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

To: geoffrey Wren who wrote (43116)	6/28/2011 3:19:31 PM
From: E_K_S	Respond to of 78570

Hi geoffrey - Hope you have been finding profitable investments in the market. Re: GSTpA I am going slowly on this one. It's probably the most speculative in the lot I own. It could trade lower in the coming weeks & months but I believe they will be good on their dividend at least for 24 months. I took a quick look at their balance sheet, Income statement and cash flows and the total interest expense from this preferred issue only increases expenses by 3%. The cost of capital is less than if they used their bank line too. The main thing that will determine the fate of GST and this preferred is with the NG wells drilled and if they produce in economical volume and/or the depletion rate of these wells does not fall off a cliff. You can hedge a sour position by selling the common but the common shares are already trading near their low. PVA just announced the results of three NG wells drilled in the Marcellus Shale Area and the results were not very good. ( finance.yahoo.com ). From the article:"...H. Baird Whitehead, President and Chief Executive Officer, stated, “The Marcellus Shale test wells had initial production rates which fell short of our expectations. We will monitor longer term production once these wells are turned into the pipeline and determine if the reserves can support a development program in this immediate area. As important, we will begin testing our eastern acreage position during the second half of the year.”..." . The Marcellus Shale Zone is a large area w/ some of the best NG production wells IF the acreage is located in the suite spot. GST does have quite a bit of experience drilling in the area. Their latest acquisition is located in Marshall County, West Virginia, near where MHR has their properties. The formation is liquids-rich and produces higher than average BTU per unit making it more valuable. Gastar expects to begin drilling during the second half of 2011 and has identified as many as 30 locations to be drilled over the next several years. If they hit productive wells, the preferred should quickly move up to PAR @ $25.00/share. ----------------------------------------------------------------------- I am more concerned with the over hang of bad real estate loans. Both the money center banks and regional community banks could be impacted by these bad loans. This will also feed into many of the REITs and could impact their recovery. Therefore, I am trimming down my exposure to this area (ie. selling some NYB and other REIT preferrds) and have been moving part of the proceeds into Oil & Gas preferreds. Of the micro caps you mention, I only own one on the list EKCS. I am thinking of adding more of my aquaculture company MNHVF but the stock has been quite weak recently and there may be some bad news pending. I do continue to look at Ag related companies and want to add some more to my group. EKS