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Caiman Valores  

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  • Gold A Poor Safe-Haven Investment [View article]
    Actually I have spent a considerable amount of time in Asia and they revere gold but they do not consider it the only true money. I would regard the manner in which gold is revered as source of status and a store of wealth as bordering on the ludicrous considering how volatile gold is and how poorly it has performed. Also don't forget in many Asian countries there have been unstable and weak central governments that have issued unstable fiat currency which has reinforced the cultural perception that gold is another form of currency.
    Sep 2, 2015. 04:50 PM | 1 Like Like |Link to Comment
  • Gold A Poor Safe-Haven Investment [View article]
    Pinto I understand gold and have researched it extremely thoroughly. The empirical evidence suggests that it is a worthless asset with its value being solely imputed or a construct. It has no real value, does not generate cash flow or have utility making it impossible to value, gives poor returns over time and is extremely volatile.

    How can you claim that an asset with those characteristics is a store of value or hedge against uncertainty? The imputed value of gold essentially survives in and is created by the modern financial system in which it and other assets exist.

    I also note that all the negative responses so far rely upon the hackneyed view that fiat currencies and government¡s will collapse leaving it as the only viable currency. if that were to occur gold will have no value because shelter, clean water, food, energy and safety will have far greater priorities for survival than a metal with no utility.
    Sep 2, 2015. 11:19 AM | Likes Like |Link to Comment
  • Gold A Poor Safe-Haven Investment [View article]
    Actually that is incorrect, what you are referring to is the treatment of unencumbered gold as a risk free asset under the Basel 3 capital requirements for banks. Under these requirements unencumbered gold along with dollar cash and Treasuries are considered to be "zero risk weighted items" or perceived to be riskless. This however is only in the context of how a banks capital requirements are calculated and not from the perspective of the risk or volatility associated with a particular asset class.
    Sep 1, 2015. 08:01 PM | 1 Like Like |Link to Comment
  • Gold A Poor Safe-Haven Investment [View article]
    Devil I am not short gold, it is an asset I don't believe in and do not invest in, you can see from my disclosure at the start of the article that I have no holdings or interest in gold or related investments. The market may be dropping now and there has been a slight rebound in gold but over the long-term stocks and 10 year T Bills will outperform gold, history has already shown us that.
    Sep 1, 2015. 07:45 PM | 1 Like Like |Link to Comment
  • Gold A Poor Safe-Haven Investment [View article]
    Kilgore I certainly understand the point of gold and portfolio diversification. But while it may have zero correlation to stocks it is still an asset that is highly volatile and has performed poorly over the long-term. This makes it particularly unattractive as an investment.

    The view that it should be a part of a portfolio for the purposes of diversification is much like arguing that it is a safe-haven asset when it has no utility, doesn't generate income and is extremely volatile. I always thought that the purpose of investing was to maximize your returns and minimize loses and you certainly won't be doing this by adding gold to your portfolio. Then you have the opportunity cost that comes with investing in gold. This in environments where a rate rise is on the cards becomes particuarly costly.

    Wouldn't it be better to invest in a diverse portflio of stocks with a mix of growth and defensive stocks? While there is a correlation between Treasuries and stocks they tend to work in opposite directions and this along with lower volatility makes Treasuries a better safe haven investment than gold.
    Sep 1, 2015. 05:55 PM | Likes Like |Link to Comment
  • Canadian Western Bank: The Market's Overbaked Perception Of Risk Has Created An Opportunity [View article]
    Jay that is a good question. If you look at the assumptions section of the model you will note that the growth rates used are lower than the historical YoY and CAGR growth rate for the dividend. If the bank did consider a dividend freeze for a short period because of diminished earnings I doubt that it would affect the long-term growth prospects for the dividend. I also used lower rates for the short-term than the long-term YoY of CAGR dividend growth to take this possibility into account.
    Aug 20, 2015. 10:46 AM | Likes Like |Link to Comment
  • Canadian Western Bank: The Market's Overbaked Perception Of Risk Has Created An Opportunity [View article]
    Timmies I agree the bank isn't going out of business and despite the issues the recent fall in oil will trigger around higher defaults and impaired loans they will still be quite manageable.

    A key problem is perception with U.S. investors betting heavily on a 2006 U.S. style housing collapse and subsequent banking meltdown. But this couldn't be further from reality.

    For some reason U.S. investors can't grasp that the structure of the financial system, the regulatory environment and circumstances surrounding the housing market differ significantly from the U.S.
    Aug 13, 2015. 08:37 PM | Likes Like |Link to Comment
  • How Bad Is The Financial Health Of Canada's Households? [View article]
    Michael thank you for the feedback. I am quite enjoying the comments from readers and these will stimulate further research for my upcoming articles on the housing bubble and risks in the financial system. In those articles I hope to cover the points you have raised in even more depth.
    Aug 8, 2015. 09:00 PM | Likes Like |Link to Comment
  • Pacific Rubiales Energy Could Run Out Of Cash [View article]
    Lex Corp Repsol decided to pursue a deal with Talisman instead and suspect because PRE wasn't big enough for the type of deal they were lookig for and the tpes of assets they were seeking to acquire.
    Jul 28, 2015. 12:56 PM | Likes Like |Link to Comment
  • Pacific Rubiales Energy Could Run Out Of Cash [View article]
    Laurent I certainly agree with your sentiments here.

    It appears unlikely that the facility which totally tapped out will not be rolled over or if it is only part. I believe this will be the case because with PRE having renegotiated its financial covenants that in the end were significantly relaxed it won't meet the lending requirements unless there is a sudden and unforeseen improvement in its financial condition.
    Jul 25, 2015. 01:40 PM | Likes Like |Link to Comment
  • Pacific Rubiales Energy Could Run Out Of Cash [View article]

    Please don't construe any of my comments as denigrating or attacking your article I am solely trying to understand how you arrived at your thesis and where your numbers come from because they are very different to the ones I have seen reported.

    I don't understand where you are getting your forecast capex figure from, all documents I have reviewed including the revised guidance and 4Q15 and 1Q15 investor presentations state it will be $1.1 to $1.3 bn .

    In the notes for the 1Q15 fins it gives total accounts receivable of $1.05 bn of which $194 mn is non-current but if you read the notes the long-term recoverable VAT which will be paid 1 year after disclosure totals $81 mn (it is likely this will be recovered in time to meet current liabilities.

    You haven't included the additional $60 mn for infrastructure capex to be received as part of the sale of the first tranche of Pacific Midstream which is payable in 2Q15.

    There is no allowance for the $200 mn to be derived from the sale of 30% of its interest in Pacific Midstream which is currently in progress.

    There is also the additional end payment to be received for the forward crude sale.

    I don't understand where you have calc'ed the tax liability from, it is highly likely that PRE will pay no tax for 2015 with the exception of Colombian equity tax totaling $39 mn and deferred tax liabilities that will be reduced by a range of offsets.

    In total this gives roughly an additional $500 mn on top of your calcs, then there is the $200 mn from the sale of the interest in Pac Midstream and the unknown additional payment for the forward sale, plus PRE can further reduce capex as flagged in the 1Q15 MD&A.

    Clearly, PRE isn't going to run out of cash and there are sufficient levers available to raise additional cash if required. This is a markedly different outcome to the one you have arrived at in your article and with such a significant difference it is clear that your investment thesis is flawed.
    Jul 23, 2015. 06:06 PM | Likes Like |Link to Comment
  • Pacific Rubiales Energy Could Run Out Of Cash [View article]
    User 9636831

    All I am aware of is that O'Hara as has been publicized in the media as touting the potential that PER holders to potential investors

    Given the cash flow and debt problems it is not difficult to infer that O'Hara may be talking to potential investors about investing in PRE while looking for an alternate management team.

    As far as the article goes I share many of Laurent's views and see that PRE is in a very difficult position but I do believe that it offers far more value for investors than the bid from Alfa offered or its current share price does.
    I believe that with the right management team and a sensible divestment of non-core oil producing assets and exploration assets it could unlock value for investors.
    Jul 23, 2015. 02:03 PM | Likes Like |Link to Comment
  • Pacific Rubiales Energy Could Run Out Of Cash [View article]
    Laurent the link doesn't work so I am an sure what it refers to.

    While I agree with many of your sentiments concerning PRE if your using the wrong numbers and these are out by hundreds of millions and don't include all of the accounts receivable, factor in hedging, proceeds still to be received from asset sales, forward crude sales and tax gains then I don't see how your investment thesis can stack-up. And this is before we start discussing the various levers available to PRE to manage its potential cash flow short-fall.

    I am a little confused as to where your reference to $45M in your comment comes from. If capex is reduced by $400M then surely there is an approximate gain of roughly that amount.

    In reference to your comment below I don't understand what you are getting at? PRE has renegotiated its financial covenants and unless it breaches those covenants then its lenders have no legal right to force it to sell assets or make repayments outside of those contractually scheduled.

    However, it would appear that PRE will look at means of raising cash in the short term in order to manage its debt and cash flow problems. This will more than likely see a potential sale of a further stake in Pacific Midstream, some of its exploration properties or possibly some non-core oil producing acreage. It also explains why O'Hara is in dscussions with potential investors as they consider their options with PRE.

    My aim is certainly not to denigrate your analysis but I am trying to understand how it stacks up when you have not considered the company's full situation, read its financial and operational reports and have used significantly incorrect figures in your calculations.
    Jul 23, 2015. 11:53 AM | Likes Like |Link to Comment
  • Pacific Rubiales Energy Could Run Out Of Cash [View article]

    There are no signs that PRE will enter an accelerated asset disposal program at the hands of lenders. For this to occur it would need to breach its financial covenants and the lenders would need to exercise their contractual rights under the lending agreements for this to occur.

    Typically as it is seen to be a last resort prior to winding up a company it is highly unlikely that they would do this with a viable running entity like PRE.

    Your article because of the fundamental flaws pointed out in my previous comments proves nothing and does not support the thesis or the potential outcomes discussed in my previous article.
    Jul 23, 2015. 07:08 AM | Likes Like |Link to Comment
  • Pacific Rubiales Energy Could Run Out Of Cash [View article]
    I am certain we heard the same conference call and if you read the M&As for 4Q14 and 1Q15 along with the press releases you will see the discussion around cost cutting, opex and G&A.

    From reviewing both PRE's M&A and press releases the capex was revised downwards from $1.5 bn to $1.1 bn. So you are using the wrong capex figure see this link-

    You have also failed to take into account the financial factors I have mentioned in my previous comments and at a rough estimate your final calculations are out by at least $500 million to $600 million.

    This means that once you take the correct capex figures into account along with the other factors I have mentioned, PRE is not in need of cash at this time.

    I would also point out that PER has a considerable portfolio of upstream, midstream and exploration assets that it can sell and at this time they can use the proceeds of any asset sales as they deem fit. This would mean they can use them to bolster their cash on hand as well as direct them to repaying debt.

    While I agree with many of your sentiments until you start using the correct figures and demonstrate an understanding of PRE's true position your analysis is heavily flawed.

    Jul 23, 2015. 07:05 AM | Likes Like |Link to Comment