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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (39769)	10/21/2010 4:20:45 PM
From: E_K_S	Respond to of 78570

Hi Jurgis- Petrobakken/Petrominerales Mr. Market is pretty smart. It's possible their are potential hidden liabilities (ie environmental) that are being discounted w/ the price differentials. I have noticed recently that there is a dis-joint between the price of crude oil (and NG) and many of these oil companies w/ their proven reserves in the ground. Specifically many of the NG stocks should be trading much lower w/ today's NG price at $3.38 (just 10 days ago it was close to $4.00). NG stocks s/b down 20% but are trading even to higher. I suspect there are some large hedge funds trading around these NG & Oil assets w/ an equal dollar short play. The discussed QE2 could be the explanation. As soon as the expectations of QE2 become reality, everything will be unwound and the rise in commodities (and NG & Oil companies) will fall back to pre-QE2 price levels. My large integrated oil companies continue to move higher as well as my Canadian Oil Trusts. The move in the Canadian Oil Trusts is partially explained by the recent announcement(s) for conversion to corporate structures (much of the uncertainty on distributions now clarified). I am not too sure why the large integrated oil companies continue their run higher (see my earlier post of the McDep report dtd 10-21-2010). I think there is a QE2 unwinding trade available but it may be a long time off (years rather than months). Therefore, I like the idea of speculating in the smaller E&O companies as in the short term they will benefit from the artificial price levels of NG & Oil from heightened QE2 expectations. Long term interest rates are much lower than normal historical levels which also make it more profitable for these E&O companies to borrow more money to drill more wells. EKS