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GFCI.....kind of "anti-climactic" after those news releases on their website a few weeks ago stating letters of intent to acquire Exxon-Mobil, Wal-mart and Microsoft.
LOL!!!!!
Rogue
Rainman/ANH......How would rising interest rates and rising mortgage rates in the US affect them??
I beleive we have seen the low in interst rates here for the next 1 1/2 to 2 years. We could get to 8% or more on mortgages soon enough in my opinion.
Rogue
TRAC....I bought some more here too($2.23-2.25). This sure looks like value to me.....I'll wait patiently on this one. Could be a double or better from here someday.
Rogue
NXG....I still own some. Luckily I traded out of half at the last rally to $1.65.
It's been sold "relentlessly" recently. Is there something "evil lurking" I don't know about??
Looks like we could "capitulate" to the $1.00 area of support sometime soon?
I would "double up" there......at some point we go north of $2 again in my opinion.
Rogue
HQSM.....no position for me now. I had bought a block of 30,000 shares at .23 a while back and traded it off for .04 or .05 cents profit.
Never got back in because I didn't like the way it had been trading as of recently......and of course "all hell" breaks loose today.
I guess if it get's "hammered" enough it may be worth another look.
Rogue
Len/Volckler..........Alan "Bubbles" Greenspan is a different "animal" than Volckler ever was. Greenspan is a much smarter man than his "imbecile" monetary policy........I think the plan is for the US$ to eventually fail. It is ordained.
Volckler knows it's coming.....we are 10 years closer to that failure than we were in 1995.
Rogue
FREETRADE....I figured it wouldn't last forever. Loved the "freetrades" to average into positions. Anyone moving their account(s) anywhere else after the announced commision increase???
Just curious if anyone found anything better than Freetrade??
Rogue
Mikeo56...Oil/What would happen to the price of oil if all the rumours we have heard of an attack on Iran by Israel or the US comes true in the near future?????
China has bought 100 BILLION dollars of future oil production from Iran. I guess if we "steal" that oil we could still "honor" those Chinese oil contracts.....right???
Just a thought......speculate/invest accordingly.
Rogue
TREK.....It's been hammered. I still own share's. I love oil and I love it's reserve numbers. It's an extremely cheap oil stock and could be a huge home run IF management respect's shareholders.
Does anyone else own any and still like it???
Rogue
THE PETRO-DOLLAR & PROTECTION RACKET
http://www.financialsense.com/fsu/editorials/willie/2005/0406.html
Excerpt:
"Behind the scenes is anger by Russia for the construction of numerous small bases for the US Military in former Soviet Republics like Uzbekistan and Kazakstan. Their erection might have helped to drain world cement supplies last year. We seem in Putin’s eyes to be encircling Russia, who might retaliate by knocking the Petro-Dollar system off its foundation pillars. The new Shanghai Cooperative Group represents a potential supply network which will have member nations of China, India, Russia, former Soviet Republics, and Iran as its core. New nations are being actively courted, such as Venezuela and Brazil. Energy (crude oil & natural gas), industrial metals, and more are to be bought and sold by this new network, outside OPEC and its gaggle of disunity and diverse puppet strings held by Washington DC. In my view the “COOP” is likely to have been organized to be a direct assault on the Petro-Dollar, if not a consciously designed network to blockade the USA from the supply chain. The COOP is a direct answer to the corrupted OPEC cartel, which seems overly influenced by US leaders. The Saudi oil minister sounds as though he has been trained in FedSpeak, when he talks of hiking oil output from already strained capacity (if it exists). It is highly likely that the COOP creates the framework to undermine the dollar-based supply system that is the PetroDollar. My guess is the euro will be the COOP’s transactional currency."
Rogue
NXG.....Northgate Minerals making new low for the year $1.33. P/E of 8. I think this is an excellent long term investment.
Rogue
CYD.......everyone saying "corporate governance problem solved". Can I see a link or a cut and paste of this news???
The corporate governance problem has dogged CYD since the .26 cents days a few years ago.....never seems to go away. Is it truly solved? Would like to see where or what you are reffering to?
I will say that CYD was the most technically "oversold" company I follow as of yesterday.......so it was ready for a big move up. Whether it is just being "pumped" all over the boards or IF there REALLY has been a corporate governance agreement for CYD is what I'd really like to know.
Rogue
Naked shorting....from Knight Trading RB board.
Posted Apr 4, 2005, 12:15 AM ET by B. Patterson
I really cannot believe all this time being spent on disproving naked shorting. It is blatantly obvious and has now ripped over $2 trillion dollars from the American people.
As a Professional Trader, I see it every day. In fact, this past week alone, a new candidate hit the list. Eltek(ELTK) posted great quarterly numbers about 10 days ago. A smaller float company, it took off to the upside and set a new 52 week high. It came down on profit taking to $3.88, then this past Monday, it broke out from $4.12 to another new high at $6.40. Since that $6.40 on Monday, CIBC World Markets showed up with "the refreshing ask from hell". CIBC had no previous position in ELTK. The stock has 5.49 mil O/S and a flaot of 2.8 mil shares. No insiders have sold any shares nor have they filed to sell any shares. On Monday, the stock traded over 12 million shares...almost 5 times the float.
From that point on Monday, the stock traded over 14 million shares and CIBC shorted and/or sold 6.683 million shares.
How is this possible? It's very possible. And it is very real. It is naked shorting.
After their earning's release on 3/21, ELTK showed up on 3 German exchanges as a listed company WITHOUT THE COMPANY'S CONSENT.
This Friday, they appeared on the Reg SHO FTD list.
I have personally witnessed it myself. I see it all day long. It is not hard to find it.
Take a stock that is trading maybe 500K-1mil shares a day. Take the slow time from 11:30am-1:00pm EST. The MM's are kiting shares on an immediate basis. I will enter an order to buy an obscure amount of shares...like 1423 or 2137 shares. I buy them on the ask. Somebody just sold that many shares that I bought. That sell, and of course my buy, will settle in 3 days. But, the sell is what we are concerned with from the person I bought from.
As I said, the MMs will kite those shares that were sold to me and sell them again. Just watch the tape. Sure enough, a few minutes later at the ask or a penny or two above the ask, here comes the identical same number of shares crossing the tape. If you don't see it in the tape because that ask was bought in partials, you will see it as the best ask lot if and when the price gets there.
The MM's will do it all day long. Tomorrow they will do it again. Four days from now, they will kite shares to replace all the nakeds from today that are settling. Then, they will pass the entire lot off to a hedge for a fee to skirt any FTD's.
Not just in theory, but in provable practice, it takes twice as many shares to make a stock go higher as it does lower.
This is the MAIN reason the MMs are fighting so hard to keep Level 3 out of the hands of the investing public. They scream we should not have access to their complete book. This is so they can hide this illegal practice, and so we can't see their intent to steal the stop-loss shares of so many stocks on their slam campaign.
There are now 9000 hedge funds out there. Plus, the off shore factions that are involved. You can rest assured they have every security on the board covered. It's a little more than one per hedge.
Say what you will to "make us all crazies". It is happening...every stock...every minute...every day.
The American people will call for immediate reform and DEMAND no less than the following:
1). Donaldson...gone
2). 300 attorneys at the SEC...gone.
3). DTCC reform and present officials...gone. No more protection of their illegal $50
bil. a year income.
4). A newly formed SEC comprised of private investors. An SEC formed solely for the purpose of which the Securities Act of 1934 called for...protection of the private
investor.
5). No security prospectus anywhere warns any investor of the perils of naked short selling. Therefore, the SEC by its own admonition has created a securities market
where they have openly committed fraud on the individual investor by allowing any
practice of naked short selling as a part of bonafide market making. By grand-
fathering all previous naked shorting previous to Jan. 2005, they are committing
a second fraud on the American investor. Therefore, the SEC shall immediately be
called to answer some 40000+ charges of fraud and market manipulation.
6). An immediate call of all outstanding short shares. The SEC does know exactly who is
naked short selling our securities. All companies will then re-issue their "auth-
orized" number of short shares. Since "the sum of the parts cannot be more than the
whole", then all the parts are deemed null and void. A private agency will then be
formed to administer the short shares of every US listed company. Seven days notice
will be required to locate the short shares of any US listed security.
7). There will be no more pools of short shares created on a daily basis as naked shares to
counteract the effect of buying on margin. This is called "kiting" shares. It is illegal anywhere else in the world with a check, and illegal in the markets. There is no accountability in this practice and no justification for it. It forces every stock on the board to have twice as
many buyers as sellers for it to appreciate in price.
8). Immediate enforcement of the uptick rule. No more shorting into the bid.
9). Immediate access to Level 3 for all investors. It is not a level playing field until it is a level playing field.
10). No more trading off the board by market makers. All trades must cross the tape
during market hours.
11). No more painting the tape by specialists. The 4pm close is the 4pm close.
12). Immediate reform and disclosure for all hedge funds. They changed the rules with-
out telling anybody. They won't mind if we demand changing the rules for the benefit of the private investor.
13). No get out of jail free cards. No deals. This is the largest crime in World History
and they all need to be made an example of. The practice of shorting should be a
scary endeavor where even the slightest news will cause panic. That was the way it
was designed. For years now, it has been the other way and anybody long a stock
cannot even sleep at nite because the criminals never sleep.
14). An immediate daily publication of all open short interest on a stock, with name or entity and number of shares.
15). Immediate delisting of all companies listed on foreign exchanges without the companies consent.
16). Immediate investigation of all media, reporters, and newswriters who have received funds for writing articles about any company. All payola payments will be found, off-shore accounts will be seized, and those involved immediately thrown in jail. I'm sure a good place to start is CNBC with their off-shore accounts and their blatant attack against Taser. There are a few thousand others. CNBC doesn't report news. They create news. There is no first amendment right to freedom of speech when you harm a stock price through a news story. Even airing a commercial for which you were paid is in fact receiving $$$ for airing slam stories against a company. News is news. Repeating the same news over and over is slamming. And CNBC is guilty as charged.
CXTI.....Good analysis Len. I believe we may see a "complete capitualation" in CXTI that may set the stage for a huge and wild rally later on(just a gut feeling). Kind of reminds me of CYD(China Yuchaui Diesal)that was "pummeled" down to .26 cents and was trading at a P/E of 1 1/2 a few years ago......once the "deck was cleared" of weak holders it then rallied wildly to $37 in a couple of years.
I believe I'm seeing some companies I'm following being "naked shorted" by hedge funds. These "big guys" will make their money short and then make it again when they get long after the "complete capitualation". I'm not going to complain too loudly about that.....when the naked shorters pummel them into the ground this message board will be "littered with 10-baggers".
Don't fight the tape for now on these companies. JMHO.
Rogue
CXTI....someone is selling into every positive news release. Who is doing the selling is the question?
If its "naked shorting"....will that last forever? They could really push it down though if they keep it up.
Rogue
ronpopeil......How's that "pocket fisherman" been selling recently?
GLH.....that "hair in an aerosol can" product was a blast!!!
Rogue
China/resources........We keep on sending massive US dollars$$ to China to buy their products. We lose jobs in the process and get "wealthy" from credit expansion/asset inflation. What a joke!
Last I heard it won't be long till China has around 1 trillion dollars in US government bonds. Do you believe these bonds are really valuable to China??....they are just paper and are truly losing value to inflation. Can you imagine a US dollar devaluation in relation to the Chinese currency?
Will China try buying Chevron/Texaco or Exxon? That would be a real eye-opener to the average American "Dittohead"!!!
Rogue
SNG(AMEX) .... Canadian Superior Energy. Someone once posted this one and liked it. It's been sold off prettty good the past few months.
Has anyone done any DD on it?? Opinions?
Rogue
I also like the idea of the 5 or 10 stocks I would buy now. Quite a few on my list I've owned for years and have gone up several hundred percent.
Why not "current buy recomendations" and also top 10 or 20 positions by dollar volume in portfolio?
Rogue
Any comment's on this link..........
http://boards.fool.co.uk/Message.asp?mid=8886471&sort=whole
The price action in HQSM does seem to correspond to shares being sold into the market.
Rogue
PFE....It was Rainman's pick. Sorry....I was just curious as to why he liked the "Big Megacap"??
Rogue
PFE....Is Viagra their big profit center drug still? How are the sales trends for Viagra? Is the competition eating into sales at all????
Haven't looked at Pfizer in awhile.
Rogue
Gut feeling....oil/gas sector may see a little correction for the next 10 days or so while the major market averages grind a bit higher.
Could be looking at a good entry point in the next week or two to get short the market averages(DIA,SPY,QQQ) and re-load and get long oil/gas.
I'm still somewhat worried about what the plan is for Iran.
Rogue
Shorting Stocks......about 20 years ago when I had first started speculating/investing in the markets, I remember reading an excellent little booklet on shorting stocks.
It was written I believe by William O'Neal? of Investors Business Daily, the famed "momentum/growth" investor. It was called "How TO Sell Stocks Short". It was great and would recommend all to try to get a copy of it.
Broken growth and momo stocks like Taser/Krispy Kreme are perfect contemporary examples of stocks that O'neal showed how to execute great strategies on profiting from the short side after the "great ride to the sky" was over with.
Highly recommended little booklet.
Rogue
Jim/HQSM.........can you expound upon or post the link you refer too.... "the link to the British "scam" thread posted a few days ago?".
I have no position now in HQSM. I made a decent profit on a trade of block of it recently. Haven't exactly liked the way it's been trading recently so haven't bought any of it back. It trades somewhat heavy and seems lower share prices may lie ahead.
Rogue
Here's our hero!!
http://jessel.100megsfree3.com/alanpumping.gif
Rogue
Follow The Raging Oil Bulls..... APRIL 11, 2005
Energy funds may head higher. But most stock and bond funds look earthbound
PERSONAL BUSINESS
The winning strategy for fund investors this year can be summed up with a simple image: a big, black gusher of oil. Oil prices that raced from $40 a barrel to more than $55 carried funds focused on natural resources to an average total return of 10.9% for the first quarter, more than five times the gain of any other fund category. With strong global demand and most suppliers pumping flat out, the outperformance should continue as the year goes on.
Naturally, higher energy prices are weighing on the broad stock market. And so is the specter of higher inflation -- and higher interest rates. The Federal Reserve recently hinted that there may be a longer cycle of rate hikes than many market participants had expected. That signal also removes any remaining allure of bonds as a refuge: For the past several years exposure to bonds helped offset down days in the stock market. But lately bonds haven't provided much ballast: While investors in U.S. diversified equity funds saw not a dribble of a return as their funds fell an average 3%, the average bond fund also showed a loss, down 0.9%. (Fund data are for the first quarter through Mar. 28. They're calculated by Standard & Poor's, which, like BusinessWeek, is a part of The McGraw-Hill Companies (MHP ).)
Can the strength in natural resources last? Absolutely, insists raging oil bull Kenneth Heebner, who had three of his four Capital Growth Management funds among the quarter's top 100 funds. Energy investments helped drive the $1.1 billion CGM Focus fund up 10.1%. The case for continued gains: "Demand growth in China isn't slowing down," Heebner says, "and there's accelerating demand from India and other parts of Asia." Leigh Goehring, whose $655 million Jennison Natural Resources (PRGWX ) fund rose 9.8%, is also gung ho on energy. His 65% weighting in oil is the highest it has been in his 13 years at the fund.
While Heebner's top holdings include large caps such as Amerada Hess (AHC ), Goehring focuses on companies with projects in the Canadian oil sands. There, the high-cost process of extracting bitumen out of oil sands has become more economical as oil prices have risen. His favorite pick in the sector is Opti Canada. (His fund was a backer of the company when it was private.) He also likes Canada's Suncor Energy (SU ). "Companies with access to long-lived, robust reserves will be the winners," says Goehring. "For practical purposes there are unlimited reserves in the oil sands, and these companies are still cheap."
What's also cheap -- and getting cheaper every day -- are growth stocks and the funds that invest in them. Large-cap growth funds lost 4.3% since January, and small-caps dropped 5.1%, dragged down, in part, by their tottering technology holdings. Tech is one area where aggressive investors should venture, says James Paulsen, chief investment strategist for Wells Capital Management. "When investor sentiment improves, tech will be one of the first sectors to benefit."
As the U.S. stock market struggled, returns were better, but hardly stellar, abroad. Diversified emerging markets funds were up 0.8% and those specializing in Asia (ex-Japan) gained the most, up 1.7%. And more U.S. investors are seeking opportunities overseas. According to research firm Strategic Insight, international equity funds captured $40 billion of assets in the first quarter, almost half of the net inflows into all equity funds.
SURPRISING OPPORTUNITIES
Some global funds are finding success in unusual places. The $321 million T. Rowe Price Emerging Europe & Mediterranean Fund (TREMX ) credits much of its 9% gain to its stake in Egypt. There, a new cabinet is instituting structural economic reforms, such as slashing personal income-tax rates. "By emerging market standards, top-tier Egyptian corporations are good quality," says Todd Henry, an emerging-markets portfolio specialist at T. Rowe Price (TROW ). "We think reform momentum will continue."
Investors waiting for the U.S. stock market to sort itself out won't find many opportunities in bond funds. The high-yield municipal category gained 0.8%, but aside from a 0.04% return for ultrashort bonds, all other categories of bond funds were down. With interest rates heading higher, the challenge to bond investors is pretty cut-and-dried, says Kenneth Buntrock, manager of the $1.1 billion Loomis Sayles Global Bond Fund (LSGLX ): "What do you do in a bond bear market?"
One option is to seek better returns outside the U.S. But one of the most popular global bond fund categories -- emerging markets -- is in a pullback. After a 6.3% gain in 2004's fourth quarter, down from 9.2% the previous quarter, emerging-markets bond funds fell 2.5% in the first three months of 2005.
Another approach is to buy funds that invest in foreign currency bonds, looking to benefit from a falling dollar -- but you can't count on that. In fact, in the wake of the Fed's recent rate hikes, the dollar has strengthened against the euro and the yen.
That sends bond investors back home. One approach to rising rates is to "shorten up" -- buy bonds or bond funds with short maturities. Those bonds will mature in a couple of years. The yields are lower than intermediate and long-term bonds, but the value is less affected by higher rates. The shortest-maturity funds, of course, are money market funds. The average maturity of the securities in money funds is less than 90 days. Right now the average taxable money fund yields about 2%. The advantage is that you're not locking in still-low yields, and money-fund returns will rise as the Fed lifts rates.
A less traditional short-term play is a bank-loan fund (also called a prime-rate fund). Such funds invest in floating-rate bank loans -- and the yields adjust along with short-term rates. Because the credit ratings on the loans are below investment grade, the yields are typically higher -- more than two percentage points above the London interbank offered rate (LIBOR), which is now 3.1%. The rub: Some funds have expenses as high as 1.5%. And according to Morningstar, Fidelity Floating Rate High Income Fund (FFRHX ) is the only no-load offering.
In coming months the investing climate will be challenging as the markets are buffeted by economic crosswinds. If stuffing money under the mattress starts to seem like a wise move, remember that the smartest strategy is often contrarian. "For the last two years people have said that the stock market was going to die," says Wells's Paulsen."As long as people keep saying it's over, it ain't."
By Suzanne Woolley
Rogue
The Energy Report
by Phil Flynn
April 4th, 2005
Jump aboard the bullish bandwagon! It's getting crowed in the bandwagon and harder to spot a bear anywhere. The energy markets continue to assault the all time highs and this morning we're going above my forecast of $58.00! Oil demand continues to rise despite all time high record prices.
US car and truck sales bounced back rising 4.6% above one year ago levels. This seeming indestructible demand for oil is raising eyebrows and price forecasts. It appears this summer demand for oil will be on a pace for at or near record demand. Gas prices are already at all time highs and are poised to move even higher. Consumers have shown they are willing to pay any price at the pump up to now.
And who will buy Unocal? Chevron Texaco stepped up and did just that for $16.4 billion. There had been rumor that Italian oil giant ENI might have been in the running or China Offshore Oil Corporation. Chevron stepped up and Unocal stays in US hands.
The Financial Times reports the International Energy Agency is urging a swift end to energy subsidies saying it spurs on higher consumption. World oil markets are stressed and not functioning well and it looks like the IEA is getting panicky.
Rogue
VFIN....thanks for posting the entire artice.
Rogue
Associated Press...ChevronTexaco to Buy Unocal in $16.4B Deal
Monday April 4, 1:06 pm ET
By Michael Liedtke, AP Business Writer
ChevronTexaco Is Buying Rival Unocal for About $16.4 Billion in Cash and Stock
SAN RAMON, Calif. (AP) -- ChevronTexaco Corp., the nation's second largest oil company, is buying smaller rival Unocal Corp. for about $16.4 billion, hoping to further elevate its recently soaring profits by tapping into another vein of oil and natural gas.
ADVERTISEMENT
The deal announced Monday proposes to unite San Ramon-based ChevronTexaco, second only to Exxon Mobil Corp. in the U.S. oil business, with El Segundo-based Unocal, the ninth biggest U.S. oil and gas production company.
ChevronTexaco initially valued its acquisition price, consisting of stock and cash, at $62 per share, nearly 4 percent below Unocal's closing price last week. Unocal's shares dropped $3.99, or more than 6 percent, to $60.36 during Monday's early trading on the New York Stock Exchange, where ChevronTexaco's shares, fell $1 to $58.31.
Unocal's shares had climbed by more than $11, or 20 percent, since ChevronTexaco's interest in a takeover was reported in the media about a month ago.
As part of the deal, ChevronTexaco also will assume $1.6 billion of Unocal's debt and plans to sell about $2 billion in assets.
Unocal has been considered an attractive takeover target for years, largely because of its valuable cache of oil and natural gas in the Gulf of Mexico and the Asia Pacific. The company reportedly drew interest from the China National Offshore Oil Corp., a large state-owned company, and Italian oil company Eni SpA before settling on a sale to ChevronTexaco.
While the Gulf of Mexico supply would cater to North America, Unocal's pool of Asian assets could be parlayed to capitalize on the increasing thirst for oil in China and India.
In a conference call with analysts Monday, ChevronTexaco Chairman David O'Reilly predicted Unocal would "fit like a glove" with his company.
"I am very excited about this transaction, both for the immediate and long-term benefits," O'Reilly said.
Like other major oil companies, ChevronTexaco already has been flourishing, thanks largely to a rapid run-up in oil prices that's pushing U.S. gasoline prices well over $2 per gallon, squeezing consumers and businesses alike.
ChevronTexaco earned $13.3 billion last year, the most profitable year since its inception in 1879. Unocal earned $1.21 billion last year, nearly doubling its profit from the previous year.
ChevronTexaco is betting it will be able to make even more money by drawing up Unocal's energy supplies and refinery operations.
An extensive round of cost cutting also is expected to lift profits. ChevronTexaco hopes to realize $325 million in annual financial benefits from the deal, with about two-thirds of that amount, or roughly $215 million, coming from cost reductions.
Those projections make mass layoffs likely, although O'Reilly didn't provide a breakdown of anticipated job cuts during Monday's conference call with analysts.
ChevronTexaco employs 47,000 workers while Unocal has about 6,000 employees.
The bid to buy Unocal marks the second major acquisition negotiated by O'Reilly since he became ChevronTexaco's CEO in 2000. The company bought Texaco Inc. for $39 billion 3 1/2 years ago, a deal that resulted in thousands of layoffs.
ChevronTexaco hopes to complete the Unocal takeover by the end of this year.
Rogue
Fannie Mae Investigation Widens
2 hours, 28 minutes ago Business - Reuters
By Kristin Roberts
WASHINGTON (Reuters) - Federal investigators probing accounting problems at Fannie Mae (NYSE:FNM - news) are now questioning how the No. 1 U.S. home finance company treated trusts that it set up to sell securities.
Shares of Fannie Mae tumbled more than 6 percent on the news, briefly dropping $3.28 to $49.96 on Monday before recovering to $50.80, off 4.5 percent in late morning trading on the New York Stock Exchange. The stock had not been below $50 since August 2000.
Fannie's U.S. regulator, the Office of Federal Housing Enterprise Oversight, said on Monday it was investigating the company's use of "qualifying special purpose entities" to account for trusts it uses to issue mortgage-backed securities.
That accounting issue is now just one of dozens being reviewed by investigators both outside and inside the company, according to sources close to Fannie Mae.
The magnitude of accounting problems at the company remains unclear. But Fannie has already estimated that problems identified so far could result in a profit restatement of more than $11 billion.
Sources close to the various investigations of the company's accounting say the restatement may be much larger.
On Monday, Fannie's regulator said it was examining how the shareholder-owned, government-sponsored housing enterprise accounted for trusts as "qualifying special purpose entities" under Financial Accounting Standard (FAS) 140.
By treating them as "qualifying special purpose entities," Fannie kept the trusts' assets and liabilities off the corporate balance sheet.
OFHEO would not comment on what questions it is raising about Fannie's treatment of the trusts, saying only that it was looking at Fannie's employment of FAS 140.
"QSBEs are one of a number of issues OFHEO is looking at," said Corinne Russell, spokeswoman for OFHEO.
The trusts are used by Fannie Mae to issue mortgage-backed securities, which it creates by purchasing mortgages in the secondary market and then putting them into trusts for sale as mortgage-backed securities.
If regulators find Fannie should have accounted for those trusts on its balance sheet, it would substantially boost the amount of capital the company must hold, as its capital cushion is determined in part by the total assets on its books.
GROWING QUESTIONS
The investigation by OFHEO first focused on Fannie's compliance with two sets of accounting rules -- Financial Accounting Standards (FAS) No. 91 on accounting for fees and costs associated with originating or acquiring loans, and FAS 133 on accounting for derivatives and hedging activities.
The U.S. Securities and Exchange Commission in December agreed with OFHEO, saying Fannie's accounting failed to comply with those standards.
But problems did not stop there.
In March, Fannie said its regulator had found more problems with the company's accounting and that questions have grown to include issues with at least five accounting standards.
The regulator also has found instances in which Fannie Mae employees falsified signatures on accounting ledgers and made changes to earnings-related records without following proper procedures.
Rogue
BSIC and COP.....a micro oil and a "big oil" have had explosive rally's in the past week. I also sold 90% of my BSIC position today and also 90% of COP.
I'm looking to get back into both at lower prices.........they seem pretty overbought and hopefully they will pull back a bit. Sometimes it pays to trade the positions.........sometime's it doesn't. Had to "book" the great gains though, they came pretty fast!
Rogue
PVX....I was intersted in this one too. Looks like it could be a good hedge against oil/gas "inflation".
Would appreciate also others thoughts.
Rogue
Hesse......could you please post the rest of the message on VFIN?? I don't like "registering" and being spammed.
I recently sold a 10,000 share block of VFIN at a nice profit. I was thinking of getting back in at lower prices but would like to see the report you talk about.
Rogue
Monday, April 4, 2005
Oil's Well
A veteran energy investor doesn't think opportunities are tapped out
By SANDRA WARD
An Interview With Art Smith -- If there's someone more knowledgeable about global oil companies, we don't know who that might be. Heading up John S. Herold Inc., based in Norwalk, Conn., and Houston, Smith oversees a team of analysts and maintains a proprietary database on 400 or so publicly held energy companies that's much in demand by money managers, oil and gas company executives and investment bankers.
Before taking charge of Herold in a leveraged buyout some 20 years ago, Smith studied the ins and outs of the oil patch for a decade. He did stints as an analyst at Argus Research and Oppenheimer and as a mergers and acquisitions banker at First Boston. For a time, he also served as chairman and chief executive of Torch Energy Advisors before returning to lead Herold in 1998.
An English-literature major in a former life, Smith is fulfilling his literary aspirations by penning a biography of Newfield Exploration's founder, Joe Foster. He's also on the verge of launching an energy fund independent of Herold. Drill down to find where he's exploring for values.
Barron's: What do you make of the energy sector?
Smith: The energy sector is basically the whole story of the stock market this year. The S&P energy sector is up 15.3%; everything else is either down or flat. It reminds me of the 1979-81 period, when energy was the only place to be until the bust came, and then it was the place not to be for six or seven years.
Q: You are not predicting another bust so soon, are you?
A: No, I'm not. The curious thing is the profound cynicism that exists among investors and the oil companies, which have not spent every dollar that comes in the door as they have done traditionally. That's best manifested by ExxonMobil, which generated $43 billion last year in cash flow and invested $14 billion, down from the year before. ExxonMobil doesn't seem to believe there is a paradigm shift and that we are in a period of higher energy prices.
Q: Have they explained that?
A: No. They are an outlier. ExxonMobil is not like the rest of the business. They have a remarkable portfolio of legacy assets. They tend to keep to themselves and they don't interact much with the rest of the industry. ChevronTexaco's chairman, David O'Reilly, on the other hand, gave a talk recently in which he said something has changed and that ChevronTexaco is in the camp that believes reserves have peaked and that we are on the other side of the Hubbert Curve [named for M. King Hubbert, a Shell geophysicist who correctly predicted in the 1950s that U.S. oil production would peak in the early 1970s]. The sense that reserves have peaked appears to be showing up in numerous ways beyond year-end reserves and Royal Dutch Shell's writedowns.
Q: What might be the ramifications of ExxonMobil's dismissive attitude?
A: I would think the leading company in the world, with a $400 billion market cap, would be active in improving the supply side. Yet they seem to be very content to grow 2% a year and buy in stock and show a high return on capital, and the rest of the world be damned.
Art Smith thinks oil-company shares don't reflect the likelihood of continued high energy prices. One exception: ExxonMobil is "pretty expensive."
Q: So they are better managers of their stock than their assets?
A: That would be a good way of saying it, though it appears that everyone has capitulated and thinks ExxonMobil is a wonderful company and wants to own it. Quite frankly, we think it is pretty expensive. It is currently the most expensive of all the large oil companies. You can buy Total for a lot better value and, like ExxonMobil, it also buys in its stock and it has a good yield. Most of the companies we deal with have recognized that the current cash flows have been greater than anticipated and many of the companies have adopted the Exxon initiative and started using excess cash flow to buy back stock.
They've also adopted something called a variable production payment, or VPP, where they sell forward some of their production into the futures market and buy back stock. The stocks are not discounting the Nymex futures. Last year we were expecting a $40 oil market going to $35 and a year later it's a $50 oil market. Natural gas last year was $5 and now it is $7.44.
There has been a rather substantial increase in the expectations for futures pricing for oil and gas, which sets up a situation in which the companies can sell forward some of their production to an intermediary -- oil at, say, $50 a barrel -- and buy in their stock, which is discounting $30 oil. Pioneer Natural Resources did that. Apache did that when they bought some reserves from Anadarko. It's an interesting trend.
Q: What about prices in general in the energy sector? Are you looking for a correction in energy stocks?
A: Despite oil prices hitting new highs recently, the stocks have started tapering off. Some would say higher oil prices aren't good even for the energy sector. But somewhere out there, Adam Smith's invisible hand is working and capital is flowing into the sector for the right reasons, because there is a lot of black ink among the oil companies. They are making a lot of money and there appear to be some very good opportunities to invest in for some very high returns.
The bad news is we continue to see a slump in exploration and discovery rates. At the same time, there are rising finding or development costs and reserve replacement costs, which are all tied together. IHS Energy, which just bought Cambridge Energy Research Associates, has come out recently with some data that show the number of major oil discoveries continues to decline each year. We are living off of inventory. That's confirmed by all the data we've collected on the industry.
It looks like another lousy year for reserve replacement. All the industry forecasts, from the International Energy Agency to the Energy Information Administration, point to a two-million-barrel-a-day increase in worldwide demand when we are all aware we probably have a one-to-two million-barrel-a-day surplus capacity in Saudi Arabia, which is my view of why OPEC [the Organization of Petroleum Exporting Countries] announced an increase in output, which the market shrugged off because it doesn't believe Saudi Arabia has more than a million barrels a day of capacity to bring forth.
So far, there has been no impact whatsoever on energy demand despite $2 gasoline in the U.S. and high prices in Europe. That is also true in natural gas. We've had a big run-up in natural-gas prices and yet demand hasn't really changed.
Q: Will energy continue to be the place to be in the market?
A: If exploration and production stocks are hot, the hotter sector is the oil-equipment and service and drilling group, which after four or five years of being in the doldrums are now seeing 100% capacity utilization. Pricing is going ballistic. We at Herold are not the best guys to talk to about oil services, but we can see that group heating up. All the rigs in the Gulf of Mexico are utilized, and it is a worldwide phenomenon.
Q: When was the last time the industry saw 100% utilization rates? That's rare in any industry, isn't it?
A: It's rare. The industry came close to it in 2000 and the market immediately collapsed, so it's been 30 years, probably. We see a lot of activity here. We see a shift from acquisitions to exploration, which is somewhat overdue. Most of the companies are being funded now by private equity firms and are more willing to actually drill to develop reserves. About 85% of the rigs that are active in the U.S. are drilling for gas, yet we haven't seen much of a supply response.
Q:What are your thoughts on mergers and acquisitions in the sector?
A: The driving force in the market right now is the national oil companies such as China's PetroChina and Sinopec and China National Offshore OilCorp. Brazil's Petrobras has gotten active. We are seeing an incredible amount of expansion interest by those companies. They are interested in the U.S., Canada and South America and everywhere else. They are setting the tone, and that will continue.
Q: And high prices are not deterring them?
A: Absolutely not. Everyone complains about China being the cause of the oil price run-up, but they are the second-largest importer of oil. The U.S. is the real culprit in terms of thirst for imported oil. Yet China's needs will continue to expand.
Q: Again, though, do you expect energy to be an easy place to make money this year?
A: After a 15% gain in three months, it could cool off for a time. But we come back to the same theme: There are still some quality companies trading at or below appraised value and at decent cash-flow multiples.
There is a real search for companies with the right portfolio of resource-development assets. Even though the Oil Sands in Canada is not undiscovered and is still undergoing an incredible investment boom as they rush to develop those resources, the companies involved there are still very economic at these prices. One of the ironies here is that Canada is talking about a gas pipeline that would run from the Mackenzie Delta down through the Northwest Territories in Alberta to exploit some known reserves and perhaps provide four billion cubic-feet a day of production. At the same time, the Oil Sands plants are expected to use up every million cubic feet of gas that comes down. None of that will make it to the U.S.
Q: At what point does supply become a bigger issue?
A: There is a growing appreciation that we have a very thin margin of error and we have some very difficult political issues to deal with. There's Saudi Arabian security and Middle Eastern security. Another big concern is Hugo Chavez in Venezuela. He is just an unpredictable fellow. He just recently caused a big ripple in the oil industry by shutting down a lot of the development that was planned for this year. He denied a bunch of drilling plants for the industry. Then he raised royalty rates on heavy oil. Venezuela is a very important supplier. We need Venezuela not only to continue to provide current levels but to increase its output.
Russia was our hope for new incremental supplies, yet post-Yukos there has been a real chill on investment programs there. If the industry doesn't spend money on new resource development, the depletion issue comes back to haunt us. Saudi Arabia has announced plans for capacity expansion. Kuwait has considerable upside from where they are.
Just the idea of getting the world back to having a two- or three- or five-million-barrel-a-day cushion in surplus capacity would take a lot of the what we could call the terror premium out of the current price. Who knows what that is, but it could be easily $10 a barrel because of concerns over not having any oil.
SMITH'S PICKS
Company Ticker Recent Price
Unocal UCL $61.69
Total ADR TOT 117.23
PTT Public PTT TB 193 baht
Santos ADR STOSY $27.90
Pogo Producing PPP 49.24
Newfield Exploration NFX 74.26
Q: What's happening on the liquefied-natural-gas front?
A: It is still a great gold rush. There are announced LNG plans every week. A number of the wannabes in the market have faded, however. At one point, there were planned LNG facilities up and down the East Coast and in Baja California and all around, and yet virtually everyone has capitulated and decided to put the plants along the Texas and Louisiana Gulf Coast because they already have refineries there.
There have been a number of plants announced in the Middle East and there's been an incredible boom in engineering construction work. That's an ancillary theme: Halliburton and even Brown & Root will start making money because engineering and construction had been in a depression and now they are bidding on projects and making money.
Q: You recommended a number of stocks at the end of the year. Would you still recommend them?
A: Unocal has had the biggest move of that group. A quick and dirty analysis of the price it might be acquired at, finding costs times reserves, gets you to $85 a share based on the fact their finding costs last year were $11 a barrel. If a full-fledged bidding war erupted, it could be similar to what happened at Conoco when it came into play back in the 'Eighties. You couldn't buy enough of it. It just kept going up. I think that Unocal is in play. Kerr-McGee is another company that has to figure out what it is going to do with itself now that Carl Icahn has arrived. He is not going away.
Q: What are its options?
A: He has already forced some concessions in that Kerr-McGee agreed to divest its titanium-dioxide pigment business, which is a $1 billion business. They have agreed to buy back stock. But they haven't agreed to let Icahn put two people on the board. If I were an adviser to Kerr-McGee, I would ask, "Why not? What are they going to do?"
Q: In December you predicted lower oil prices by year end. Do you still think that?
A: We were just being cautious. Well prices were weakening in December, and after two years of being up 40%, we took a more defensive position. But the market rallied amazingly. So we were wrong. It appears the fundamentals are just so strong.
The other bit of news since December would be the fact that companies' financials for the fourth quarter were better than expected on profitability and cash flow. Still, they were worse than expected on reserve replacement and finding cost. Industrywide, it looked like a pretty horrible year for finding new reserves. The scarcity factor has come into play. Oil is harder to find but it is worth more.
That's true of the U.S. and Canada. The royalty trusts in Canada have now started to buy properties in the U.S. The more companies convert to royalty trusts, the more they pay out their cash flows and the less they reinvest in new reserve development. It is just like the big oil companies buying back shares.
For 2004 Exxon, Total, BP, Royal Dutch, ConocoPhillips and Chevron bought in $25.8 billion worth of stock. That's about how much they spent on exploration worldwide. It has worked well also for Burlington Resources and Anadarko and others. Some of the large E&P companies have also said we don't know how long these cash flows are going to continue to be this good, but we know no one is going to be mad if we buy back shares. Through the magic of accounting, if you reduce your shareholders' equity, it raises your return on equity.
Q: Any areas in energy you would avoid at this point?
A: I would be concerned about coal, not because it isn't a great resource or that it hasn't a good future. But I would be concerned about it because it is like the automobile industry: It has problems with labor and health-care costs.
The oil-service companies for the next year or two will enjoy great prosperity, but the question is how much of that is already factored into the share prices. The big names there would be Halliburton, Schlumberger, Baker Hughes and rig companies such as Transocean and Global Santa Fe.
Q: What are some of your best ideas?
A: PTT Public, the national oil company of Thailand, is both a reasonable value and a great exposure to a growing area. We like Santos, a big Australian company with a lot of very interesting exploration plays around the world, including the Gulf of Mexico.
Pogo Producing is one of the few E&P companies whose share price has underperformed the sector. It announced some disappointing results and low reserve-replacement and took a rather contrarian position in deciding to cut back on their drilling and development projects because prices were up so high. But it's got some great assets and, at $45 a share or so, it is a great value.
I should also call attention to a very interesting well being drilled in the Gulf of Mexico called the Blackbeard Well. It was put together by Newfield Exploration. BP and ExxonMobil will carry the development. This is the deepest well ever drilled in the Gulf of Mexico. The well is targeted at 32,000 feet and it will take a $100 million to drill it. They are testing the idea that there are some tertiary rocks under the existing production in the shallow waters of the Gulf of Mexico. It will take about a year to drill, but if they find something it could be wonderful. This was interesting because Newfield was able to farm this out to Exxon and BP. It's not easy for a company to persuade some of the majors to drill a well for $100 million and carry you as Newfield has done.
Q: So you're recommending Newfield?
A: It is a fine company. It is not grossly undervalued, but it has quality operations, much as EnCana and Noble do. If you want to own the sector, you want to be involved there. The founder of Newfield is Joe Foster, who had been with Tenneco as the head of its oil and gas operations until 1988, when it sold its E&P business for $5 billion and he was out of a job at 54. He started Newfield with $9 million and now it is a $4.7 billion company.
Q: Thanks, Art
Rogue
Rogue's current top holdings.......
EGY
COP
MRO
BSIC
FPPC
TPL
ASPN
BABB
GM(Short)
BABB
CPPKY
AWRCF
DTNOF
TSGTF
YDHCF
TREK
HEMA
CLHL
APCFY
TRAC
TWOC
Rogue
Market averages look kind of oversold now.......could possibly see a rally the next week or two.
Time to think about going short the market index tracking equities soon....DIA,SPY,QQQ?
Something to consider.
Rogue
Rawnoc......the censored Oil article has been posted on the IHUB "swingtrade" board.
I think the article accurately lays out the current state of affairs.
Rogue
The Final War for Resources: Special Update
Bill Ridley
April 1st, 2005
Neo Cons Lose Control of Iraqi Oil
For the past few years I have been documenting how Washington’s neo-conservatives have been pushing to remove Saddam Hussein from power and in doing so, take control of Iraq’s oil.
For the sake of new readers, let me just recap that this agenda has been around well before 9/11 and even before George W. Bush was elected President.
The viewpoint of these extreme right wingers is that ultimately the security of the United States rests on the free flow of oil. And without it, the American way of life – the free enterprise economy, health and welfare, the maintenance of the world’s most powerful armed force and so on – would quickly grind to a halt.
When George Bush Jr. came to power in January 2001, the White House and the Pentagon were at once populated with hard line hawks in positions of power. With the likes of Dick Cheney, Donald Rumsfeld, Richard Perle, and Paul Wolfowitz – it was game on to accomplish the vision.
The neo conservatives now had the right people in place to go after their number one objective - Iraqi oil.
Just days after the Bush administration took control of the White House, Vice President Dick Cheney headed up the new energy task force. Their acute awareness of the tightening U.S. oil supply was revealed when Cheney confirmed that U.S. production had peaked in 1970 and by 2000 output was 39% below the peak. Cheney pointed out that “dependence on foreign sources of oil is at an all-time high and is expected to grow…the U.S. and global economies remain vulnerable to a major disruption of oil supplies. The Gulf will be a primary focus of U.S. international energy policy.”
In those early days just after Bush moved into the White House the National Security Council held their first meeting where plans to overthrow Iraq where at the top of the agenda.
Revelations of these meetings where gathered by Wall Street Journal reporter Ron Suskind and documented in his book: The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’Neill.
The book reports that former U.S. treasury secretary Paul O’Neill told of his surprise when he found out that getting rid of Saddam and a proposal for military action in Iraq were the administration’s number one priority.
O’Neill recalled that at the next National Security Council meeting just two days later, Rumsfeld had rejected an idea from Colin Powell that targeted sanctions should be brought against Saddam. Rumsfeld instead was pushing hard for an outright overthrow of the Iraqi government.
According to O’Neill, Rumsfeld reportedly stated “Imagine what the region would look like without Saddam and with a regime that’s aligned with U.S. interests.”
Then September 11th came along. You know the terrible story. The next day, Bush links al Qaeda with Saddam. The following weekend the group meets again. O’Neill recalls that Wolfowitz is urging military action against Iraq.
O’Neill’s recollections are further confirmed by Richard Clarke who served as the top counter-terrorism expert in the White House before he resigned last year. Clarke stated in his book Against All Enemies that he was shocked to discover that on the day after the 9/11 attacks, he showed up for work at the White House expecting to discuss al-Qaeda but instead the conversation centered on Iraq. Clarke states he “realized with almost a sharp physical pain that Rumsfeld and Wolfowitz were going to try and take advantage of this national tragedy to promote their agenda about Iraq.”
The Bush administration are no dummies when it comes to the global oil economy. They know U.S. oil production has peaked and is now on a downward plunge.
With the U.S. having a growing dependency on oil imports which are estimated to hit 90% by 2020, the economic future of the U.S. is very much dependant on the supply of oil – most of which comes from the Mid East.
Before the invasion of Iraq took place, a plan was already in place on how to deal with Iraq’s oil. The neo con’s guide book for governing the occupied nation of Iraq was titled "Moving the Iraqi Economy from Recovery to Sustainable Growth." This action plan had the seal of approval of Paul Wolfowitz and the other hard liners in Washington.
Aside from securing Iraqi oil fields, the neo conservative agenda had another specific objective in mind. After the successful invasion, the next order of business was to privatize Iraqi oil assets which would allow for the free flow of oil into the open market. The idea here was to crush OPEC’s strangle hold on world supplies and pricing by flooding the oil market with millions of barrels of excess capacity.
In order to accomplish this objective however, the power brokers first needed to privatize Iraqi oil assets. Once Baghdad fell, Washington thought their plan to sell off Iraqi oil assets to friendly hands would be a slam dunk. The neo cons thought everyone was on the same page- literally. But that was not the case.
In an interview with Newsnight of London, Robert Ebel, a former CIA and Energy oil analyst said he flew to a secret meeting in London at the request of the State Department to strategize the reorganization of Iraqi oil assets.
The man selected to implement the plan was Philip Carroll, a former CEO of Shell Oil. Carroll’s job was to take control of Iraq’s oil facilities and production while the paperwork for the sale of Iraqi oil assets was drawn up by the puppet interim governing council of Iraq.
However the neo-cons dream was about to be shattered when they learned that the power brokers behind the scenes in the State Department had no desire to sell off Iraqi oil assets.
This was made clear by their front man, Carroll who stated in May of 2003 that "There was to be no privatization of Iraqi oil resources or facilities while I was involved."
It seems the State Department had their own influential group who had much different plans – Big Oil Inc.
The evidence of these new plans were obtained from the State Department by way of the U.S. Freedom of Information Act and reported by Newsnight and Harper's Magazine.
The new plan was completed in January 2004 under the direction of Amy Jaffe of the James Baker Institute. This is the same James Baker who was the former U.S. Secretary of State but is now practicing law. His firm, Baker Botts just happens to represent the world’s largest oil company, ExxonMobil and the Saudi Arabian government. AKA – Big Oil Inc.
What a tangled web THEY weave.
As you can imagine, Big Oil Inc. wasn’t too happy about the prospects of Iraqi oil diluting the highly structured quotas set by OPEC and thus forcing the price of oil to drop – and with it record breaking profits.
Ms Jaffe revealed to Newsnight that the oil industry prefers state control of Iraq's oil over a sell-off because it fears a repeat of Russia's energy privatization where U.S. oil companies were locked out.
Jaffe said "There is no question that an American oil company ... would not be enthusiastic about a plan that would privatize all the assets with Iraq companies and they (US companies) might be left out of the transaction."
Philip Carroll concurs, "Many neo-conservatives are people who have certain ideological beliefs about markets, about democracy, about this that and the other. International oil companies without exception are very pragmatic commercial organizations. They don't have a theology."
Conclusion
Well you can forget about low oil prices. The balance between increasing world oil demand and stagnant supplies is destined to be under the control of OPEC for the foreseeable future.
On the upside, we as investors are destined to reap the benefits of greater profits from select oil and gas stocks going forward as well. The neo cons plan of cheaper oil, for now at least, is history. With Big Oil Inc. now influencing the destiny of Iraqi oil, you can now bet high prices will be with us for some time to come.
William Ridley
Publisher
OnlineInvestorsNews
Rogue
VERY SORRY to see that the article about OIL was deleted.
I had "contemplated" deleting all the names(Lentinman) in the article to "protect the guilty". But I thought.....it is historical fact!, and it accurately stated (I believe) "where we are NOW as a country and where we are GOING".
GOING?....probably to war with Iraq soon. I "feel" for those that have sons/daughters/relatives that will be drafted to fight for those "oil reserves".
I have a funny feeling that if the article was left on this board.....other's would have supported the author's views on the "Final War for Resources". I think he was right on.
Very "Orwellian" World we are living in today....it's frightening.
Rogue