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

To: Paul Senior who wrote (40940)	4/10/2011 6:57:26 PM
From: E_K_S	Read Replies (1) \| Respond to of 78467

Hi Paul - Here are the results of my small cap E&P Basket as of 4/11/2011. It's been around 6 months since my first buy. I have made 32 Buys and 1 Sell to date. I continue to add both current and new shares to my basket as values present themselves. I have created a Google Doc spreadsheet to help me track and manage future Buys and Sells. I have been thinking of what the appropriate exit strategy and/or re-balancing should be and have yet to come up with a definitive plan. Many of these companies have some very aggressive drilling programs planned for 2011 and a lot of their future value depends on the outcome of the wells drilled. % Gain/(Loss) % Gain/(Loss) E&P Stock % of Basket Open Positions Closed Positions GMXR 11.66% 31.59% 0.00% SSN 11.35% 154.29% 0.00% VOG 9.15% -4.11% 0.00% RAME 8.73% 20.78% 0.00% PVA 8.61% -8.42% 0.00% GST 8.25% 14.18% 0.00% MHR 8.13% 107.13% 0.00% DBLE 6.35% 24.15% 0.00% SDCJF 5.88% -3.06% 0.00% CPE 3.68% 0.95% 0.00% USEG 3.23% -0.93% 0.00% LEI 3.16% 143.19% 57.78% AZZEF 2.94% 11.90% 0.00% CFW 2.28% -22.37% 0.00% TPLM 2.24% 15.37% 0.00% DEJ 2.24% 37.50% 0.00% MPET 2.14% 17.29% 0.00% ------- 100% No of Companies in E&P Basket: 17 No of Buys: 32 No of Sells: 1 (as of 4/11/2011) (as of 4/11/2011) Total Return Total Return Open Positions Closed Positions as of 4/10/2011 as of 4/10/2011 ---------------- ----------------- 39.07% 57.78% I have also been correlating the performance of my Open Positions in the basket w/ the price of crude oil. Until last week, there was a pretty good positive correlation. However as crude hit new multi year highs, my basket fell 7% with no one company specific issue responsible for the drop. Therefore, I am not sure that my future Buys or Sells will be tied to the price of crude until I see if there is more of a positive correlation w/ my basket. Finally, the value based on proven reserves makes my basket still quite cheap. I plan to eventually lay in each company's proven reserve(s), daily BOE production and future reserves/production (based on new wells completed) to provide me a fair value estimate to use for peeling off shares. If any one position gets to be too negative, then I will either close that one holding or buy more to establish a lower average cost (if prospects still look attractive). For example, my initial CFW buy was at a high and at a 30% too high of a price (paid $0.20/share too much). I still like their prospects (fracking old wells in New Mexico) and as long as crude is above $100/barrel, they could well sell above $1.00/share. The key is to establish a means to estimate fair value, be patient for the market to recognize this value and cull out the loosers before they get too big. If you have come up with some exit strategy for your basket(s) specifically the small cap components, let me know. I do know that many of these small cap E&P companies remain undervalued and it's just a matter of time for them to blossom. EKS