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

To: hoyasaxa who wrote (51328)	4/17/2013 11:28:27 AM
From: Jurgis Bekepuris	2 Recommendations Read Replies (1) \| Respond to of 78470

MHR-D: you can buy it. You might even make good money. The risk is that the debt covenants are breached and the company does a forced restructuring. Then common and pref are likely kaput. What's the likelihood that this does not happen? What would be your position size in MHR-D? If it's below 1% of portfolio, you are likely fine. If it's 10% of portfolio, you are putting a lot of eggs into a basket run by CEO who cannot manage a company and cannot keep its books balanced? How many other companies you know that cannot file an annual report and have to fire an auditor who asks relevant questions? It's pure incompetence.

To: hoyasaxa who wrote (51328)	4/17/2013 11:34:38 AM
From: E_K_S	2 Recommendations Read Replies (2) \| Respond to of 78470

Hi hoyasaxa - Re: MHR I think that is what is now in question; their stated "reserves". Auditor would not sign off on that and some other issues. Auditor was fired. Banks lend on future reserves and it sounds like Evans said screw you, I will pay off all our bank loans and do future financing through preferreds and/or common shares. So for me, the key lies in the assets they own, the cash flow those assets produce, and if there is sufficient FCF to operate (ie. drill wells) and pay interest on those preferred shares. I tend to like the MHRpC's better than the D's and E's as they are superior to the other preferred shares. I bought more MHRpC's today. Payments on all the preferreds will be stopped according to the 8K until their audit, bank revolver and 2012 financials are resolved. I am a cautious buyer of only the preferred C's at this stage. There are too many other bargains presenting themselves so I am out finding some of those. VALE is one that is getting close for a buy. EKS