Richard & Everyone/Oversold Stocks & Opportunities
In regards to Richards comments. I agree, especially with the oil & gas service companies. However, they have not been companies I've been following with exception of the few we've touched upon recently.
How about turnaround situations with producers? Do you have any in mind. The #1 situation I'm following is Harbor Petroleum. When I was buying Berkley Petroleum and Newport Petroleum, my broker was pushing Harbor Petroleum. All three were moving up very rapidly. I chose to further accumilate the first two rather than buying into Harbor at the time, no special reason. But I followed HRP and saw what debt could do to a company in a period of poor commodity pricing and unsustained growth in drilling. I don't believe the market has recognized their efforts to get out of trouble. I've had a couple oil CEO's tell me that once you disappoint in forecasting, institutions won't give you a second look for quite some time.
Other companies that come to mind are Archer Resources, Richland Petroleum and possibly a buy out candidate such as Serenpet Inc. I'm not sure I have a grasp on what is developing with cases such as Serenpet. To me, they were an ideal takeover candidate and should of been pursued. The part I don't understand, why are they initiating action to be taken over? There have been a few announcements by companies (usually secondary comment in bodies of financial & operating report releases) where they state feelings that company is undervalued and have hired an institution to review ways to increase shareholder value. Quite an interesting phase. The vast majority of times, this means they're looking to be sold and within months, are sold. Recently, this is an increasing trend. What this is saying for the companies and management taking this route is unclear to me. Can you, or anybody, shed some light on why companies are taking these steps. I'm more accustomed to companies taking measures for discouraging takeover bids.
My next question is, are companies making these announcements good short term investments? I accumilated several thousand shares in a company named Signal Energy last year. I bought at prices in the $0.32 to $0.38 range. In one of my calls to CEO (after purchases) he mentions that company was having fairness opinion analyzed by an institution, which at the time didn't strike home with me. A couple months later, shares began to move up abruptly and shortly thereafter, Signal reports that Richland Petroleum is bidding to buy out company at $0.72/share. All resulted from institution efforts to sell company, the first step being the fairness report.
Anyone with any comments?
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