Irfan Chaudhry

Long/short equity, special situations, contrarian, growth at reasonable price
Irfan Chaudhry
Long/short equity, special situations, contrarian, growth at reasonable price
Contributor since: 2010
The production capacity is substantial - which if no strikes, is likely to keep market well supplied - qouted inventory numbers vary
Benni - The relationship between oil and gold is not straight forward. Gold is a fear investment while oil is a "hope" (in terms of economy) investment, besides intrinsic fundamentals. The key to the scenario you alluded to is that there is a regime change in oil markets (because of oversupply). In that case average gold to oil ratio over last many years become irrelevant. The closest example for reference sake is oil to gold ratio from 1979 to 1994, when there was a regime change in oil markets after discovery of North Sea oil. If oil goes to $20 a barrel, which I do not see happening over an extended period, then follow the ratio from 1979 to 1994. I shall write separately about oil price, ceiling, floor and median levels in near, mediu and long terms
There is always a sentiment component which is effected by the fundamentals. thotdoc I read what you say and have lot of respect for that. That is the reason some investors have used G.O and Gold to SPX ratio as a see saw between optimism and pessimism. rkctech the ratios or relative values tend to show long term nature of balance between optimism and fear.Provided there is no regime change -
I looked through your past predictions about market outlook on seeking alpha and found out that you have been predicting crashes, bear market etc. since start of 2013, on a regular interval - Only if you keep saying the same thing - you may turn out right for once in a while. While, whether market corrects or not - you past track record does not give me confidence in what you imply in this article (not expressly say)
And the excess capacity in East Asia, Uralkali and Middle East, where the utilization rates (Middle East) has been in low 70s
The current weakness in fertilizer markets is not cyclical. Difficult for POT to match the cash cost per ton. Staying ability is above doubt. Should concentrate on retaining market share
Thanks Zoinked
Associated gas from wells in Saudi Arabia, Iraq, Iran and Kuwait was burnt as flares till 1980s. Only after that they started selling to chemical producers like SABIC for 70 cents per mmbtu. So, it is possible to drill wells for wet gas and liquids
Second recession in US on the basis of asset deflation is unlikely. China interest rate hikes is not intended to slightly cool domestic demand - and CBC has lot more tools at its disposal. Government spending at the expense of domestic spending is just one of them. Ethanol subsidy is being seriously questioned by US congress and in all likely hood 50 cents per gallon will face challenges by YE 2011, which should increase gasoline demand in the mix. China Yuan still have a crawling peg to US$, which gives it some insulation to US$ volatility. China is likely to buy for their third crude oil reserves of 327 million barrels as crude oil price get to US$80 level. Arab spring resurgence in fall of 2011 will bring in question almost 35% of global oil output. All this should be supportive of crude oil price and will pull it back up north of US$90 is a short haul.
With due respect to the claimed individuality, I gree with Rhianni. I see big overlaps in some of the percieved asset classes, which will obfuscate the investment strategy Iif there is one). Portfolio fails validity and I doubt that author understands diversification, its objective and means to achieve it.
Thanks for the oil drum
Middle East will remaqin volatile for coming few months. Only thing is that a further increase in crude oil price may being another recession - and obviously a fall of equity markets and commodities. Current economic situation may not be able to take a US$120 per barrel for a quarter. Consumer confidence data has already started showing that. This creates a ceiling crude oil price of somewhere between US$120 -140 per barrel beyond which investment thesis based on crude oil price and equity markets will not pan out - . As we are pretty near a goldilocks peak or beyond - the portolfio risk is higher than the potential reward at this stage.
In some countries natural gas has become a transportation fuel of choice both because of price and fuel efficiency. I have driven nat gas cars myself
Cars, public transport vehicles and even motorcycles are running on natural gas in some parts of Asia
You are right - ICE physcial contracts asks for an fob at oil terminal at Sullem Voe where oil is carried from brent though a pipeline. Both WTI and Brent blends are quite similar.
Not enough storage space in Cushing - 290 million barrels is more comfortable
Rumpole: The spread is around $10 per barrel today. Uncertainity about Middle East and Egypt has helped widened the spread as it effects the Brent more than it does Cushing. Also, Brent inventories are smaller than Cushing.
Yes the contracts are supposed to be financially setteled and not be physical delivery.
No, physical delivery is part of contract for Hedgers and Commercial users - you can not deliver the Cushing at Brent - you are betting on spread tightening
Roaming charges are the major part of the revenues from tourists - which in the case of MOBINIL, Egypt Tel & Orascom Tel is arond 5-7% . To a certain extent will be compensated by Egyptians moving abroad as the result of protests
The index includes the blue chips like Orascom Construction & Telecomuunications, GB Autos, Al Ezz Steel, Talaat Mustafa Group Holdings - which are owned by people who have some connection to the regime or members of ruling NDP (Swaris Family, Rauf Ghaboor, Al Ezz Brothers and Talaat Mustafa). I agree with you on long term value of these companies but will like to see the situation stabilize or early signs of that before I commit money to any of these companies. Currently, I will be more selective - and names like Commercial International Bank of Egypt, Egyptian Telecommunications may be of interest rather than the index investment.
Some of the investors I know had been using the oportunity by building their positions in small increments. Only time will tell whether that was a right move
All non commodity countries are facing food inflation. For Arab world - liberality and deomocracy are additional items to the mix
The probability of Ikhwan coming to power is very very low. Even in these protests, they are sitting on the sidelines. Their mass support has eroded int he last 10 years. Most prominent protesting group is urbanized, middle class, educated youth.
ETFs like WisdomTree Middle East Dividend ETF (GULF) and SPDR S&P Emerging Middle East & Africa ETF (GAF) recovered some lost ground, Orascom Construction & Commercial Inetrnational Bank recovered soem of the lost ground - Ezz steel is still at buying level (1.5% today)
I dont expect political risk to increase as CDS has already started dropping - equity markets were up 1.4% a day after I wrote this article
2)Al Ezz Steel is the largest steel maker in Middle East (5m Tons PA) 60% exported - 40 % local - maket leader in Egypt.
3)Orascom construction - 60% EBITDA from Urea manufacture and export business - 40% from infrastructure projects in Middle East (not Egypt)
4) Comercial International Bank - By far the largest bank in Egypt - very low LD ratio - visible asset book - low NPLs and high LLC ratios
5) I am not aware of and have not experienced any restrictions on dividend or capital gains out of Egypt.
Saudi Fertilizer Company announced Q4 earnings today - Earnings up+300% yoy
Saudi Fertilizer Compnay & Industries Qatar at 12.5X 2011 earnings with a dividend Yield of 7% & 4% respectively -
I shall send you a separate email on that
Thanks julesa123
Happy new year. Interesting sectors in the region are the Banks (Saudi, Qatar & Oman like Al Rajhi, SAMBA AB, CBQ QD, BKMB AB) , Petrochemicals (SABIC (bloomberg SABIC AB) is the world - market leader in 33 chemicals), SIPCHEM AB (market leader in Acetic Acid & Derivatives), Telecoms (like STC & Telecom Egypt) and consumer names like Alhokair AB.Top picks depends on the investor's risk profile - because some of these good names can be quite volatile and investors may face investbaility challenges especially in Saudi Arabia (P - Notes). Indexing may be one of the choices but a better sugestion will be to invest through the managed funds based in the region with good investment process, research capability, performance record and people. I am of the opinion that Emirates NBD public funds (Tickers available on the bloomberg) (EMTCF, EMHIF) can be one of the top choices in the group.