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DanielHolzman

DanielHolzman
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  • Stansberry's Matt Badiali On The Companies That Could Thrive In A Cheap Oil And Gas World [View article]
    "These cycles are like clockwork. Their periods vary, but it's been an annual event since 2009."

    Maybe the interviewee can explain this complex sentence. So far as I understand, a clock is called a clock because it has cycles which DO NOT vary. If they varied, it wouldn't be much of a clock. So what does it mean to describe cycles with varying periodicity as "like clockwork"? In the next sentence, the claim is that the cycles are annual events. If the cycles were annual events, and were really like clockwork, it should be easy to profit by purchasing appropriate options. Call me baffled.
    Nov 2, 2014. 11:46 AM | 1 Like Like |Link to Comment
  • Stansberry's Matt Badiali On The Companies That Could Thrive In A Cheap Oil And Gas World [View article]
    "These cycles are like clockwork. Their periods vary, but it's been an annual event since 2009."

    Maybe the interviewee can explain this complex sentence. So far as I understand, a clock is called a clock because it has cycles which DO NOT vary. If they varied, it wouldn't be much of a clock. So what does it mean to describe cycles with varying periodicity as "like clockwork"? In the next sentence, the claim is that the cycles are annual events. If the cycles were annual events, and were really like clockwork, it should be easy to profit by purchasing appropriate options. Call me baffled.
    Nov 2, 2014. 11:46 AM | 1 Like Like |Link to Comment
  • Ophir Energy Has A Potential 67% Upside [View article]
    I did not see any discussion in the article about the cost to extract the gas and oil versus the expected price. Or the cost to build the LNG facility that the author indicates will be needed to export the product. I don't see how it is possible to value gas and oil in the ground without a full analysis of the potential profit to be earned, which is the difference between the cost to extract and the sale price. Valuing plays based on the estimated total quantity of gas and oil seems to totally ignore the potentially large differences in extraction cost from one play to another.

    Further, I saw nothing in the article that discussed risk factors that could impact profit. Africa is a notoriously difficult place to do business, what with unstable governments, corruption, lack of infrastructure, tropical diseases, shortages of skilled workers. Surely there would be room in a robust article like this to discuss the discounted value of a company with assets in some of the riskiest real estate on the planet.
    Oct 30, 2014. 11:29 PM | 1 Like Like |Link to Comment
  • Seadrill Is A Value Play For Those Willing To Wait [View article]
    The charts you presented on break even price for oil were interesting. Many of the countries appear to be operating below break even price, which suggests that perhaps some of them will reduce ouput, or shelve projects. Perhaps the author can comment on his opinion of the accuracy of the tables, I saw no attribution as to the ultimate source of the data, other than the immediate source (Seadrill and Reuters). It would seem to be difficult at best to obtain reliable, unbiased information on the true cost to extract oil, and certainly this is critical to determining how many projects will go forward in the future. I suspect the price for Seadrill will be heavily dependent on its ability to lease rigs into the future, and the lease rate will be highly dependent on the number of projects that are undertaken (and canceled).
    Oct 26, 2014. 10:13 AM | 1 Like Like |Link to Comment
  • Valero Energy Could Impress Its Investors [View article]
    I do not understand the connection between the Brent-WTI spread and the profitability of Valero. Valero purchases crude oil, refines it, then sells refined product. So presumably the profitability of Valero depends on the difference in cost between the purchase and refining costs of various types of oil, and the price Valero receives for the refined products derived from the various types of oil. Exactly where in this business model does the spread between Brent and WTI factor in? Perhaps the author can explain the factors that affect VLO profits, and offer an opinion as to whether the future is favorable or not for VLO.
    Oct 26, 2014. 10:04 AM | 3 Likes Like |Link to Comment
  • Contrarian Alert: A Compelling Opportunity Is Emerging For North American Platinum And Palladium Producers And Developers [View article]
    I am not clear about the relationship between platinum and palladium spot pricing and the profitability of platinum producers, in particular Stillwater and Wellgreen. There is little in the article about the actual cost to produce metal, and nothing that I could see about the pricing strategy of the companies. For example, do they sell on the spot market, do they have long term commitment pricing, do they hedge? As the author certainly knows, the profitability of a mining company is closely tied to the spread between the cost to produce, and the price received. Without a careful analysis of the business model of each company, I don't understand how the author can be so certain that a rise in the spot price of a given metal will result in rapid stock price appreciation and improved profits for any company. I think the economics of mining are complex, and difficult to understand. I happen to hold SWC stock, but I also have protective puts, and am selling covered calls. I am not so sanguine as the author that SWC will rapidly rise even if the price of the ore it mines goes up.
    Oct 22, 2014. 06:47 PM | Likes Like |Link to Comment
  • How Much Does It Cost To Produce 1 Barrel Of Oil (African Oil Producers, 2013) [View article]
    I don't follow your argument that since oil sells for (let's call it $80) per barrel, and equivalent energy content gas is about $24, it makes economic sense to go for the oil first. Oil and gas production companies earn a profit per boe based on the spread between their cost to produce the (gas or oil) versus the price they can sell the product for. Since the cost to produce oil is potentially very different than the cost to produce gas, you need to make an economic case for each type of hydrocarbon.

    In some locations, it is very inexpensive to drill for natural gas, and the spread is good, so it can be very profitable to extract gas. In other locations, the oil spread may be more favorable. And of course this varies over time, and certainly varies by location, but whether oil or gas extraction is more profitable IS NOT dependent on the boe cost of oil versus gas, rather is dependent on the spread between production cost and sales price. I think your claim that since oil has a higher price than gas per boe it makes economic sense to extract oil is incorrect.
    Oct 21, 2014. 08:41 PM | 1 Like Like |Link to Comment
  • Why You Should Consider Buying Pentair Now [View article]
    "Pentair's multiple has not been this low this year, and it is unlikely that Pentair's multiple will contract any further."

    A P/E ratio of 21 is typical of a rapidly growing company, maybe in the tech sector, rather than a solid if unspectacular industrial company, where I would expect a P/E closer to 15. Perhaps the stock reduction is simply the market valuing Pentair at close to a P/E of 15 rather than recently inflated values? Given what appears to be a slowing world economy, maybe the stock still has a way to drop before it reaches a realistic valuation. Maybe the irrationality is the high P/E ratio the market previously afforded this company, not the recent drop in price, which seems like it may have been inevitable.
    Oct 19, 2014. 08:25 PM | 2 Likes Like |Link to Comment
  • Why The Stock Market May Have Found A Bottom And What To Buy Now [View article]
    "Dividend payers have historically outperformed non-dividend payers with less risk."

    This is a pretty remarkable claim, I would have thought you would back up such a strong statement with equally strong sources. I don't even know how you define the word "risk" in the quote, let alone how you measure it. As I recall, Eastman Kodak had an unblemished record of paying dividends, right up to the point where it went bankrupt.
    Oct 19, 2014. 08:03 PM | 1 Like Like |Link to Comment
  • A Textbook Model Of Dividend Predictability [View article]
    The discounted cash flow model is fine so long as the analyst can accurately predict future payouts, in your case dividends. Since the net present value of any stream of income is heavily dependent on payouts that will occur five or more years down the road, it is clearly essential to accurately estimate dividends in the distant future correctly in order to apply the model. I question how this is possible with a REIT, or for that matter any financial instrument with significant volatility. If you are arguing that historical payouts over say the last decade are accurate predictors of future payouts, I have to wonder what possible basis there is for such a claim.

    Drops in the share price of REITS over the summer, by your account due to overblown fears of interest rate rise, is simply one example of how the landscape for REITS can change rapidly. And you have previously noted in your articles that the dividend payout for some REITS was cut substantially in the past year. I suppose you could argue that O is resistant to dividend cuts because of it's business model, but if that is truly the argument, you would need to demonstrate that there is a high probability that the business model will continue to function substantially unchanged many years down the road in order to apply the discounted cash flow model. I don't see how this is possible.

    The DCF model works fine for truly predictable assets like treasury bills or toll roads. Not so applicable in my opinion to stocks, REITS, or commodity producers.
    Oct 18, 2014. 10:50 AM | 11 Likes Like |Link to Comment
  • Southwestern Energy: The Acquired Assets Are Top Quality, But Not Inexpensive [View article]
    Interesting article. Perhaps the author can comment on the takeaway capacity in the areas where the acreage was acquired. Ultimately the value of the acreage would seem to be heavily dependent on the cost and availability of pipelines to transport the gas.
    Oct 18, 2014. 08:41 AM | 1 Like Like |Link to Comment
  • Irrational Ebola Fears: What To Do And What Not To Do [View article]
    I appreciate the author educating us on the dangers (or not) of ebola. Still, the author's thesis, stated in the first bullet, is that markets are being crushed in part due to fear of ebola. When I expressed skepticism, pointing out that not all stocks are being crushed (consumer staples are up, certain mining stocks are up) the author replies that I cannot prove that the ebola hysteria is not negatively impacting stocks. This is true, I can't prove anything, but I did not write an article claiming causality in the first bullet.

    So if the markets are being crushed due to ebola panic, why would they have enjoyed such a nice rally today, in the face of additional cases in the U.S. Seems odd that one week irrational paranoia is crushing the market, yet at the end of the week, with no good news on the ebola front, the markets recover. Perhaps the ebola outbreak, like outbreaks of other rare diseases, gets a lot of media attention, but in the end has little to do with the daily grind of the market. Perhaps better to focus on fundamentals like interest rates, sector growth, supply and demand, new technologies, than Fox News paranoia.
    Oct 17, 2014. 07:15 PM | Likes Like |Link to Comment
  • How Much Does It Cost To Produce 1 Barrel Of Oil (African Oil Producers, 2013) [View article]
    "1 boe of gas ($100 versus $6)"

    Help me out with the arithmetic. You said that 1 barrel of oil was assumed to equal 6000 cubic feet of gas. Then you said that 1000 scf of gas sells for about $6. So wouldn't one boe of gas be $36? As to the equivalency concept, is the theory that you have the same energy content in one barrel of oil as in 6000 standard cubic feet of gas?
    Oct 17, 2014. 08:05 AM | Likes Like |Link to Comment
  • Irrational Ebola Fears: What To Do And What Not To Do [View article]
    I do not see any evidence in your article connecting ebola with the market downturn. What basis do you have to conclude that an extremely rare disease, relatively easily controlled by your own admission, would have such a dramatic effect on the market, and in particular the energy stocks and tech stocks? But no similar effect on real estate trusts or consumer staples? Isn't it just as likely that the ebola outbreak happens to coincide with a natural correction to the market, and has no more causality than the large typhoon that hit Asia, or the eruption of a volcano in Japan?
    Oct 15, 2014. 09:19 PM | Likes Like |Link to Comment
  • Annaly: Understanding Interest Rates [View article]
    "If we see a continued decline in long yields, Annaly's book value would continue to rise, which should theoretically translate to a higher stock price."

    I don't understand why book value is related to the price Annaly stock sells for, so maybe the author can help me out here. Isn't the average investor paying for future dividends, less whatever they value risk at? How exactly does book value enter into the price an investor is willing to pay for the stock at auction?
    Oct 14, 2014. 05:54 PM | Likes Like |Link to Comment
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