BargainValueHunter Posted December 7, 2012 Share Posted December 7, 2012 http://www.optionmonster.com/news/article.php?page=sandridge_draws_bullish_3way_spread_75952.html More than 122,000 SD options have traded so far today, already about 6 times its daily average in the last month. A trader sold 12,000 June 6 calls for $1.59 against open interest of more than 28,000. At the same time, he or she bought 24,000 June 7 calls for $1.13 and sold two blocks of 12,000 June 9 calls for $0.50 and $0.49, with volume at each of those strikes above open interest. This is before noon New York time... Link to comment Share on other sites More sharing options...
bmichaud Posted December 7, 2012 Share Posted December 7, 2012 This is unreal. It is a mad rush to make the Dec 13 deadline.... Link to comment Share on other sites More sharing options...
alertmeipp Posted December 7, 2012 Share Posted December 7, 2012 Did I miss something? what the significance of Dec 13? Link to comment Share on other sites More sharing options...
bmichaud Posted December 7, 2012 Share Posted December 7, 2012 Did I miss something? what the significance of Dec 13? Record date for the consent solicitation. Link to comment Share on other sites More sharing options...
alertmeipp Posted December 7, 2012 Share Posted December 7, 2012 Interesting. Did I miss something? what the significance of Dec 13? Record date for the consent solicitation. Link to comment Share on other sites More sharing options...
bmichaud Posted December 7, 2012 Share Posted December 7, 2012 It's more than interesting - you have almost 10% of the market cap trading every day as funds try to cram into the stock to vote this clown out.... Link to comment Share on other sites More sharing options...
Myth465 Posted December 9, 2012 Share Posted December 9, 2012 I bought my leaps on Thursday and am sitting pretty. With the volume I think bmichaud is correct. Everyone is buying at $7 to kick Ward out and sell at $10 - $12. Everyone wins around $12 except for perhaps Ward who has a high basis and loses the perks. Its worth much more fully developed, but he will have a hard time convincing shareholders to wait. Someone like Exxon or Shell could develop the entire Miss from cash flow and really enjoy the 40% IRR, not including oil price increases, gas price increases, and enhanced oil recover. Its a still for anyone with excess cash flow / a lower cost of capital. Link to comment Share on other sites More sharing options...
Redskin212 Posted December 9, 2012 Share Posted December 9, 2012 http://seekingalpha.com/article/1053681-what-does-fairfax-s-prem-watsa-see-in-sandridge-energy-s-management?source=email_rt_article_readmore&ifp=0 Link to comment Share on other sites More sharing options...
Myth465 Posted December 9, 2012 Share Posted December 9, 2012 Good article, this is one of the things I wonder. Link to comment Share on other sites More sharing options...
muscleman Posted December 11, 2012 Share Posted December 11, 2012 muscle I dont see how you make money on that one. You would lose on the shares you had, or on the short position. Everyone is in this game to make money, evil is just a buy product of that greater cause inmo :) I was on the trip so I couldn't reply until now. I think there is actually a way to make money on both long and short side, and it will be much more than buy and hold and vote for the solicitation, as I explained above. Since you look to be confused, let me explain again. Please let me know if you do not think this is doable. If I had a lot of money to play with, I would buy all the way up before Dec. 13th, as long as it is below some price like $8. Preferrably I have already allied with some other folks and we together have more than 50% of the shares to control the outcome of the solicitation. Then on Dec. 13th, the stock price must have already been high enough to book profits on the long side. We would vote against the solicitation, book profits on the long positions on the Dec. 14th, and then go short. Let's say on Dec 13th, the price is already $11.5, then going short would have really limited risk because the price will be capped at $12. And then the news comes out that the solicitation is not agreed, and stock price would crash, and we book profits on the short side. This would be my strategy if I had enough money to play this. Unfortunately I don't have that much money so I choose to just get out as it comes close to Dec. 13th. I think it will be interesting to track short positions on IB. Just be aware if someone has already allied with TW and playing this strategy. Link to comment Share on other sites More sharing options...
Myth465 Posted December 11, 2012 Share Posted December 11, 2012 It would be difficult to liquidate a 10% position at a gain and then start a massive short inmo within a few days. I think most of the larger guys will get trapped as they buy up to vote either way. Link to comment Share on other sites More sharing options...
muscleman Posted December 11, 2012 Share Posted December 11, 2012 It would be difficult to liquidate a 10% position at a gain and then start a massive short inmo within a few days. I think most of the larger guys will get tapped as they buy up to vote either way. Hmm... Yeah that sounds true. Is it possible to do this through options? For example, buying stocks low, all the way up to Dec. 13th, vote no, buy put options and sell the shares? If price is trending up steadily, put options will be extremely cheap to buy. Anyway, I think you are probably right that the larger folks will just buy and vote yes. Link to comment Share on other sites More sharing options...
Myth465 Posted December 11, 2012 Share Posted December 11, 2012 Trapped- is what I meant. I think liquidity becomes a big problem for the big boys. If I was TPG I wouldnt have risked millions without having everything already worked out. I would have already talked to the Majors, Foreign Oil Companies, and Independents and would have a few buyers lined up to pay $10 - $12 to steal SD's assets. I would have deals worked out for each of the 4 major assets, and would have a few buyers for the whole company. I would also have enough friends with deep pockets to buy up at least 50% of all shares. If I was Tom Ward, I would be talking to my lawyers about the options to block this, and would be looking for a white knight. I would talk to Prem, then realize there is no way I will get 50% of the vote unless I too have friends with deep pockets. I would think realistically and realize its in no shareholders interest for me to run the company this way except for me of course. I would then find a buddy who runs a bigger company to buy SD, so I can save face and perhaps still run SD under the new guy. Both guys are much smarter then me, but thats what I would have done / have been doing over the last few weeks. Its also what the volume and option market suggests. The only real variable is who will win first and how long will it take. Its fun to watch though. Link to comment Share on other sites More sharing options...
muscleman Posted December 11, 2012 Share Posted December 11, 2012 Trapped- is what I meant. I think liquidity becomes a big problem for the big boys. If I was TPG I wouldnt have risked millions without having everything already worked out. I would have already talked to the Majors, Foreign Oil Companies, and Independents and would have a few buyers lined up to pay $10 - $12 to steal SD's assets. I would have deals worked out for each of the 4 major assets, and would have a few buyers for the whole company. I would also have enough friends with deep pockets to buy up at least 50% of all shares. If I was Tom Ward, I would be talking to my lawyers about the options to block this, and would be looking for a white knight. I would talk to Prem, then realize there is no way I will get 50% of the vote unless I too have friends with deep pockets. I would think realistically and realize its in no shareholders interest for me to run the company this way except for me of course. I would then find a buddy who runs a bigger company to buy SD, so I can save face and perhaps still run SD under the new guy. Both guys are much smarter then me, but thats what I would have done / have been doing over the last few weeks. Its also what the volume and option market suggests. The only real variable is who will win first and how long will it take. Its fun to watch though. Yeah. I was concerned who will eventually win, and decided to just get out because the risk/reward doesn't seem that great. You specialize in Oil and Gas? What's your thoughts on CHK? That one has already changed the board, so if the upside is similar, then probably risk/reward is better? Link to comment Share on other sites More sharing options...
Myth465 Posted December 11, 2012 Share Posted December 11, 2012 Specialize isnt the right word. For some reason I am drawn to the sector but I have a lot to learn. I have picked the 2 biggest losers in the sector (ATPG and SD) so that speaks volumes about my "expertise", lol. CHK is similar to SD inmo, but far more complex, much bigger, and with more moving parts. SD only has had 2-4 major assets which were pretty straightforward. CHK is at the turn, while SD is beginning. In a perfect world there would be a buyout, and I could take a small portion of the cash and cycle it into CHK. I would invest a small portion till I grew to understand CHK as well as I do SD. If you understand the Miss, Perm, and Shallow Gulf you understand SD. CHK has many more regions and areas, and alot of them are gas related properties which I am not too excited about. --- Upside perhaps similar, SD has a very hard catalyst and could be sorted in 3 months or so. Link to comment Share on other sites More sharing options...
muscleman Posted December 12, 2012 Share Posted December 12, 2012 Specialize isnt the right word. For some reason I am drawn to the sector but I have a lot to learn. I have picked the 2 biggest losers in the sector (ATPG and SD) so that speaks volumes about my "expertise", lol. CHK is similar to SD inmo, but far more complex, much bigger, and with more moving parts. SD only has had 2-4 major assets which were pretty straightforward. CHK is at the turn, while SD is beginning. In a perfect world there would be a buyout, and I could take a small portion of the cash and cycle it into CHK. I would invest a small portion till I grew to understand CHK as well as I do SD. If you understand the Miss, Perm, and Shallow Gulf you understand SD. CHK has many more regions and areas, and alot of them are gas related properties which I am not too excited about. --- Upside perhaps similar, SD has a very hard catalyst and could be sorted in 3 months or so. Is it really possible to truly understand the assets? I got burned with ATPGP, and I thought I could understand the assets they own in GOM. It later turned out that there is no way to understand those assets because all the important well data is confidential. Link to comment Share on other sites More sharing options...
Myth465 Posted December 12, 2012 Share Posted December 12, 2012 I think you can get comfortable with the assets. ATPG was interesting, they were buying assets basically nobody else wanted, and drilling in deep water with no real cash flow to support it. Offshore / shallow water is a bit easier, especially with the many private transactions you can use to support the valuations. You have 8 companies getting great returns in the miss, companies paying $4k an acre in JVs, ect. to use as a valuation benchmark, ect. Link to comment Share on other sites More sharing options...
T-bone1 Posted December 12, 2012 Share Posted December 12, 2012 Well results are all over the place in the Miss Lime and operators are basically betting that they can drill enough 1,000 boe IP wells to offset the money losers. I believe Tom Ward himself has described it as "crappy rock". The Miss Lime is not a shale, which means its is much less uniform geographically. This means there aren't large well defined sweet spots like there are in the Marcellus or Eagleford. I believe the play makes economic sense in the areas where there has historically been good vertical production like Woods and Alfalfa, but I'm not sure the other areas are working out so well. The "type curve" is something of a joke in this play because there are few average wells. The "type curve" is an estimation of what all the wells look like when averaged together - Sandridge had to move their type curve down because they were getting more crappy wells. It is difficult to put a value on a lot of the Miss acreage, although the play in total seems to be working. Considering CHK also is trying to sell a large chunk of acreage in the play (perhaps a million acres), I don't think buyers will be pounding down SD's door. That being said, I agree with the activists that the stock is likely worth $10+. I'm not sure how this plays out from here. SD is cheap and Tom has built some value here, but using the Dynamic acquisition as a backdoor equity offering and then selling the Permian doesn't leave me with a lot of confidence in management. SD has been aggressively leasing acreage in the Miss for high prices when they can't afford to develop what they have. Some people assume Tom was the conservative one at CHK, but I'm not so sure. Link to comment Share on other sites More sharing options...
zippy1 Posted December 12, 2012 Share Posted December 12, 2012 Anyone has any thought about SD's trading volumes for the past few days? I mean: the trading volumes were high on Dec.6th, 7th and 10th. On 11th and 12th, the volumes come down. Originally, when the volumes went higher on 6th,7th and 10th. I thought that everyone was grabbing shares for the Dec. 13th deadline. But now the volumes have come down fr yesterday and today with price also down. It seems that either TPG and its allies already got enough shares or TPG and its allies know that they would not have enough shares and stopped their buying.. My guess is the latter?! Link to comment Share on other sites More sharing options...
Myth465 Posted December 12, 2012 Share Posted December 12, 2012 Perhaps it has something to do with settlement date vs. trade date, that's my guess... Link to comment Share on other sites More sharing options...
bmichaud Posted December 12, 2012 Share Posted December 12, 2012 Perhaps it has something to do with settlement date vs. trade date, that's my guess... That would've been my explanation. Link to comment Share on other sites More sharing options...
zippy1 Posted December 12, 2012 Share Posted December 12, 2012 Perhaps it has something to do with settlement date vs. trade date, that's my guess... That would've been my explanation. Thanks, Myth and BM... Link to comment Share on other sites More sharing options...
bmichaud Posted December 13, 2012 Share Posted December 13, 2012 I think Myth was spot on earlier when he said that it's likely TPG had things locked up on the vote even before proceeding. With TPG's resources, why not? Link to comment Share on other sites More sharing options...
Myth465 Posted December 13, 2012 Share Posted December 13, 2012 I cant wait to see the 5% fillings, they are due within a few days of trading I believe. Link to comment Share on other sites More sharing options...
alertmeipp Posted December 13, 2012 Share Posted December 13, 2012 did u guys vote? Link to comment Share on other sites More sharing options...
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