Replies to post #275503 on ERHC Energy Inc (ERHE)

[Krombacher]

I disagree.

The share price fell right when it was announced that the offering price would be 7.5 cents. Arbitrage.

Second, going from 70 to 50 cents on JDZ drilling news is hardly a realization by the market that there was only biogas found. If the market knew that then the price would have dropped far, far, further than that.

A 70 to 50 cent move is nothing more than investors saying to themselves, "this is good enough for me". Some said that, others didn't.

Taking chips off the table is something that stock investors do all of the time. When one stock within your portfolio ends up becoming 80% of your portfolio because it appreciated so much, many investors will re-balance their portfolio by selling some shares.

I challenge you to find ANY company which rockets several 100% and DOES NOT pull back at LEAST 30%.

Krombacher

[Krombacher]

Honestly, I find it an interesting bias/subjectivity of investors who look at a meteoric rise from 10 cents to 70 cents as the market NOT indicating that oil was there and would be found...

...but a drop from 70 cents to 50 cents as indicative that only biogenic gas was found.

Why is one due to hype and behavior...

...but the other due to sound market efficient hypothesis?

Seems like a double standard whereby market efficient hypothesis is applied only selectively where it "works" and after the fact.

Krombacher

[Krombacher]

You've set yourself up to win the argument either way:

Scenario 1 - the LOI doesn't pan out as hoped.

"You see Krom, the market said the LOI wouldn't pan out!"

Scenario 2 - the LOI works out to be great.

"The market at the time Krom did not expect the LOI to be great, but great to see that the LOI looks good"

In post 274047, you say:

That's an interesting statement considering the sp is.085 ask and no takers. I guess investors are not yet convinced the loi will turn into a real deal. -ssc

So I suppose if the LOI turns out to be great and the stock market rockets northward, we can say that investors finally became convinced??

Krombacher

[Krombacher]

Prior to the LOI announcement, we were trading in the 4's. After the LOI announcement we are trading in the 7's and 8's.

What is the market telling us with a doubling of share price, ssc?

Krombacher

[Krombacher]

In fact,

the market was saying NOTHING about the LOI when we dropped into the 4's.

I thought the market knew about things like LOI's? According to your theory, we should have made a move from the 4's to the 6's at least just prior to the LOI.

Yet that did not happen.

Krombacher

[Krombacher]

In fact, that's what caught all the shorts off guard...in the deepest saddest moment of SEO not having participated in the offering...the stock was continuing its downward movement...and then a weekend came...and that Monday, blamo...

...and LOI.

Yet the market couldn't predict it.

Why?

Krombacher

[midtieroil]

You are absolutely right in concluding that ERHC is unlikely to get very much for their blank canvas in Kenya. Why carry ERHC when other blocks are becoming available? And if ERHC does get a lot it will likely be from a partner who is technically deficient and probably won't actually find oil, but does have a lot of cash. SNP and CNOOC come to mind. We always knew massive dilution was coming. Next we will find out how bad it will be. Personally I would prefer the dilution to another inferior JV partner. If ERHC didn't learn that lesson in the JDZ, then they never will.