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 $20 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, September 26, 2012

Petrobank Getting More Aggressive With Buyback

I haven't seen them buy this much on a single day.   I suppose I should be cheering for the stock price to continue to go down near term.

Toronto Stock Exchange

Company Name : Petrobank Energy and Resources Ltd.Last Updated: September 26, 2012
DateSymbolInsider
Buys
Volume
Insider
Sells
Volume
Insider
Buys
Value $
Insider
Sells
Value $
Insider
Buys
Transaction
Insider
Sells
Transaction
Currency
09/26/2012PBG318,90004,243,070.000.002390CAD

Monday, September 24, 2012

Jeff Rubin - How High Oil Price Will Permanently Cap Global Growth


For most of the last century, cheap oil powered global economic growth. But in the last decade, the price of oil has quadrupled, and that shift will permanently shackle the growth potential of the world’s economies.
The countries guzzling the most oil are taking the biggest hits to potential economic growth. That’s sobering news for the U.S., which consumes almost a fifth of the oil used in the world every day. Not long ago, when oil was $20 a barrel, the U.S. was the locomotive of global economic growth; the federal government was running budget surpluses; the jobless rate at the beginning of the last decade was at a 40-year low. Now, growth is stalled, the deficit is more than $1 trillion and almost 13 million Americans are unemployed.
And the U.S. isn’t the only country getting squeezed. From Europe to Japan, governments are struggling to restore growth. But the economic remedies being used are doing more harm than good, based as they are on a fundamental belief that economic growth can return to its former strength. Central bankers and policy makers have failed to fully recognize the suffocating impact of $100-a-barrel oil.

Ahmadinejad Says Israel Will Be Eliminated

Iranian President Mahmoud Ahmadinejad said on Monday Israel has no roots in the Middle East and would be "eliminated," ignoring a U.N. warning to avoid incendiary rhetoric ahead of the annual General Assembly session.

http://ca.news.yahoo.com/iran-prepared-defend-against-israel-attack-ahmadinejad-123911011.html

Friday, September 21, 2012

Foreign Suitors Circle Canadian Oil Patch

Which of my Canadian unconventional oil producers will be the next to get taken out?


A number of foreign companies are flocking to Canada’s oil patch in search of acquisitions and investments as Ottawa weighs the $15.1-billion takeover of energy company Nexen Inc. by China’s CNOOC Ltd.
While it is not unusual for companies to circle the oil patch, interviews with a dozen industry sources and deal makers over a month have revealed a picture of an industry set for a massive influx of foreign capital while the window to foreign investment remains open.

Thursday, September 20, 2012

Jim Grant - We Are All Bernanke's Labrats



Petrobank - A Value Unlocking Spin-off

My latest Seeking Alpha article:

I bought my first shares of Petrobank Energy (PBEGF.PK) in June 2010 after listening to CEO John Wright speak at the 2010 Petrobank Annual General Meeting. I've been buying more shares on a regular basis ever since as I've gotten more comfortable with the company and its management team.
Petrobank was and still is (in my opinion) a terrific combination of these items:
1) A CEO who has a huge chunk of his net worth invested alongside shareholders
2) A CEO focused on per share value creation and not empire building
3) A very attractive valuation
4) A solid balance sheet
5) A free option on a potentially game changing technology called THAI
I haven't made any money so far on my Petrobank investments that span a period of two years. In fact, the only reason that I'm not down considerably is because I have been regularly buying more and lowering my average acquisition cost.

Wednesday, September 19, 2012

Unconventional Resource Plays - Upside Without the Exploration Risk


My latest Seeking Alpha article:
I'm a sucker for a good story. And in the oil and gas business there are a lot of good stories.
The most interesting stories to me are those about companies likePetrominerales (PMGLF.PK) or IPC Oil and Gas that are drilling high-impact exploration wells. For these companies, success on one high-impact exploration well has the ability to create a step change in value for shareholders.
Exploration success can result in fantastic returns, huge value where previously there was none. Exploration however involves a high level of risk. For that potential of a huge payoff from a successful well is the possibility of a dry hole.
For me that risk is tough to stomach. I'm more interested in getting an opportunity for a step change in valuation without the risk involved in exploration.
And with the changes that have taken place in the oil and gas business over the past decade, I think an investor can now avoid taking on exploration risk and still invest in companies that can create step changes in valuation. I believe that opportunity lies in companies focused on unconventional resource plays.

Jack Bogle - How To Fix Wall Street

Jack Bogle, the founder of mutual fund giant Vanguard, and the man who popularized index funds, is part of an older generation of financiers, including people like Warren Buffett, who believe in long-term, low-cost investing, paying their taxes, and giving away most of their money. And like many of that generation, he’s worried about how short-term thinking has corrupted the markets and endangering our economic future. His 11th book, “The Clash of Cultures: Investment vs. Speculation,” is a highly critical, numbers-driven look at how Wall Street went wrong, how it’s screwing up both the economy and our retirement prospects, and what we can do to fix things. He spoke with TIME’s Rana Foroohar about the book, and what’s rotten in the markets today.

Read more: http://business.time.com/2012/09/19/jack-bogle-speaks-on-how-to-fix-wall-street/#ixzz26v3q56C9

Discounted Energy Firms Buying Back Own Shares


CALGARY — Low stock prices have convinced many Calgary energy companies that their best investments are in their own stocks.
And analysts say shareholders should welcome the trend.
On Tuesday, Suncor Energy Inc. said it repurchased and cancelled $1.5-billion worth of shares over the past year through its normal course issuer bid and noted it has stock exchange approval — but no obligation — to buy back another $1 billion worth of shares this year.
In a similar announcement on Monday, PetroBakken Energy Ltd. said it has regulatory approval to buy back up to 8.7 million shares this year, about five per cent of its float, after spending $52 million to buy and cancel 3.8 million shares at an average of $13.75 per share over the past year.

Continued:  http://www.calgaryherald.com/business/Discounted+energy+firms+buying+back+shares/7261579/story.html 

Tuesday, September 18, 2012

Bruce Berkowitz Outperforming, Plus Bill Gross, Marc Faber, Jim Grant and Wilbur Ross

Bruce Berkowitz’s Big Bet on AIG Starting to Pay Off

Bill Gross – Bernanke’s Recent Policy Is the Biggest Move by the Fed in Decades

Question and Answer with Distressed Asset Investor Wilbur Ross

Jim Grant Thinks the Most Recent Announcement from Bernanke Is a Big Deal

Marc Faber – Fed Policy Will Destroy the World




One Photo - $126 Billion of Net Worth

Jon Bon Jovi?

<a target="_blank" href="http://l.yimg.com/os/284/2012/09/17/image001-jpg_232832.jpg">Click here for a larger view of the image.</a> Photo (left to right): Warren Buffett, Oprah Winfrey, Bill Gates, Melinda Gates, Peter Peterson, Leon Black, Jon Bon Jovi, Marc Benioff, David Rubenstein, Steve Case, Laura Arrillaga-Andreessen, Marc Andreessen.

The Dangers of Chasing David Einhorn


Chasing David Einhorn can be a dangerous investing game. Investors in a tiny ethanol company should consider themselves warned.
Ethanol producers, particularly BioFuel Energy (BIOF), have been struggling this year. The drought in the Midwest isn't going away, and in late August, BioFuel Energy's investors learned that revenues for the first half of 2012 were down 20% from 2011.

Goldman Sachs List Reasons To Be Bullish On Housing

http://www.businessinsider.com/goldman-presents-housings-long-list-of-positives-2012-9

Natural Gas Juniors Face Selling Crown Jewels

I like this part with Petrobakken sitting on $1.1 billion of liquidity:


Leslie Kende, managing director of acquisitions and divestitures for AltaCorp Capital Inc., a partner with ATB, said there are probably assets producing 200,000 barrels of oil equivalent per day on the block in Canada but a buyer-seller gap is preventing deals being done.
“There are 17 companies currently in strategic alternatives processes that are advertising and being broadly shopped. That’s about 65,000 boe/d,” he said. “And there are 35 asset packages, giving us another 76,000 boe/d.”
Unpublished sale attempts account for the rest.

Full Article: http://www.calgaryherald.com/business/energy-resources/Tougher+times+ahead+Alberta+junior+natural/6764914/story.html

Wednesday, September 12, 2012

Whitney Tilson AIG Presentation

Lots of folks following Berkowitz and his outrageously large position in AIG:

AIG-5-12

Petrobank Approval To Re-Start Buyback Plan

CALGARY, ALBERTA--(Marketwire - Sept. 12, 2012) - Petrobank Energy and Resources Ltd. (PBG.TO) announces that we have renewed our normal course issuer bid (the "NCIB") and have entered into a pre-defined plan (the "Plan") with a designated broker to allow for the repurchase of our common shares ("Shares"). Petrobank completed our prior NCIB purchases in mid-July, having repurchased our full NCIB limit of 7,273,401 Shares at an average cost of $12.09 per Share.
The Toronto Stock Exchange ("TSX") has accepted the Company's notice to make the NCIB to purchase outstanding Shares on the open market, in accordance with the rules of the TSX. As approved by the TSX, Petrobank is authorized to purchase up to 7,784,304 Shares, representing approximately 10% percent of the public float of Petrobank Shares as defined by the policies of the TSX. As of August 31, 2012, there were 99,647,804 Shares outstanding. On any trading day, Petrobank may not purchase more than 113,821 Shares, representing 25% of the average daily trading volume on the TSX over the previous six calendar months.
Petrobank is authorized to make purchases during the period from September 14, 2012 to September 13, 2013, or until such earlier time as the NCIB is completed or terminated at the option of Petrobank. Any Shares purchased by Petrobank under the NCIB will be purchased on the open market through the facilities of the TSX and other registered marketplaces, including ALPHA, OMEGA, PURE, Chi-X and Match Now, at the prevailing market price at the time of the transaction. All Shares acquired under the NCIB will be cancelled.
Petrobank's broker may repurchase Shares under the Plan on any trading day during the NCIB, including during Petrobank's internal trading blackout periods, subject to certain trading parameters set forth in the Plan and to daily and aggregate trading limits pursuant to the rules and policies of the TSX, provided that the broker is not, at such times, in possession of undisclosed material information about the Company. As part of the Plan, the broker has been instructed to automatically sell one PetroBakken Share for each Petrobank Share purchased under the Plan. The Plan has been reviewed by the TSX and will terminate on the earlier of the termination of the Plan by the Company in accordance with its terms, the purchase of the maximum number of Shares under the NCIB or the expiry of the NCIB on September 13, 2013. Petrobank may also repurchase Shares under the NCIB outside the Plan provided we are not within our internal trading blackout periods.

Chesapeake Sells $6.9 Billion of Assets

Weren't analysts expecting quite a bit more from the Permian basin assets?


Chesapeake Energy Corporation (CHK) announced today it has entered into multiple agreements to sell the vast majority of its Permian properties, substantially all of its midstream assets and certain noncore leasehold for total net cash proceeds of approximately $6.9 billion. The company will use a portion of the proceeds from these asset sales to fully repay its $4.0 billion of term loans during the 2012 fourth quarter.
Chesapeake has entered into purchase and sale agreements with three companies covering the vast majority of its Permian Basin assets for total net proceeds of approximately $3.3 billion. The Permian Basin assets being sold produced approximately 21,000 barrels of liquids and 90 million cubic feet of natural gas per day during the 2012 second quarter, or approximately 5.7% of Chesapeake’s production during the quarter.
Chesapeake has entered into a purchase and sale agreement to sell its assets in the southern Delaware Basin portion of the Permian Basin to SWEPI LP, a subsidiary of Royal Dutch Shell plc (RDS-B). Additionally, Chesapeake has entered into a purchase and sale agreement to sell its assets in the northern Delaware Basin portion of the Permian Basin to Chevron U.S.A. Inc., a subsidiary of Chevron Corporation (CVX). As previously announced, the company has entered into a purchase and sale agreement to sell its producing assets in the Midland Basin portion of the Permian Basin to affiliates of Houston-based EnerVest, Ltd. Chesapeake is retaining approximately 470,000 net acres of undeveloped leasehold in the Midland Basin for future sale or development. Chesapeake expects to close all three transactions within the next 30 days and to receive approximately 87% of the proceeds in cash at closing. Payment of the remaining proceeds will be subject to certain title, environmental and other standard contingencies.
In addition, Chesapeake has entered into sale agreements with respect to substantially all of its midstream assets in three separate transactions and also expects to enter into a fourth agreement, which would result in combined proceeds of approximately $3.0 billion. The company has entered into a letter of intent with Global Infrastructure Partners (GIP) covering most of the midstream assets owned by Chesapeake Midstream Development, L.P., a wholly owned subsidiary of Chesapeake, for expected proceeds of approximately $2.7 billion. The assets to be sold to GIP include gathering and processing systems in the Eagle Ford, Utica, Haynesville and Powder River Basin Niobrara shale plays and certain other assets. The transaction with GIP would include new market-based gathering and processing agreements covering certain acreage dedication areas and also include one new volume commitment covering approximately 70% of the company’s expected production volumes in the southern portion of our Haynesville Shale area during 2013-17. In addition, Chesapeake has sold or entered into purchase and sale agreements with two other companies to sell certain Mid-Continent midstream assets and also expects to enter into a fourth agreement to sell certain oil gathering assets in the Eagle Ford Shale for combined proceeds of approximately $300 million.
The midstream transactions are expected to close on various dates in the 2012 third and fourth quarters. When combined with the previous sale of its limited and general partnership interests in Access Midstream Partners, L.P. (NYSE:ACMP and formerly known as Chesapeake Midstream Partners, L.P.) in June 2012 for approximately $2.0 billion, Chesapeake’s total proceeds from its midstream exit will be approximately $5.0 billion.
Finally, in four separate transactions, Chesapeake has recently sold or entered into purchase and sale agreements to sell noncore leasehold assets in the Utica Shale and various other areas for approximately $600 million, the majority of which has already been received. Following these transactions, Chesapeake will continue to own approximately 1.3 million net acres of leasehold in the Utica Shale, in which its cost basis, net of various sales and its joint venture with Total, will be approximately $200 per net acre (including all drilling carries in the Total joint venture).
Jefferies & Company, Inc. and Goldman, Sachs & Co. are serving as financial advisors to Chesapeake regarding the Permian Basin asset sales and the sale of midstream assets to GIP.
Management Comments
Aubrey K. McClendon, Chesapeake’s Chief Executive Officer, stated, “We are pleased to announce further progress towards our asset sale goals for 2012. The net proceeds of approximately $6.9 billion from the sales discussed today are in addition to the $4.7 billion of sales previously closed in the 2012 first half and will bring our 2012 year-to-date sales to $11.6 billion, or approximately 85% of our full-year goal of $13-14 billion, which we expect to achieve by year end. These transactions are significant steps in the transformation of our company’s asset base to a more balanced portfolio among oil, natural gas liquids and natural gas resources and production by focusing on developing and harvesting the value embedded in the 10 core plays in which Chesapeake has built a #1 or #2 position.
“We very much appreciate the skill, effort and dedication of our midstream and Permian employees over the years, and we look forward to their continued success as they are either re-assigned inside Chesapeake or pursue new opportunities with the buyers of our assets or elsewhere in the industry.”

Tuesday, September 11, 2012

Wednesday, September 5, 2012

Shame On You CNBC - Kim Kardashian On With Maria

A new low?

By The Numbers, Sandridge Vs Petrobakken


For a couple of years now I've been steadily buying shares in North American unconventional (tight or shale) oil producers. Without planning it, my portfolio has evolved to consist almost exclusively of unconventional producers operating north of the Canada/U.S. border.
Why have I focused on Canadian unconventional? A simple answer, really: valuation.
I thought I'd compare an American producer -- SandRidge (SD) -- to a Canadian producer -- Petrobakken (PBKEF.PK) -- to show the valuation difference.

EOG's Papa Believes There Are Only Two Significant Tight Oil Plays

Beware of companies promoting "liquids" growth!


Something big has happened in the oil business in North America. After decades of declining oil production, the United States is now actually leading the world in oil production growth. The key to this turnaround is, of course, horizontal drilling with multistage fracturing, which has cracked the code when it comes to recovering oil trapped in tight rocks that had previously been unrecoverable.
As an investor, I've been trying to profit from this "unconventional revolution" by owning shares of companies with large land positions in these emerging oil plays. In my opinion, the stock market is greatly underestimating the value of those acreage positions and the ability of these companies to grow cash flow for decades to come.
Today I listened to a presentation from Mark Papa, who is the CEO of EOG Resources (EOG) -- the leader in unconventional oil production in the United States.

Most Recent Sandridge Energy Presentation

Sandridge - Investor Presentation - Barclays CEO Conference - Final

Tuesday, September 4, 2012

Financial Historian Niall Ferguson On Wealthtrack

Saudi Arabia May Become Oil Importer By 2030

According to Citigroup:


Saudi Arabia, the world’s biggest crude exporter, risks becoming an oil importer in the next 20 years, according to Citigroup Inc.
Oil and its derivatives are used for about half of the kingdom’s electricity production, which at peak rates is growing at about 8 percent a year, the bank said today in a an e-mailed report. A quarter of the country’s fuel production is used domestically, more per capita than other industrialized nations, as the cost is subsidized, according to the note.

Jim Rogers Short the Indian Market

ET Now: Nothing big has come out from the Jackson Hole meeting, but do you still expect FED to announce a QE3?

Jim Rogers: I do not know if they will announce it. I know they are going to print more money. They already are. If you look at their balance sheets, you will see that something is happening, assets are building on their balance sheets and they are not coming from the tooth fairy. So I do not know whether they will announce it or not. They are a little bit embarrassed because they announced QE1 and QE2, and it did not work. So they may try to discuss it. They may just continue to do it without getting egg on their face again, but they are going to print money, they are all going to print money. It is the wrong thing to do, but that is all they know to do.

ET Now: Are you expecting more shocks from the Eurozone or is the worst behind us?

Jim Rogers: Worst may be behind us for this week but no, there are going to be more problems coming out of Europe. You have got countries that are essentially bankrupt. Nobody is dealing with the problems in Europe. You look at everyone out there. They all have higher debts and all of their projections, maybe Bulgaria and one or two more countries do not have higher debts in their projections, but everybody has got increasing debt. The solution to too much debt is not more debt. So now you are going to have plenty more problems coming out of Europe.

Link to full interview: http://economictimes.indiatimes.com/opinion/interviews/expect-more-problems-emerging-from-eurozone-short-on-indian-market-jim-rogers/articleshow/16231848.cms

Can Steve Williams Lead Suncor to New Heights?

Steve Williams got a taste of what life will be like running one of the Canada’s biggest and most profitable publicly traded companies during a July teleconference discussing Suncor Energy Inc.’s 2012 second-quarter results.

In many ways it was a solid quarter for Suncor. Its revenues, cash flow from operations, return on capital and production were all up compared to the second quarter of 2011. But the analysts and reporters who listened in on the call were more interested in what Suncor was going to accomplish rather than what it had just accomplished.

They seemed particularly interested in the health of three of Suncor’s biggest growth prospects – the proposed Fort Hills and Joslyn North oil sands projects and the Voyageur upgrader – that the company is developing jointly with France’s Total E&P Canada.
In a press release announcing its second quarter results, Suncor said it intended to present development plans for each of the projects to its board of directors for approval by the middle of 2013. (Total would also have to approve the projects for them to go ahead). But as analysts quizzed Williams about the future of Fort Hills, Joslyn North and Voyageur, the man who replaced retired CEO Rick George as the company’s chief executive officer in May indicated that timeframe was a moving target and that Suncor wouldn’t be sanctioning them if they weren’t the best projects out there. “Growth for the sake of growth doesn’t interest me too much,” Williams said in July. “What interests me is profitable growth.”