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How is it that a few weeks back we had 25 million shares placed in just a few hours but just closed below $4 today? How can so many be so enthusiastic to buy at $5 and so few willing to step up below $4??? I'm not a sophisticated trader so forgive me if I appear confused here.
Looks like the Motley Fool is starting to play nice...
http://www.fool.com/investing/small-cap/2011/04/08/5-stocks-to-buy-before-the-crowd-does.aspx
5 Stocks to Buy Before the Crowd Does
http://www.fool.com/investing/small-cap/2011/04/08/5-stocks-to-buy-before-the-crowd-does.aspx
Dan Caplinger
April 8, 2011
Index funds give investors an easy way to invest in the stock market. But because index funds have gotten so popular -- and so big -- following the ins and outs of how their underlying indexes work has captured the attention of opportunistic traders seeking quick profits at the expense of long-term traders. If you're quick on your feet, you may be able to beat those traders at their own game and pick up shares of the stocks you want at a bargain price.
The next big rebalancing
Earlier this week, the Nasdaq announced that it would rebalance its Nasdaq-100 index for the first time in 13 years. The move had a huge impact on several of the nation's top tech stocks, which saw their weightings within the index changed dramatically. Many anticipated that the resulting buying and selling by index mutual funds and ETFs could have a big effect on share prices.
But even with the Nasdaq's move still several weeks away, some are already turning their attention to the annual rebalancing of the Russell indexes, including its popular small-cap Russell 2000 index. Even though Russell won't complete its rebalancing process for another two months, traders are getting a head-start speculating which stocks might become eligible for the small-cap benchmark.
What's at stake
The idea behind trying to game index rebalancings is pretty simple. When index overseers add a stock to an index, the funds that track that index are forced buyers. To be certain that they'll be able to match the index's performance, funds have to buy shares of the new components. As a result, demand rises astronomically for new index additions as they become part of popular benchmarks.
For small-cap stocks like those in the Russell 2000, that can make a huge difference. Although the Nasdaq 100 rebalancing got a lot of attention, the stocks involved are so huge and have such high trading volume that index funds don't have to worry much about liquidity being a problem. But small-cap stocks often trade far fewer shares than their large-cap counterparts. And given that investors had nearly $4 trillion tracking various Russell indexes as of last year, there's enough money at stake to put plenty of pressure on illiquid small-cap stocks.
With this year's rebalancing not happening until June 24, it seems early to start thinking about it now. Yet analysts at Charles Schwab's equity research unit have actually suggested that with more investors paying attention to rebalancing, buying as soon as late March would have made sense.
The stocks to buy
So which stocks are likely to get added to the Russell 2000? By looking at stocks with appropriate market capitalizations that aren't yet in the index, you can get a sense of which stocks are likely candidates. Here are five:
Stock Market Cap 1-Year Total Return
Hyperdynamics (AMEX: HDY ) $703.1 million 247.0%
KEMET (NYSE: KEM ) $550.6 million 190.8%
Bronco Drilling (Nasdaq: BRNC ) $305.6 million 112.2%
NN, Inc. (Nasdaq: NNBR ) $301.6 million 163.4%
Hurco (Nasdaq: HURC ) $203.4 million 81.9%
Source: Schwab, Yahoo Finance.
It's important to realize that plenty of high-flying small-caps won't make this list because they aren't eligible for inclusion in the Russell 2000 for other reasons. For instance, Rare Element Resources (AMEX: REE ) and North American Palladium (AMEX: PAL ) have market caps in the right range, but they're both headquartered in Canada and therefore can't be in the U.S. index.
What to do
There's no guarantee that these companies will actually get added to the Russell 2000 in June. For one thing, after such big moves up for most of these stocks, a reversal could carry shares downward just as quickly.
So rather than simply buying these stocks as a short-term trade, you may prefer to pick particular stocks that you believe are good long-term investments and then look at beating the crowd to the party. Even if something happens and the stock you like doesn't end up in the index, you won't be disappointed -- because you'll still have a strong stock.
Index rebalancing events happen all the time, and they draw a lot of attention. By steering clear of the hype and focusing instead on the things that are important to you as a long-term investor, you'll get better results no matter what happens.
Want to be the first to know if these stocks end up in the Russell? Add them to your watchlist and don't miss anything.
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Legal Information. © 1995-2011 The Motley Fool. All rights reserved.
I'm thrilled with the progress made over the last year. I'm quite pleased with the offering and money raised...just perplexed by the stock price. Shorting is the only thing which makes sense here. Seems a risky gamble to me though given the next few months should be filled with news.
I still don't get who is selling here --- certainly not those who just bought in at $5. Are some big holders shorting??? Seems a risky business with all the impending news to roll out in the next month or two.
who sells below the offering price? i don't get it.
That's a tough one...I think there are still so many unknowns prior to drilling ---
NSAI report on 3D
whether HDY will seek to diversify prior to drilling
whether HDY will sign another JV prior to drilling
what oil does in the coming months.
I don't think your guess of $14 is out of the question pre-drilling though --- it could easily happen given the right conditions and timing of events.
Agreed. I think this is just RL keeping all his options on the table.
Am I correct in saying that it is pretty rare for a major drilling company to take an equity stake as opposed to cash payment??? If so, and if something like that materialized, imagine what a show of confidence in the concession that would communicate.
Who knows what is going on behind the scenes. I just hope we don't have to wait too long to find out. April should be a full month - drilling news, financing/JV news, CC (assuming Ray sticks to his every two month timeframe).
How do large funds make a purchase like that on the open market??? Do MM's accumulate all they can over a period of time for an agreed upon sell price? Would the MMs work to keep the price lower in order to accumulate to fill the order? I'm pretty clueless as to how all of this works, but if there has been pressure on the stock for this reason, then maybe we head up from here.
Any idea when to expect the NSAI report on the "super giant"? Days or weeks???
Huge move up on tremendous volume again today. Not sure those gaps will be filled. Only a few weeks out before the NSAI report on the deep water prospect. I suspect many instituional investors are wanting to establish positions before then and the cascade of other news to come after that report. The next two months are going to be filled with big news items for HDY. I'm just not sure this stock can be "played" much more - competition from those wanting to get in should keep the trading honest.
SHM webcast
Just listened to the webcast last night. Great job by RL and the HDY team. How many CEO's come out at their SHM and tell shareholders they may be diluting the stock in the next few months to help raise $50M and the stock responds with near record level volume with over a 10% price spike up??? That alone speaks volumes to our management and the value of the concession.
RL gave us a list of things to look forward to and to send the pps higher in anticipation just in the next 2 months:
NSAI report on 2D of deep water propsect
NSAI report on 3D - revised reserve estimates
drilling contract
potential financing deal/JV deal
In terms of the revised report based on the 3D work - one of my favorite nuggets from the presentation was RL's comment that the 3D revealed several more plays not revealed with the 2D --- he said these additional prospects would "significantly increase" the value of the Guinea concession. Not only will the revised NSAI report give us a higher risked reserve number, but it would seem we can expect a reserve estimate in the 3D area much higher than the 2.3B barrels initially reported last fall.
As shareholders, we are truly blessed with a top notch CEO and management team - the disappointment of the LOI falling thru seems like a distant memory and I think all of us are seeing the benefit of this deal not coming to fruition. Things are really falling into place nicely!
http://finance.yahoo.com/news/Hyperdynamics-Announces-prnews-2216308729.html?x=0&.v=1
Hyperdynamics Announces Addition to its Management Staff
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EmailPrint..Press Release Source: Hyperdynamics Corporation On Wednesday February 16, 2011, 7:00 am
HOUSTON, Feb. 16, 2011 /PRNewswire/ -- Hyperdynamics Corporation (NYSE Amex: HDY) announced today that Andrei Orlov has joined the company as Vice President for Business Development based in London, England.
Orlov most recently was a Regional Director of Foster Wheeler, a global engineering and construction firm, and prior to that, Vice President for Business Development in the former Soviet Union with SNC Lavalin, Canada's largest engineering firm. He has more than 15 years of international project and business development experience for the oil and gas industry in Europe and the former Soviet Union.
"With the addition of Andrei Orlov to our team, we are continuing to build the solid management and operational capabilities to enable Hyperdynamics to grow in the future," said Ray Leonard, President and Chief Executive Officer. "Andrei's years of experience in the field of international mergers and acquisitions will be an invaluable addition to the management team of Hyperdynamics. He will be responsible for the business development function of the company and will work closely with the Houston and Guinea offices in our farm-out and expansion efforts."
About Hyperdynamics
Hyperdynamics is an emerging independent oil and gas exploration and production company that is exploring for oil and gas offshore the Republic of Guinea in West Africa. To find out more, visit our website at www.hyperdynamics.com.
Forward Looking Statements
This news release and the Company's website referenced in this news release contain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding Hyperdynamics Corporation's future plans and expected performance that are based on assumptions the Company believes to be reasonable. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "may result", "will result", "may fluctuate" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. A number of risks and uncertainties could cause actual results to differ materially from these statements, including without limitation, funding and exploration efforts, fluctuations in oil and gas prices and other risk factors described from time to time in the Company's reports filed with the SEC, including the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2010. The Company undertakes no obligation to publicly update these forward looking statements to reflect events or circumstances that occur after the issuance of this news release or to reflect any change in the Company's expectations with respect to these forward looking statements.
HDY-IR
Contacts:
Dennard Rupp Gray & Lascar, LLC
Ken Dennard, Managing Partner
Jack Lascar, Partner
(713) 529-6600
Anne Pearson, Sr. Vice President
(210) 408-6321
Article: US diplomat convinced by Saudi expert that reserves of world's biggest oil exporter have been overstated by nearly 40%
http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks
The last I heard was around mid-March for the reserve report.
If a deal is done in the coming weeks/months, do you think we'll likely see another LOI announcement first or will we just get an announcement of a finalized deal? I suspect RL would be a little hesitant to sign and PR another LOI - he certainly won't be signing a LOI that would give another potential JV exclusivity before finalizing the deal.
If you want to totally discount the progress made since that time - completion of 3D - comments by the company that the 3D looks good - anticipation of revised reserve report.
rayovac - if your hunch on this is right and the terms were changed at the last minute, then it would appear the company we were negotiating with thought they had Ray over a barrel. If as you say, we walked away because they tried to change terms at the last minute, then they greatly overplayed their hand - if that is how it played out, then good riddance to them. If Ray had been desperate to make a deal, no doubt he could have - I don't think we are desparate right now, and based on my coversation with Jack Lascar at DRG&E (HDY's IR firm), we have many options to raise the funds needed for drilling. After talking with Mr. Lascar, my sense is the real risk here is when drilling begins, not the funding - that will happen, it is just a matter of finding the right deal.
Here's the link to the video
http://www.cnbc.com/id/15840232?video=1766352296&play=1
Did anyone see HDY mentioned on Jim Cramer's show tonight?
http://www.cnbc.com/id/41253480?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
Leadership makes this tolerable
What a disappointing morning - truly is. We all had our hopes up for a big deal and big bucks to get us over the top. This feels like a punch in the stomach. That being said - the feeling I had didn't take me back to the Watts days at all. How many set up and let downs did we experience with them - they seemed endless - expectations set, but never delievered on. RL has delivered every step of the way and my money is betting he will deliver here as well. My belief, hope, bet is that he passed on a deal for something much better. I for one am sticking around to see what that is. I am certainly disappointed today, but not in him or the job he is doing - any time in the past I've questioned one of his moves, the wisdom of such move has always been made clear soon thereafter. I believe it will be in this case as well.
You are right - the JV announcement won't send the pps to the moon, but it will help establish a new base of support I think. The Blackrock investment did this back in the fall. After Blackrock's investment was announced, we moved to a new level of support. Depending on who the JV is and how good the deal is, I think we could move up to a new level of support - what that level is will obviously be determined by the details to come next week. The revised NSAI report to come in February or March could do the same thing - taking us to a new level of support. Each step seems to build the value of our little company here. Can't wait til next week. I don't think Mr. Leonard is going to disappoint!
Regarding the A.I. article ---
I emailed RL asking about the A.I. article. I mentioned that A.I. has been a source for some unreliable information in the past and just wanted to confirm that this was indeed "Hogwash". His reply to me was:
Hogwash. Ray
It was encouraging to hear so just wanted to pass that along to others who were possibly concerned with it as well.
Another Motley Fool mention
http://www.fool.com/investing/general/2011/01/18/extreme-bullishness-which-oil-stocks-are-expected-.aspx
Extreme Bullishness: Which Oil Stocks Are Expected to Climb Higher?
http://www.fool.com/investing/general/2011/01/18/extreme-bullishness-which-oil-stocks-are-expected-.aspx
Eben Esterhuizen and Alicia Sellitti, Kapitall
January 18, 2011
Over the past year, oil import costs for countries in the Organization for Economic Co-operation (OECD) have slicked upwards by a margin of 30%, hitting a whopping $790 billion -- that's the equivalent loss of 0.5% of their GDPs. Earlier this week, U.S. light oil prices hit a 27-month high, with crude also trading far above average. And some experts think this puts 2011's recovery in serious jeopardy. Because oil has a way of leaking into just about every nook and cranny of the world's economy.
According to the UN's Food and Agriculture Organization, sky-high oil spurred food prices to new records in December. Coupled with the rising price of coal, on the move since flooding in Australia put a halt to most of their production of the resource, oil's ascent heightens anxiety over the cost of commodities at this moment in the recovery. Experts wonder, as the demand for raw materials increase, will supply be able to keep pace?
Fatih Birol of the International Energy Agency (IEA) is among those concerned that the current price of oil will endanger the global economy at large. He opines that, "if the oil price goes much higher, it affects everything from the trade balance to household spending" -- which could result in deflated personal budgets and higher inflation.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) remains unmoved and hasn't given any indication of plans to increase export quotas. But Birol warns that greed may not turn out to be so good for oil exporters in this case.
He explains that, "[they] need clients with healthy economies, but these high prices will sooner or later make the economies sick." The end result? "The need for importing will be less."
So while oil prices have been climbing, it's worth remembering that what goes up, must eventually come down ... so which oil stocks should you be avoiding if oil prices pull back?
It might be interesting to start with the oil stocks that are expected to see continued gains. As history tells us, when too many people get optimistic about a stock, it's probably time to get out. Excessive bullishness around a stock is often a fairly good indicator that the bottom's about to drop out -- and an investing rule of thumb for contrarians like Warren Buffett.
Here's a list of oil-related stocks that are seeing extreme optimism in the options market, with a large number of open call option contracts relative to put option contracts, as well as an uptick in institutional buying over the last three months.
Is this extreme optimism justified? What do you think? (Click here to access free, interactive tools to analyze these ideas.)
Company
Options Sentiment
Institutional Buying
SandRidge Energy (NYSE: SD)
Call open interest at 152,052 contracts vs. put open interest at 57,813 contracts (Put/Call ratio at 0.38)
Institutional investors currently own 290,808,605 shares vs. 247,017,613 shares held three months ago (+17.73% change)
Concho Resources (NYSE: CXO)
Call open interest at 16,942 contracts vs. put open interest at 4,681 contracts (Put/Call ratio at 0.28)
Institutional investors currently own 1,769,486 shares vs. 1,574,058 shares held three months ago (+12.42% change)
Key Energy Services (NYSE: KEG)
Call open interest at 4,510 contracts vs. put open interest at 1,585 contracts (Put/Call ratio at 0.35)
Institutional investors currently own 136,037,711 shares vs. 124,004,407 shares held three months ago (+9.7% change)
Holly Corporation (NYSE: HOC)
Call open interest at 3,437 contracts vs. put open interest at 2,319 contracts (Put/Call ratio at 0.67)
Institutional investors currently own 54,066,102 shares vs. 51,078,439 shares held three months ago (+5.85% change)
Hyperdynamics Corporation (NYSE: HDY)
Call open interest at 4,931 contracts vs. put open interest at 1,165 contracts (Put/Call ratio at 0.24)
Institutional investors currently own 2,210,757 shares vs. 2,096,630 shares held three months ago (+5.44% change)
Exterran Holdings (NYSE: EXH)
Call open interest at 2,114 contracts vs. put open interest at 717 contracts (Put/Call ratio at 0.34)
Institutional investors currently own 4,693,338 shares vs. 4,575,119 shares held three months ago (+2.58% change)
Oasis Petroleum (NYSE: OAS)
Call open interest at 953 contracts vs. put open interest at 408 contracts (Put/Call ratio at 0.43)
Institutional investors currently own 50,218,570 shares vs. 49,096,173 shares held three months ago (+2.29% change)
Options data sourced from Schaeffer's, institutional data sourced from Reuters. The list has been sorted by change in institutional ownership. (Note: Data was sourced on January 13, 2011.)
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.
HDY article in Motley Fool tonight
http://www.fool.com/investing/small-cap/2011/01/14/stop-hyperventilating-about-hyperdynamics.aspx
Stop Hyperventilating About Hyperdynamics
http://www.fool.com/investing/small-cap/2011/01/14/stop-hyperventilating-about-hyperdynamics.aspx
Toby Shute
January 14, 2011
Back in mid-December, I cited 101 reasons the market looks overheated. One of the examples I offered of a speculative stock showing signs of froth was Hyperdynamics (AMEX: HDY), a small company with a large exploration license offshore Guinea. Amazingly, the stock has doubled since then.
Your first guess might be that Hyperdynamics made a huge discovery sometime in the past month. Well, that's not the case. The firm isn't planning to drill its first well until the fourth quarter. The only material news is that Hyperdynamics has entered into a letter of intent with a large independent E&P regarding a farm-out.
Farm-outs are pretty straightforward. A license holder sells down its interest in the exploration block to a partner who, in addition to possibly paying a signing bonus, agrees to foot a portion of future costs, as well as project-related costs incurred to date. Hyperdynamics brought in Dana Petroleum (since taken over by KNOC, Korea's national oil company) as a 23% partner about a year ago. It's now looking to farm out an additional 30% to one or more companies, in order to fund a three-well program expected to cost $129 million.
I should note that Hyperdynamics announced a letter of intent with Repsol (NYSE: REP), which was to operate the project with a 37% interest, in late 2009. That deal was not completed. If the current negotiations fall through, I expect the shares to take a dive. But let's assume Hyperdynamics does bring in a strong partner like Noble Energy (NYSE: NBL) or Nexen (NYSE: NXY) to take the entire 30% farm-out. That leaves the company with its desired 47% interest and the ability to proceed with drilling.
How much is that barrel in the window?
Netherland, Sewell (NSAI), one of the top independent reserve estimating outfits, has placed a best estimate of 2.26 billion barrels of gross unrisked resource potential on Hyperdynamics' block. On the December conference call, management said that NSAI assigned the company a "risk-weighted resource estimate of about 350 million barrels." That translates to about a 20% chance of success on Hyperdynamics' 77% working interest pre-farm-out. If we use the same chance of success on Hyperdynamics' post-farm-out 47% working interest, that's 212 million net risked barrels.
With a touch over 125 million shares outstanding, Hyperdynamics' market capitalization is currently around $900 million. On an adjusted enterprise value basis, assuming the closing of the pending farm-out, I see the market valuing Hyperdynamics at roughly $4 per risked barrel.
$4 per barrel? Sign me up!
That might not sound like much, compared to an international oil price flirting with the $100 level. An oil barrel in hand is worth a heck of a lot more than two in the possible bush, however. Four dollars is on the high side for undiscovered oil barrels in a virtually undrilled frontier province. I used a $5-per-risked-barrel metric for my valuation exercise on Cobalt International Energy (NYSE: CIE) last year, but that company focused on the Gulf of Mexico, Angola, and Gabon. Unlike those well-developed oil markets, Guinea has not seen any modern offshore drilling, and I assume it has little to no relevant infrastructure.
I'm not questioning the prospectivity of offshore Guinea. Anadarko Petroleum (NYSE: APC) made a discovery in neighboring Sierra Leone in its first attempt. Further up the coast in Mauritania, there have been a string of discoveries as well. I do think Hyperdynamics should get a larger frontier risk discount than investors are currently awarding it, however.
An attempt at an apples-to-apples comparison
Consider Chariot Oil & Gas, a U.K.-listed company with major acreage offshore Namibia. Namibia, another virtually unexplored oil frontier, is just south of OPEC member Angola, and smart folks such as HRT Oil & Gas' Marcio Mello (formerly of Petrobras (NYSE: PBR)) argue that it's analogous to offshore Brazil and its massive pre-salt oil deposits. It would seem that Namibia is at least as prospective as Guinea.
Chariot has brought in Petrobras as a 50% partner on part of its acreage. Looking at only the portion covered by that farm-out, and assuming the same 20% chance of success as with Hyperdynamics, Chariot is valued at around $0.80 per net risked barrel. These guys use NSAI to do their reserve estimates as well, though this week's resource update has not yet been independently verified.
Chariot doesn't have much money, and it also has no drilling timetable, so I would expect it to trade at a fairly hefty discount to Hyperdynamics. Still, the valuation gap is pretty striking. Is Hyperdynamics really worth five times as much? As always, I encourage you to sound off in the comments section below.
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Legal Information. © 1995-2008 The Motley Fool. All rights reserved.
your chart was right on with support at 6.85
Great news today! - I'm not surprised anymore thought - RL continues to do what he says he's going to do - how refreshing!
OT
Bradford - still keeping an eye on HDY? Blackrock bought in a month or so ago and a nice PR today (LOI for additional partner) - if you have time, the CEO is giving a CC (he gives them promptly every 2 months) at 11AM eastern - it should be worth the listen.
http://investors.hyperdynamics.com/events.cfm
Has anyone on the board spoken with anyone at the company or any of their representatives?
A10 - any guesses as to how the company responds to this offer? Do you think there are or will be other interested parties and do you think this is just a starting point price-wise (1.75). thanks.
Imcat - are you still planning on holding SAEI til the CC? With the offer, I suspect we trade over $1.50 next week - what do you think
SAEI - what a day!
well said
lying about anything in life or on a message board seems, i don't know, wrong - call me old-fashioned --- so it would seem, we basically have a huge portion of the float in the hands of traders who are just playing the game.
Someone help me here. How can the float be so low, there be significant accumulation, there be as many longs with significant positions as are professed on this board, the volume be so high and the stock still be sitting where it is at. Can the MMs play with non-existent shares to any level or are they limited somehow?
This is old news - by old I mean 3 days old. See the company's PR on 12/7. Looks like a repeat.
My position is pretty small as well. Also waiting until the 20th - or possibly will sell just prior if there is a big runup. Best of luck to you
Imcat,
what are your thoughts on SAEI? Are you in this one?