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  • Atlantic Power Cuts Dividend And Adopts A 'Poison Pill' Plan  [View article]
    When you look into AT, it really is not a corporation in a traditional sense. They are more a private equity fund run by former investment banker types (link below / also checkout the CFO link within for Ronan, unless I am missing something, some how the timeline of his career doesn't make sense...26 years Navy, 14 years BofA and predecessors, 2 years Merrill Lynch and CFO at Atlantic power from 8/12).

    It's seems they buy (or invest) in generation assets that have (or will have) PPAs and then contract out operations (although they do manage a few projects themselves) and line up supply agreements with larger established energy suppliers. They use derivatives to manage the risk inherent in mismatched durations between their cost (supply) and revenue (demand/usually fixed with PPAs).

    They finance most of this with various kinds of debt (convertible, revolvers and so on) and other techniques (tax equity syndication) and sell RECs (Renewable Energy Credits) from projects where and when available, which they stated in the CC that prices for these RECs have softened. They also plan to issue equity for so called further accretive acquisitions going forward (talk of 50/50 debt equity split), although hard to believe they will be able to do this in the public markets.

    Sadly, it seems they are not very good bankers and are a little worried that their managing positions in this fund/corporation is at risk, hence the poison pill. Lastly, when you look at these guys and the company, they really are minnows swimming in an ocean of whales that can strand them on the beach at any time by using their vast size to utilize cheaper financing and/or demand better pricing (the current problems and what seems to have happened in FLA).
    Mar 2, 2013. 11:32 AM | 1 Like Like |Link to Comment
  • Atlantic Power Cuts Dividend And Adopts A 'Poison Pill' Plan  [View article]

    An investigation absolutely needs to be done as you state. The company has mislead investors as the author states, but the potential for insider trading is off the charts. Look at the price action and volume over the last two weeks leading into this announcement today. Fairly obvious that some people were in the know about this dividend cut.
    Mar 1, 2013. 05:29 PM | 5 Likes Like |Link to Comment
  • Is Total A Better Investment Than Exxon And Chevron?  [View article]
    All the big European oils (RDSa and RDSb, BP, STO, E) trade in ranges over a period of a few years (or months when volatility increases). Foreign exchange and U.S. institutional investment flows (EU institutional flows as well) that overweight, underweight and neutral weight influence these trends (I experienced this first hand this since I traded them professionally for ten years at a major investment bank before retiring). Obviously, BP was a little different over the last few years due to the GOM oil spill, but will likely head back toward the $50 area and higher (stock was over $60 when spill occurred) when final liability is determined.

    Total is a solid company, but you have to question some of their projects/investments which destroys some shareholder value. For example, the Shtokman project with Gazprom suspended last year cost them (and Statoil, who joined after TOT and was the desperately needed expert for drilling in those extremely harsh conditions), but more important why did TOT even get involved? The answer was political (Putin invited the French in)and that is a risk when you invest in European national champions.

    An interesting long term investment in France/Europe now is GDF Suez, a company still viewed predominantly as a utility, but has global natgas (as well as oil / link below for full description) production/distributio... networks. The shares are unloved and down over 70% in last five years. The stock yields over 8.0% is very cheap on many metrics. E.ON in Germany, another European giant, is another interesting long term play as well.

    GDF link

    E.ON link
    Feb 27, 2013. 12:45 PM | 1 Like Like |Link to Comment
  • Seadrill Limited Is Not Worth The Risk  [View article]
    Don't bet against John Frederiksen who is the power behind Seadrill as well as a few other companies. Invest with him and you won't be disappointed.
    Feb 24, 2013. 08:51 PM | 11 Likes Like |Link to Comment
  • Visualizing Bob Farrell's 10 Rules  [View article]

    Thank you for that observation. I should have been more specific and said the equity market has been quite volatile in the last ten years plus, but has not surpassed the old record highs seen over a decade ago.

    It seems obvious we have been in a secular bear market and may still be in the final stages of these long seventeen year cycles that some have called long term valuation wave theory (LTVWT). Within the secular trends you can have multiple cyclical bull and bear markets, with the current being a cyclical bull.

    The link below discusses the LTVWT and where it was last year. The author believes another cyclical bear is on the horizon, although his timing/prediction may have been a little early the theory behind it seems plausible. To change his forecast and for a new secular bull to begin we would need a much better macro environment for corporate earnings, which currently appears to be missing.

    Finally, the shale oil/natgas boom may provide a trigger in the coming years with comparative economic advantages for the U.S. with lower energy costs a primary driver (provided they materialize) as well as potential energy product exports (already occurring in some refined products where the U.S. has flipped to net exports).
    Feb 21, 2013. 10:08 AM | Likes Like |Link to Comment
  • Visualizing Bob Farrell's 10 Rules  [View article]
    Bob Farrell's wisdom is some of the best and his technical work on markets was interesting, and much better the subsequent technicians that followed him at Merrill.

    The one striking aspect in all the above charts is just how the market really hasn't gone anywhere in the past decade plus. While a correction is likely, let's not forget what a correction means, which is to correct over bullishness. In order to do that the selloffs have to scare most out before any meaningful bounce can occur. Unfortunately, we are a long way from those conditions.

    Feb 20, 2013. 08:53 PM | Likes Like |Link to Comment
  • Nordic American Tankers Is A Sucker's Bet  [View article]
    As I stated, my friend mentioned in his experience as a banker these types of transactions can proceed an eventual sale of a company (call it a experienced observation rather than a premise).

    Also, do you believe management would have seen all shares tendered if they bid $8.90 (where Hansson received his shares) or even $10.00 per share? Of course it is possible, but in my opinion not likely. A leveraged management buyout would also reduce the ability to acquire additional ships (still a stated strategy) since secondary equity issuance would be off the table (as you stated, something they do every few years) and Nordic American would become another highly leveraged shipping company with less flexibility in raising future capital.

    Now, imagine a real sustained recovery in suezmax spot rates and volumes (granted it hasn't occurred and bears believe it won't anytime soon) which would likely improve ship values as well (allowing some to be sold and debt reduced). This scenario could prompt a sharp rally in NAT shares. Even, if the entire company isn't sold, Hansson could reduce his stake more easily with NAT remaining a public company as well as receive increased dividends. Finally, I don't know what the management company agreement was prior to the sale to NAT, but I think if is safe to say that cashing out a stake in NAT (if that is the intention) in the future then selling the management company would be more profitable if/when a real recovery in the industry emerges.
    Feb 15, 2013. 11:27 AM | 1 Like Like |Link to Comment
  • Nordic American Tankers Is A Sucker's Bet  [View article]
    While there are no guarantees the company will be sold, why would the CEO sell his management company for mostly shares rather than all cash? Hansson is in position to best access the value and potential value for this company. No one knows the future for spot prices and volumes (as one post correctly states) in the suezmax tanker market, but you would think he is in a better position than most to gauge the potential and more importantly back up the belief with an equity stake rather than sell the management company for 100% cash.

    I am a retired institutional trader for a major investment bank (actually traded NAT for the bank for while, although mostly spent my career there trading Europe which included Norway) and always try to determine multiple reasons for transactions by companies other than the stated ones. Furthermore, I have a very good friend who is a retired investment banker who spent his career working on many deals in Norway and Russia and when I mentioned this transaction by NAT, it was his observation that he has seen these type of transactions prior to companies being sold. I also interpret Hansson's statement after the deal that he plans to be CEO for many years to come as twofold. First, he likely thought about cashing out his stake, but believes NAT is worth more than current share price (hence the equity stake increase). Second, the statement was to stop speculation (before it happened) he was bailing out of a sinking ship (sorry couldn't resist) to prevent a potential sell off.

    Finally, when I look at NAT's full year numbers I make the following calculations for cash (all in millions and numbers rounded): Rev $92-Opexp $64- Gaexp $15- Netintexp $5.5 +Noncashexp $7.0-Divpaid$63.5=($49.0) for the year. Certainly not great numbers, but if adjusted for the lower dividend payment going forward and all other numbers stay unchanged (of course unlikely with longs looking for improvement this year and next as is Hansson, shorts further industry weakness) the cash burn drops to ($19.5) which hardly puts the company in dire straits (again,sorry for pun).
    Feb 13, 2013. 10:46 AM | 6 Likes Like |Link to Comment
  • Nordic American Tankers Is A Sucker's Bet  [View article]
    The so called dividend has been classified a return of capital the last couple of years. The company seems to be run as a limited partnership rather than a traditional corporation regarding payouts/distributions. Obviously, tanker rates have hurt them and every other tanker company that operates in the spot market. Fleet expansion only works if spot rates rise and shipping volumes increase.

    The recent buyout of their management company (owned by the CEO and his family) was predominantly done with stock (price at ~$8.90), giving them ~5% of the company. Transactions like these can proceed sales of the entire company and a profitable way for the current CEO/Family to cash out. While NAT was as the author stated a "suckers bet" (chasing yield usually is), I am not sure it is now, given the potential for a sale of the entire company in the next few years.
    Feb 12, 2013. 02:57 PM | 1 Like Like |Link to Comment
  • The Good And The Bad From Nokia's Earnings  [View article]
    The article you linked highlights last year's cash flow, which the article above points out was negative and a reason for the dividend cut (rating agencies are always slow to react, so pay little attention to them). It is old news and Nokia will likely improve cash flow this year as their turn around continues. All stocks trade on future prospects, not past so discount last year's performance. Also, the quoting of SocGen's analyst is probably self serving for that bank, since they are a very large derivative player (too large and were bailed out via the back door when AIG was rescued) and probably long Nokia's CDS and getting hammered since Nokia's bonds have soared since last spring.

    Finally, reverse stock split is a sign of failure by management and is admitting they can't get the stock to rise any other way. Citigroup had way to many shares outstanding (close to 30bil) after the government bailout and had little choice. If you adjust Citi's stock price for the reverse split it is ~$4.20, not exactly close to pre crisis levels.
    Jan 29, 2013. 11:07 AM | 2 Likes Like |Link to Comment
  • Does Nokia Really Need To Sell 12 Million Lumias To Break Even?  [View article]
    Sounds like the Barclay's analyst is a good contrary indicator. Ironically, analysts like this provide a service, although not in the way they would think.
    Jan 16, 2013. 01:57 PM | 6 Likes Like |Link to Comment
  • Bank Of America: More Trouble On The Way?  [View article]
    As mentioned in a previous comment, the BAC rally was mainly driven by improving real estate. The Countrywide acquisition was terrible and as mentioned cost BAC plenty. It has been written (last year) that BAC allocated ~$40bil to resolve the Countrywide mess. If claims/losses are to vastly exceed that number, Countrywide is still a separate subsidiary and could be put into bankruptcy to protect the rest of the bank (still some debate on whether this is a real option or not). However, since it seems that this isn't going to happen, BAC must believe the worst is behind for this operation and value exists going forward with the Countrywide platform. The Merrill Lynch acquisition (while expensive) has been fully integrated into BAC's platform and has been profitable (helped provide most of BAC's earnings in 09 and 10), although some still see a chance some sort of monetization of Merrill (tracking stock?) could occur if needed.

    Finally, it seems that if we are ever to get a real recovery, the major banks need to get back to what they are supposed to do, make loans to businesses and individuals. The longer the litigation drags on in this sector, the longer a real recovery is delayed and we all pay the price.
    Jan 14, 2013. 09:32 AM | 4 Likes Like |Link to Comment
  • Nokia: Take Home Lessons From The Latest Guidance  [View article]
    Yesterday's selloff on large volume indicates, in my opinion, that there are still nervous longs that don't believe fully in the turnaround. It is interesting that it happened a day before a pre-announcement, which may indicate some investment houses heard that a pre-announcement on the quarter was coming (Europe tends to be a leaky ship at times with information), and obviously guessed wrong as to the contents.

    Given the positive release, I expect NOK will trend higher into the actual detailed earnings report later this month as buy the anticipation sell the news mentality takes hold. A move toward $5.00 is possible given the demand is growing (284mil shares traded so far today with stock near the day high). It is a fact big buy side institutional investors wait to see confirmation a company has regained profitability (fiduciary's responsibility and job security main drivers), before buying back sizeable positions which today's volume likely indicates (remember it isn't their money and they don't mind missing the move off the lows as long as it was a true bottom).

    Finally, Nokia's bonds are back near par after trading in the low to mid $70s last spring, further indication confidence in Nokia has returned by large institutions.
    Jan 10, 2013. 03:54 PM | 3 Likes Like |Link to Comment
  • Bank of America (BAC) settles for about $10.3B with Fannie Mae over repurchase claims on $1.4T of mortgages. The bank will pay Fannie $3.6B in cash and repurchase for $6.75B certain mortgages. BofA expects to take a $2.7B charge in Q4. Shares +2.4% premarket. (PR[View news story]
    BAC now can sell the $6.75bil mortgages they bought from FannieMae to the Fed. I would not be surprised if other money center banks did similar purchases with the federal agencies, since $40.0bil a month is still being bought by the Fed.
    Jan 7, 2013. 09:13 AM | Likes Like |Link to Comment
  • Will 2013 Be The Year Of Nokia?  [View article]
    Nokia's smart phone problems of the last two years are fading and will soon be forgotten by traders/investors since stock analysis is forward looking, not backward and the trend is up.

    The shares will be above $5.00 in Q1, providing no major market selloff occurs when the U.S. debt ceiling/spending cut circus starts in Washington in the coming weeks. The institutional selling is long over and they will likely add shares back this year if the sales figures of the Lumia line are trending higher when reported as well as channel checks.

    Finally, it is possible that Nokia will maintain a dividend payment this spring (usually announced in Q1), which is not expected by many analysts and this may trigger a gap move higher, hence my belief $5.00 is achievable early this year.
    Jan 3, 2013. 04:46 PM | 4 Likes Like |Link to Comment