Introducing the CVI - Punch Card Portfolio Newsletter

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Friday, August 26, 2011

Banro Corporation

Pretty clearly very cheap gold assets.

Carries political risk though and might make for part of a basket of gold developers/producers I'm considering:

Banro Corporation – On the Doorstep of Major Gold Production

Chesapeake moving into the Monterey ?

Heard it with my own ears, can't hurt Venoco....

http://seekingalpha.com/article/290102-chesapeake-moves-into-the-monterey-where-venoco-already-has-multi-bagger-potential

Another Win for the Canadian Value Investor !!!

Beaten down by Mr. Market.  Petrobank cut in half, other unconventional producers kicked as well.

But a couple of bright spots. 

Got out of Arcan at $6.90 after getting in at $4 in the spring on the Crescent Point news.

And now Hathor gets a hostile offer from Cameco for $3.75 which is quite a bit better than my $2.60 entry here:

Hathor Exploration — How Long Until It Is Acquired?

Some additional cash (sold Hathor at $3.90, market thinks offer too low) now available to average down on Westfire/Petrobank/Novus/Skywest/PennWest

Details on the transaction:

Cameco Offers to Acquire Hathor Exploration at 42% Premium to GuruFocus Estimate

Tuesday, August 23, 2011

CIBC Research

http://www.investorvillage.com/uploads/51958/files/ResearchOGWeekly.pdf

What I've Been Reading

Sprott Asset management - greatest trade in American history

Sprott Asset Management - The Greatest Trade in American History

Updated market commentary from Mulhenkamp

Updated Market Commentary from Ron Mulhenkamp

Chris Davis - takin the F Word out of financial stocks

Chris Davis – Taking the F-Word out of Financial Stocks

Mobius thinks investors will have to get into equities

Mark Mobius Believes Policy Driven Inflation Means You Have to Be in Equities

Audio of the final chat with Munger

Audio of Final Chat With Charlie Munger

Noble Marcellus Deal Once Again Shows CHK Value

http://seekingalpha.com/article/289372-noble-s-marcellus-deal-emphasizes-incredible-value-in-chesapeake-energy-shares

I'm Wigging Out !!!!!!!!!

Up, down, down, up, down, down, down............

http://www.completegrowth.com/cvi/blogs/devonshire/?p=172

Friday, August 19, 2011

Michelle Bachmann Idiotic $2 Gasoline Promise

She might as well promise to make everyone good looking while she is at it:

http://seekingalpha.com/article/288504-michele-bachmann-promises-2-gas-whether-her-plan-would-create-another-great-recession

Of course Obama has had almost 4 years and really hasn't done anything to make the situation any better either.

Thursday, August 11, 2011

Prem Watsa Sees The Future Looking Like the Dirty Thirties

Recent comments by Watsa of Fairfax

http://www.gurufocus.com/news/142020/prem-watsa-of-fairfax-financial-sees-dirty-thirty-pain-ahead

15 Minutes With Dr. Brain - Jim Grant on CNBC

http://www.gurufocus.com/news/141994/extended-interview-with-jim-grant--educating-us-on-the-gold-standard

5 Investment Ideas from Trapeze Asset Management

http://www.gurufocus.com/news/141957/five-investment-ideas-from-trapeze-asset-management

Some perspective on the volatile Mr. Market from Blackrock and Tweedy Browne

http://www.gurufocus.com/news/141935/blackrock-and-tweedy-browne-offer-some-perspective-on-current-volatility

Muhlenkamp Has a Think About The Current Investing Environment

http://www.gurufocus.com/news/141871/muhlenkamp-and-company--what-in-the-world-is-going-on

Investment Opportunities in Gold

I think gold investing might be above my pay grade so to speak, but I'm interested in the idea that gold miners are vastly undervalued vs the current price of the commodity:

http://seekingalpha.com/article/286749-it-may-be-time-to-short-gold-and-buy-gold-equities

I've previously looked at one idea that has gold exposure:

http://seekingalpha.com/article/281591-sprott-inc-an-investment-idea-inspired-by-jeremy-grantham

Tuesday, August 9, 2011

My Current Buy List

http://www.completegrowth.com/cvi/blogs/devonshire/?p=165

For those of you unlike this jackass (me) who have cash to take advantage of the opportunity.

And I thought I did so well waiting for the Q2 Canadian small cap selloff !  Hopefully just early and not wrong.

Are These Gulf of Mexico Stocks Really Back to Macondo Levels ?

Forced selling through margin calls, panic, momentum trading ?  Whatever how could one possibly think these things should be back to Macondo prices when there was real concern for their businesses.

http://seekingalpha.com/article/285909-4-gulf-of-mexico-stocks-priced-as-though-bp-blew-another-well

Monday, August 8, 2011

Some reading

Jim Rogers on S&P downgrade

http://www.gurufocus.com/news/141426/jim-rogers-comments-on-the-sp-downgrade-and-turbulent-global-markets

Profile of 5 successful Chinese short sellers

http://www.gurufocus.com/news/141370/profile-of-five-short-sellers-who-popped-a-china-bubble

George Soros hedged out

http://www.gurufocus.com/news/141369/george-soros-is-hedged-out

Dick Bove suggests banks ridiculously valued

http://www.gurufocus.com/news/141366/dick-bove--us-banks-capital-positions-are-strongest-in-60-years

Seeking alpha

Buffett's repeated inflation warnings

http://seekingalpha.com/article/285546-warren-buffett-s-drum-banging-a-repeated-warning-on-inflation

Sandridge's outrageous 42% decline in a week

http://seekingalpha.com/article/285200-is-it-rational-for-sandridge-energy-s-market-capitalization-to-drop-42-in-one-week

Chesapeake trying to improve natural gas prices

http://seekingalpha.com/article/285077-chesapeake-energy-offers-hope-for-improvement-in-natural-gas-prices

Berkshire Hathaway operating businesses valued at 2X earnings

http://seekingalpha.com/article/284624-berkshire-hathaway-s-operating-businesses-currently-priced-under-2x-earnings

It is Agreed - S&P Downgrade Nothing We Didn't Already Know

Might be a good day not to watch the financial networks.  Some observations on the S&P move:

Buffett

http://www.cnbc.com/id/44056326

Investment Biker Jim Rogers

http://www.cnbc.com/id/44054257

The Great Housing Bubble Creator Mr. Greenspan

http://www.cnbc.com/id/44051683

Little Timmy Geithner

http://www.cnbc.com/id/44053113



Friday, August 5, 2011

Chesapeake Doing Its Part to Improve Natural Gas Prices

What a sh*t show this stock market is.  Valuations of businesses changing 40% in a week despite no real change in the underlying business.  Efficient markets my arse.  And me fully invested with nothing to do.  Thought I took my time pretty well this spring as the Canadian resource sector got kicked.

Would be like shooting fish in a barrel today if one had the cash handy.

Chesapeake had some interesting details on their rig count drilling for natural gas as well as their efforts to move the USA towards natural gas fueling transportation:

http://seekingalpha.com/article/285077-chesapeake-energy-offers-hope-for-improvement-in-natural-gas-prices

Thursday, August 4, 2011

Reverse Engineer The Multiple the Market Has On Berkshire Operating Businesses

http://seekingalpha.com/article/284624-berkshire-hathaway-s-operating-businesses-currently-priced-under-2x-earnings

Times like these when you wish you were sitting on nothing but cash so you could plow it in here and go to sleep for a decade.

A Dosage of Fear For You

http://www.ft.com/intl/cms/s/0/6691437a-beb3-11e0-a36b-00144feabdc0.html#axzz1U3jk2WLK

Compares this summer with 2008. 

I'm out of my depth trying to predict implications of the Euro debt problems, but this strikes me as a particularly stupid comparison:

"
● When Greece first started to wobble, many policymakers – and some investors – tried to downplay it because Greece is so small relative to global markets – with less than €200bn of foreign-held central government debt. Similarly, Lehman Brothers and Bear Stearns, with assets of $600bn and $400bn, were also small compared with the US financial sector."

How are the assets held by Lehman and Bear Stearns relevant ? Wasn't the issue that that were trillions of shitty securities on balance sheets all over the world ?   Everyone was insolvent if they had been forced to liquidate.

Looking at Chesapeake

Aubrey talkin to Cramer

http://www.gurufocus.com/news/140294/chesapeake-ceo-aubrey-mcclendon-details-their-giant-new-oilweighted-discovery

Recap of the earnings call

http://www.gurufocus.com/news/140324/chesapeake-earnings-call-sheds-light-on-the-best-unconventional-resource-assets-in-the-industry

Why I like Investing in Energy Companies

http://www.gurufocus.com/news/140231/chesapeake-energys-recent-announcement-is-a-perfect-example-of-why-i-like-investing-in-energy-companies

Wednesday, August 3, 2011

Daylight Energy into the Duvernay

Makes me wonder what PBN has in this play as they got in over the past 2 years so likely at very good prices

Daylight Energy (DAY : TSX : C$9.18) - Buy - Target:C$13.00




DAY; First glance: Q2 results a slight beat; $100mm land purchase establishes new Duvernay shale position.



We are maintaining our BUY rating and $13.00 target on Daylight following our initial review of the Q2/11 results which came in slightly above expectations. The most notable update from the company was the $100 million purchase of Crown land year to date, primarily focused on the Duvernay shale in the Pembina area. Combined with other Duvernay rights owned in the Kaybob area, Daylight now has a total of 130,000 net acres of Duvernay rights and plans to drill their first 4 well pilot project in Q1/12. The Duvernay land position comes as a pleasant surprise to us and could represent significant future development potential; however, given the limited activity in this play to date it is difficult to ascribe any upside value to this land position at this time. We will be reviewing the results in further detail and will follow up shortly with additional commentary and analysis of the results. Our target price is based on a 1.0x multiple to our risked CNAV estimate of $12.87 and reflects a



2012E EV/DACF multiple of 8.7x. Investment highlights Operating cash flow of $0.36 per share diluted came in slightly above our estimate and consensus of $0.34 per share. The beat was largely due to $5.6 million of other income related to the sale of royalty credits, which we did not forecast. Production of 36,814 boe/d was in line with the estimate provided in the July 19, 2011 operational update; however, the company did warn that Q3 production has been impacted by further wet weather delays and will likely come in at similar levels to Q2 production levels (versus previous guidance of 39,000 boe/d). This weather related delay is temporary and not expected to impact their Q4/11 production guidance of 42,000 boe/d. Daylight spent $133.4 million on capital related expenditures during the quarter including $86.4 million on crown land sales(~$100 mill year-to-date), primarily focused on the Duvernay shale in the Pembina area. Combined with other Duvernay rights owned in the Kaybob area,



Daylight now owns a total of 130,000 net acres of Duvernay rights and plans to drill their first 4 well pilot project in Q1/12. In addition, Daylight also acquired 26 net sections of complimentary land in their Wapiti Montney liquids rich play and additional land adjacent to their Medicine Lodge Cardium assets. Daylight is currently trading at a 2012E EV/DACF multiple of 6.7x and a P/CNAV of 70%, which compares to the Intermediate Producers peer group average of 7.8x and P/CNAV of 90%, respectively.

BMO on VQ

Venoco reported 2Q11 EPS/CFPS of $0.25/$0.72, roughly in line with our $0.23/$0.73 and consensus $0.22/$0.72 estimates. Production declined 1.4% Q/Q,but was above our estimate. Oil grew 0.7%, the first Q/Q growth in 10 quarters,owing to a renewed focus on legacy assets. Production guidance was cut to18,500Boe/d from 19,500Boe/d, although not unexpectedlyand we were already at 17,385Boe/d (we raised this to 17,631Boe/d). Capex was maintained at $200 mn.


efer to pages 6 to 8 for Important Disclosures, in

Impact

The focus remains the Monterey and well results weren’t compelling enough for us to believe this will be a commercial play. Last quarter’s horizontal/high-angle wells were apparently unsuccessful, and the focus is now strictly vertical. As such, the main data point was a side-track well at the Sevier prospect,which tested 61Boe/d from one zone over 24-hours. Near-term, Sevier will be the main focusarea, along with Salinas, and “Three Amigos,” where we noticed two OXYpermits; in one of which, the well was just spud. Venoco also mentioned a well drilled off-structure in Three Amigos, which, unstimulated,was its best yet (will be completed soon). Interesting, but we don’t feel the need to get in front of this.

Forecasts

Our forecast for 2012 is uncertain given commentary around drilling 75 Monterey wells (risking production is anyone’s guess), growing legacy asset oil/gasproduction 10% (history suggests this will be difficult), drilling 100 wells in Sac Basin (dependent on gas prices), all resulting in a doubling of capex. We’re not modeling this ramp in activity yet and are assuming a $220 mn budget, but we are increasing our estimates on better CA oil prices and higher legacy oil production.

Valuation

We’re lowering our target price to $14 per share, from $15.

Recommendation

We rate Venoco MARKET PERFORM. While we think the stock discounts little tono value for the Monterey acreage, we feel little urgency to get more positivegiven minimal evidence of commercial success in the Monterey. One of the things we’re watching is the monthly oil and gas production report (PR04) published bythe DOGGR, which includes confidential wells in operator/field totals. So far, wesee little to excite, and with only 150Boe/d of Montere

Tuesday, August 2, 2011

18% of Fairholme Now Invested in AIG

Bruce done got some big balls on him.  I hope this works out for him, the trouble is that he needs it to happen pretty quickly or his investors will redeem relentlessly given the press he is getting.

http://seekingalpha.com/article/284032-bruce-berkowitz-s-fairholme-fund-invested-in-companies-you-love-to-hate

America is merely wounded, Europe risks death

Needless to say, these are not normal times. The US and EU debt crises are feeding on each other in a dangerous synergy, with fears of a fiscal “sudden stop” in Washington causing global risk aversion and aggravating tremors in the Spanish and Italian bond markets. It is a pre-taste of the “catastrophe” predicted by the Fed’s Ben Bernanke if politicians fail to control their passions.


And yet, data from the St Louis Fed show that America’s M2 money supply grew at a 6.4pc annual rate in the second quarter, accelerating to 12.2pc in June. The compound annual rate of change has exceeded 40pc over recent weeks.

The broader M3 indicator (including large savings deposits) is growing at the optimal rate of around 5pc. It has been an uncannily accurate lead indicator at each twist and turn of our economic drama over the past five years, and is telling us now that the Fed’s kindling wood has at last begun to ignite the damp coals of the US financial system. There is no longer a 1930s liquidity trap. We can infer that the housing market may be nearing the end of its deep slump.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8673577/America-is-merely-wounded-Europe-risks-death.html