Don-n-ABQ

Cramer's Mad Money - Five Safety Stocks (10/29/09)

RE: "However, some legislators are starting to get the message about natural gas. Oklahoma Congressman Dan Boren (Democrat)..."

That is like saying: "A Colombian politician takes a bribe from the cocaine cartel."

You can't get elected in Oklahoma if you don't believe in natural gas.

Things will only change for natural gas when the congressmen and woman from New York and California get on board. Two years ago this would have been impossible, but now the Marcellus Shale discovery might get New York, Pennsylvania and Ohio on board, and California's budget problem and all the NG in the Santa Barbara Channel might get them on board.

If the federal government and California opened up the SB Channel, the state of California could probably obtain $500 billion in financing against leases and royalties payments.

But, that probably won't happen unless we are both in a recession and the price of oil is $150.00 per-barrel and NG is $13.00...

The Secret Paulson-Goldman Meeting

1) Robert E. Rubin, before his government service, he spent 26 years at Goldman Sachs.

2) Lawrence H. Summers, "Harvard academic"

3) Paul O'Neill was chairman of the RAND Corporation,

4) Alan Greenspan disciple of Ayn Rand

5) John W. Snow chairman of Cerberus Capital Management.

6) Henry Paulson at Goldman Sachs for 32 years.

7) Paul Volcker, Federal Reserve Bank of New York and Chase Manhattan Bank.

8) Timothy Geithner, Federal Reserve Bank of New York, He was Under Secretary of the Treasury for International Affairs (1998–2001) under Treasury Secretaries Robert Rubin and Lawrence Summers. Summers was his mentor, but other sources call him a Rubin protégé.

Until this (if ever) "New York City/Harvard" chain is broken, nothing will change.

We need a man from middle-America, a Warren Buffett (Warren are you sure you can't do both jobs?), a banker from middle-America who knows what it is like to lend money to a farmer, a small auto repair shop, a small grocery store, etc. Maybe a banker from the Saint Louis or Minneapolis Fed?

Until we hire bankers from middle-America who lend money to people who actually make things or provide a service that involves physical labor (and not just push paper credit default swaps around) I see no change in policy.

Okay, I am going to start holding my breath now...

IPO Windfall Coming for Blackstone Group?

Could you list the IPOs?

Also, I wonder that because BX is public, and thus must make earnings, that they will harvest investments before they are really ready or the timing is more optimal? They may make some decisions based on their stock price and not what might be best for the individual portfolio company?

Cramer's Stop Trading! Costco Comes Back (10/7/09)

The reason COP went up was because they said that they were going to sell $10 billion in assets and cut the exploration and capital expenditures budget to pay down debt. Their are trying to fix their balance sheet, which is not as attractive as the other big boys. The increase in the dividend is to retain investors from fleeing to higher quality and maybe attract some new investors looking for dividend yield.

Yield investors are usually longer term investors, so the company is trying to attract long term investors who want a better balance sheet, but a slower growth rate (they will grow slower by giving up some of their assets and cap-ex budget).


On Oct 08 08:35 AM CFO wrote:

> COP already started such a massive cost & asset reduction plan.
> Wonder what is the logic behind dividend increase?

Cramer's Stop Trading! The Best Strategy on Earth (10/9/09)

If the Middle-Eastern SWFs buy up the top 10 American banks (or even 25%-40% of each), then the banks lend money, we spend the money, which means their return comes back to them in the form of oil consumption.

It is called "priming the pump" and it is a great idea (short term). The price of oil goes through the roof, the banks rally from the earnings they make from fees, SWFs make money off of the fees and then the oil. They get a double-barreled blast of windfall.

Of course, somewhere down the road, we still have to go to rehab. This is the same business model of the crack dealer giving away the first few bags to the customer for free. It only prolongs the inevitable of actually fixing the problem and getting help. That means less "toys" and more savings.

But, by then the markets rally for the next ten years and the SWFs and Cramer make an absolute ton of money.

Hey man, need a fix?

How Much Natural Gas Remains in the USA?

A couple more thoughts:

1) Lets get large government (federal, state, county, and city) fleets to mandate the use of CNG and LNG with electric first before looking at the general public's use of it. It is easier to install the fueling apparatus at a government yard than it will be for the retail consumer, both physically and through all of the red tape and discussions that it will cause. Then move to very large commercial fleets, like UPS and FedEx. Do this in steps please.

2) If you listen to or quote T. Boone Pickens, remember where he is coming from. He is self-serving and wants the price of NG to go to $25.00. If he didn't have an interest in NG or wind or water, I might take him more seriously. But, lets face it, he wants to make money, lots of it. And that is fine, but don't forget that part of it.

How Much Natural Gas Remains in the USA?

Are you sure that is what you want?

At $2.00 to $3.00 do we really want the District of Columbia opening up new areas of drilling?

I bet if you ask guys like Pickens they might say something different right now?

Even if Washington said that drilling would be allowed in offshore Carolina, at this price, would anybody do it?

Shouldn't we focus on demand right now and not supply?


On Oct 05 09:43 PM OilFinder wrote:

>Keep your fingers crossed that Obama and Salizer allow drilling off the coast of the Carolinas. I bet there's lots of goodies down there.

How Much Natural Gas Remains in the USA?

Mark,

How much did that well cost to drill and maintain?

How much would it cost to drill that well today?

I already know the answers to these questions, but you apparently do not. This well was very profitable. Check it out and get back to the readers.

Also, some people have already touched on this: I am more interested in the price at which it is profitable to explore for and produce natural gas. You left that out of your article and to me, it is the most important part. If some of these unproven and undiscovered reserves cost X, Y, and Z, and we are at A, this needs to be taken into account.

We need an article that shows how of the much of the unproven and undiscovered NG is profitable at $2.50, $5.00, $10.00, and $20.00. That would really be an article that is helpful.

In searching the Internet I came across a 2008 article by Allen Brooks, Managing Director of Parks Paton Hoepfl & Brown. In this article he tries to compare rig counts from the 1950s, 1970s, and 2000s. I never finished reading the article because I instantly found a hole in his thesis large enough to park a rig on:

You can't compare apples-to-apples rigs of 2009 with those of 1949 or even 1979.

We will never see the rig count numbers of the 1950s because one rig now can out drill and be moved faster than 10 of 1955. Mr. Brooks never even brings up the differences in technology that have occurred over the years. When comparing the past, people like Mr. Brooks and you, must take into account the changes that have occurred over the intervening period. There are things being done with drilling now that would have been laughed at in 1955 or even 1985 (especially offshore).

But, back to my other thought: How much will it cost to get it out of the ground and to my house. That is what I really want to know.


On Oct 04 12:54 PM Mark Anthony wrote:

> "In 1969 GHK, and its partners drilled a well over 24,000 feet deep
> in the Anadarko Basin. The well has produced 21 Bcf of natural gas
> (the equivalent of 3.6 million barrels of oil) and is still producing
> today. "
>
> That's an very expensive well to drill, 24000 feet deep. Over the
> 40 years what investment return did it bring to the investor? 21
> BCF natural gas is 21 million TCF, at roughly $2 or less per TCF
> averaged over the past 40 years, it brings in a revenue of $42M.
> The oil equivalent of 3.6M barrel, if averaged at about $15 per barrel
> in the 40 years, is roughly $54M. The initial drilling cost, inflation
> adjusted, plus the maintenance and operation cost over the 40 years,
> must far exceed the product revenue over the 40 years. This is an
> absolutely losing investment.

Tier 1 Capital Ratios and NPAs of Unofficial Problem Banks in the U.S.

I decided to check another one on the list for insider action:

Columbia Bancorp. (CBBO)

For this one we see insider buying by multiple insiders in Feb., May, and August. These insiders are buying at prices from $0.97 to 2.21.

There was also a nice gap up in September. On Sep. 17 the stock closed at $1.19, then the next day (Sep 18), it opened up $1.95, spiked to 2.904 @ 11:00 AM, and closed at $2.59 on massive volume (over 2 million shares versus average daily volume of 30 thousand.)

There was no news for the massive gap up and volume serge, and the bank was "officially" stumped:

www.thedalleschronicle...

Staci L. Coburn, the CFO, has been selling and not buying, in three small transactions this year. And so has director Terry Cochran and Director of Risk Management Robert Card.

But, directors Frank Toda, Charles Beardsley, Richard Betz, and Jean McKinney, have bought larger amounts this year.

So, on a net comparison basis, some of the directors of CBBO are at least buying some shares. Something the directors at FSNM are not doing.

David's list might have more value if it was additionally screened with insider transactions?

Tier 1 Capital Ratios and NPAs of Unofficial Problem Banks in the U.S.

FSNM put out an interesting press release today about "rumors":

www.snl.com/irweblinkx...

You would think that at the prices some of these banks are trading you would see some insider buying?

I just looked at FSNM and there has been only one insider purchase in 2009 (Dee H. Patrick, 5000 shares @$2.18 on 2009-05-01; which brought him to a total of 180,015 shares; so big deal in his overall holdings).

Prior to that you have to go back to three insiders (Avila Kathleen, Michael R. Stanford and Chris Spencer) in July 2008. So, only one insider buy since July 2008.

Also, in looking at the "tale-of-the-tape," it shows that the stock has rolled over with large block sales (9/18 & 9/23) at around the $1.30-1.33 area. Prior to that it was positive at the beginning of August when it traded in the $1.00-1.03.

There is additional positive volume action that occurs the two days prior to the August 5 announcement of :

"First State Bancorporation (“First State”) (NASDAQ: FSNM) announced today the retention of Keefe, Bruyette & Woods (“KBW”) as a financial advisor to the Corporation for the review of strategic alternatives to enhance shareholder value, including the possibility of entering into a business combination with a strategic partner."

Note to the SEC: There is also a curious volume uptick in the twenty (fifteen to thirty) minutes prior to the release of the August 5 announcement.

Bottom line, if the insiders are not willing to step up and buy at these prices, why should anybody else?

Money talks and .....you know the rest.

Gulf Island Fabrication: Value with Deepwater Exposure

Tom,

Well, I typed out a big long reply then hit the wrong button and it was lost.

Anyway, GIFI to me is more of a trading vehicle than a long term hold.

What we need is a chart that shows worldwide offshore rigs under construction. I guess this would be a buy when the price of crude is going up, the offshore rig count is going up, and day-rates are going up? Then it is a buy. When those indicators go down we short.

I like companies like Carbo Ceramics (CRR) a lot better that GIFI because of the cyclical downturns/overbuilds.

Thoughts?

Making a Value Case for Axcelis Technologies

Yesterday the company said:

"Axcelis has already made several successful installations and received multiple follow-on orders from customers..."

But without actual numbers, this looks more like a PR pump than a real turn around.

Continue to poke this one with a stick like a rattlesnake.

Sirius XM Poised to Profit from Muzak Bankruptcy

The Philippines?

I have to vote no on this one.

The current population for SIRI's footprint is 360 million people. They have 19 or so million subs. That is 5% market penetration right now. 10% might be easily achievable, but to get to 20% the business model would have to be altered, like some channels for free with ads or half the ads with a $6 subscription. 25% TMP is going to be a large wall.

Now, lets go to the Philippines:

Population: 92,222,660
5% MP = 4.6 million subs

Now, if we factor in GDP (PPP) per capita:
$46.0k (U.S.)
$39.0k (Canada)
$15.0k (Mexico)
$35.0k (MEAN)

$ 3.5k (Philippines)

So, 4.6 million subs divided by a factor of 1/10th the GDP = 460,000 subs.

How much does it cost to roll out the service?

You are not thinking clearly here. It is not worth it.

Australia makes sense (Rupert Murdoch)
Western Europe maybe makes sense (too many languages; which ones and how many languages?)
China (Chinese government will not allow SIRI in, they will do their own thing?)
Middle East (Al Jazeera in Arabic; not enough population?)

The Middle East in Arabic? You have GDP's that can support 20%+ market penetration (Qatar, Kuwait, UAE, Bahrain, Saudi Arabia, all with GDP (PPP) per capita above Mexico and a combined pop of 35 million with one good sat; [as long as the O&LNG keeps flowing]).

Russia?
Pop = 142 million
GDP (PPP) per capita = $16.0k

Not much better than Mexico.

South America? Only two languages: Spanish and Portuguese, but low GDP, and Hugo Chavez wouldn't go for it in his area.

Remember, it is extremely expensive to put up sats, then you need a high GDP to get 5%+ MP. It is going to be very tough to make money elsewhere. Lets just get North America profitable first.


On Sep 26 03:33 PM BRUCE E. W. wrote:

> Incidently, In adding to my comments earlier I wanted to mention
> that the Philippines as a potential market is primarily an English
> speaking Country and has a direct interest in American cultural affairs.
> They are computer savy and very sophisticated about electronic communications.
> They are an ideal location to build up a Pacific Ridge interest with
> anticipations into China itself. Anybody else have any info on penetrating
> that market?

Haynes International: Value in Specialty Steel

Tom,

I have not looked at this company, but after reading your article, I want to know more about who the competitors are and if HAYN's raw materials costs rise can they easily pass on price increases to their customers? Do they have either proprietary end-products or processes that allow them easy pass-through? I want either products you can't easily get elsewhere, or even if you can there isn't enough overall supply to effect pricing?

Thanks....Don

Sirius XM Poised to Profit from Muzak Bankruptcy

I don't own the service, so I don't know about it. But, do you know if SIRI cut back in the CS dept. in an effort to put a breaks on the bleeding back last year?


On Sep 26 09:03 AM Neal Barkett wrote:

> Two comments. Sirius Xm has to be more customer freindly. More &
> more people are upset with the customer service, that they are cancelling
> even though they love the product, out of frustration (Cmon Mel get
> it fixed). Sirius Xm will be growing leaps & bounds internationally
> w/ the internet & I-Phone applications (will take a little time
> to get the ball rolling).