Introducing the CVI - Punch Card Portfolio Newsletter

I write a weekly investment newsletter. This newsletter involves the development of a focused portfolio of undervalued securities. The subscription price is $12 per month (cancel any time). Every investment idea I recommend will be one I purchase for my own portfolio. If you have questions prior to subscribing shoot me an e-mail (Swizzledxxx@gmail.com)

Please note I'm running a low-tech operation and that the newsletter is sent by me via e-mail. There will be a delay between when you pay and when you receive your first e-mail (usually a couple of hours).

Subscribe to CVI - Punch Card Portfolio Newsletter

Wednesday, February 29, 2012

Who Will Be the Next Canadian Junior To Get Taken Out?

Here are three likely candidates...

http://seekingalpha.com/article/402511-3-junior-producers-to-profit-from-takeovers-in-canadian-oil

Open Range - New Montney Oil Well

http://www.openrangeenergy.com/news/press-releases/index.aspx?news=http://cnrp.marketwire.com/client/open_range_energy/release_xml.jsp?actionFor=1577876&releaseSeq=0

Gurus Gone Wild February 29, 2012

Full transcript of Buffett on CNBC

Full Transcript of the CNBC Warren Buffett Interview

Steve Forbes Interviews John Buckingham

Steve Forbes Interviews Value Manager John Buckingham

Bill Gross Thinks Playing Defense is Key Going Forward

Bill Gross Thinks It Is Time to Focus on Playing Defense

Article on Second Wave Being in Play

http://www.calgaryherald.com/business/Junior+producer+Second+Wave+Energy+target+unsolicited+offers/6224229/story.html

Sandridge 2012 Analyst Day

Sandridge - 2012 Investor Analyst Meeting - Official Final File

Burton Malkiel Believes Investors Are Missing Excellent Opportunity in China

http://www.theglobeandmail.com/globe-investor/investment-ideas/the-case-for-doubling-down-on-china/article2353237/

Tuesday, February 28, 2012

CVI Newsletter Holding Being Taken Out - 50% Gain In 5 Months

In two minutes I'm going to click send an e-mail to subscribers of my CVI Newsletter alerting them to the fact that one of our holdings is being acquired.

Midway Energy (TSX:MEL) is going to be acquired for $4.85 which is a 50.62% gain from the $3.22 price at which I added Midway to the CVI Newsletter Punch Card Portfolio.

The Punch Card Portfolio has several other unconventional light oil players which I expect will also get gobbled up at healthy premiums over the next couple of years.

Here are the details:


CALGARY - Whitecap Resources Inc. (TSX:WCP) has struck a $550-million cash, share and debt deal to acquire Midway Energy Ltd. (TSX:MEL).
The two junior companies are light oil producers with a focus on Alberta.
The companies said Tuesday that shareholders of Midway, which operates in the Garrington area of Alberta, will get $4.85 a share in cash or stock for each of their shares.
Whitecap will also assume $100.8 million of Midway debt in the deal.
The total value of the deal is $550.3 million, including the debt.
Whitecap said the acquisition will add 5,400 oil equivalent barrels of daily output, two thirds of its oil and natural gas liquids.
As well, Whitecap will acquire Midway's exploration interests in the Beaverhill Lake light oil play in the Swan Hills area of Alberta.
"Through the transaction, Whitecap is acquiring high quality, high netback light oil assets, located predominantly in the Garrington area of Alberta and focused on the Cardium formation," the company said in a release.
"The acquired Cardium assets are complementary to Whitecap's existing horizontal drilling operations in the Pembina Cardium play and have significant growth and upside potential."

Second Wave Petroleum Gets Multiple Unsolicited Offers

In response to certain unsolicited expressions of interest the Company's Board of Directors believe it is in the best interest of the shareholders to initiate a process to identify, examine and consider strategic alternatives available to the Company with a view to enhancing shareholder value. Such alternatives may include, but are not limited to, a sale of all or a material portion of Second Wave's assets, whether in one transaction or a series of transactions, a sale of the Company, or a merger or other strategic transaction involving Second Wave and a third party, and will include continued execution of the Company's business plan.


http://www.newswire.ca/en/story/928733/second-wave-petroleum-inc-announces-2011-year-end-reserves-and-strategic-alternatives-review-process

Sunday, February 26, 2012

CVI Newsletter

I've just sent the 25th issue of my weekly investment newsletter to subscribers.

Next week will be the six month mark for the newsletter after which I will being posting performance numbers.

Results will be posted on this page http://valueinvestorcanada.blogspot.com/p/cvi-newsletter-performance.html, with names of the portfolio positions obviously kept for subscribers only.

The newsletter is $10 per month, and you can cancel at any time.  Upon subscription (first $10 payment) you will receive all back issues.

Check back next week if you are interested in seeing the newsletter results so far.  Six months is too short to mean anything with respect to long term performance, but I've had regular requests for results and 6 months is as good a time as any to start.

Rising Demand, Falling Supplies - No Relief in 2012 For Oil Consumers

http://online.wsj.com/article/SB10001424052970203918304577242893454030000.html?mod=googlenews_wsj

Saturday, February 25, 2012

The New Canadian Gold Rush

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/the-new-canadian-gold-rush/article2349620/

Buffett's take on gold from the letter today:


The second major category of investments involves assets that will never produce anything, but that are
purchased in the buyer’s hope that someone else – who also knows that the assets will be forever
unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of
such buyers in the 17th century.
This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they
believe the buying pool will expand still further. Owners are not inspired by what the asset itself can
produce – it will remain lifeless forever – but rather by the belief that others will desire it even more
avidly in the future.
The major asset in this category is gold, currently a huge favorite of investors who fear almost all other
assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however,
has two significant shortcomings, being neither of much use nor procreative. True, gold has some
industrial and decorative utility, but the demand for these purposes is both limited and incapable of
soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still
own one ounce at its end.
What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the
past decade that belief has proved correct. Beyond that, the rising price has on its own generated
additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis.
As “bandwagon” investors join any party, they create their own truth – for a while.
Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses
that can be created by combining an initially sensible thesis with well-publicized rising prices. In these
bubbles, an army of originally skeptical investors succumbed to the “proof” delivered by the market,
and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling. But bubbles
blown large enough inevitably pop. And then the old proverb is confirmed once again: “What the wise
man does in the beginning, the fool does in the end.”
18
Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it
would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At
$1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400
million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most
profitable company, one earning more than $40 billion annually). After these purchases, we would
have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying
binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?
Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual
production of gold command about $160 billion. Buyers – whether jewelry and industrial users,
frightened individuals, or speculators – must continually absorb this additional supply to merely
maintain an equilibrium at present prices.
A century from now the 400 million acres of farmland will have produced staggering amounts of corn,
wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the
currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its
owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The
170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can
fondle the cube, but it will not respond.
Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m
confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at
a rate far inferior to that achieved by pile B.
• Our first two categories enjoy maximum popularity at peaks of fear: Terror over economic collapse
drives individuals to currency-based assets, most particularly U.S. obligations, and fear of currency
collapse fosters movement to sterile assets such as gold. We heard “cash is king” in late 2008, just
when cash should have been deployed rather than held. Similarly, we heard “cash is trash” in the early
1980s just when fixed-dollar investments were at their most attractive level in memory. On those
occasions, investors who required a supportive crowd paid dearly for that comfort.
My own preference – and you knew this was coming – is our third category: investment in productive
assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in
inflationary times to deliver output that will retain its purchasing-power value while requiring a
minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola, IBM
and our own See’s Candy meet that double-barreled test. Certain other companies – think of our
regulated utilities, for example – fail it because inflation places heavy capital requirements on them. To
earn more, their owners must invest more. Even so, these investments will remain superior to
nonproductive or currency-based assets.
Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper
(as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola
or some See’s peanut brittle. In the future the U.S. population will move more goods, consume more
food, and require more living space than it does now. People will forever exchange what they produce
for what others produce.
Our country’s businesses will continue to efficiently deliver goods and services wanted by our citizens.
Metaphorically, these commercial “cows” will live for centuries and give ever greater quantities of “milk”
to boot. Their value will be determined not by the medium of exchange but rather by their capacity to
deliver milk. Proceeds from the sale of the milk will compound for the owners of the cows, just as they
did during the 20th century when the Dow increased from 66 to 11,497 (and paid loads of dividends as
well). Berkshire’s goal will be to increase its ownership of first-class businesses. Our first choice will be
to own them in their entirety – but we will also be owners by way of holding sizable amounts of
marketable stocks. I believe that over any extended period of time this category of investing will prove to
be the runaway winner among the three we’ve examined. More important, it will be by far the safest.

Berkshire Annual Shareholder Letter is Out

BerkshireAnnualLetter2012

Buffett's MidAmerican Ordering More Wind Turbines

http://www.evwind.es/noticias.php?id_not=16854

Gurus Gone Wild February 25, 2012

Passport Capital's John Burbank Heavily Invested in Saudi Arabia

A Rare Treat – Passport Capital’s John Burbank on Bloomberg

Unintended Consequences - Eric Sprott

Unintended Consequences - From Hedge Fund Manager Eric Sprott

Alaska's North Slope May Contain up to 80 TCF of Shale Gas

http://www.doi.gov/news/pressreleases/USGS-Releases-First-Shale-Oil-and-Shale-Gas-Resource-Potential-Assessment-for-the-Alaska-North-Slope.cfm

Chesapeake Sale of Permian Basin Properties

Chesapeake Energy has put its Permian Basin oil fields on the block, in what could be one of the biggest deals of the year.

Associated Press
A herd of buffalo edges up to a Wildcat oil test well in the Permian Basin area in west Texas, about 40 miles west of Midland, on Sept. 3, 1947.
If the properties are sold together, they potentially could fetch upward of $10 billion.
Stretching for some 75,000 square miles across much of west Texas and into New Mexico, the Permian Basin is the largest oil-producing area in the U.S. It is also the most prolific after Alaska’s North Slope.
Chesapeake has 1.5 million acres there and contemplated spinning off its Permian assets, which make up about 5% of its total reserves and output, Chief Executive Aubrey McClendon told investors Wednesday. “Just looking at the valuation of some companies that are pure Permian Basin players, we’re tempted to spin out our Permian asset and just make it a separate company,” he said.
Alas, McClendon said, “it’s probably best for our overall goals” to sell either a stake in the Permian acres in a joint venture or shed them in their entirety.
Chesapeake is seeking to raise as much as $12 billion this year through various asset sales in an attempt to trim debt and bridge a multibillion-dollar funding gap. That target accounts for a partial sale of the Permian fields. An outright sale could push divestiture proceeds much higher.
“We’re making a transition from strictly gas to oil, and along the way, we need to sell some of the assets that we developed,” McClendon said. “And this is an asset that we think that will attract a great deal of industry interest.”
Neal Dingmann, an analyst with SunTrust Robinson Humphrey, said Chesapeake’s acreage might be worth $10 billion, or roughly $6,666 per acre. But it’s difficult to price Chesapeake’s properties without knowing exactly where they are since production can vary greatly throughout the vast basin, Mr. Dingmann said in an interview.
Last week, Forest Oil Corp. bought 63,000 acres there for about $103 million in a cash-and-stock deal that puts the per-acre price at slightly more than $1,600. In December, meanwhile, Concho paid Petroleum Development Corp. $175 million for 10,200 Permian acres, a price exceeding $17,150 for each.
Dingmann’s estimate values Chesapeake’s acres right between those two deals.

Friday, February 24, 2012

Jeremy Grantham Longest Quarterly Letter Ever

GranthamLetter-LongestLetterEver-4Q11

Iran Has Stepped Up Uranium Enrichment in the Last 4 Months

http://isis-online.org/uploads/isis-reports/documents/IAEA_Iran_Report_24February2012.pdf

Anderson Energy For Sale

http://www.andersonenergy.ca/pdfs/2012/AXLPR120221.pdf


The Board of Directors has decided to initiate a process to identify, examine and consider a range of
strategic alternatives available to the Company with a view to enhancing shareholder value. The strategic
alternatives considered may include, but are not limited to, a sale of all or a material portion of the assets of
Anderson, either in one transaction or in a series of transactions, the outright sale of the Company, or a
merger or other strategic transaction involving Anderson and a third party. The Board of Directors believes
that the Company’s shares trade at a significant discount to the value of the underlying assets, especially
given its high quality Cardium oil production base, prospective Cardium horizontal oil drilling inventory and
approximately $495 million in tax pools. The Board of Directors has established a special committee
comprised of independent directors of the Company to oversee this process and has retained BMO Capital
Markets and RBC Capital Markets as its financial advisors to assist the Special Committee and the Board of
Directors with the process. Parties interested in obtaining additional information regarding this process or
the Company can contact BMO Capital Markets or RBC Capital Markets at the numbers listed below. This
process has not been initiated as a result of any particular offer

Timmy Geithner Says "No Quick Fix to Oil Prices"

I hope you are right Tim.  A couple of years of $100 oil should do wonders for my portfolio.

Petrobakken Valuation Still Appears Compelling

The recent transactions help put a ballpark value on this company:

http://seekingalpha.com/article/387231-petrobakken-still-considerably-undervalued

Thursday, February 23, 2012

Bloomberg Interviews Leon Cooperman

Hedge Fund Legend Leon Cooperman Would Run From Treasuries and Into Stocks

It is nice when you get to hear an actual investor speak on one of the financial networks rather than the usual fast talking, attention deficit disorder, talking head.

Why do those Fast Money guys talk so fast anyway?  And how can you believe people whose answer is never "I don't know"?

Thursday, February 16, 2012

Gurus Gone Wild February 16, 2012

Tilson - Lotsa Talkin to the Fast Money Dudes Suffering From the Attention Deficit Disorder

Whitney Tilson on CNBC – Missing a 66 Bagger on Apple Still Haunts His Dreams

Wilbur Ross Talkin Politics and Greece

Vulture Investing Guru Wilbur Ross – On Greece, Romney and Automakers

Pickens on Oil and Gas

Energy Guru Boone Pickens – Natural Gas Is a Game Changer for the United States

Herb Greenberg Raises Red Flag on Chesapeake Energy

Come on Herb, at least a little substance to your critique......I don't disagree with it but you didn't say a bloody thing worth listening to.

Petrobakken Sells 5.5% of Current Production for $427 Million



Something else big is cookin........these guys are sitting with enough liquidity now to bag something big.


CALGARY, ALBERTA--(Marketwire - Feb. 16, 2012) - PetroBakken Energy Ltd. ("PetroBakken" or the "Company") (TSX:PBN), announces that we have entered into an agreement to sell certain non-core southeast Saskatchewan assets (the "Non-Core Assets") to Crescent Point Energy Corp. for gross cash proceeds of $427 million, subject to closing adjustments (the "Transaction"). The Non-Core Assets are considered to be outside the key focus of our Bakken Business Unit as they are largely non-operated and generally have lower average working interest than our remaining lands. Proceeds from the Transaction will initially be used to further pay down our credit facility, leaving at least $1.1 billion in available borrowing capacity. As a result of this sale, we will be revising our capital plan and may increase spending in the second half of 2012, primarily in the Cardium area. We will provide revised guidance with respect to our 2012 expected capital spending and exit production levels in the near future.

Non-Core Asset Details:

--  Approximately 2,900 boepd of Bakken light oil production (January 2012
    field estimate) 
--  10.5 million boe (7% gas) of gross proved plus probable reserves (as
    evaluated by Sproule Associates Limited according to NI 51-101 effective
    January 1, 2012)  
--  20,360 net acres of land, which includes 14,030 net developed acres
 
Key Metrics of the Transaction:

--  $147,250 per flowing boe (January 2012 field estimate) 
--  $40.50 per boe of gross proved plus probable reserves (excluding future
    development capital of $67 million) 
--  7 times annualized current cash flow 
--  5.5% of December 2011 Company production
 
The Bakken Business Unit will continue to represent a significant portion of our corporate asset base as this sale represents only 7% of the Business Unit's land holdings and approximately 12% of its production. Assuming successful completion of this Transaction, our average working interest in our remaining Bakken Business Unit lands will increase from 82% to 86% and we will continue to have over 700 net drilling locations in the Business Unit, representing approximately 10 years of drilling inventory.

Wednesday, February 15, 2012

Iran Trumpeting Nuclear Advances

http://ca.news.yahoo.com/iran-trumpets-atom-advances-deepening-standoff-west-121448512.html

Risks To Oil Supplies Higher Now Than Since Late 70s

http://www.cnbc.com/id/46401693

Biglari Holdings Quarterly Filing

The man is not into diversification:

http://www.sec.gov/Archives/edgar/data/93859/000152153612000124/q1100370_13fhr-biglarihold.txt

The Big Short Crew (Paulson, Bass, Lippman) Going Long Subprime

http://www.bloomberg.com/news/2012-02-15/big-short-becomes-big-long-as-bass-joins-reverse-subprime-wager-mortgages.html?cmpid=yhoo

Henry Paulson on CNBC - Lehman Brothers Not the Right Analogy for Europe

Top Five Positions For Longleaf Partners

http://seekingalpha.com/article/369271-the-5-best-current-stock-ideas-from-the-legendary-longleaf-partners

Gurus Gone Wild February 15, 2012

Berkowitz speaks to Bloomberg:

Bruce Berkowitz Speaks with Bloomberg – There Is No Free Lunch

Bruce Berkowitz Extended Bloomberg Interview – Touches on Bank of America, St. Joe and Fairholme’s Recent Performance

Longleaf Partners 2011 Letter

Longleaf Partners 2011 Annual Letter to Shareholders – Still Very Long Dell and Chesapeake

Buffett Gives a Tour of Berkshire Headquarters

“Person to Person” Interview with Warren Buffett

Ex-Shell CEO Sees WTI at $120 This Year

What would that mean for Brent?  $140?


Sunday, February 12, 2012

23rd Issue Of CVI Newsletter Sent To Subscribers

I just sent the 23rd issue of my newsletter to subscribers.

This week I am adding a position to the Punch Card Portfolio.

The company is an unconventional oil producer with the following attributes:

- Trades at 60% of Net Asset Value
- Projects Growth of 85% in 2012
- Will Be Over 85% Weighted to Oil By The End of 2012

The stock is cheap for a non-grower.  The reality is though that it is growing very rapidly and has a solid balance sheet.

What really has me intrigued though are early results from a downspacing program in its key play.  Other industry participants are discovering that the play can handle twice as many drilling locations as originally thought.  The early downspaced wells are not showing any interference with the original wells.

This company is trading at 60% of NAV.  That NAV is growing rapidly every year.  And now it looks like there are twice as many drilling locations (double the reserves) originally assumed in that NAV figure.

I'm going to be a very happy acquirer of stock on Monday and in the coming weeks.

Thursday, February 9, 2012

Sonde Sells Duvernay Acreage

Sonde Resources Corp. Completes Sale of Alberta Undeveloped Acreage 

CALGARY, ALBERTA, Feb 08, 2012 (MARKETWIRE via COMTEX) -- Sonde Resources Corp. ("Sonde" or the "Company") /quotes/zigman/51620 CA:SOQ -1.81% (nyse amex:SOQ) announced today that it has completed the sale of 26,240 gross undeveloped acres (24,383 net acres) in its Kaybob Duvernay play in Alberta for aggregate proceeds of $75 million. The sale will result in a net gain of approximately $73 million. Sonde will have approximately $54 million after the repayment of our outstanding credit facility. The net proceeds from this sale will be used to focus on Sonde's Western Canada and North African strategy and for other corporate purposes. Sonde continues to own approximately 39,000 net undeveloped acres in Duvernay and Montney oil plays, in the Ante Creek and Bezanson area. 

Jack Schanck, Sonde's CEO stated, "This sale provides Sonde with the flexibility to advance our capital programs across the company. We are particularly focused on how to best deploy the proceeds given the demonstrated expertise in the early identification of high potential areas as demonstrated by this sale." 

Wednesday, February 1, 2012

Fairholme Fund 2011 Annual Report

FairholmeFunds2011AnnualReport

Gurus Gone Wild Feb 1, 2012

Longleaf Q4 2011 Letter

Longleaf Partners 2011 Letter to Shareholders

Steve Romick - FPA Crescent Q4 Letter

Steve Romick (FPA Crescent Capital) Q4 2011 Letter to Investors

GMO Fourth Quarter Report

GMO Fourth Quarter 2011 Report

Niall Ferguson - Europe is Still Screwed

http://www.businessinsider.com/niall-ferguson-paul-krugman-was-right-2012-1#ixzz1l0LZM8l5

Petrobank New Presentation - Feb 2012

Unveils the new Corporate Strategy.  Focus on heavy oil projects and away from oil sands.

PetrobankFeb2012

Exxon Not Scaling Back on Nat Gas Development

http://www.upstreamonline.com/live/article300991.ece