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

To: Madharry who wrote (41367)	2/8/2011 1:51:26 PM
From: E_K_S	Read Replies (2) \| Respond to of 78523

Re GMXR notes I believe they were a private placement and not available yet to the public. I have a pretty large position in the MHRpC that yields 10.125% and distribution are paid monthly. Many of these E&P companies since my buys, have issued more shares and/or debt. It's a very capital intensive business but these announcements really hit the stock price in the short term. Yesterday Callon Petroleum Co. (CPE) announced a secondary of 9 million shares (about 35% dilution) w/ no price announcement! Stock cratered down 18% then back up 10%... who knows what it will do when they announce the final price. It seems that if you pick up shares at or below the secondary offering(s) it's a pretty good entry point. Then if the company had previously traded options, you can hedge your bet on any run up higher by selling some covered calls. Many of these smaller E&P's do not trade options so your hedges are limited. My strategy is to focus on the mid cap and smaller cap E&P companies (rather than the very large integrated oils especially for new buys). Some of the companies that provide support services to these E&P companies look interesting too. Complete Production Services, Inc. (CPX) & GATX Corp. (GMT) (GMT suggested by Paul Senior Message 27146427 ) are two that come to mind. Many of these companies are benefiting from the domestic growth in shale fracking and their new well development (including NG gathering & processing operations) have a much larger impact on their current & future earnings (when compared to the lare integrators). To generate an appropriate dividend income from my sector buys, I have bought preferred shares and have hedged my bets by selling some covered calls. So, basically no interest in the GMXR debt especially if it is thinly traded. EKS