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

To: E_K_S who wrote (46768)	2/27/2012 1:01:18 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78507

I also added this morning to my small ATO position. Just a few shares though. ERF also.

To: E_K_S who wrote (46768)	2/28/2012 1:55:00 PM
From: Sergio H	Read Replies (1) \| Respond to of 78507

Hi EKS. Have you looked at the impact of the electric car at all and would you agree with my opinion that infrastucture for this devlopment will be more immediate and easier to find investable value ideas in as opposed to the NG sector? TIA for your thoughts in this regard. Sergio

To: E_K_S who wrote (46768)	2/28/2012 3:28:19 PM
From: Spekulatius	Read Replies (3) \| Respond to of 78507

re ATO@30.8$, PEP @63.12$ I followed you into ATO at 30.8$. low return (high single digits/year) but very low risk sort of situation. I figure that a 4.4% dividend yield and a 5% (maybe growth rate/year) would lead to an 9-10% estimated return (assuming multiples don't change) in my very simlpe dividend growth model. PEP is somewhat similar, with less initial dividend (3.3%) yield but a higher growth components (5-10% range). If we are lucky we could do low single digit returns over the years. I think I'll make that a permanent position in my and plan to add from time to time. Got some for my wife's "sleep well IRA" and my own not so sleepy Roth IRA <g>.

To: E_K_S who wrote (46768)	3/2/2012 7:12:10 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78507

EKS, To your question, Iona's a North Sea gas producer stock I'm buying, and that you might look at. I’m buying INA.v/IONAF.pk. It’s developing North Sea gas properties. From their recent presentation they say they expect or are targeting 8k boepd for exit production 2012. And 50% more -- 12K for ’13. I don’t know if there is or will be a nat gas glut for producers who supply North Sea gas. And I don’t know how the recent increases in English North Sea tax rates will affect Iona. I suspect these are not relevant factors at this point for INA stockholders. There are 141m of INA shares outstanding. INA has now obtained $130M with a Senior Secured Reserve Lending Facility. The company has also said they intend to issue between $60-$80M more of stock. At $.55/sh that would be between 109-145M more shares. (i.e. roughly doubling the outstanding shares). Shares may have to be priced less than .55 to place, I don’t know. Stock price is now about .57- .58/sh. From all this I calculate enterprise value to be, or will be (141+145)x $.58 = $166M, plus $130M = $296M. (I assume the current net cash, $30M, and the cash from the stock issuance, will all be spent to bring INA’s new field(s) into operation for 2012-3 production.) So to value the company on its presumed 8k boepd (mostly gas), what is the metric number we might be using to guess what a purchaser might pay for the entire company? Maybe, if nat gas pricing holds up in Europe, maybe $60K per boepd? That would value INA at $480M . So the stock is undervalued based on it having an enterprise value of $296M (and 8k bopd at end of '12). The stock also appears undervalued imo on other valuations. For example, 2pnpv(after tax) is $3.09, per p.20 of 2/3/12 presentation. Somebody’s also reported the stock’s very inexpensive on a cash flow basis if the company can get its wells up and running and producing as the company hopes. I’m somewhat overwhelmed with all these e&p companies I’m looking at and/or owning. In considering the INA numbers now, these other stocks temporarily fall into the background for me. Which means I’m not quite sure where I place INA compared to others that I’ve found that, rightly or wrongly, seem to me to be cheap. I’m guessing that if INA can pull out the gas/oil that they expect without too many production glitches impeding them, that INA will be over $1 by year end - maybe a double within 12 months- making it one of better stock bets now in my purview, based on value and timeliness. But who knows? (I’ve been wrong many, many times.) I'm buying shares, yet also buying shares of other e&p’s as well. I point out that although I’m buying shares now because I believe I see the value now, I do expect that INA might go lower and perhaps provide a better buying opportunity. To sell all its new shares, I believe the company will have to offer those shares at prices below the current shares price that exists when the pricing announcement is made. And I expect the then current stock price to move down to, and maybe below, that offering price. All jmo, Paul S.