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Christopher Wallace  

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  • Alberta Oilsands Update [View article]
    I wonder if the class action lawyers are going to jump on this?
    Mar 24, 2015. 09:08 AM | 1 Like Like |Link to Comment
  • Alberta Oilsands Update [View article]
    On Feb 9, I wrote this in my comment above: "My guess is this will trade at a discount to cash, the degree will reflect the market's view of management. "

    At $0.11 that is a 31% discount to cash about to be in the bank. That is a 58% discount to total book value. The market has stated pretty clearly their view of management.

    Now they have about 60% of the cash they thought they would and so they will press the reset button. Could be year end before they announce any "deal"; another 9 months of board fees for very questionable benefit to the shareholders.

    Dividending out the money, or doing a substantial issuer bid, whatever is more tax efficient, and selling off the other assets is the intelligent thing to do. Carrying on this business is not intelligent.
    Mar 21, 2015. 11:16 AM | 2 Likes Like |Link to Comment
  • Oil Rig Efficiency Will Fuel A Deeper And Longer Price Decline Than Many Expect [View article]
    Reading this article today (March 18) shows just how prescient you were back on Jan 13. Well done.
    Mar 18, 2015. 10:19 AM | Likes Like |Link to Comment
  • Alberta Oilsands Update [View article]
    I have talked with management and they only submitted invoices for amounts that qualify under the regs so they are confident in the number. There is no allocation for overheads in that number. Seldom in life do you get all that you want so some discount seems appropriate but a 65% recovery strikes me as too extreme. I would expect the discount to be more on the order of 10 - 20%, but that is pure guesswork.

    The market is pricing this stock at such a discount because we all have doubts; doubts about the whole claim process because so little info has been put forth (12 press releases since announcing the claim). Doubts about the other assets, which have received a whole 2 sentences of attention in those 12 press releases. And doubts about management; their track record here is unimpressive and the market clearly has doubts about any deal they might do with the money. They have done nothing to allay any of these doubts.
    Mar 9, 2015. 09:14 AM | 1 Like Like |Link to Comment
  • Alberta Oilsands Update [View article]
    "The Alberta government will release its budget for 2015 on March 26th. Do you think this has any effect on when AOS gets reimbursed?"

    A good question but unfortunately I doubt that it will have an effect. If it were a traditional budget expense, that would have impact because with government expenditures, typically, if you don't spend it in this fiscal year you can't ask for new funds. But this is not a discretionary or ordinary budget item; it is a matter of law. It is not like other budget items where you spend it one fiscal year and then ask for more for the next.

    I have heard others speculate that the government will want this off their books before going into the next fiscal year. I am not sure I agree with that logic myself, but I can hope!
    Mar 8, 2015. 11:46 AM | Likes Like |Link to Comment
  • Alberta Oilsands Update [View article]
    The delay has been in completing the audit process. It baffles my mind that it could take this long but it has. AOS first submitted their claim back in November of 2013. Alberta made requests for more documentation and back in Feb of 2014 AOS told me the process was substantially complete, that it was a relatively simple claim. Then, in a subsequent call in the fall of 2014 AOS told me they were still going through the audit process and had submitted over 7,000 invoices. Someone has bungled the process. The largest energy companies in Canada can complete a full audit of their financial statements in less than three months; how can this possibly take so long?? I am sure that blame lies with both parties, but I find it difficult to accept that AOS did a complete or thorough job with their application if the government auditors are still making requests more than a year after the original submission. But if none of the other claimants have received anything, perhaps that lets AOS off of the hook.
    Mar 8, 2015. 11:33 AM | 1 Like Like |Link to Comment
  • 2015: What Is Oil Really Telling Us? [View article]
    A sober look at most of the main leading indicators. Very comprehensive. Perhaps the only major indicator left out was the yield curve. Well done.
    Mar 7, 2015. 10:47 AM | 1 Like Like |Link to Comment
  • The Early Bird Gets The Worm: Using Crude Oil Production To Time A Rally In Natural Gas, Or Predict Its Doom [View article]
    What survey are you referring to? Can you provide a link? Thanks.
    Mar 6, 2015. 11:56 AM | Likes Like |Link to Comment
  • The Early Bird Gets The Worm: Using Crude Oil Production To Time A Rally In Natural Gas, Or Predict Its Doom [View article]
    A very interesting thesis and interesting article. An underlying assumption in this thesis is that reduced production will result in increased gas prices. There is the whole demand side of the equation that needs to be considered as well. There is not any direct 1;1 correlation between prices and production. But production is certainly a factor and well worth watching. We have seen steadily increasing production over the last decade; it will be interesting to see how prices react if we actually get a decline in production. I would not be surprised if daily production rates in the second half of 2015 are lower than 2014 on a YoY basis.
    Mar 4, 2015. 10:35 AM | 1 Like Like |Link to Comment
  • Big Short II: Can Canada's Largest Banks Absorb Increasing Defaults From A Real Estate Crash? [View article]
    Thank you for those links< South Gent. Very good information.
    Feb 24, 2015. 11:38 PM | Likes Like |Link to Comment
  • Big Short II: Can Canada's Largest Banks Absorb Increasing Defaults From A Real Estate Crash? [View article]
    With respect, Mark0f0, Canadian bank mortgage lending is nothing like US subprime was. The underwriting criteria are simply worlds apart. While there are subprime lenders in Canada, they are not the chartered banks.
    Feb 24, 2015. 09:43 AM | 1 Like Like |Link to Comment
  • Big Short II: Can Canada's Largest Banks Absorb Increasing Defaults From A Real Estate Crash? [View article]
    While this is an interesting thesis, the glaring variable of a 7% default rate needs to be substantiated. I would agree, under a 7% default rate the Canadian banks would be in big trouble. But what reason do you have for thinking that total outlier default rate might come to be? In 1981 interest rates spiked to 20%. Even then I don't think there was ever a 7% default rate in Canada, even though some markets saw up to 40% declines in residential real estate prices. That scenario took down must of the Canadian trust companies who were employing much riskier lending practices than the Canadian banks of today are.

    A new article substantiating your 7% default rate thesis would be very interesting to read. However, to simply grab that number because US sub-prime, a very, very different animal, reached it, seems to be tenuous logic.
    Feb 23, 2015. 09:44 PM | Likes Like |Link to Comment
  • Time To Catch This Falling Knife [View article]
    I am not so sure I can agree with the author's thesis that the market has excessively discounted MHR's price. While he is correct to point out that MHR has transitioned to be a gas play and the stock has correlated more closely with oil, that is more of a coincidence than the market mis-reading the situation, IMHO. The key issue is of course MHR's balance sheet. The market has re-priced every mid-cap or small cap with that kind of leverage. A deep discount to NAV IS the current pricing for debt laden balance sheets. And I suspect that will remain the case until commodity prices improve. MHR, and a host of other highly levered gas stocks will provide multi-bagger returns if there is a quick return to $4 gas. But I highly doubt there will be any revision upward in their stock prices if gas stays at its current level. MHR could be a big gain if gas rallies, or if there is a liquidity event in the pipeline. But I don't see much opportunity for price recovery absent that.
    Feb 23, 2015. 09:15 PM | Likes Like |Link to Comment
  • Uranium Participation Corp. At Attractive Entry Price [View article]
    At Jan 31 the NAV was CDN$6.07. The stock price is currently CDN$5.57 or about an 8% discount to NAV. Premiums and discounts to NAV are all over the map for this one as shown in this graph from their investor presentation http://bit.ly/1DLMzrv An 8% discount is not extraordinary in their history. If buying for the discount, I would wait until a 20% discount had been reached. Otherwise, you need to have an imminent belief in rising U308 spot prices.
    Feb 22, 2015. 06:38 PM | Likes Like |Link to Comment
  • Energy Fuels And Uranerz Energy Uranium Merger: More Than A Sum Of The Parts [View article]
    I have been a big fan of UUUU and wrote about them positively here at SA. I have spoken with management and think they are a capable group. However, I cannot say that I am a great fan of the deal with URZ. I thought it was too rich. But now that it is done and the price of UUUU has dropped so much, I think buying in here and holding for the long run is probably a wise investment.
    Feb 21, 2015. 11:54 AM | 1 Like Like |Link to Comment
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