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Josh Young

 
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  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    If you sold recently, the buyer of your stock was likely the Stone family, ~31% owners of Austex. They made billions for their clients through their investments and are making their single largest public investment to date in Austex...

    Re: information flow, the company publishes quarterly reports and is in compliance (as far as I know) with Australia's strict securities laws.
    Jan 13, 2014. 02:08 AM | 1 Like Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    Karuna,

    Most of the stock the Stones got is through a convertible preferred deal, which converts at 16 cents per share. The stock is less than 10% above that conversion price, so it is very close to their effective cost for ~2/3 of their shares. If the reserve reports and analyst reports are right and if the stock is worth ~$0.30 per share, than there may still be most of the upside remaining at 17 cents per share.
    Jan 12, 2014. 11:57 PM | Likes Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    I'm not sure I fully understand the question or agree with some of the premises.

    There have been numerous wells drilled in Austex's field and in the adjacent field by Range. The results from these are likely incorporated into the reserve engineering reports. It appears there is significant upside to the numbers in these reports, given the repeated upwards revisions over the past 18 months.

    Also, I think being in one basin makes it more likely, not less, that Austex would be an acquisition target. It is much easier for a mid-sized E&P to tack-on a high growth single area than try to merge in a complex organization active in multiple basins.

    Does that help?
    Jan 12, 2014. 11:51 PM | Likes Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    I bought some GMET after it fell to a ridiculously low price due to tax loss harvesting and then I wrote about it. It subsequently doubled and has continued to trade at 2x the price it was at prior to my article. I think it was simply mispriced, and I fully disclosed the size and illiquidity prominently in that article.

    AOK is also not very liquid and also appears mispriced. I would be thrilled if the stock behaved like GMET, and if readers bought it at 8, after it traded up from 7 prior to the article being published, and it traded up to 15 and stayed at 15 at higher volume than before the article, I think everyone would be happy. Small cap stocks are more often mispriced than large cap stocks...
    Jan 12, 2014. 10:05 PM | Likes Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    Thanks for the comment. I am generally bullish on the price of crude oil over the medium term. The global marginal cost of production continues to rise, and the natural decline curve of the supply of oil is increasing as more production shifts to unconventional production. More capital is spent every year to replace declining production, which demands a continually higher price of oil. I think this trend continues unless there is a sharp correction in demand, potentially driven by alternatives or an economic shock like China's economy slowing down further.
    Jan 12, 2014. 09:37 PM | 1 Like Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    JF, there is a 50 to 1 conversion between ATXDY and AOK AU. There is also a currency conversion that needs to be factored in between USD denominated ATXDY and AUD denominated AOK AU.
    Jan 12, 2014. 07:36 PM | Likes Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    Yeah, ATO V is the Canadian listing, had no volume until Friday. Atxdy and aok au have more liquidity.
    Jan 12, 2014. 11:44 AM | Likes Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    Nytex, Austex has improved the drilling and completion techniques used in the area and has far better well results than nearby competitors except for some of those excellent vertical wells drilled by range.

    Before a blanket dismissal of this idea, look at the massive insider buying by sophisticated investors who have made their clients BILLIONS of dollars and at the PWC fairness opinion.

    As you said, you have not done a thorough evaluation of this security. You can be sure the insiders buying huge amounts of stock around the current price have...
    Jan 12, 2014. 11:42 AM | 1 Like Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    Austex is one of the lowest cost producers in North America, as mentioned in the article. Oil price movements affect them less than other, higher cost producers. The concern you mention is general - if one is worried about this, it is easy to short oil or an E&P index. The point of my article is that, under current conditions, Austex is radically mispriced compared to other public e&ps and to the value of its field.
    Jan 11, 2014. 06:30 PM | 1 Like Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    Its an Australian listed company. It has Australian and Canadian market compliant reserves. Breaking out pud vs pdp is not as instructive for rapidly growing companies. I'd expect PDP % of reserves to be skyrocketing along with production as these wells are consistently coming online at high rates.

    Skeptical of listing in Canada? They added an additional market at almost no cost. I think they should have listed in the US but its expensive to go from IFRS to GAAP. They hopefully will eventually.

    I didn't want to hit everyone over the head with all of the info you are requesting. Please look at their website and at their corporate presentation, it is all there. Lots of production, reserves, cash flow, growth. It is real, it is growing, and it is super cheap...
    Jan 11, 2014. 06:28 PM | 2 Likes Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    The situation has changed significantly. Biggest differences are that way more wells have been drilled, there is way more production, and way more reserves. There is also much better corporate governance, and the reserves are now vetted by multiple parties.

    It was cheap then and is even cheaper now...
    Jan 11, 2014. 06:25 PM | 1 Like Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    Great article, I commented on it and have previously discussed Sandridge's issues, and I actually said in an article a while back that Sandridge's royalty trust results indicated bad future well results and problems for the parent company. Austex is focused on a specific core vertical field in an area Sandridge doesn't have much exposure to. Apples and oranges. Thank you for the comment and the opportunity to make the distinction.
    Jan 11, 2014. 12:10 PM | 4 Likes Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    Thanks for the comment, you're totally right. I should have focused more on insider buying, it is an important aspect of the thesis. I really liked your analysis of Nova Copper and Xyratex. Perhaps you'll write a follow on article about Austex?
    Jan 10, 2014. 09:10 PM | 1 Like Like |Link to Comment
  • SandRidge Energy: Disappointing Asset Sale Reinforces Valuation Concerns [View article]
    I considered writing an article that would have said pretty much exactly what this one said, but probably wouldn't have included as much detailed analysis. Well done, and thanks for doing all this work on Sandridge and sharing it with us.
    Jan 10, 2014. 12:14 PM | 1 Like Like |Link to Comment
  • The Next Great Investment Idea: AusTex Oil Is Trading At 1/3 Of Proved Reserve Value, Growing 300% Per Year [View article]
    Thanks for the question. Not very common.

    I should have included in my article this little factoid- Austex raised some money recently and hired PWC to do a fairness opinion. PWC said the deal was "reasonable but not fair" because the stock is worth 50-100% more than it was trading for. This is extremely uncommon, as firms are hired to give fairness opinions on the understanding they will say the deal is fair! So PWC was incentivized to give a low estimate for Austex's value, and they still said it was worth at least 50-100% more than the deal price (deal was at ~$7 per shares)!!!
    Jan 10, 2014. 11:15 AM | 3 Likes Like |Link to Comment
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