Lisa, If you are looking for a fast trade, AIPN will give you more action than AKSEF. But if you are looking at intrinsic value, I think that at book value, it is tough to go wrong, particularly since the book value is probably understated. So the question is, what is amiss. One of my tenets is if the fundamentals and technicals do not agree with each other, follow the technicals.
I think that we are going to have a better tone to the market in the near future, but will that help AKSEF? I do not know. I did not think it would break 2.625 and did not think then it would break 2.25, now it touched 2 and there was no influx of buy orders. Yes the selling might be tax related, but in face of the value, where is the buying? Wher are Rice and Lundin? Why are they not scooping up the shares at these low levels?
Well, here are some of the potential downsides that may be some of the unknown fundamental causes for the weakness.
a. They are having a hard time raising their part of the capex. US banks might have been told to stay out of Sudan and without a major US bank, they may not have a choice but to offer special "premium" for the next debt they need.
b. They are lacking solid corporate leadership with the infighting and constant management shuffles.
c. They have not shown us major increases in reserves.
d. Book value and valuations may have to be downssized if oil will trade in the 15 to 18 $/bbl next year.
Yet, I cannot see it going much lower if they did not discover a single additional barrel of reserves. And, yet, it will probably breach 2 before the end of the year. Once I see buying stepping in, it may signal a major move to now a very solid overhang at about 2.875 to 3. Then, depending on the situation, it might once again rise from the ashes like a Phoenix.
It is likely, however, that I may be again an owner of Arakis sometime before the end of the year.
Zeev |
