pro"> Seeking Alpha
Felix Pinhasov's Instablog Felix Pinhasov is a Financial Analyst, Accountant and a Speculator in Natural Resource Equities. Felix Pinhasov http://seekingalpha.com/user/1123672/instablog An Open Letter To Finavera Energy Shareholders, Management And The Board http://seekingalpha.com/instablog/1123672-felix-pinhasov/1390821-an-open-letter-to-finavera-energy-shareholders-management-and-the-board?source=feed 1390821 Fellow Shareholders, respected board members and senior management personnel:

Today Finavera Energy (FNVRF.PK) announced the sale of its British Colombia assets for $40M to Pattern Energy Group, while retaining its 10 percent interest in an Irish wind project. It does not take a genius to net the pro-forma assets and liabilities of the corporation and realize that the market finds the deal objectionable.

On November 16, 2012 the company reported that the offers it received ranged from an outright takeover of the company to a corporate partnership. The company's board and management have chosen neither of these options and decided to proceed with a terrible agreement that exposes Finavera to potential financing risks as only $11M will be payable from Pattern Energy Group and the remainder subject to project financing. Why should Finavera and its shareholders be exposed to such risks, when the company gains no benefits from the projects?

In addition, management and the board failed to recognize the time decay of money. In what world is $29M (the remainder) a year, or two from now is worth as much as $29M today? How can the board possibly agree to these terms?!

A strategic review should significantly decrease the discount between the market value of the company and its inherent value. After all, that is why a strategic review process is undertaken. Instead, the board managed to choose the one option that resulted in the exact opposite!

The spread between the market value of the company and its inherent value is now greater than before the deal was announced.

By selling most of the company's portfolio and retaining the cash to "pursue further high growth opportunities" the board and management are sending the wrong message to the market. Whose interests does the board exactly have in mind? In other words, management and the board decided that shareholders, whom suffered the incredible volatility and depreciation of their investment over the past year, are secondary and not primary. Management and the board have frankly betrayed shareholders and put their personal interests (their jobs) ahead of those of the company's true owners-- its shareholders.

This is not the time for arrogance and personal pride. Management and the board, who are also major shareholders, truly must see that the deal is not favorable. It exposes us to risks, but none of the benefits.

I strongly urge you fellow shareholders to express your dismay and aversion to the deal announced today by making your voice heard loud and clear. Let the company know you will vote AGAINST the deal, express your right as a shareholder!

Disclosure: I am long [[FNVRF.PK]].

]]>
Thu, 20 Dec 2012 14:48:28 -0500 Fellow Shareholders, respected board members and senior management personnel:

Today Finavera Energy (FNVRF.PK) announced the sale of its British Colombia assets for $40M to Pattern Energy Group, while retaining its 10 percent interest in an Irish wind project. It does not take a genius to net the pro-forma assets and liabilities of the corporation and realize that the market finds the deal objectionable.

On November 16, 2012 the company reported that the offers it received ranged from an outright takeover of the company to a corporate partnership. The company's board and management have chosen neither of these options and decided to proceed with a terrible agreement that exposes Finavera to potential financing risks as only $11M will be payable from Pattern Energy Group and the remainder subject to project financing. Why should Finavera and its shareholders be exposed to such risks, when the company gains no benefits from the projects?

In addition, management and the board failed to recognize the time decay of money. In what world is $29M (the remainder) a year, or two from now is worth as much as $29M today? How can the board possibly agree to these terms?!

A strategic review should significantly decrease the discount between the market value of the company and its inherent value. After all, that is why a strategic review process is undertaken. Instead, the board managed to choose the one option that resulted in the exact opposite!

The spread between the market value of the company and its inherent value is now greater than before the deal was announced.

By selling most of the company's portfolio and retaining the cash to "pursue further high growth opportunities" the board and management are sending the wrong message to the market. Whose interests does the board exactly have in mind? In other words, management and the board decided that shareholders, whom suffered the incredible volatility and depreciation of their investment over the past year, are secondary and not primary. Management and the board have frankly betrayed shareholders and put their personal interests (their jobs) ahead of those of the company's true owners-- its shareholders.

This is not the time for arrogance and personal pride. Management and the board, who are also major shareholders, truly must see that the deal is not favorable. It exposes us to risks, but none of the benefits.

I strongly urge you fellow shareholders to express your dismay and aversion to the deal announced today by making your voice heard loud and clear. Let the company know you will vote AGAINST the deal, express your right as a shareholder!

Disclosure: I am long [[FNVRF.PK]].

]]>
fnvrf
Power Financial Director And Former CEO Sold $56.1M Worth Of Shares http://seekingalpha.com/instablog/1123672-felix-pinhasov/1223071-power-financial-director-and-former-ceo-sold-56_1m-worth-of-shares?source=feed 1223071 According to regulatory filings, Power Financial Corporation (POFNF.PK) insider and director, Robert Gratton, has been heavily selling shares in the public market for the past four months. The former chief executive has sold about 2.2M shares worth roughly $56.1M, which represent 62.6 percent of the 3.53M shares he held at the beginning of the year.

Gratton served as the company's chief executive for 15 years, from 1990 to 2005, and currently serves as a board member of the company.

Power Financial Corporation is a management and holding company with businesses operating in the insurance and financial services industry. The company's most notable holdings include a 68.2 percent holding of Great-West Lifeco (GWLOF.PK) , an international financial services provider and insurance company, in addition to a 58 percent interest in IGM Financial (IGIFF.PK),one of Canada's largest distributors of Mutual Funds.

The company's holdings are experiencing both industry specific and competitive pressures.

On one side, Great-West Lifeco must meet its long-term life insurance commitments by purchasing long-term government bonds that do not yield enough to cover the potential commitments. As a result, it must set aside more capital to meet those commitments, which jeopardizes its ability to pay its current dividend. On the other side, IGM Financial has to compete with low cost Exchange Traded Funds by lowering its Mutual Funds management fees, which also jeopardizes its current dividend payout.

In many cases, the disposition of shares by a director does not translate into relevant information. However, given Gratton's extensive background and insight into Power Financial and its subsidiaries, investors should definitely take notice and reconsider their position in the company.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in [[IGIFF.PK]] over the next 72 hours.

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Mon, 29 Oct 2012 11:02:03 -0400 According to regulatory filings, Power Financial Corporation (POFNF.PK) insider and director, Robert Gratton, has been heavily selling shares in the public market for the past four months. The former chief executive has sold about 2.2M shares worth roughly $56.1M, which represent 62.6 percent of the 3.53M shares he held at the beginning of the year.

Gratton served as the company's chief executive for 15 years, from 1990 to 2005, and currently serves as a board member of the company.

Power Financial Corporation is a management and holding company with businesses operating in the insurance and financial services industry. The company's most notable holdings include a 68.2 percent holding of Great-West Lifeco (GWLOF.PK) , an international financial services provider and insurance company, in addition to a 58 percent interest in IGM Financial (IGIFF.PK),one of Canada's largest distributors of Mutual Funds.

The company's holdings are experiencing both industry specific and competitive pressures.

On one side, Great-West Lifeco must meet its long-term life insurance commitments by purchasing long-term government bonds that do not yield enough to cover the potential commitments. As a result, it must set aside more capital to meet those commitments, which jeopardizes its ability to pay its current dividend. On the other side, IGM Financial has to compete with low cost Exchange Traded Funds by lowering its Mutual Funds management fees, which also jeopardizes its current dividend payout.

In many cases, the disposition of shares by a director does not translate into relevant information. However, given Gratton's extensive background and insight into Power Financial and its subsidiaries, investors should definitely take notice and reconsider their position in the company.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in [[IGIFF.PK]] over the next 72 hours.

]]>
pofnf Insurance financial services Insider Ownership dividend income
Hedge Funds Swing To Positive Territory http://seekingalpha.com/instablog/1123672-felix-pinhasov/416321-hedge-funds-swing-to-positive-territory?source=feed 416321 Thanks to strong market performance and probably the use of leverage, hedge funds are solidly in the green so far this year. Riskier strategies focusing on emerging markets are topping the group with returns ranging from 6.37 - 11.95 percent. At the same time more conservative strategies, while positive, underperformed materially and range from 1.02 - 5.69 percent.

Not surprisingly, funds with a bearish focus were the only group with negative returns, as the Short Bias Index returned a negative 9.7 percent.

YTD (March 15, 2012) Returns by Index:

Data Source: Hedge Fund Research

After poor performance in 2011, the returns are more than welcomed and seem to catch investors' attention; hedge fund flows grew by 2.1 percent in March over February. The strong performance coupled with tamed market volatility should raise some caution going forward. After all the LTRO and second Greek bailout addressed liquidity and deferred the inevitable down the road. The LTRO failed to depress Portuguese borrowing rates and a second Portuguese bailout is believed to be likely; likewise, Greek elections are nearing and political rhetoric is likely to impact more than just Greek markets.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Tue, 20 Mar 2012 17:12:15 -0400 Thanks to strong market performance and probably the use of leverage, hedge funds are solidly in the green so far this year. Riskier strategies focusing on emerging markets are topping the group with returns ranging from 6.37 - 11.95 percent. At the same time more conservative strategies, while positive, underperformed materially and range from 1.02 - 5.69 percent.

Not surprisingly, funds with a bearish focus were the only group with negative returns, as the Short Bias Index returned a negative 9.7 percent.

YTD (March 15, 2012) Returns by Index:

Data Source: Hedge Fund Research

After poor performance in 2011, the returns are more than welcomed and seem to catch investors' attention; hedge fund flows grew by 2.1 percent in March over February. The strong performance coupled with tamed market volatility should raise some caution going forward. After all the LTRO and second Greek bailout addressed liquidity and deferred the inevitable down the road. The LTRO failed to depress Portuguese borrowing rates and a second Portuguese bailout is believed to be likely; likewise, Greek elections are nearing and political rhetoric is likely to impact more than just Greek markets.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

]]>
market-outlook
Take-away From PDAC http://seekingalpha.com/instablog/1123672-felix-pinhasov/400321-take-away-from-pdac?source=feed 400321 The resource boom is being followed by a huge boom of new junior exploration companies and this phenomenon is no more obvious than in the recent annual convention of the Prospectors and Developers Association of Canada (PDAC) in Toronto.

The four-day annual convention of PDAC ended last week and it was incredibly busy. Tens of thousands of people showed with an unbelievable number of new companies exhibiting their "unique" and "world class" projects.

All these new junior resource companies are popping everywhere and it seems that there is no end in sight. IPOs are expected to grow and this of course has some implications for those investing in the sector in 2012; here is the take-away from the convention.

The incredible increase in junior explorers presents opportunities, but also pitfalls. For one, the increase in exploration spending only exacerbates the inflationary pressures the industry is trying to cope with. These junior explorers will need drilling rigs, technical expertise and consulting services, which are already in short supply (I wish I was a qualified geologist!).

History shows that most of these companies promote an asset that is not economical. With the same money chasing a growing group of juniors, we are less likely to see the entire group being lifted as a whole and more likely see specific companies do well, while the others languish.

Lastly, it was very clear that many of the early stage juniors are simply looking for a senior to take them out at a huge premium. This mentality should keep investors in the sector on their toes. One should look beyond the one to five spectacular drill hole results and focus on the real potential economic viability of the particular project (for an interesting project see here).

To visit PDAC see here.

]]>
Tue, 13 Mar 2012 16:23:48 -0400 The resource boom is being followed by a huge boom of new junior exploration companies and this phenomenon is no more obvious than in the recent annual convention of the Prospectors and Developers Association of Canada (PDAC) in Toronto.

The four-day annual convention of PDAC ended last week and it was incredibly busy. Tens of thousands of people showed with an unbelievable number of new companies exhibiting their "unique" and "world class" projects.

All these new junior resource companies are popping everywhere and it seems that there is no end in sight. IPOs are expected to grow and this of course has some implications for those investing in the sector in 2012; here is the take-away from the convention.

The incredible increase in junior explorers presents opportunities, but also pitfalls. For one, the increase in exploration spending only exacerbates the inflationary pressures the industry is trying to cope with. These junior explorers will need drilling rigs, technical expertise and consulting services, which are already in short supply (I wish I was a qualified geologist!).

History shows that most of these companies promote an asset that is not economical. With the same money chasing a growing group of juniors, we are less likely to see the entire group being lifted as a whole and more likely see specific companies do well, while the others languish.

Lastly, it was very clear that many of the early stage juniors are simply looking for a senior to take them out at a huge premium. This mentality should keep investors in the sector on their toes. One should look beyond the one to five spectacular drill hole results and focus on the real potential economic viability of the particular project (for an interesting project see here).

To visit PDAC see here.

]]>
Gold
Canadian Oil Recovery And Remediation Provides A Near Term Transformational Catalyst http://seekingalpha.com/instablog/1123672-felix-pinhasov/350411-canadian-oil-recovery-and-remediation-provides-a-near-term-transformational-catalyst?source=feed 350411 Generally speaking, the macro environment needs to be positive, or at least provide a level of certainty for stocks to gain traction as more risk appetite draws investors away from bonds and cash. With the current uncertainty, it is vital to pick stocks with value creating catalysts in the near term, now more than ever.

Canadian Oil Recovery and Remediation Enterprises Ltd. (CVR) specialize in remediating oil-contaminated soil with its Advanced Recovery Equipment Systems (ARES). The company's operations are mainly based in the Middle East, the Mecca of oil drilling.

The company is thinly traded on the TSX Venture Exchange primarily due to its small public float. Approximately 80% of the company is owned by insiders (40%) and Al-Najah Advanced Technology (40%), a Saudi Arabian firm. The small public float enhances moves to the up/down side and therefore, creates extreme volatility. However, this is the case with many small-cap stocks that entail liquidity risk.

Background

In the summer of 1990 the Iraqi army invaded Kuwait, which was followed by several months of occupation. In early 1991 a U.S. led coalition began an operation to liberate Kuwait, which lasted about a month. As the Iraqi army retreated, it also destroyed about 800 oil wells along the way, resulting in the formation of hundreds of oil lakes covering about 120 square kilometers.

Although soil remediation services are needed everywhere drilling for oil takes place, the focus here is on this truly massive environmental disaster. The United Nations War Reparations Fund will pay Kuwait about $3.5 billion to cover the costs to clean and treat the vast area covered with the oil lakes.

The seed contracts

The administration of the funds and the clean-up responsibility falls with the Kuwait Oil Company (KOC), which issued the first-stage oil remediation contract tenders in April 2011 with more than $200 million in value. Out of the 31 companies that have pre-qualified, 12 bidders were selected for the seed contracts bidding stage.

Although each company can bid for the three contracts, each bidder is eligible to win only one contract. Bidders are evaluated based on price, technology, effectiveness and other metrics.

Through its partnership with SAR (45%), a Norwegian oil and industrial waste management company, CVR (45%) is one of the leading bidders for one of the contracts with an approximate value of $90 million. To put it in perspective, the company's market capitalization is currently about $42 million. The remaining 10% ownership in the partnership is held by a private investment company.

According to the company, the seed contracts are a pre-cursor to the oil lakes remediation contracts, that is, the window to the $3.5 billion awarded to Kuwait by the United Nations for the clean-up. Therefore, if the company is going to be awarded one of the contracts, the potential appreciation of the stock could be very significant as it opens the company to material value creation.

This is a high risk-high reward binary event:

Pros

Cons

  

* KOC inquired with CVR twice since the bid submission for further clarification on specific items in the bid documents.

* CVR is not in the top 3 lowest bidders (such as GS Engineering)

  

* CVR has the ARES I facility in Kuwait, which was tested and proven to clean soil, exceeding international standards of 1% of remaining oil content.

* Due to the transformational extent of this event and tight liquidity of the shares, the stock will experience material decline if CVR is going to lose to another bidder.

  

* CVR is bidding for other contracts (although not the same size) in Saudi Arabia, Jordan and other countries.

 
 
 
  

* CVR has a major investor (Al-Najah Advanced Technology ) with deep pockets and long reaching connections.

 
 
 
  

The company recently released an update on the bidding process indicating it intends to extend its bid for the contract KOC inquired about from January 3, 2012 to March 3, 2012. The contract is estimated to have a value of about $90 million.

The CVR-SAR partnership also recently signed a contract with BP Plc to clean and treat drill cuttings in Jordan.

Disclosure: I am long [[RCVY.PK]].

Additional disclosure: I have a long position in CVR on the TSX venture

]]>
Mon, 27 Feb 2012 09:27:57 -0500 Generally speaking, the macro environment needs to be positive, or at least provide a level of certainty for stocks to gain traction as more risk appetite draws investors away from bonds and cash. With the current uncertainty, it is vital to pick stocks with value creating catalysts in the near term, now more than ever.

Canadian Oil Recovery and Remediation Enterprises Ltd. (CVR) specialize in remediating oil-contaminated soil with its Advanced Recovery Equipment Systems (ARES). The company's operations are mainly based in the Middle East, the Mecca of oil drilling.

The company is thinly traded on the TSX Venture Exchange primarily due to its small public float. Approximately 80% of the company is owned by insiders (40%) and Al-Najah Advanced Technology (40%), a Saudi Arabian firm. The small public float enhances moves to the up/down side and therefore, creates extreme volatility. However, this is the case with many small-cap stocks that entail liquidity risk.

Background

In the summer of 1990 the Iraqi army invaded Kuwait, which was followed by several months of occupation. In early 1991 a U.S. led coalition began an operation to liberate Kuwait, which lasted about a month. As the Iraqi army retreated, it also destroyed about 800 oil wells along the way, resulting in the formation of hundreds of oil lakes covering about 120 square kilometers.

Although soil remediation services are needed everywhere drilling for oil takes place, the focus here is on this truly massive environmental disaster. The United Nations War Reparations Fund will pay Kuwait about $3.5 billion to cover the costs to clean and treat the vast area covered with the oil lakes.

The seed contracts

The administration of the funds and the clean-up responsibility falls with the Kuwait Oil Company (KOC), which issued the first-stage oil remediation contract tenders in April 2011 with more than $200 million in value. Out of the 31 companies that have pre-qualified, 12 bidders were selected for the seed contracts bidding stage.

Although each company can bid for the three contracts, each bidder is eligible to win only one contract. Bidders are evaluated based on price, technology, effectiveness and other metrics.

Through its partnership with SAR (45%), a Norwegian oil and industrial waste management company, CVR (45%) is one of the leading bidders for one of the contracts with an approximate value of $90 million. To put it in perspective, the company's market capitalization is currently about $42 million. The remaining 10% ownership in the partnership is held by a private investment company.

According to the company, the seed contracts are a pre-cursor to the oil lakes remediation contracts, that is, the window to the $3.5 billion awarded to Kuwait by the United Nations for the clean-up. Therefore, if the company is going to be awarded one of the contracts, the potential appreciation of the stock could be very significant as it opens the company to material value creation.

This is a high risk-high reward binary event:

Pros

Cons

  

* KOC inquired with CVR twice since the bid submission for further clarification on specific items in the bid documents.

* CVR is not in the top 3 lowest bidders (such as GS Engineering)

  

* CVR has the ARES I facility in Kuwait, which was tested and proven to clean soil, exceeding international standards of 1% of remaining oil content.

* Due to the transformational extent of this event and tight liquidity of the shares, the stock will experience material decline if CVR is going to lose to another bidder.

  

* CVR is bidding for other contracts (although not the same size) in Saudi Arabia, Jordan and other countries.

 
 
 
  

* CVR has a major investor (Al-Najah Advanced Technology ) with deep pockets and long reaching connections.

 
 
 
  

The company recently released an update on the bidding process indicating it intends to extend its bid for the contract KOC inquired about from January 3, 2012 to March 3, 2012. The contract is estimated to have a value of about $90 million.

The CVR-SAR partnership also recently signed a contract with BP Plc to clean and treat drill cuttings in Jordan.

Disclosure: I am long [[RCVY.PK]].

Additional disclosure: I have a long position in CVR on the TSX venture

]]>
Oil Gas Middle East
Yamana Gold Selling Out Of Calibre Mining Corp. http://seekingalpha.com/instablog/1123672-felix-pinhasov/314881-yamana-gold-selling-out-of-calibre-mining-corp?source=feed 314881 According to insider filing reports for the week ending February 9, 2012, Yamana Gold Inc. (AUY) sold 9 million shares of Calibre Mining Corp.(CXBMF), which trades on the TSX Venture Exchange under the ticker symbol CXB.

The disposition took place on February 1, 2012 and represented 75 percent of Yamana's common share interest in Calibre. Yamana's remaining interest amounts to 3 million shares.

The sale comes as the stock price of Calibre more than doubled from CAD$0.185 on January 19, 2012 to CAD$0.58 on February 10, 2012.

In late January of this year, the company reported drill results on its Primavera gold-copper project in Nicaragua. Yamana's action might indicate overreaction to the drill results.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Wed, 15 Feb 2012 07:25:13 -0500 According to insider filing reports for the week ending February 9, 2012, Yamana Gold Inc. (AUY) sold 9 million shares of Calibre Mining Corp.(CXBMF), which trades on the TSX Venture Exchange under the ticker symbol CXB.

The disposition took place on February 1, 2012 and represented 75 percent of Yamana's common share interest in Calibre. Yamana's remaining interest amounts to 3 million shares.

The sale comes as the stock price of Calibre more than doubled from CAD$0.185 on January 19, 2012 to CAD$0.58 on February 10, 2012.

In late January of this year, the company reported drill results on its Primavera gold-copper project in Nicaragua. Yamana's action might indicate overreaction to the drill results.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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auy cxbmf