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HighSharpe

HighSharpe
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  • Spectrum A Significant Hidden Asset At Entravision [View article]
    I appreciate you sharing this company on seeking alpha. I do not follow spectrum, but know a little about finance. This seems like a reasonable play. I did purchase at your first iteration. Thanks
    Feb 20, 2015. 10:32 AM | Likes Like |Link to Comment
  • Little LRR Energy Has Big Hedges, Strong Prospects [View article]
    Hi, nice comment. Do you have any guess how much higher rates might be running on another tranche of term debt? I think they are paying 9% on the 50 now. could be 8. I would assume they have some sort of plan for a base shortfall. Even at 10% on 100mil wouldnt be terrible to swap out.

    If you assume base/net asset of 58%, and lets decline asset by 20% then borrowing base would decline to 208mil. I just used back of the envelope on 446.765 mil asset from the most recent filing. 260mil base on 446.765mil asset is 58%. Impairing asset by 20% would reduce asset to 357mil, at 58% would be 208 mil base.

    Looking at the energy price decks, there was a sensitivity done 20% conservative price deck. I assume base case is fair(banks would try to get some edge so maybe wouldn't calculate at fair, but would want some cushion), and sensitivity case is edge(where they would love to price and are very comfortable). So lets assume borrowing base was priced off of midway between base case and sensitivity. That would give us something between 60 and 77 or mid at 68.5 a barrel. If we discount that for the recent move in oil by 20% we get 54.8 mid. Is that reasonable?

    Of course a dist cut is inevitable. They aren't really a wildcat operation so their production is pretty stable and low field cash cost.
    Feb 6, 2015. 11:02 AM | Likes Like |Link to Comment
  • Lonestar: High-Conviction Long Idea Remains Irrationally Undervalued Compared To Its Peers [View article]
    I cant argue with you. I dont have the info. If that is the case then we better be driving more gas guzzlers!
    Jan 21, 2015. 10:05 AM | Likes Like |Link to Comment
  • Lonestar: High-Conviction Long Idea Remains Irrationally Undervalued Compared To Its Peers [View article]
    I totally agree 2016 could be very challenging. Recession etc. At the same time, there are quite of few of these shale plays out there. They have steep decline curves, if drilling slows there will be a natural supply decline. I am concerned about an extended period of low prices, but I think its very hard to predict when last jan guys would have said sub 50 oil in 1 year was 20 to 1. I think there are many variables both domestic and international that will play into the price. I'm not an oil expert, but there may have been flooding of the market in recent months through increased extraction methods. This didnt show up in the crude inventory levels, but sure did in the byproduct levels, so refiners were buying like mad and cracking. Overall production in lower 48 US is 1mil barrels per day higher this year than last year with exports down. That production number is going to be lower in 6mos. Just from natural decline. Overall if global demand is not there, the price will decline, no doubt. And those most exposed will be the indebted ones. I think perhaps that is a bit down the road, and I would like to see some more time before deciding this has played out.
    Jan 21, 2015. 09:32 AM | Likes Like |Link to Comment
  • Lonestar: High-Conviction Long Idea Remains Irrationally Undervalued Compared To Its Peers [View article]
    I did some quick calcs on their hedges and in brief: lonestar as of the most recent quarterly report had hedges in place for 911k barrels during 2015. and about 500k for 2016. Looking at just 2015 that represents 55% of production assuming they stopped at 4669 boepd. The weighted average hedge price is 88. Assuming they sold the balance of production over the course of 2015 at 47, their weighted average price collected would be 69.68. Their cash cost including financing costs of 5mil quarterly interest is roughly 33(ignoring depr and depl). In 2015 it would be highly highly unlikely they could not make an interest payment.
    Jan 20, 2015. 11:25 AM | 1 Like Like |Link to Comment
  • Lonestar: High-Conviction Long Idea Remains Irrationally Undervalued Compared To Its Peers [View article]
    I can appreciate moving more levered players to the sidelines. However, the equity has factored this in. I disagree with your movement, but understand. Arguments concerning debt should not isolate energy companies. Credit goes to highest payer, and if interest payments increase for energy, they increase for all. So to some degree a natural hedge would be to sell the market...or the high yield names...and interestingly enough, there are quite a few energy plays in that cadre...
    Jan 14, 2015. 12:58 PM | Likes Like |Link to Comment
  • Ghosts Of LTCM And 2008 Collide - Putin Is Crushed [View article]
    Thanks for the article. Sure seems like the stage is set for volatility in 2015. Would be very naive to think there will be immunity in certain asset classes. Negative swiss rates interesting. wondering if there is a contagion does more money pour in?
    Dec 23, 2014. 07:43 AM | Likes Like |Link to Comment
  • Lonestar Resources Is Hilariously Undervalued Right Now [View article]
    Now is the absolute worst time to sell. One buys. If a high cost producer, different story.
    Dec 11, 2014. 04:20 PM | 2 Likes Like |Link to Comment
  • Lonestar Resources Is Hilariously Undervalued Right Now [View article]
    How is food created? Waiting for good weather? No.. risk is integral. The development of shale assets changed the global environment. Recent behavior by OPEC has exacerbated it. Demand has not declined. Supply is trying to keep up with demand.
    Dec 11, 2014. 01:28 PM | 2 Likes Like |Link to Comment
  • I Am Not Selling Procter & Gamble, Even If It Is Near A 52-Week High [View article]
    If it's cheaper to produce products, it's cheaper for new entrants. If it's cheaper for distribution it's cheaper for new entrants, if it's cheaper for advertising(via web), cheaper for new entrants. Naive to think PG will be immune to changes that affect rest of world. Why are they disgorging Duracell? Look at their revenue growth. Look at their div payout. New CEO? No, this is not something to hold as rock solid. This is a company in flux. The world is changing. To apply changes to everything excepting some is foolish. Great arguments made for toilet paper, diapers and soap. Globally there are many competitors.
    No doubt PG generates significant cash. Not extraordinary relative to their growth profile and enterprise value. I almost look at PG equity as a bond, and equity investors should as well.
    Dec 9, 2014. 11:11 AM | Likes Like |Link to Comment
  • Lonestar Resources Is Hilariously Undervalued Right Now [View article]
    If you believe the equity trading price of LNREF can predict the future of oil, i.e. those trading this equity are exiting and the current price reflects the trending belief that oil prices are destined for a shallow grave, the debt coverage ratio will collapse, ukraine and russia will make up, iran will agree to all terms, china and india wont grow, alternative energy will not need to be subsidised, dogs and cats will live together... then sell. If you ask yourself, are these the same lemmings that bought oil at 120, buy.
    Dec 9, 2014. 10:20 AM | 3 Likes Like |Link to Comment
  • Lonestar Resources Is Hilariously Undervalued Right Now [View article]
    I just bought more today.
    Dec 9, 2014. 10:04 AM | 1 Like Like |Link to Comment
  • Lonestar Resources Is Hilariously Undervalued Right Now [View article]
    Scenario 1)
    We have entered a deflationary spiral that pulls the entire world down with all markets.
    Scenario 2)
    We have not
    Pick one
    Trade LNREF accordingly
    Dec 9, 2014. 07:36 AM | 1 Like Like |Link to Comment
  • Walter: Future Depends On Met Coal Price Recovery [View article]
    I've been following the Walter due to its significant operator responsibility as Walter Black Warrior LLC the operator of Dominion Resources Black Warrior Trust's wells of coal bed methane. Independent well and reserve analysis at the beginning of the year had Walter potentially losing money as the operator on 90% of the wells. They have been shutting and plugging wells both in 2012 and 2013, my question to everyone; if a asset sell down or non-core realignment occurs do you believe they may accelerate this shutdown or in the event of the bankruptcy, wholesale close their operator responsibility to the trust? The trust is trading way over present value of reserves currently. Thanks
    Dec 4, 2014. 09:19 AM | Likes Like |Link to Comment
  • Lonestar: High-Conviction Long Idea Remains Irrationally Undervalued Compared To Its Peers [View article]
    global daily consumption is around 93mil barrels. OPEC is 31mil barrel. I dont believe the marginal production comments really affect fundamental oil price. This seems more speculation then anything. If you are running an oil company you dont make decisions on a weekly move in oil. There are also many correlations that prop or increase oil demand as it declines. There really is a case to be made for increasing demand as the price falls. For example the substitution effect. Renewables become less desired. or more uneconomic.
    Dec 1, 2014. 08:00 AM | 1 Like Like |Link to Comment
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141 Comments
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