t care a hoot.
Ugly day on the market and Diamond Tree simply
can’t go against it, but I suspect Diamond Tree is one of
the one’s you put on your list to start nibbling at or accumulating
down the road when the charts for the gas sector
suddenly start looking a little better.
Having said all this, we do start to nibble today.
CDN. SUPERIOR ENERGY (T-SNG) $2.72 +0.14
A while ago, when we were looking at the potential big
plays in the oil and gas sector coming down the road, one of
them we had mentioned was Canadian Superior Energy. Of
course the one thing you can count on with the big, exciting
plays is that nothing will happen on time—something we
keep learning over and over again.
From today’s announcement it looks like Canadian Superior
which has seen a $60 million refurbishing of their Kan
Tan IV semi-submersible drilling rig which has delayed drilling
offshore Trinidad by almost 3 months, looks like progress
is at hand.
According to today’s announcement, they expect to be
moving the rig by month-end. This is going to be a big play
as they drill three offshore natural gas prospects—the Victory,
Bounty and Endeavour, which according to the announcement
and according to interviews we’ve done with
people at the company, they suggest each prospect has potential
for TCF’s and of course, that would be a big number.
Of course, once again, you are going to have to be patient as
each well will take 80 to 100 days to drill and evaluate.
Needless to say, each of these wells are expensive, but it
would be good if at least one of them hit.
Greg Noval the Company Chairman reminds people that
this is a good area of the world to be looking for oil and gas
pointing out that British Petroleum has 18 of its 25 biggest
wells from around the world in the Trinidad area.
It’s already popped because drilling is hoped to be
around the corner, but now it’s going to start getting interesting.
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