Harrison Jaynes Capital

Harrison Jaynes Capital
Contributor since: 2012
Company: Harrison Jaynes Capital, INC
This company is on sale for sure and its general partners is a buy as well. The management team has been executing on all cylinders since 2010.
Great research. Risk and reward trade off is exceptional on this short opportunity. Starbucks should side with protecting their image and seek a different vehicle for tea expansion.
We don't have a short position. The point of the article was to highlight that in the past management had continued to mislead and misguide investors on the potential of the company. We stress that jaguar does have assets, however, that it would be wise in our opinion to wait and see if this management team can deliver.
Hermanne
We know a little about mining and investing. We bought Medusa Mining at $3.97 and sold at or around $8.00. We have a large position in a low cost high growth silver producer that already has given us 60% upside so far.
We hold long positions in gold and silver in our managed funds and personal holdings. There is no question that the printing of dollars will continue. I strongly urge you to not believe managements empty promises. They have failed their investors and will continue to disappoint.
I agree with you that Jaguar mining has upside potential with the depreciation of fiat currencies. JAG would also see a jump if the fed announced QE3 but so would many other more attractive precious metal stocks.
"As part of the process, the Company and its financial advisor contacted or received contact from 22 parties regarding a potential change of control or other strategic transaction. Five of those parties executed confidentiality agreements and were provided access to an extensive data room. Three of those parties conducted site visits in Brazil. Throughout this process, the Special Committee held 17 formal meetings and had numerous, frequently daily, informal discussions and communications.
Ultimately, one party, a North American based mining company, expressed a serious intention to pursue an acquisition of the outstanding shares of Jaguar, though others expressed interest in acquiring assets of the Company. In early February, that party provided a preliminary proposal respecting the acquisition of Jaguar at a price of between U.S. $8.20 and U.S. $9.45 per share, conditional upon, among other things, the completion of a diligence investigation of Jaguar."
http://bit.ly/Pz6QaL;highlight=
What valuation model did you use to calculate $2 a share?
The same analyst also noted ,"CJES estimates it can payback its $220mm debt drawn from its credit line for the Casedhole acquisition by early 3Q13."
JP Morgan has always been very positive on CJES. After their recent couple days shadowing management they are even more bullish on the stock. Keeping in mind:
J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for C&J Energy Services within the past 12 months.
J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: C&J Energy Services
Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: C&J Energy Services.
If you find significant value in CJES then you will also find it in Canyon Services Group (CYSVF.PK).
I can't stress enough the difficulty smaller service companies run into when moving into new basins. These difficulties result in some companies moving into new areas without the ability to obtain contracts for months if ever. Also, if companies want to continue to charge a premium for their services and not drastically discount their services just to get work they must have a solid reputation. The risk to hire someone who is unproven or unknown is just too high. This is why we are very pleased with their decision to purchase Casedhole Solutions and let them continue to operate under their already existing reputable name. Additionally, Casedhole competes with a few acquaintances of ours and they have a great reputation and will lead to C&J expanding further than OK and TX.
Hal Ofstie,
Thanks for reading the article. Canyon Services is cheap and highly profitable. We're looking forward to when its given a respectable P/E multiple.
Our original intent was to highlight the fact that RPC, Inc is a great company that has good margins and is growing earnings at a very respectable rate. It also has a great dividend. The oil service sector has been trading at multi year lows in the aspect of P/E multiples. During the last decade the high for yearly average of earnings for a multiple perspective was 25 times earnings and yearly low was 10 and that was during 2009 when companies across the board reported severe impairment to earnings.
The conclusion is that two things are weighing on the multiples, that is the over reaction to the price of natural gas. The second and the elephant in the room so to speak is the current administration propensity of over regulation and known feeling in regards to fossil fuels. If an investor does not think that if there is a new administration in office and this wont have a positive effect on the multiples then an investor is not being honest with themselves.
We believe that the multiples should be higher with these companies executing and fears of service sector be severely hampered is overblown. Then throw in the downward pressure that is associated with the current administration office not being there after November, if Romney wins, we believe the sector will go back to its historical P/E range.
We challenge anybody to do an accurate analysis on the impact of future regulation on fracking. You can’t cause who knows what type of regulation the EPA will try to enforce going forward and not knowing who will be in office. If someone is able to put together accurate analysis then our hat's off them. Our opinion is if Obama wins its not going to be good for domestic energy industry. If Romney wins then there will be a pro domestic drilling administration and any new regulation wont be severe. 
The point of the article is to demonstrate the strength of the oil and gas services industry. The fact that they are all doing so well in a unfriendly political environmental demonstrates their strength. They will not put a moratorium on fracking because it would be political suicide and cause the crash of our fragile economy. Fracking is proven to be a safe and effective way to extract gas and oil.
So if I'm hearing you correctly your telling me that higher energy prices will create jobs. I going to have to disagree. If we could no longer frack then the energy prices would skyrocket causing disposable income to dramaticaly fall causing an economic crash.
The energy sector is not considered a safe place to be on wall street due to the risks associated with fracking. I'm ready for Harold Hamm to be the new energy adviser under Romney. Get ready to see the energy services sector to explode with the forthcoming change in the White House.
Oilfinder, not familiar but will look into it.
TFCAB, your welcome. CJES and RES and SD are good companies to hold.
Definitely agree about HAL the company is performing.
PalmDesertRat, stability is talking about earnings and the companies producing cash flow. You won’t have moments like the one JP Morgan experienced this past week. In regards to the share price volatility is a good thing.
Sorry that you didn't like the earlier response.
Apple is now sort of becoming a victim of its own success. We think people are trying to talk themselves in to trying anyway to think Apple is overvalued even though based on the usual metrics its cheap. We currently have no position in Apple. If it was to drop in price considerably then we would think about a position.
Saturation- in meteorological sense means a 100%.
Therefore, with respect to your question if Apple is or has reached saturation in growth, we think that’s a hard question to answer point blank. There is still growth in US. The international market still has plenty of growth.
It’s true, short-term Apple and the stocks that supply Apple with chips have experienced a healthy sell-off. We believe over the next year as Apple releases its Iphone 5 this will benefit Skyworks. This is why we are long (SWKS). The company is a play on the overall smart phone market and its projected increase presence in Apple’s Iphone going forward.
The customers of Apple are all extremely pleased with their purchase and will continue to buy the latest and greatest that Apple has to offer. I've never talked to anyone who said they hate their iphone and can't wait to go back to android. Bottom line, Apple is a titan who will crush all who stand in their way. Feel free to open a short position if you dare.
Thanks for the questions,
We haven’t really painted that rosy of a scenario when it comes to the revenue and earnings of the company. If you were to look at the last four years of financial results you’ll see that this company has built a business that has really impressive margins.
Ex: 2X11 Results in (000’s) Revenue $372,096 EBITDA $156,798 NI $95,270/ Canyon Exited at NI rate of 28%
EBITDA MARGIN 42% NI MARGIN 26%
Sorry about that. We should have included the spreadsheet we did on their last four years of financials. If you look at it, we were actually conservative with our projected numbers.
Now with respect to the value or P/E multiples we aren’t asking a lot for the company to be given respectable multiples. The market is really focused on the price of natural gas. They can’t seem to grasp the concept that the oil and oil liquids play in the shale plays are going to be more than enough to offset the decline in drilling in the dry gas shales. There is already a record in US land RIG count. This will continue to increase. Also the market isn’t giving any credit to the ramp up in the Mississippian play and the start of drilling in the Brown Dense shale play and the Marine Tuscaloosa shale. This is the main reason that the US oil service sector and the Canadian sector is being given away. The market is just not being forward looking in its thinking. Watching the opinions of the experts on CNBC and Bloomberg they just don’t get the ever increasing shale plays that have oil and oil liquids. They continue to focus on dry gas. Just look at the earnings by Halliburton and Schlumberger. These two companies have already commented that the oil plays are making up for the decline in drilling from the dry gas plays. This should accelerate in the next two years.
I hope this helps explain our reasoning to be long the oil service sector.
Canyon's 4th qtr results link:
http://bit.ly/JXEgt3
Thank you for your comment and for reading the article.
We fully realize GasFrac uses LPG technology to fracture wells. Yet, they are still a fracking company and compete against all the above mentioned companies for service contracts. Therefore, not to include them in comparisons is not reflecting the reality that they are a peer.
GasFrac is definitely an interesting topic with in this industry.
Hearing IAMGOLD is Pursing an Acquisition of Jaguar Mining
The Rumor:
IAMGOLD (NYSE: IAG) is looking to acquire Jaguar Mining (NYSE: JAG), according to sources. Jaguar has been the subject of chatter involving China's Shandong Gold. It was rumored last week that Shandong had withdrawn an unconfirmed offer to acquire Jaguar.
Benzinga spoke Friday with a representative of IAMGOLD who said that Jaguar Mining was one of 50 companies they have evaluated over the past year, but she would not comment specifically if they were actively pursing the Brazilian miner.
Jaguar Mining closed at $3.54 Friday, a loss of 4.84% on twice the average daily volume.
Read more: http://bit.ly/IpL97M
The holding out by management for a $10+ bid might have been a good idea in november 2011 but not now. I would hope that they would take any deal above $7 before their options are completely worthless. Regardless, the worse case scenario appears to already be priced into the stock.
Analysts have commented that JAG assets are not significant enough to attract a buyer but I would disagree. They have undervalued assets and are producing over 150k oz a year. Management had been unable to live up to their promises and control costs. There is massive underlying value or there would never attracted interest in the first place.
Bretb,
Thanks for the upbeat post! I am simply stating facts in all of my articles with a slight bit of interpretation. When I say we will find out this quarter I am more referring to the expiration of the shareholder rights plan which they initiated on March 21 and expires 120 days after.
There is no question that management has dropped the ball on Jaguar. Im not sure if that had more to do with the Ex-CEO or the current "Special Committee."
The "Poison Pill" expires at the end of the quarter so I would defiantly expect an answer by then. Jaguar's management is very vague when addressing the potential buyout issue. I do seek comfort in their decision to use JP Morgan to broker the sale. If management doesn't find a buyer Im thinking that they major shareholders will attempt to takeover management instead of taking a large loss. Management doesn't stand a chance if investor activism takes over. JAG shareholders are fed up with management and would likely side with the hedge funds.
Carbo is not free from the risks associated with fracking. If a nationwide moratorium was put in place there would be no need to buy Carbo's products. Hydraulic fracturing is here to stay because it creates jobs and tax revenue. The risk of regulation is always a concern when it comes to fossil fuel extraction. Throughout the years, issues come and go but Oil & Gas companies continue to make money. Carbo is fairly valued with limited growth and more attractive investments exsist in (CJES), (RES), and (HAL). The previously mentioned companies have more upside potential and the same downside as Carbo
The market doesn’t believe that management will be able to reach a deal. The day of the reported Shandong Gold bid, the stock reached $7.80 which is still substantially lower than the offered $9.30. Management has been in talks with other companies for a possible collaboration or partnership since Q2 2010. They were trying to solidify financing for the Gurupi mine which I believe might have caused the unsolicited offer.
Remember, Jaguar has a historically large % of short interest. Management identified that the 2014 convertibles were capping the equity’s value. They were looking at possible options for a possible tender or issue high yield debt to remove this large short interest.
Management must know that they only way this stock is going higher is if they accept a buyout. Management has never discussed finding a new CEO. This would be top priority if they were only looking at obtaining financing for the Gurupi mine.
I'm pleased to say that my article has sparked some interest in this merger opportunity. On Fast Money this evening, Sachin Shah a special situations and merger arbitrage strategist at Tullett Prebon mentioned he likes Jaguar Mining. JAG up 6% after hours.
http://bit.ly/HdqR0w
GASFRAC just came out with 4th quarter earnings. Analysts expected between $77-70m and they reported $59m. EPS consensus was $.08 and they reported $.03.
The good news is the CEO said, "I expect 2012 to be another year of progress for GASFRAC, albeit not without its challenges. It is never easy introducing a new technology but I firmly believe GASFRAC has the right elements in place and with focus, hard work, time and determination we will achieve on the great potential of our technology."
Analysts will likely significantly reduce next years expectations. Hopefully they will be able to control cost better next year.
Specific gravity is the ratio of density of a substance compared to the density of fresh water at 4°C (39° F). At this temperature the density of water is at its greatest value and equal 1 g/mL. An object will float in water if its density is less than the density of water and sink if its density is greater than that of water. Similarly, an object with specific gravity less than 1 will float and those with a specific gravity greater than one will sink.
Gasfrac states LPG has a Surface Gravity of .51 and Water of 1.02
This is stating that LPG has half the density of water.
When we store water do we keep it under pressure? NO, the reason for that is because water unlike gas is incompressible. Well it can be compressed but it would take a massive amount pressure for very little compression. As we all know gas can be compressed easily.
When we force water into a well, the water does not compress and fractures the rock. When we force gas into a well, the gas compresses until it eventually fractures the rock. So I’m guessing that it’s safe to say that if we want to break something we would want to use the densest object.
Forcing highly flammable gas down a well doesn’t seem very safe to me. This could easily result in a flash fire which already happened to Husky back in March of 2011 during the fracking process. Husky never reported who was at fault for the incident.
GasFrac claims RESULTS*: Higher intial production and immediate economic benefits) on their website. *Actual production results above. GASFRAC does not guarantee similar results for all wells.
This may be true for some wells.
I have heard other reports that customers were disappointed with GasFrac’s results. The operating margins are very slim which tells me that they are offering their services at a steep discount in order to attain contracts.
There are times when this stock may be attractive such as if we have another severe drought here in Texas and farmers hike up water prices. I just believe that GasFrac is an extremely speculative investment considering the entire industry is selling at very depressed valuations. If GasFrac becomes an industry changer then I will be the first one to tell you, you were right. I was not impressed with their 3rd quarter 2011 results and am excited to see their 4th quarter results released today after the bell.
I am not short GasFrac and obviously not long.
Complete Production Services had approximately 315,000 horsepower of pressure pumping capacity when Superior Energy Services announced buyout on Oct 10, 2011. Now that the merger is complete and Complete Production Services reported year end results we can compare them with RPC, Inc and C & J Energy Services.
Complete Production Services
$590.2 million adjusted EBITDA for year end 2011
$2.7 billion announced buyout
4.6x 2011 EBITDA
RPC Inc
$666.2 miliion adjusted EBITDA for year end 2011
$2.2 billion market cap
3.3x 2011 EBITDA
CJES
285.0 million adjusted EBITDA for year end 2011
$950 million market cap
3.3x 2011 EBITDA
2012 Forecasted EBITDA of $410 million
2.3x 2012 Forecasted EBITDA
Randall Rollins and his brother Gary Rollins own almost 50% of the company. They will likely not sell the company at these depressed levels. Electing to hold on a few more years when the market values oil and gas service companies at higher prices.
Here is a quick comparison of C & J Energy Services (CJES) and Basic Energy Services (http://bit.ly/wIdRmS):
First, many service companies sell their services at a discount in order to open the door to their more profitable products (Pressure Pumping, Hydraulic Fracturing, and Coiled Tubing). This decreases the overall profitability of the business which is why I find CJES so appealing. CJES focuses on the highest margin part of the Oil and Gas Services industry (Hydraulic Fracturing).
All information provided below is directly from both the CJES and BAS 2011 annual report filed with the SEC.
Basic Energy Services (http://bit.ly/wIdRmS)
“In 2011, our completion and remedial services segment represented 43% of our revenues. Our completion and remedial services segment includes pumping services, rental and fishing tool operations, coiled tubing services, nitrogen services, water treatment, cased-hole wireline services, snubbing and underbalanced drilling.”
“Our pumping services business focuses primarily on lower horsepower cementing, acidizing and fracturing services markets. Currently, there are several pressure pumping companies that provide their services on a national basis. For the most part, these companies have concentrated their assets in markets characterized by complex work with higher horsepower requirements. This has created an opportunity in the markets for pressure pumping services in mature areas with less complex characteristics and lower horsepower requirements. We, along with a number of smaller, regional companies, have concentrated our efforts on these markets. One of our major well servicing competitors also participates in the pressure pumping business, but primarily outside our core areas of operations for pumping services.”
Basic Energy Services does not service high profile wells. They are implying that they service vertical wells which is a profitable business but does not deserve to trade at a premium. They also have $749 million in long term debt as of 12/31/2011.
C & J Energy Services (http://bit.ly/y3V0JR)
States their competitors of fracturing services as: Halliburton, Schlumberger, Baker Hughes, Weatherford International, RPC, Inc., Superior Energy Services, and Frac Tech. They receive 81.7% of total revenue from hydraulic fracturing services which I believe which have the most growth potential. They have no long term debt with a $200 million revolving credit facility of which none has been withdrawn. All expenditures will be able to be financed through cash flow with no need to tap credit facility or issue debt. C and J Energy Services is a very attractive buyout opportunity due to the low debt and industry leading margins.
I can’t tell you when a company will break out of its trading range but I can suggest focusing on the margin of safety. C & J Energy Services superior reputation, strong balance sheet, and significantly undervalued stock price will equal Superior Profits for CJES shareholders. CJES deserves to trade at a premium for the above mentioned reasons.