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Stocks that trade below cash are typically seeing huge burn rates and no chance to do a reasonable finance transaction.
VERI bulked up the balance sheet at an attractive coupon and hedged the convertible dilution on the upside. Hindsight says they didn't need to do that! But they are in no need of cash even if GAAP profitability and sustainable free cash flows get pushed out a few quarters.
I have been building a position the past few days as the risk/reward in here is ridiculous.
The lack of "Expand" contract announcements from their "Land" pilot projects is problematic. But the feature releases, awards, and value propositions are real. The deals will come. The risks have all been accounted for in the stock price IMO.
While nobody was really looking, lumber prices got "sawed" in half.
Bloomberg Article
One example of commodity markets self correcting.
The debate regarding national oil policy versus industry actions is one sided when you look at reality. Wall street was sick of mid term capital destruction in the drilling names while industry execs lived high on the hog. I attended some impressive parties thrown by the industry when i was investing in drillers. So the flow of easy credit and no questions asked equity slowed. Labor and supply chain shortages exacerbated the shortfall in production. Hence releases from the SPR to try and bridge the gap to some higher production. Meanwhile demand destruction is beginning to show up. Could oil be the next lumber? Stay tuned...
I suggest that a direct quote from a former central bank economist saying the models are wrong is a pretty useful concept to add to any investment outlook. That's an inside look at the policy making. You claim it is useless for an investor.
I use my macro outlook to understand forces that can alter revenue/earnings trends for industries and individual portfolio companies. Looking backwards is how an investor gets hurt. So the more quality information in, the better the future outlook can be. HOW people interpret the same information is what makes markets.
And someone marketing quality investment research products is not a promoter in my world. So no I will not call John Mauldin a promoter.
Are my regular ALVOF updates on this board promotional? In a sense, yes. It helps get more eyeballs on my largest portfolio holding (I am a microcap leaning investor because I can get an edge in the stories I follow). But they are a legit undervalued company with a proven management team executing on their plan. And topical to the original natural resource focus of this board. Anyone who bought in has done quite well with a ton more upside ahead.
And with that I will sign off on this exchange. Just needed to respond to what would be legitimate questions from someone without a history of trolling.
You seem to be itching for a fight. I am not biting.
If you believe the Central Banks can control complex systems utilizing their financial models without a policy mistake, then the commentary is not for you.
I believe they fell so far behind the curve they will screw up. That is food for thought on a board like this. Hence the posting of that interview excerpt.
And I find Mauldin's weekly email worthy of suggesting to others since it is free. It's Macroeconomic in focus. Sorry you take offense and imply some kind of nefarious motive.
Please leave it at that.
You are free to think of his work as you may. I posted the excerpt as it was topical to the discussion regarding inflation and Fed responses.The source of the quotes is a former central bank economist.
I personally find Mauldin's weekly email a must read. I seldom find free content that I say that about.
He does use the weekly email to ultimately market his pay services and yearly conference, but he is no promotional shill. The weekly missives are chock full of useful macro information distilled from a number of high quality sources. Often he is allowed to share portions of very expensive, high quality research pieces from third parties.
If you do not want to know anything about the macro environment, don't read it. But your complaint seems to miss the mark.
Along the same theme, if you don't get John Mauldin's free weekly email letter "Thoughts From The Frontline", you are missing some great macro commentary. This is an excerpt from last weekend citing a track from his recent investment conference. "Bill" is Bill White, a former global central bank economist:
Bill’s most interesting point is one I have made many times: central banks are overconfident in their own ability to control the economy. He says it more eloquently, so I’m going to quote him at length.
“Mark Twain said, ‘It ain’t the things that you don’t know what gets you, it’s the things what you know for sure, what ain’t so.’ And Oliver Cromwell wrote a letter to the Scottish parliament, I think it was… And what he said was, ‘Brothers, I beg you in the bowels of Christ, think it possible that you might be wrong.’ And this problem of people holding on to false beliefs seems to me to have been around for a very long period of time. The first question, I guess, is, do we think that the Central Bankers actually have got it wrong?
“They’ve got the wrong model, the wrong framework, and I’ve said and written this a number of times. I think they have made what I call a profound ontological error. It’s almost a philosophical error that they have misunderstood the nature of the system that they’re trying to control and what all of these models are based upon—and not just the Neo-Keynesian models, but the big structural models too—they’re based upon the idea that the economy is actually very simple and it’s static, essentially. It is understandable because it’s simple and static and, therefore, it is controllable.
“The models have all got that as fundamental assumptions, but there’s a problem. And the problem is, it’s not true. Because the economy is not simple, it is complex; it is not static, it is adaptive. Everybody’s constantly reacting to all the stuff that’s going on and changing their behavior.
“And in consequence, the economy is not understandable, and it is not controllable. Maybe controllable within certain limits, but it will not take the maximization that has been going on without having some unintended consequences that, over some longer run, will come back and bite you in the bum. And that’s precisely what’s been going on.
“And I think the degree to which the Fed—and the other Central Banks too—have gotten wedded to this fundamental, philosophical misconception is really unfortunate because it has allowed them to conduct a policy, which, again, as I’ve said before, this ultra-easy monetary policy going back decades almost, has been both unneeded because deflation is not always and everywhere, a bad idea. We can talk about that a bit more. That policy has proved to be ineffective for reasons that you know well, Lacy. Easy money encourages a buildup of debt, which over time then weighs negatively against further growth.
“And lastly, I think this policy has just been very dangerous because of all of the unintended consequences. In addition to the debt overhang, you’ve got all of those financial imbalances that I just spoke about a few moments ago. And in addition, I think what you’ve got is that ultra-easy monetary policy—and this goes back to Hayek and the Austrians—does lead, in the end, to misallocations of real resources that actually slow down aggregate supply every bit as much as it slows down aggregate demand.
“So, I do think it’s unfortunate that this approach has been so widely taken because it has allowed us to go down a path that has generated the problems that we are currently facing and which, as I said earlier, I fear could lead us to a rather sticky end. Not saying it’s inevitable, but it does seem to me to be quite likely.”
These are profound words: “The economy is not understandable, and it is not controllable.” Powerful people at the Fed and other banks disagree. They think they do understand the economy and they can control it. They’re wrong on both counts, and their mistakes are causing enormous damage.
This echoes a point I have made in numerous past letters. Easy money and quantitative easing have contributed to the excessive wealth disparity in the world. It is clearly the root cause of the financialization of the economy, which leads to the distortions that Bill mentions.
I have started to build a position in VERI, one of the players in AI. Fortress balance sheet for a still cash burning company (over $5/share cash), lower P/S and higher gross margins than companies like C3, who are 30% larger, growing at a similar rate but 5X the valuation.
Should all go well, they will be profitable starting in 2023. CEO grew 3 prior media businesses to impressive exits.
DE missed on revenues. Combined with the potential for peak earnings as you suggested, stock takes a hit in a bear market cycle...
Warren Buffett decides PARA is undervalued.Good to have him supporting the name. Maybe it can start moving in the right direction now...
Berkshire new stake
Except we are far less reliant on oil prices then we were in the past. I would not use oil as the primary forward indicator for a recession, although it is a factor.
Powell blew the transitory call, and now that he has been confirmed, he is ready to channel his inner Volcker.
When he says the Fed policy will result in "some pain" he is serious. They will not be pressured into a policy shift until they know they have driven a stake into the heart of inflationary expectations. Quantitative tightening and a lower stock market are two of the ingredients in their plans.The debt markets have done the heavy lifting on interest rates already, but we have not even begun to see quantitative tightening in the system. That begins next month. Why they waited so long is the puzzle.
ALVOF crushed it on Q1 earnings with a promising growth outlook. Stock pushing 52 week highs and is significantly undervalued at this stage of corporate development. Paid off half of its remaining debt this week. I am looking for $6+ as the next price plateau when it finally breaks out. 28% production bump coming this Summer and pricing outlook remains firm at ~$11/mcf for the remainder of the year. Well development program delineated including a second exploration well and pending flow test on the discovery announced a few weeks ago.
Q1 earnings
The resilience of the markets has been a result of the excess liquidity sloshing around the system, be it quantitative easing or fiscal policy. Both of those spigots are closing and the Fed Put may have taken a back seat to tamping down speculative fever in the financial markets. We will see.
A synchronized global recession is highly likely. This Russo-Nazi campaign is creating all sorts of butterfly effects around the globe at a time when negative bond yields are a relic of the recent past.
Owning good defensive companies at good prices will mitigate some of the pain, and I do believe we have priced in a chunk of the risks, but there is more downside to come IMO.
ALVOF just scored a success on their first exploration well of the year. 7%+ yield, rapidly growing EBITDA, production bump this Summer, and more organic production and reserve growth to come. Persistant seller in the stock is holding price back from fresh new highs. I added a little more to my oversized core position.
Alvopetro Announces Discovery at 182-C1 Well
CALGARY, AB, April 21, 2022 /CNW/ - Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces that we have completed drilling the 182-C1 well on our 100% owned and operated Block 182 in the Recôncavo basin. Based on open-hole wireline logs the well has discovered 25 metres of potential net natural gas pay, with an average porosity of 8.2%.
President and CEO, Corey Ruttan commented:
"Preliminary drilling results from our 182-C1 well represent the first successful step in our organic growth strategy to expand our natural gas business in Brazil. We are currently increasing the capacity of our gas processing facility and we look forward to testing this well to understand the full development and production growth potential relating to this exciting new discovery."
The 182-C1 well was spud on March 2, 2022 and drilled to a total measured depth ("MD") of 2,926 metres. Two open-hole logging runs were completed and based on the open-hole logs, the 182-C1 well encountered a 36-metre-thick Agua Grande Formation sand at 2,550 to 2,586 metres total vertical depth with 25 metres of potential net natural gas pay, at an average 34% water saturation and average porosity of 8.2%, using a 6% porosity cut-off, 50% Vshale cut-off and 50% water saturation cut-off. Neutron-density crossover on logs is interpreted to be reflective of natural gas pay but will be confirmed with well testing.
The primary and secondary targets of the 182-C1 well were the Agua Grande and Sergi Formations, respectively. Based on preliminary drilling results, the 182-C1 well encountered net pay in the Agua Grande Formation but did not encounter the Sergi Formation, the secondary target, due to the well crossing a normal fault before reaching the Sergi Formation. Data obtained from drilling the 182-C1 well is expected to assist in drilling follow-up development Agua Grande wells that will also be designed to reach the Sergi Formation further east from the bounding fault.
Based on these drilling results, we plan to undertake a testing program of the 182-C1 well with a service rig, subject to customary regulatory approvals and equipment availability. This additional testing will assess the productive capability of this well and help define the field development plan.
After running casing, we plan to mobilize the drilling rig to our next exploration location, the 183-B1 well, which is expected to be spud in May. The 183-B1 well also targets the Agua Grande and Sergi Formations as the primary and secondary targets, respectively.
Putin sees himself fighting a 1,000 year war against the West, and leading Russia to glory and renewed power.
Foreign Policy
Energy and agricultural resources become an added bonus.
And the sordid history of Grozny being bombed to oblivion finds it's echo in the destruction of Mariupol.
Putin's Russia acts like a Nazi regime, including barbaric war crimes against civilian populations. And then uses propaganda to co-opt that very argument against his Nazi tactics (De-Nazification of Ukraine). A rhetorical slight of hand used far too often in our domestic political discourse.
The NATO worry of escalation is well founded, but Putin will not stop with just Ukraine. I believe it is now time to provide Ukraine with the weapons and support they need to win the pending battle for Donbas, and control of commercial ports on the Sea of Azov. Russian atrocities committed to date approach the destructive force from WMD's. What more is to be feared from increasing a defense of Ukrainian independence?
I looked at a similar competitor about 15 years ago. It wasn't solar powered. They were selling regional distributorships and didn't find success as far as I know.
I think this could be very attractive for NGO funded projects in developing world areas.I assume that was Bill Gates' interest.
Probably a novelty/feel good investment in more affluent areas.
I honestly haven't been following that story. Your explanation makes sense.
Forever chemicals (PFAS) will be a toxic stain on the legacy of this otherwise exemplary company.
Maybe someone will come up with a replacement under their "permitted bootlegging" policy?
This press release reeks of "Greenwashing"...
ALVOF is trading at all time highs right now with a below 1 beta.
My favorite microcap turned small cap energy company continues to deliver.
Quarterly dividend increased to $0.08/share, exploration program in progress to hopefully boost proven reserves 100%, pipeline extension to Gomo development field completed with gas plant production increase due this Summer, and contracted natural gas prices of $11.32/mcf through August of this year!
ALVO NEWS
Truer words have never been spoken. AI is going to crush the accounting and transactional legal professions.
But the next generation of trades need to get off their mobile devices and learn from their bosses when driving to job sites. This is the number one complaint I hear from subcontractors. The kids tune out during the drive.
I know for a fact good plumbers are pulling in $100K+ in growth markets right now. I imagine electricians as well. Out here in Colorado the oil/gas drillers compete for the same labor pool as construction so that may drive these economics.
You do see the more grueling jobs like drywall, roofing and masonry being filled by Hispanic crews. They are starting to wise up and ask for higher wages as well. So labor costs increase along with materials. Not a good combination for developers...
Sorry for that POS call on VIAC.
If they hit their earnings but lagged on streaming subs the street would have knocked them.
Instead they crushed the streaming numbers but took a major earnings hit to do it.
Content is king and this may be the slap in the face for Shari Redstone to shop the company to AAPL or another suitor in need of their deep IP.
I'll go back to nursing my wounds on this one...
VIAC won the rights to stream Premier League "Football" (Soccer) in Mexico and other Latin America markets. Along with Pluto TV, which is ad supported streaming, and Paramount+, they are building an impressive streaming portfolio to tap emerging markets along with developed.
Stock got hammered in the Archegos debacle, and suffered further tax loss selling into the new year. Short term chart is constructive. Cheap!
I took a look at LNG landed prices in Brazil. Over $12 this fall.
ALVOF contract price cap is $2 cheaper for Bahiagas.
New update should be out tomorrow. Gomo exploration wells to be spudded, and Gomo development wells will follow the new pipeline connection. Second quarter of $0.06/share dividend about to be paid.
6.57% yield at current price.
Looking like they are going to grow this small cap gem into a mid cap success just like they did twice before in S America.
Not wanting to sound promotional, but ignoring the illiquidity in this and treating it like a Private Equity investment has worked out well to date.
A bit of a delay on this reply.
I was referring to EV's experiencing electronics issues in the cold, not PV systems.
Lease extension posted on the docket shows a cancellation right for TMST as of August 1, 2022. I can only assume the end is near and we should get this wrapped up before year end.
Only 12 years later!
I suspect all those hoarders will regret the extra buying.
And yet the potential advances in electric automobiles keeps coming.
Solid Power SPAC (SLDP)
EV's have lower lifetime cost of ownership (fewer moving parts) and lower emissions even with current fossil fuel grid power. And if you have experienced the sheer thrill of their acceleration, you get the driving experience.
But the grid can't handle the mass proliferation of EV's. Cables may start melting down! Need more distributed power solutions (microgrids, etc).
When they can figure out the wonky electronics in cold climate, I am in with a home charging PV solution.
Among the redacted files from the BK docket, I see some initial references to a plan of wind down.
Now that we are deposing bank officers the case seems to be moving forward again.
Legal careers have been made on this Ch 11 file...Ridiculous.
Interesting. The cost per drink seems a bit prohibitive. But should be a good new line for my BUD stock...
Meanwhile I am kicking myself for never buying ENPH. Their next gen inverters are a game changer. And they will enable microgrids.
IQ8
Smart move to split those assets!
What's funny is I had read a different article on this restaurant, and the owner said "the robots are not stealing anyone's job because I have nobody to hire".
We have a big adjustment coming as AI gets more widespread and capable. All the science fiction writers who raised ethical questions in their writings are having their day.
I looked at an AI startup that was solving the difficulty in fast food drive through order taking. Didn't invest, as the tech still needed a learning curve. But it's getting closer.
I've seen that retirement is a big factor in the job market, along with lack of child care and fear of covid exposure. Breakthrough infections are prevalent and can be nasty.
Eventually the bots will take many service jobs, and the accountants/lawyers of the world are getting antsy. But we are not there yet.
The robots are coming evrywhere.
Waitstaff in Dallas!
Real Life Jetsons
$0.06/share quarterly dividend declared for Q3. Initiated six months early!
Roughly a 7% yield at today's price of $3.46
I expect this to trade up towards it's current PV 10 asset value of $5.79/Share. Would yield 4.14%.
Two coin flip shots (45% probabilities) of doubling those reserves with the Gomo exploration wells scheduled for Q4 drilling.
At a minimum they will tie in 183-1 well early next year upon completion of pipeline. Bahiagas will take all the production they can get, so we should maximize the 18 MMCF/Day gas plant, and order up a new expansion unit to double capacity!
So many good things in place and no overhead stock supply since we trade at all time highs!
Alvopetro Home Page
ALVOD For those playing at home with Canadian microcap stocks, my favorite little energy company just increased EBITDA guidance again and initiated their dividend program 6 months early. Declared $0.06/share for Q3.
Tax witholding will take a bite, but at these prices and assuming a stable payout rate, that's 8% yield.I assume the stock price will react accordingly and bring that yield down.
And they are not sacrificing growth. Gomo project on track to come online in Q1 2022, and the Cabure field keeps providing steady cash flow.
Once the OTC ticker snafu gets cleared up it will trade under its old ALVOF ticker. I would expect dual uplisting to TSX and Nasdaq or NYSE in the next 12 months.
Alvopetro Home Page
Nice chart for context.
I don't follow the lumber market and supply chain enough (are mills staffing back up or running lean?)to opine on the next 30% move with MUCH confidence, but there are multi year shocks to the physical assets in N America from fires and storms that go beyond the demands of an expanding population and demographic trends. The idea that millenials don't want to own stuff was thrown on its head. They want houses to raise families in, not apartments...
My neighborhood outside Denver was first built in the early 80's. I have seen tremendous turnover the past few years, as kids who grew up here are returning to spawn like salmon. And suburban developments are crushing it north of Denver up through Ft Collins.
The limiting factor in the west is WATER. Complexity in water law makes investment difficult, but there are some indirect vehicles out there (real estate plays with senior water rights).
Curious how much of the spot market is traded by a firm like Vitol? Wherever the whales transact is where the success will be. If they have a hand in an exchange, it will give that market immediate deal flow!
I clearly don't fear OTC/Canadian Microcaps!
This is a fascinating timely idea. But if they gain any traction with the new exchange and contract, what is the competitive moat to keep larger players from stealing share?
I am surprised to see a 40% number attached to spot market LNG transactions. I'd want to double check that assumption...
NO way lumber falls another 30%. Demand from fires and storms alone will keep prices higher than that. And we are still short housing in the U.S.
Of course we are short trades, so construction costs remain elevated ex-materials...