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Felix Pinhasov
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Felix Pinhasov is a Financial Analyst, Accountant and a Speculator in Natural Resource Equities.
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  • An Open Letter To Finavera Energy Shareholders, Management And The Board

    Fellow Shareholders, respected board members and senior management personnel:

    Today Finavera Energy (OTCPK:FNVRF) announced the sale of its British Colombia assets for $40M to Pattern Energy Group, while retaining its 10 percent interest in an Irish wind project. It does not take a genius to net the pro-forma assets and liabilities of the corporation and realize that the market finds the deal objectionable.

    On November 16, 2012 the company reported that the offers it received ranged from an outright takeover of the company to a corporate partnership. The company's board and management have chosen neither of these options and decided to proceed with a terrible agreement that exposes Finavera to potential financing risks as only $11M will be payable from Pattern Energy Group and the remainder subject to project financing. Why should Finavera and its shareholders be exposed to such risks, when the company gains no benefits from the projects?

    In addition, management and the board failed to recognize the time decay of money. In what world is $29M (the remainder) a year, or two from now is worth as much as $29M today? How can the board possibly agree to these terms?!

    A strategic review should significantly decrease the discount between the market value of the company and its inherent value. After all, that is why a strategic review process is undertaken. Instead, the board managed to choose the one option that resulted in the exact opposite!

    The spread between the market value of the company and its inherent value is now greater than before the deal was announced.

    By selling most of the company's portfolio and retaining the cash to "pursue further high growth opportunities" the board and management are sending the wrong message to the market. Whose interests does the board exactly have in mind? In other words, management and the board decided that shareholders, whom suffered the incredible volatility and depreciation of their investment over the past year, are secondary and not primary. Management and the board have frankly betrayed shareholders and put their personal interests (their jobs) ahead of those of the company's true owners-- its shareholders.

    This is not the time for arrogance and personal pride. Management and the board, who are also major shareholders, truly must see that the deal is not favorable. It exposes us to risks, but none of the benefits.

    I strongly urge you fellow shareholders to express your dismay and aversion to the deal announced today by making your voice heard loud and clear. Let the company know you will vote AGAINST the deal, express your right as a shareholder!

    Disclosure: I am long OTCPK:FNVRF.

    Tags: FNVRF
    Dec 20 2:48 PM | Link | 76 Comments
  • Power Financial Director And Former CEO Sold $56.1M Worth Of Shares

    According to regulatory filings, Power Financial Corporation (OTCPK:POFNF) insider and director, Robert Gratton, has been heavily selling shares in the public market for the past four months. The former chief executive has sold about 2.2M shares worth roughly $56.1M, which represent 62.6 percent of the 3.53M shares he held at the beginning of the year.

    Gratton served as the company's chief executive for 15 years, from 1990 to 2005, and currently serves as a board member of the company.

    Power Financial Corporation is a management and holding company with businesses operating in the insurance and financial services industry. The company's most notable holdings include a 68.2 percent holding of Great-West Lifeco (OTC:GWLOF) , an international financial services provider and insurance company, in addition to a 58 percent interest in IGM Financial (OTCPK:IGIFF),one of Canada's largest distributors of Mutual Funds.

    The company's holdings are experiencing both industry specific and competitive pressures.

    On one side, Great-West Lifeco must meet its long-term life insurance commitments by purchasing long-term government bonds that do not yield enough to cover the potential commitments. As a result, it must set aside more capital to meet those commitments, which jeopardizes its ability to pay its current dividend. On the other side, IGM Financial has to compete with low cost Exchange Traded Funds by lowering its Mutual Funds management fees, which also jeopardizes its current dividend payout.

    In many cases, the disposition of shares by a director does not translate into relevant information. However, given Gratton's extensive background and insight into Power Financial and its subsidiaries, investors should definitely take notice and reconsider their position in the company.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in OTCPK:IGIFF over the next 72 hours.

    Oct 29 11:02 AM | Link | Comment!
  • Hedge Funds Swing To Positive Territory

    Thanks to strong market performance and probably the use of leverage, hedge funds are solidly in the green so far this year. Riskier strategies focusing on emerging markets are topping the group with returns ranging from 6.37 - 11.95 percent. At the same time more conservative strategies, while positive, underperformed materially and range from 1.02 - 5.69 percent.

    Not surprisingly, funds with a bearish focus were the only group with negative returns, as the Short Bias Index returned a negative 9.7 percent.

    YTD (March 15, 2012) Returns by Index:

    Data Source: Hedge Fund Research

    After poor performance in 2011, the returns are more than welcomed and seem to catch investors' attention; hedge fund flows grew by 2.1 percent in March over February. The strong performance coupled with tamed market volatility should raise some caution going forward. After all the LTRO and second Greek bailout addressed liquidity and deferred the inevitable down the road. The LTRO failed to depress Portuguese borrowing rates and a second Portuguese bailout is believed to be likely; likewise, Greek elections are nearing and political rhetoric is likely to impact more than just Greek markets.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Mar 20 5:12 PM | Link | Comment!
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