SharperDingaan Posted October 30, 2017 Share Posted October 30, 2017 A few useful tidbits learnt over the years .... 1) Investment IS speculation. Transact both often and rapidly, and you will notice trading patterns; we call it technical analysis, and pooh-pooh it as Voodoo Science. Trade less often, and you will notice market metrics; we call that fundamental analysis, and believe it can do wrong. But whatever label we prefer; it is a bet the price will go in our direction - within our tolerated time span. 2) Every quarter we are either right or wrong; if our thesis is right - staying with the same investment over multiple quarters will eventually pan out (a black DOES follow every string of reds). We make an informed decision in the hope that today is the day, against the unknowns of how long, and can I last it out. 3) OPM is technical analysis in slow motion - the unit holder resembles a day trader, and you are only as good as the last 2 quarters; hence, private money has an enormous advantage in commodity investing - simply because it can last a commodity cycle out. Play within your strengths. All of this is consistent with WEB (quality firms, hold for long periods, etc.), but not literal WEB. Forward thinking, flexible, but not married to a position (you will routinely trade around it). Do it well, and you end up with T-Bills and significant house-funded positions; if a ship comes in, sell some of it down and withdraw the capital. Different strokes, but perhaps not for everybody. SD Link to comment Share on other sites More sharing options...
Joe689 Posted November 6, 2017 Share Posted November 6, 2017 Feel like our shorts are working hard to keep this from breaking out. If oil doesn't correct soon to the downside, I think they will run out of power. With the SEC and under a buck fears, they must be lurking. Yet, do not see outsized volume yet, so do not think they have even started to cover. I am showing 13M short on the US side and 7.5M short on the CA side. So maybe 4%? Anyone else have a count? Not as high as some others... We will catch our big break soon I feel. We have been patient enough. Link to comment Share on other sites More sharing options...
Joe689 Posted November 10, 2017 Share Posted November 10, 2017 Another good quarter of execution it seems. Lends well for the new management, and the new Obsidian. We are starting to build a good reputation. Link to comment Share on other sites More sharing options...
ICUMD Posted November 10, 2017 Share Posted November 10, 2017 Does anybody have any target price on this? Hoping to recover my principal on this, maybe make some money for my pains and move on to some less cyclical stock. Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 11, 2017 Share Posted November 11, 2017 Was away from my desk last week .. hence the delay. Q3 was a great report. Production up, WF delivering results (Cardium decline rate down 75%!), rising liquids, 65% of existing production hedged through 2018, and capex (135M) at 85% of projected FFO. 2018 operating costs that include 12% inflation. We have a very conservative arc, that can only improve as net new (liquids rich) production gets added; with forecast beats being the norm - rather than the exception. Yet total silence on share consolidation? With an arc this solid there's almost no downside; but without institutional demand, there are few ways by which OBE can get full value for its shares. It suggests that there a few more shoes to drop. Otherwise, a great quarter SD Link to comment Share on other sites More sharing options...
chrispy Posted November 11, 2017 Share Posted November 11, 2017 Agree with you SD. If there goal is to sell the company, is there a benefit to paying down debt instead of reducing the share count? Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 11, 2017 Share Posted November 11, 2017 Agree with you SD. If there goal is to sell the company, is there a benefit to paying down debt instead of reducing the share count? It is not clear that the intent is a sale; they have lots of other options. Let the other shoes drop first. SD Link to comment Share on other sites More sharing options...
Uccmal Posted November 12, 2017 Share Posted November 12, 2017 I sold neary half my position at a breakeven this week. I will probably exit the remainder shortly. Nothing specific to their execution. I need the capital elsewhere where I am paid to wait. The position I have is getting too small to move the needle and its costing me to wait in OBE with no dividend in the foreseeable future. It seems unlikley the stock breaks $3 or $5 in the near future to get institutions interested. So, that leaves waiting without being paid. Meanwhile Whitecap has raised their dividend and has greater ability to increase production faster should oil continue to rise. Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 12, 2017 Share Posted November 12, 2017 Inclined to agree, but we'll give it to the end of the year for the 'other' shoes to drop. As already put forward; their smartest 'next move' is to privatize @ 6x FFO, and issue new common trading on just the TSX. The 'gain on repurchase' would be > $C Biliion 1.0, and so large that leaving it on the table is a career limiting decision. Understandable to release the Q3 results first, and ascertain interest in a 'bought deal' after; but the clock is ticking. Our own thoughts are that there will be a privatization, and the 'bought deal' interest will determine the size of the new issue. We could be flat-out wrong of course, but we think it's enough to at least warrant giving them a little more time. If we're right we look like Forest Gump, if we're wrong we still have a profit. SD Link to comment Share on other sites More sharing options...
longlake95 Posted November 15, 2017 Share Posted November 15, 2017 https://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/obsidian-energy-settles-with-sec-over-fraud-charges/article36987440/ Link to comment Share on other sites More sharing options...
Pelagic Posted November 15, 2017 Share Posted November 15, 2017 Glad to see the SEC case has been settled. I'd put an absolute worst case scenario at $50 million based on research and similar cases in my valuation so $8.5 million, while not negligible, should be easily dealt with by OBE. Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 15, 2017 Share Posted November 15, 2017 Agreed. With the SEC investigation now out of the way, we wouldn't be surprised to see a few other things start to happen now as well. A good chunk of the settlement will very likely also be covered by insurance. SD Link to comment Share on other sites More sharing options...
doc75 Posted November 16, 2017 Share Posted November 16, 2017 Agreed. With the SEC investigation now out of the way, we wouldn't be surprised to see a few other things start to happen now as well. A good chunk of the settlement will very likely also be covered by insurance. SD I've never heard of insurance paying for SEC settlements. Any specific examples in mind that make you say it's "very likely" a large chunk will be covered by insurance? Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 16, 2017 Share Posted November 16, 2017 Agreed. With the SEC investigation now out of the way, we wouldn't be surprised to see a few other things start to happen now as well. A good chunk of the settlement will very likely also be covered by insurance. SD I've never heard of insurance paying for SEC settlements. Any specific examples in mind that make you say it's "very likely" a large chunk will be covered by insurance? E&OE Insurance, and it's why the language of the settlement is so distorted. The company simply made a clerical representational error, against which insurance can be purchased. Per the language of the settlement there was no fraud, hence the insurance is not nullified. How much of the settlement gets recovered depends on how much PWE was responsible for it, and their mitigation efforts before and after the event. https://en.wikipedia.org/wiki/E%26OE https://financial-dictionary.thefreedictionary.com/E%26OE SD Link to comment Share on other sites More sharing options...
enoch01 Posted November 16, 2017 Share Posted November 16, 2017 Agreed. With the SEC investigation now out of the way, we wouldn't be surprised to see a few other things start to happen now as well. A good chunk of the settlement will very likely also be covered by insurance. SD I've never heard of insurance paying for SEC settlements. Any specific examples in mind that make you say it's "very likely" a large chunk will be covered by insurance? E&OE Insurance, and it's why the language of the settlement is so distorted. The company simply made a clerical representational error, against which insurance can be purchased. Per the language of the settlement there was no fraud, hence the insurance is not nullified. How much of the settlement gets recovered depends on how much PWE was responsible for it, and their mitigation efforts before and after the event. https://en.wikipedia.org/wiki/E%26OE https://financial-dictionary.thefreedictionary.com/E%26OE SD In other words, you don’t know what you are talking about. Link to comment Share on other sites More sharing options...
Uccmal Posted November 16, 2017 Share Posted November 16, 2017 Down to just a placeholder of 1000 shares. Bought more Whitecap and Enbridge with the proceeds. Score: Break even with opportunity cost. Link to comment Share on other sites More sharing options...
clutch Posted November 16, 2017 Share Posted November 16, 2017 Agreed. With the SEC investigation now out of the way, we wouldn't be surprised to see a few other things start to happen now as well. A good chunk of the settlement will very likely also be covered by insurance. SD I've never heard of insurance paying for SEC settlements. Any specific examples in mind that make you say it's "very likely" a large chunk will be covered by insurance? E&OE Insurance, and it's why the language of the settlement is so distorted. The company simply made a clerical representational error, against which insurance can be purchased. Per the language of the settlement there was no fraud, hence the insurance is not nullified. How much of the settlement gets recovered depends on how much PWE was responsible for it, and their mitigation efforts before and after the event. https://en.wikipedia.org/wiki/E%26OE https://financial-dictionary.thefreedictionary.com/E%26OE SD In other words, you don’t know what you are talking about. It is hilarious how people project stuff from their own conjectures. Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 17, 2017 Share Posted November 17, 2017 We'll just wait for the 2017 AR note disclosure. SD Courtesy of investor village. 2017-11-16 20:36 ET - Market Summary by Stockwatch Business Reporter https://www.investorvillage.com/groups.asp?mb=19172&mn=10870&pt=msg&mid=17714335 "Obsidian Energy Ltd. (OBE) Obsidian agreed to pay the SEC an $8.5-million (U.S.) fine, without admitting any wrongdoing. The case involved an alleged accounting scheme carried out by former employees from 2012 through the first quarter of 2014. At the time, the company was still called Penn West Petroleum Ltd. In the third quarter of 2014, Penn West: announced the discovery of incorrectly classified expenses; fired the employees believed to be responsible for the reclassifications; conducted an accounting review; and restated its financials for the affected periods. It then paid a total of $53-million last year to settle class actions in Canada and the United States, also without admitting any wrongdoing. Insurance covered that settlement. Obsidian has not yet said whether insurance would also cover the SEC settlement." Evidence that the cost of the regulatory settlement - for the same incident, was 100% covered by insurance last year. Pretty hard to make the case that this settlement will not be similarly covered. SD Link to comment Share on other sites More sharing options...
constala Posted November 21, 2017 Share Posted November 21, 2017 In the name of the Father! Come on Zack show us how it's done! 5.4%, average price 1.14ish. https://www.sec.gov/Archives/edgar/data/1334388/000092189517002732/sc13d08016014_11202017.htm "The Reporting Persons believe that the Shares currently trade at a significant discount to intrinsic value and do not reflect the value inherent in the Issuer’s unparalleled acreage position in the Cardium, significant upside in the Mannville, infrastructure advantaged position in the Alberta Viking and valuable tax pool position. In order to unlock this value, the Reporting Persons intend to communicate with the Issuer’s management and Board about a broad range of strategic and operational matters." Link to comment Share on other sites More sharing options...
Cardboard Posted November 21, 2017 Share Posted November 21, 2017 That is in USD, so not that impressive. Other trades made in CAD are specifically mentioned. Regarding these guys, I have heard mixed reviews to say the least. And for him to go make a mess in a company that has been fixed, in part by his dad who was Chairman and who died recently of leukemia, is a complete lack of respect IMO. Cardboard Link to comment Share on other sites More sharing options...
longlake95 Posted November 21, 2017 Share Posted November 21, 2017 Very tacky on the part of Zack. Not impressed. Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 21, 2017 Share Posted November 21, 2017 So .... 26.54% of all the shares are owned by a single activist group, looking for a share consolidation/break-up. Our own thoughts are that a share consolidation would receive a lot of support; but try selling assets - and its gloves off. With the SEC suite now cleared, OBE is finally in a position to buy back ALL its common; and reissue new (& less) common on just the TSX to help pay for it. We have previously posited on this thread - that a minimum take-out price of 6xFFO (C$2.40/share), would result in an equity gain on repurchase of roughly $C 1.058B (504(4.5-2.4)) before costs. It would also allow the activist group to exit at a gain, and not harm the company. Of course, now that an activist group is present; all prices are likely to be higher than they otherwise might have been. A knife at the throat, and another at the groin - is a powerful incentive to think clearly. We live in interesting times. SD Link to comment Share on other sites More sharing options...
constala Posted November 21, 2017 Share Posted November 21, 2017 Sharper, please explain why you think "26.54% of all the shares are owned by a single activist group". I thought Kernwood had 5.48% and FrontFourCapital 5.6% as per last two SEC reports? Are you saying they act together/that there is more to it? Thanks! Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 21, 2017 Share Posted November 21, 2017 Sharper, please explain why you think "26.54% of all the shares are owned by a single activist group". I thought Kernwood had 5.48% and FrontFourCapital 5.6% as per last two SEC reports? Are you saying they act together/that there is more to it? Thanks! There are 9 separate entities on that SEC filing - total up the share count of each entity. The fact these 9 entities were filed together, evidences they are related parties. While it is not a guarantee they will all vote for the same outcome, most would take the conservative view - and assume that they will. Of course; if there are shares attached to other 'like minded' entities - not on that filing, their combined influence will be somewhat higher than the 26.54%. SD Link to comment Share on other sites More sharing options...
Joe689 Posted November 21, 2017 Share Posted November 21, 2017 I think that might be inaccurate. You cannot just total up all the individual holdings. There is overlap. Shares counted more than once. The different entities have interest in the other like entities, yet they must be reported separately because they are effectively an insider. For example STEPHEN LOUKAS 210K shares are part of one of the FrontFour shares count. Between all of them they own 5.5. Correct me if I am wrong.... Good news is that it is almost certain that they would at least try to join up with the other 5% holder (that other canadian, forgot name). So I would agree that the activist group is more than just frontfour. They need to force the hand. They gave the market and ceo time, and it is not registering.... Something needs to change Link to comment Share on other sites More sharing options...
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