Let's make one thing clear: There is no magic formula to determine which company will be the next big buyout story. But if there were a formula, it would include variables like asset value, management skill level, risk profile and location, location, location. Today, C. K. Cooper & Co. Analyst Daren Oddenino joins The Energy Report to discuss M&A trends and help us solve for X. One caveat-a company that tempts an international player might leave domestic majors cold.

The Energy Report: Interest in merger and acquisition [M&A] deals in the oil and gas space seems to be picking up. Pioneer Pioneer Natural Resources Co. (PXD) made headlines last January when it sold 207,000 net acres of its Wolfcamp shale leases to Sinochem Group [00817:HK] for $1.7 billion. Does this signal a trend of international companies investing in North American shale plays at a premium?

Daren Oddenino:

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Loeb pushes for Sony spinoff. Daniel Loeb, whose Third Point Capital has a 6.5% stake in Sony (SNE) worth some $1.1B, is pushing for a spinoff of the company's entertainment business including the film studio responsible for James Bond blockbuster "Skyfall" and the music label which houses big name artists such as Taylor Swift. Andrew Ross Sorkin says Loeb flew to Tokyo last weekend and hand-delivered a letter to CEO Kazuo Hirai praising the company's turnaround initiatives but calling for greater focus. In order to "ensure the success" of a potential spinoff, Third Point would be willing to put up $2B to backstop an IPO of around 15-20% of the entertainment arm, the letter said. Other corporate assets Loeb thinks could be ripe for a split include the company's insurance division.

U.S. oil boom fuels non-OPEC supply growth. Thanks to U.S. shale oil, demand for OPEC

I started posting my portfolio updates this year for two reasons. One, I wanted to get feedback from the people I respect on SA. I hope they will look at the investments I pick, and make suggestions on what I may have done right or wrong, and where I can improve my thought processes and actions. The other reason is to try to demonstrate that using relatively simple techniques, and spending a relatively small amount of time, someone can manage their own portfolio and still get acceptable returns that come close to matching the returns of the market or the "expert" financial advisers out there.

I'm not out to show that I can beat everybody else's returns, or that my methods are superior to anybody else's. And I'm not trying to say that people who spend more time analyzing more data will not have better returns. I'm just trying to

BHP Billiton's (BHP) stock price has been under pressure since it topped out at over $80 per share in recent months, leaving investors wondering if the stock price has finally exceeded its fair value range (a range between which we think the stock is fairly valued). To answer this question, we perform a rigorous discounted cash-flow methodology and assign an appropriate margin of safety to our point fair value estimate (key components of our Valuentum Buying Index). If BHP's stock price falls outside this range, only then do we consider the stock to be undervalued or overvalued. Let's see if BHP is now reasonably valued despite the share price pressure.

Our Report on BHP Billiton

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Investment Considerations

Investment Highlights

• BHP Billiton earns a ValueCreation™ rating of EXCELLENT, the highest possible mark on our scale. The firm has been generating economic value for shareholders for the past

Energy pundits sing natural gas' praises, but Bill Powers, author of "Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth," isn't buying it. He sees serious flaws in how reserves are reported, and his own research shows steep, across-the-board production declines in the near future. Nonetheless, he expects a multiyear bull run for the resource, and recommends investors get positioned before scarcity hits-just five to seven years from now. Find out who Powers is betting on in this interview with The Energy Report.

The Energy Report: Numerous experts, including T. Boone Pickens and Porter Stansberry, have said that, thanks to natural gas shale recovery technology, the U.S. is set to become energy independent. In your new book, "Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth," you say that the U.S. has only a five- to seven-year supply of shale gas

There are a number of reasons supporting the view that the rebuilding of BP is progressing favorably.

1) Balance Sheet Still Improving

BP generated $4 billion in cash flow in the quarter, helped by downstream revenue and replacement cost profits from Rosneft and from inventory. BP ended the quarter with a net debt of $17.7 billion. The net

BHP Billiton (BHP) is currently focusing on the growing Chinese demand to increase its top-line in the immediate future. Though there seems no doubt that the company will be able to achieve good results because of the Chinese government's spending plan, I am particularly doubtful about the probable effect on the bottom-line. The reason behind my concern is the currency translation effect.

Planned Chinese spending on infrastructure

The Chinese government is all set to speed up its infrastructural projects, including but not limited to expansion of railway lines by 1200 km, costing around $150 billion. Along similar lines, China has approved $23 billion for steel projects for which BHP Billiton and Rio Tinto (RIO) could be the ultimate beneficiaries.

BHP Billiton has an edge for winning the Chinese projects over its competitors. The company operates in a wide range of products, from iron ore, oil, metallurgical and energy

The Australian stock market has performed well so far this year. The benchmark S&P/ASX All Ordinaries Index is up 5.77% on a price basis and 9.67% on a total return basis YTD. Due to the fall in commodity prices, the index has not regained the level reached before the global financial crisis. However, the long-term return of the index since is pretty impressive as shown in the chart below:

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Source: Yahoo Finance

The Australian economy is a resource-based economy similar to Canadian and South African economies. The country is called the "The Lucky Country" for the weather, lifestyle and history, it can also be said that the country is lucky due to the vast amount of natural resources available that can be exploited. For example, some of the major commodity exports of Australia are: coal, iron ore, gold, meat, wool, alumina and wheat.

As part of our process, we perform a rigorous discounted cash-flow methodology that dives into the true intrinsic worth of companies. In Vulcan Materials' (VMC) case, we think the firm is overvalued. We think it is fairly valued at $26 per share, representing over 50% downside from today's levels based on our point fair value estimate. The market seems to be pricing in way too optimistic revenue and earnings expansion in coming years.

Before we dive into our valuation assumptions, which we disclose for all companies, let's provide a little background to help with the understanding of some of the metrics in this article. At Valuentum, we think a comprehensive analysis of a firm's discounted cash-flow valuation and relative valuation versus industry peers is the best way to identify the most attractive stocks at the best time to buy. This process culminates in what we call our Valuentum Buying

Vale (VALE) has been on a roller coaster ride in recent months, but most of its action has resulted in a steady downward trend. With the stock now trading at the low end of our fair value range, is the risk-reward finally tilting in investors favor? Let's find out how we value Vale in this article.

But first, a little background to help you understand some of the terms we us. At Valuentum, we think a comprehensive analysis of a firm's discounted cash-flow valuation and relative valuation versus industry peers is the best way to identify the most attractive stocks at the best time to buy. This process culminates in what we call our Valuentum Buying Index, which ranks stocks on a scale from 1 to 10, with 10 being the best. Essentially, we're looking for firms that overlap investment methodologies, thereby revealing the greatest interest by investors

In China the investment share of GDP stands at 48%, 12% higher than any other industrializing country in the past. While many point to such high numbers as proof that the commodity boom will last forever, the truth of the matter is that such growth is unsustainable. Below is a chart from Credit Suisse that shows us Japan and Korea when they went through a similar investment expansion boom.

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If history is any guide, what is clear from the above chart is that sooner or later (I think sooner), China's investment boom has only one way to go and that is down -- for many years to come. And while many might say China is a unique situation and things are different this time, my take is that there are limits to how long you can defy gravity.

A China slowdown will affect the commodities space

Shares were steady at $17.50 before quarterly earnings were announced, but when earnings beat bearish analyst estimates, the stock surged:

CLF data by YCharts

Macroeconomic headwinds are being led by factors that include slowing growth in China, a big consumer of iron ore. If the weakness persists, weak players in the sector could hurt shareholders of Cliffs Natural Resources. Cliffs has $3.4 billion in debt, and is still adjusting its operations to lower its high cost of production. If the recovery in iron ore prices does not hold, investors need to determine if the downside in

Shares of Cliffs Natural Resources (CLF) traded with gains of nearly 15% in Thursday's trading session. The troubled mining and natural resources company reported its first quarter results on Wednesday, April 24th after the close.

First Quarter Results

Cliffs Natural Resources generated first quarter revenues of $1.14 billion, down 6% on the year before. Lower revenues were mostly to blame to a 10% decline in global iron ore sales volumes. Revenues fell short of consensus estimates of $1.19 billion.

Net income for the first quarter came in at $97 million, or $0.66 per share. This compares to last year's earnings of $2.63 per share. Adjusting for special items, the earnings decline is less worrisome. Adjusted earnings per share came in at $0.60 per share vs. last year's earnings of $0.85 per share. While revenues fell short of estimates, earnings comfortably beat consensus estimates of $0.45 per share.

CEO and

This week we return to the far eastern country of Mongolia to find what we believe are excellent short-term, high-yielding U.S. dollar corporate bonds relative to the amount of risk that investors typically find in much more common or more popular domestic U.S. corporate bonds. Increasingly known for its vast mineral resources, Mongolia is the fastest growing country in the world with an amazing 17%-a-year growth rate. As the Mongolian economy transitions away from a long history of oppression and into free markets, the sheer abundance of its very low cost resources has unlocked great market opportunities for their county.

One of the companies leading this charge is Mongolian Mining Corporation, a high-quality hard coking coal producer and exporter. Although the currently indicated 7.5% yield to maturity of this bond is lower than some of the double-digit yields that we have presented recently, the following review shows why we believe

Here's the story on potash according to Analyst Andrea Rubakovic: The major players are planning for long-term demand by developing brownfield projects, but they're running into hurdles. Meanwhile, juniors are having trouble financing greenfield projects. Does this mean we're in for a global supply pinch? If so, who could be positioned to profit? Read what Rubakovic has to say in her interview with The Energy Report.

The Energy Report: What's your outlook for the potash industry at this point?

Andrea Rubakovic: We are expecting a cautious global potash market for the remainder of the year. Chinese and Indian potash demand is slowing. Demand from developing nations in general is softening due to economic concerns in the U.S. and Europe. Nevertheless, we believe that the combination of existing producers' supply management and foreseen difficulties in bringing new supply onstream should keep global potash markets relatively balanced. So potash