₪ David Pescod's Late Edition February 26, 2008
AURIZON MINES (T-ARZ) $4.65 +0.05
ITERATION ENERGY (T-ITX) $6.00 -0.02
ALTER NRG (V-NRG) $4.43 +0.12
He is rapidly becoming one of this country’s
more identifiable stock pickers because of
his frequent appearances on BNN Network.
And of course, the much more important fact
that over the last year while many analysts
and the like have been beaten up, Peter Hodson
has one of the best-performing mutual
funds in the country...by a lot. It’s why we
like to talk to him from time to time and as
we are just back from Mexico and he’s just
back from taking his young fellow to Disneyland, it’s time for a
discussion...it’s not hand holding.
Hodson says at the beginning that “we’ve just gone through
eight weeks of pain to get right back to where we were.” While
we have had lots of bailouts in the United States, it hasn’t really
solved the liquidity problem, but sentiment does seem to have
improved. As far as the overall economy, he jokes, “what if we
had a recession and nobody cared.” He thinks that maybe there
isn’t a recession coming and jokes that “it isn’t a recession
unless of course, you are involved with a mortgage company.”
As far as earnings he is looking to first quarter numbers as to
telling the tale, but overall right now, he uses the technical concern
to describe it currently as “not freaked out”. I guess that
sums it up, don’t you think?
Meanwhile, as far as the market feeling a little better he still
finds himself with a solid weighting in gold just in case there is
inflation coming or even if last week’s worry of stagflation rears
its ugly head.
But getting to stocks that he thinks are timely, one of the
ones that he frequently mentions on BNN is Timminco and the
chart tells you that it too, got absolutely clobbered in the last
few weeks...and proved to be one heck of an opportunity for
many. He suggests that their news of last Friday came as expected
in that the customers are basically there to pay for expansion.
He had previously thought that the stock could have
seen $40.00, but now with ever-more customers lining up and
signing up, he suggests that that target might possibly move to
as high as $60.00.
Another blue-chip that he likes is Iteration Energy as he notes
the market seems to be falling in love with natural gas again and
Iteration through its purchase of Cyries Energy, is now a more
significant company.
In the gold sector, one that is hitting new highs is
Aurizon Mines and he suggests that their Casa Berardi
mine in Quebec looks like it is a good one. He wouldn’t
be surprised to see if they are consolidated with another
operator—say a Western Goldfields, which would then
give them operations in two comfortable countries and
some fairly sizeable production. Either that he suggests,
or they could be bought out. Notice that their stock is
flirting with new highs and Hodson is one of those who
loves to see momentum and is not scared away from
paying high prices if the momentum is there.
For an update on Points International, a story that he’s
mentioned before, it too got swacked in the recent market
correction. He expects them to report some fairly
decent numbers next week and all contacts he has with
parties involved with the company and service providers,
has been happy. He would not be surprised to see the
stock back to $4.00 in short term, particularly if the numbers
are decent. As far as the stock going higher than
$4.00, well he admits he is gun-shy these days on some
stories he might have been more bullish on just a few
months ago.
“If you are looking for stories with a little juice” he
says and he emphasized that these stories involve more
juice than fundamental numbers, one story he finds very
intriguing is Alter NRG which is already up almost 20%
this year and their development of the plasma-arch furnace
which may be used for producing energy from carbon.
“It’s fits the green environmental space” he suggests
and it is basically involved with burning garbage,
coal or whatever and turning it into power. They have
some experienced management, the likes of Deer Creek
and Trinidad Drilling and he feels that it is a wellmanaged
story that should have many opportunities in
the offing. “The company is still in the “prove-it” mode”
Hodson says, so if and when some large contracts finally
start to be announced or some joint ventures or the like
make the press, then he suggests he would buy a lot
more as currently he only has small positions.
Also a story with a little bit of juice is Mag Industries,
involved in potash and a considerable discovery in the
Republic of Congo. He mentions right away that this is
not the DRC—it’s the other Congo. He thinks it’s an asset
play based on their power generation plant in Africa
that will be up and running shortly and a sulphur-acid
plant also worth some dollars and he thinks when you
take several of the assets and put them together, you
might end up with $5.00 of value and the potash asset is
free and clear.
Meanwhile, when we ask him our favorite question, if
he could only buy one stock these days, he sticks with
Bankers Petroleum with management Abby Badwi and their
gas projects in Oklahoma and heavy oil in Albania. He
suggests that is the one comfortable stock that he has
where he sees “next” to no downside. And that’s something
we don’t see a lot of in this still volatile market.
PETROLIFERA PETROLEUM (T-PDP) $11.39 +1.29
If you didn’t know we have been through a market correction
in the last while, Petrolifera Petroleum has a chart
like many other high profile oil and gas and mining stocks,
just to show you how ugly it has been. When the flying
started two years, Petrolifera moved from roughly $3.00 to
almost $20.00, but the last while has been ugly, mainly
because of increases in royalty rates in Argentina as well
as capping the prices they can get for oil, plus delays in
drilling. Plus the market!
But finally some good news and for those people who
scooped some up cheap a few weeks ago, they’ve got to
already be in party mode as Petrolifera announces new
reserve numbers and point to proven numbers of 15.1 million
barrels of oil and natural gas as the end of last year
which is up significantly—43% from the end of 2006.
Last year was a record year for the Company as they
produced 2.9 million barrels of crude oil. They also said
it’s proven natural gas reserves increased 14% to 16.3
BCF and work continues on a rather aggressive campaign
in Argentina for much of this year.
But if you are following Petrolifera and there is some
greed involved, you are following it for one reason...the
potential of their oil and gas exploration in Peru, which
should happen in the second half of this year and for
those who have looked at the data suggest that this target
are absolutely enormous. Which is the good news.
Usually these things come with high risk.
URANIUM ONE (T-UUU) $4.88 -0.17
Yes, you’ve seen a lot of ugly charts on what’s happened
over the last while, but some of the uranium stocks
show drops that have been absolutely fearful. Uranium has
gone from a time that it was the talk of the town to the one
commodity you simply didn’t want to have in your portfolio
it seemed. If it wasn’t for the diamond sector, uranium
would be the “Black Hole of Calcutta.”
Uranium One though, is a rather sizeable junior player in
the uranium market and announced late last week that they
would cut by 32% to 3.15 million pounds production on
their underground development at their Dominion mine in
South Africa and Chief Executive Officer Neal Froneman
has resigned.
How bad is it? Well, take a look at how the brokers have
reduced their expectations big time for the stock as Paradigm
cuts their target from $19.50 to $9.50; GMP cuts their
target from $16.35 to $8.50; BMO from $15.50 to $11.50;
UBS from $10.00 to $8.00, Versant from $15.70 to $10.30
and Raymond James from $14.40 to $6.40. Cormark, who
apparently never did think much of their stock to start with,
dropped their target from a mere $7.00 to $5.00. For 2009
they expect their output to drop 15% to 6.8 million pounds.
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