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Brian McMorris  

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  • Microsoft Posts Largest Loss Ever: Good For Microsoft! [View article]
    I expect a bounce off this "news" providing market sentiment cooperates. This IS the Balmer flush. What a disaster he was as CEO. Shows that Bill Gates may be a great judge of technology marketing but not so much organizational leadership. Too much loyalty to his friend.
    Jul 22, 2015. 10:44 AM | 4 Likes Like |Link to Comment
  • Microsoft Posts Largest Loss Ever: Good For Microsoft! [View article]
    Good post! I bought MSFT for the first time a few months ago based on the changes in process by Mr. Nadella. This company badly missed the last three waves in IT (search engines, smart phones and cloud-based applications). Yes, they made belated efforts in all three areas, but too little and much too late. The only "catch up" project that has worked is X-Box or you could make that four waves missed, including cloud-based gaming.

    But through all of that, MSFT has kept on performing. What could they be if they stayed on top of the technology waves rather than lagging, as Google and Apple have done. Big size does not condemn a company to lagging and eventual obscurity. It should be leveraged as the other two have done (and that some like Oracle, which missed CRM, have not).

    If we can have our cake (strong and consistent financial performance) and eat it too (leading edge innovation), MSFT can become what it was destined to be, a perennial technology leader.
    Jul 22, 2015. 10:41 AM | 3 Likes Like |Link to Comment
  • Penn West surges after cutting dividend, amending bond covenants [View news story]
    Not so Great (and I give too much credit when I say that) is dreaming that he has some junior analyst. I find it unlikely his book is big enough to pay his own bills let alone other employees (senior, junior, janitor, whatever). If he were indeed even a competent CFA, let alone great, we would know him by name, not some childish handle

    I am a big fan of Bill Ackman and it is unfortunate NSG tries to inflate his image by associating with a truly great investor (one who made me some money piggybacking on GGP)
    Mar 14, 2015. 07:40 PM | Likes Like |Link to Comment
  • Penn West surges after cutting dividend, amending bond covenants [View news story]
    $0.01 cents on 500m shares is $5m per quarter. A pittance for a company with $5.5B shareholder equity. Cutting does nothing for FCF. It is worthwhile as a marker of better days to come.
    Mar 14, 2015. 07:35 PM | Likes Like |Link to Comment
  • Penn West surges after cutting dividend, amending bond covenants [View news story]
    Tennvol....current management inherited the debt (actually about $3B when they came on board and only $2B now) with all its covenants. I would say the previous mgmt team was so eager to get deals done to buy additional E&P companies, even crappy ones, they took whatever debt deals they could with whatever covenants the lenders wanted.

    Current management continues to do a good job negotiating a very difficult course avoiding all the land mines planted for them. I don't have any control over what happens in the endemically risky and volatile oil and gas market. What I care most about are the skills of the senior management team to reduce risk
    Mar 14, 2015. 07:33 PM | Likes Like |Link to Comment
  • Penn West Petroleum EPS of -$3.57 [View news story]
    The headline writer probably does not go through the entire Q4 report but just scans for a few commonly quoted ratios like EPS. If one has followed the stock, the report was very positive. It shows the commitment of management to clean up the company in a very unforgiving market environment. Good thing they started over 2 years ago and had already made significant headway.

    By my calcs, on 500M shares, the $1.8M of writeoffs for impaired goodwill and PP&E, which could have been taken quarters ago, results in a one-time expense of around $3.60 per share. That means the company actually made a small profit in Q4 on an operating (GAAP) basis. Oil was averaging around $60 CDN during that time, as it is today. So PWE is able to turn a profit and FFO at current prices, which I have been saying for months. I think they can drive out even more cost and still generate positive earnings at $50 CDN. So they are well protected at this level and still building more buffer. PWE will survive this once in a generation price crash. The same won't be true for others in the industry
    Mar 12, 2015. 07:39 PM | Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    Qniform: $1.50 calls (Jan 16) should be pretty solid. If the oil price even just stabilizes around here ($50 USD) based on lifting much of the uncertainty over PWE the shares might double from here. The nearly pristine balance sheet, now that half of goodwill along with plant and equipment have been written down by almost $2B, is still at $5.5B. Market cap at $1.50 / share is $750M. PWE is selling for less than 15% of Book. Cheap! unless it is going out of business and it won't unless oil drops below $30 for an extended period, it is a strong buy here.
    Mar 12, 2015. 02:19 PM | 2 Likes Like |Link to Comment
  • Penn West surges after cutting dividend, amending bond covenants [View news story]
    This is about as good a quarterly report and management letter as could have been hoped for by any PWE investor. What the Q4 report shows is that the current management team lead by Dave Roberts is responsible and strategic, thinking ahead several steps.

    * They moved early on divestiture of poor or peripheral assets to reduce leverage
    * They moved early to reduce finding and development costs and become more efficient with R&D expenses
    * they have reduced SG&A (front office) expenses to an efficient level
    * They made free cash flow a priority and have established a decent coverage of discretionary cash out items like drilling budget and dividends
    * They have anchored production around 100K BOED which is a level that allows profitable operation given the established overhead structure of the company
    * They anticipated the tough credit environment and began working with bankers early to revise covenants that were more accomodative of the current market environment
    * They cleaned up the balance sheet by writing down impaired assets such as goodwill and non-producing plant and equipment (entirely responsible for the big "paper" EPS loss in Q4)

    This is an inexpensive equity compared to others in the same space. If oil prices turn around in the next 2-3 years, PWE will prove to be a bargain.
    Mar 12, 2015. 02:15 PM | 6 Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    Did you read the Q4 press release this morning, Not so Great? It counters every argument you have ever made against PWE.

    Debt was once again reduced. Funds Flow was quite positive. Goodwill and Plant and Equipment were written down which will make the balance sheet even more solid going forward. Covenants were renegotiated very favorably with lenders.

    Hope you were not short. They shorts are going to be burned.
    Mar 12, 2015. 09:47 AM | 4 Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    Qniform: you will be happy to learn that PWE cut dividend to $0.01 and renegotiated its credit covenants favorably. PWE also wrote down its PPE by $634M and Goodwill by $1.1B which accounts for all its loss in Q4. Those are paper losses and do not impact OCF, but I am sure some will react and comment very negatively on this event not understanding the difference.

    Many here have argued for months that Goodwill is overstated to which I have agreed. This will clean up the books quite a bit. The Shareholders Equity was reduced by about $2B to $5.5B, adjusted for the decrease in oil prices hence reserve value. But Market Cap is now under $1B, so this is still a very cheap company on an adjusted "current market" balance sheet.

    LT Debt was reduced by the $315M asset sale in Q4 as noted so that LT debt is now at $2.1B all in.

    Covenants were renegotiated as follows (from press release):

    As a result of the current low commodity price environment, Penn West has actively been in negotiations with the lenders under its revolving, syndicated bank facility and with the holders of its senior, unsecured notes to ensure its financial flexibility. Effective March 10, 2015, the Company reached agreements in principle with the lenders and the noteholders to, among other things, amend its financial covenants as follows:

    the maximum Senior Debt to EBITDA and Total Debt to EBITDA ratio will be less than or equal to 5:1 for the period January 1, 2015 through and including June 30, 2016, decreasing to less than or equal to 4.5:1 for the quarter ending September 30, 2016 and decreasing to less than or equal to 4:1 for the quarter ending December 31, 2016;

    the Senior Debt to EBITDA ratio will decrease to less than or equal to 3:1 for the period from and after January 1, 2017; and

    the Total Debt to EBITDA ratio will remain at less than or equal to 4:1 for all periods after December 31, 2016.
    Mar 12, 2015. 09:44 AM | 2 Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    35 million shares on Friday....interesting. I see 11m traded during the day which is almost twice the average volume. There were several 150K+ blocks traded through the day which suggests someone is accumulating stock in a deliberate and careful way so as not to push prices up too fast. The buy blocks were much larger than any sell blocks

    Someone got a sneak peek at the annual report perhaps? Divestitures announced there? Or perhaps surprising reductions in CapEx costs? I have been waiting for that as with all the rig lay-downs there is a lot of supply chasing little demand in the oil services market.
    Mar 1, 2015. 07:55 PM | 1 Like Like |Link to Comment
  • Monster Has Entered The Stratosphere [View article]
    Josh, You might be right about $MNST in the long run, using rational valuation pricing models like DCF. However, once a company gains "momentum" or "story" status, DCF or earnings-growth methods no longer work. The market is not rational and you are applying rational metrics to a very hot "story" name.

    I have used DCF and BV methods of valuation for years and normally been disappointed in the results. It requires a great deal of patience to use rational valuation methods and sometimes, by the time such techniques would work (5-10 years), the company story changes and earnings slows or decreases. For examle, even with great earnings and growth INTC and MSFT were dead money for over 10 years before they finally got traction last year

    Momentum has been most popular for stock pricing the past 20 years with only a few short years where it did not work. Momentum worked in 1995-2000, 2003-2007 and 2009 till current. Low price to value worked only in the 2001-03 and 2008 period and then, not very well. Momentum with tight stops seems to be a much more effective way to invest in the stock market, unfortunately for those of us who wish pricing were rational.

    There is a simple Wall Street saying to capture this: "Price is Truth"
    Feb 19, 2015. 10:16 AM | 2 Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    DAR....I will continue to hold you accountable for the writings you post. I am absolutely sure you will NOT keep quiet and will respond to entertain us all again. You are not a quiet nor calm person
    Feb 19, 2015. 08:35 AM | 3 Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    Brand new management in 2012 and a team with decades of combined energy / oil experience in all kinds of markets. Management is not left over from trust days as you say.
    Feb 18, 2015. 12:21 PM | Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    Dividend was recently reduced to $0.03/share for $0.12/annum. It is no longer 18% but more like 5% at today's stock price
    Feb 18, 2015. 12:19 PM | 1 Like Like |Link to Comment
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