Netwall

Hedge fund manager, value, contrarian
Netwall
Hedge fund manager, value, contrarian
Contributor since: 2013
Company: Netwall Investments LLC
Bob Carl, What is your take on bankruptcy risk of KMI?
You say there are better places to invest than this MLP,, can you name a few? That offer better risk/reward at this point?
"$7.13 is the cheapest price offered for Noble "
Wasn't it trading in $1 range in 1992?
Richard, you wrote:
"converted common stock to preferred stock (lowering the preferred obligation) "
Did you mean, "preferred stock to common stock"?
Thanks Richard for a nice writeup:
I havent looked closely at Antero's hedge book lately, but one thing that typically is common with "excellent" hedge book is that you also cap your upside. It might sound crazy but if Nat gas rises to $5 by 2017, how do you see AR upside capped in % terms as well as absolute $ terms?
What do you think of CRS? Is it a better name to own than ATI?
What are these spikes in share price every year or so?
Finding Value, Thanks
I am still of the opinion that this company will survive and thrive though wait time could be counted in years...
Tom, with all due respect, you have dollar/oil relationship backwards. You said,
"Possibly the flood of oil strengthens the dollar"
Its like tail is wiggling the dog. Its actually strength of dollar that causes weakness in oil.....how? Since oil is $ dominated asset, with strong dollar and weak local currency to buy oil, the demand decreases because oil becomes more expensive to buy..
Having said that, strong $ is not "the" cause of weakness in oil. Its basic supply/demand with glut of oil and that is the main reason. Strong $ is just adding fuel to the fire.
OneCitizen, Yes about 33% drop in 1X commodity will cause a 100% drop in its 3X shadow and that's a scenario where 3X products such as UWTI, UGAZ can wipe out in a single day never to recover. Improbable ,yes; impossible, no.
Out of Altruism? for who? His children? Buffett is only leaving $5M per child (total $15M) out of his $65 Billion net worth. And they will only be paid once he dies, not now.
I wonder if Buffett's children pray for his long life...
Come on guys, just admit Warren Buffett was wrong on IBM. I am personally a fan of him but IBM was a mistake. Is 4 years not enough? He is investing god but at the end of the day, he is still a money manager who is expected to produce a +ve return every year. I keep on hearing long term long term; Is 4 year not long term???
By the way in *long term*, we will all be DEAD. So our investments better produce a +ve result before *long term*
Paulo,
What do you think of shorting DWTI right now?
Another question that I could never get a clear answer from anyone ever, is that if UWTI touches zero due to catastrophic drop in oil price in a single day (I think 33% or more single day drop can wipe UWTI out), what would be the outcome for DWTI? I know that it would balloon but not wipe out, correct?
Gregg, you are a mind reader.... :)
In one of the BK annual reports right after IBM purchase, Buffett said that he wished that IBM stock will linger and that with buybacks he will own more of IBM and would have greater earning yield. Reminds of phrase, "Careful for what you wish for".... :)
Richard - Don't you think that BP dividend is safer than RDS.B?
I think DNOW is a stock to buy and forget about for the next 5 years. I am sure it will do well but don't know when.
Oil and Gas industry is a bit like food industry where I can sell you a burger at elevated price if you are hungry but cannot sell you a gourmet food if you are not. Oil inventories are full and nobody wants oil. But think about depletion and then everyone will want oil again full speed.
I have blindly followed some super-investors in the past, but as my investing career has matured, I have started to trust my gut only, more and more... And thankfully sold IBM when it was $180 a while ago and has never dipped into it again to this day.
Whenever I have added to BTE, I wished I had waited another month...
BTE netback are ~$23 range, so oil staying near $30 will become an unmanageable problem for the company going into 2017 as they have minimal hedges. But then it will come become unmanageable even for oil majors... I believe pendulum has swung too far now and should be due to swing back atleast a little bit, but never forget:
"Markets can remain irrational longer than you can remain solvent", Warren Buffett
I have written in the past about perils of chasing yield...
http://seekingalpha.co...
Majority of shale producers could not have made money even at $100 oil but they kept drilling and were FCF negative in hopes of being FCF positive "one day". But I agree with your thesis that its now how you run a business. Even if a business is FCF negative, it is always run with an intention of being a stable / positive FCF business. But not in the case of shale oil. However, the exceptions are always there as OXY was FCF positive even before late 2014, when this downward spiral started.
"Want A Buy A Streaming Precious Metals Company? "
There seems to be a grammatical error in the title
SLW does not belong in this comparison as they have a completely different business model than your typical mining companies.
Interestingly again MRO has "no moat" rating. HOwever MPC (which is not a direct comparison) has a "narrow moat" rating.
It seems to me that morningstar is assigning this moat rating to BTE due to its canadian assets, which is a little puzzling since heavy oil is sold at significant discount. Eagle ford seems to be a shining star for the company right now.
This below text is a copy/paste from Morningstar's BTE commentary:
"
Baytex holds high working interests in the majority of its plays, which allows the firm flexibility to manage the timing and cost of development. We think the degree of control the firm holds will strengthen its financial position and its ability to continue low-cost production growth. The exception is the Eagle Ford, where the company's nonoperated interest leaves future capital commitments largely outside the control of management. Still, we believe the asset strengthens Baytex's competitive position due to its positive impact on the company's netbacks and cost structure, as well as the potential for substantial additional resource. "
Good update thanks... Morningstar gives BTE a narrow economic moat and to give you a little perspective, morningstar gives "no moat" rating to Royal Dutch Shell (RDS.B). My point is that a company needs to have great assets in order for it to be given a narrow moat rating. So what I am trying to understand is that since many Eagle ford operators (such as APA) is not given a narrow moat so whats so special about BTE's heavy oil up in Canada that causes morningstar to declare BTE a narrow moat based on its assets. Any thoughts on this?
I wrote about FNGN in 01/2014 and deemed it to be very expensive at around $67 and was one of the rare occasions in my investing career where I shorted the stock. Luck and skill combined, I managed to find a perfect top. It is interesting that today it is still being deemed over-valued.
If anyone wants to read my piece on FNGN way back in 2014, the link is below though behind paywall.
http://seekingalpha.co...
Tom, 2016 is presenting once in a life time opportunity to pick your FAV names in energy sector. Ignore the "Experts" and go with your gut that oil bottom is here given that only Saudi ARabia and Kuwait are making money at these oil prices. Nobody else in the world can do it! Not even oil sands operators where oil is lying on the ground in front of your eyes.
What do you think of insiders selling more recently?
Does migration to EAF benefits firms like ZINC who collects Zinc dust from EAFs? Any thoughts?
DoctorRx,
For SLCA, Factoring in cash on BS, Net debt. is only ~195M. This is the company that is still generating income of $60M and Operating Cashflow of $100M in this tough oil environment. Again, frackers HAVE to use frac sand but CRR's ceramic is a luxury they can live without if they have to and thus live with little less throughput from their oil wells.
You stop eating at 5 Star restaurants when times are tough, but that does not mean you have to die of hunger since you can still eat at McDonalds to survive.
I enjoy your writings!
SLCA might be a far better position than CRR as shale E&P will easily give up ceramic proppants in favor of Sand when times are tough. Even if good times return, it might take shale producers a long time to adopt to ceramic proppants again.