David BaskinCompton PetroleumCMT.TODON'T BUYDec 19, 2005
This one is a puzzle. It has been trading amazing volumes and as a result, the price has absolutely spiked. This is as a result of a lot of speculation. They have a number of terrific prospects. Have very good real estate for a company their size. There is always speculation that it will be taken over or turned into a trust. Looking a little toppy at the moment.
Ran into production and management problems and very much on the gas side. Expect the company will have difficulty surviving. If you own consider for a tax loss.
Prefers oil to gas as gas is in for a difficult period. You have to be very selective on the type of companies for gas exposure. Look for ones that are operating in the top quartile. This one doesn't fit those criteria. Carry a lot of debt so he questions the real equity value.
Not a better stock if you believe in $10 gas. Leverage has been an awful situation. Sold some assets so debt to cash flow is still unbelievably levered. Only catalyst for growth is the price of Natural Gas.
Doing a lot of the things right. Debt is still high. A little more gas weighted. It has gone from a sell to a hold. A year or more of patients and you will be rewarded.
One of his least favourite names. Will probably be okay because they recently went to the market and raised some money. Would be cautious on this name. If there is a little bit of lift, he would be inclined to sell.
Had far too much debt. New management issued some equity last week, which will help but doesn't think it's enough to keep the debt levels in a range that she would be comfortable with. Thinks new management will be able to turn it around.
A couple of problems. 1) In the gas business and 2) have a very high debt load. New management is focusing on cutting costs. Speculative. Consider selling for tax losses.