alertmeipp Posted January 15, 2014 Share Posted January 15, 2014 TIA. any thoughts will be appreciated. just starting looking into it. The energy sector is so dead. They are proving out an new area called TMS. Decent management but run into issue recently. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 15, 2014 Share Posted January 15, 2014 On the surface this looks like a good short. -Their long-term track record is very bad in terms of GAAP profits and free cash flow. -33% of the float is short, which probably means that this is a pretty obvious short. -It's oil and gas. This is not a good sector to look for longs. -They recently had a secondary offering. Offering price $25.25. Proceeds to company $24.11375 (before expenses and ignoring share dilution from the call option). I'm surprised that the stock tanked so hard after the secondary. Normally investment banks try to support the share price after a secondary. Link to comment Share on other sites More sharing options...
alertmeipp Posted January 16, 2014 Author Share Posted January 16, 2014 Thanks! The offering was done after the stock doubled in short period of time. Someone got hosed. The raise was due to an excitement regarding their acres in TMS. Some nice results there. Now, the market is focus on risk and challenges. Seems another gas to oil play, EV - 1.3B, 30k acres in Eagle Ford, probably worth 400-600million. (13k - 20k per acre). They have other gas assets that they said will keep. What's interesting is its 300k net acres in TMS, these are 90%+ oil acres, the theory is if they are get TMS to close to Eagle Ford's economics and thus its per acre price. Share price will be multiple of current. Insider ownership of 20%. They will have announce results from two wells and guidance early Feb. I have bought in today and will further read up on this when time allows. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 17, 2014 Share Posted January 17, 2014 Um... I'd probably short this stock. I think investors will lose a lot of money on these stocks. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 17, 2014 Share Posted January 17, 2014 Let me explain: independent oil and gas is a magnet for fraud because insiders can lie about the economics of the company's resources and face no consequences for it. I don't know of any examples where insiders have been charged with fraud (let alone convicted)... so I would expect fraud to be very high in this sector. If GDP were to go above $18, I would've shorted the stock and then done actual research on the company. Link to comment Share on other sites More sharing options...
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