Wow, what a year!

I haven't posted for a while, mostly because life has been extremely busy. But also, what an ugly market! It doesn't matter how good of a story any stock has, they are all getting indiscriminately slammed in this economy.

That being said, I have made some really good buys in the past two months at what appear to be lows (and I hope that remains the case). In the past month I've been focusing on picking up stocks that have a lot of cash on the balance sheets, especially those companies that are producing and have a good revenue stream.

There are a few ways to go with it these days. First option: trade, trade, trade. If you are comfortable with trading, and you know how certain stocks fluctuate, then there is a lot of money to be made right now. Things are incredibly volatile, which is awesome for traders. But that take time, patience, and steel huevos.

The other way to go is to look for companies with a market cap that is less than their current cash holdings, especially those that are not burning through the cash with major capital expenditures. New Gold (NGD.to) has been my best performer to date, as I bought it @ $0.98/share back in mid-November. It's doubled and pulled back a bit, but I think it'll go higher so I'm holding on for now. Another favourite is PhosCan Chemical (FOS.v), which is not yet producing but is worth at least $0.40/share based on its cash holdings alone, and it's currently sitting in the mid-$0.20 range. I picked up some around $0.20 cents, and I may add if it dips down again.

Anyone who bought oil stocks in the past year, especially jr. companies are probably crying in their cereal these days. What a truly depressing situation. I've seen my Oilexco stock go from $19 a share just six months ago down to a very sad $0.20 this morning on insolvency news. I probably couldn't even sell what I have for the transaction fee at this point. So what to do? Well, if you are like me and you think that the price of oil is madness, then think about investing in direct relation to the commodity. This morning I spent my Christmas bonus on shares of HOU.to, which tracks the price of oil on the NYMEX (but at double the rate). If you think oil will go up in the long term, then it's looking good right now to invest.

Other stocks that have been holding up nicely in this total market glut: Marvel (NYSE: MVL), Thomson Reuters (TRI.to), Kinross (K.to) and Goldcorp (G.to). Stocks I've purchased in the past six weeks that are performing well include: Kodiak Exploration (KXL.v, up 20% from purchase), Paladin Energy (PDN.to, up 30% since purchase), Uranium One (UUU.to, up 42% from purchase), Endeavour Financial (EDV.to, up 15% plus a nice dividend pay out today). I have only purchased one stock recently that is down, which is Ivernia (IVW.to). That's a long shot if Magellan can get their lead mine up and running again with blessings from the Australian government. So we'll see.

So that's my recent moves in a nutshell. Due to the shaky market, we've been diversifying lately ... really diversifying. We recently started to invest in income property and are in escrow/closing with a week or so to go. Maybe real estate will be good to us. In the meantime, I started a second job at a cruise agencY, selling warm vacations to frozen Canadians. Business is good, and it's a fun change of pace from my full-time job (which I still love, too).

I hope for everyone's sake that 2009 is an easier ride than 2008, but if not... just remember that you can find opportunities just about anywhere as long as you look hard enough!

Happy New Year everyone!

Deb

Mining 101

For those that want more information about how mining companies are valued and how the system works, check out this blog on mining. Really good stuff, especially if you're new to the game.

Unconventional Natural Gas Blog

Hats off to Vince "Stateside" Marciano, a fellow smartinvesment.ca poster, for his excellent blog on some of the hot natural gas plays in Canada. He's mostly covering the Utica formation in the Quebec Lowlands and also some of the Maritime shale gas plays. The man is making me lazy, since now I can practically go to one source for shale gas news. Well, at least for East Coast plays.

Now I just need a good Montney site!

Good job, Vince!

Deb

Summer Frenzy

Wow, it's been a while since I wrote. One thing about living in Canada is that you have a lot of down time in winter (so you do time consuming things like start a blog), and then summer is a flurry of activity. In Edmonton, you've got three good months to get your stuff done. Especially if it involves the outdoors.

Summer's in full swing now, with kids going to soccer, corporate extra-curricular activities, vacations, etc. So unfortunately, this blog is low on the priority list. Lucky I write off the cuff.

Usually around this time of year, most natural resource stocks take a breather and you can kind of ignore the market a little. Not the case this year, though. Oil and gas stocks have been on fire, and certain jr. mining companies are too low to ignore. So the slow shoulder season has been volatile and great from trading, making my life pretty busy.

For the past few months I've been trading in and out of Altai Resources (ATI.v), while keeping a core position, which has been fairly lucrative. I've also had good luck with a lot of other oil & gas stocks. I've been loving the rise in Bronco Energy (BCF.to), Talisman (TLM.to, US: TLM, Falcon Oil & Gas (FO.v), Tusk Energy (TSK.to), Profound Energy (PFX.to)... and well, just about all of my energy stocks actually. I've been taking profits and buying back in with the volatility, and it's been a good ride so far.

To balance my oil & gas-heavy portfolio, I've been trying to dabble in other hot areas. For solar & tech, I've started a position in VN Plus (VNP.to). Great article released a few days ago, says it best. For fertilizer/ag, I've bought some Viterra (VT.to), MagIndustries (MAA.v) and Phoscan Chemical (FOS.v). Working out good so far, with pretty decent gains in the past few months. Once again, I'm taking money off the table from time to time as these have been rising (my trade count with TD Waterhouse is smoking this quarter, which is cool because now I get the $9.99/trade deal).

With energy plays coming down, I've been holding on to some cash to hopefully pick up some beaten down gold or PGM shares in August. Seems like there's always something good to buy in August.

Anyway, I hope everyone is enjoying the summer... and getting some good trades going in the market this year.

Cheers!

Deb

Everything Looks Marvel-ous

Well, tomorrow is a big day for long-time shareholders of Marvel Entertainment (MVL), as it sets to release the much-awaited Iron Man movie. This event is the beginning of a new future for Marvel as a movie studio, which could bring superhero-size rewards.

I originally bought Marvel for my husband, a consummate Spider-Man fan and long-time Marvel comic collector, as a Christmas present. The original idea was that I’d get him into stocks by buying into a company with a product he knows and loves. I knew virtually nothing about the company, beyond maybe a handful of characters, but that all changed once we added it our portfolio. Since we bought into Marvel in December 2006, it’s had a lot of ups and downs, especially when you factor in USD/CAD parity. But I’m really starting to think that it will be a winner in the long-term, especially if they see success this summer at the box office.

While you’d think that Marvel would make a ton of money off of the box office sales of their movies, it wasn’t really the case, as the actual movie studios got the majority of the windfall. Or in the case of a dud like Elektra, it’s the movie studio that took the hit. In reality, a big chunk of Marvel’s previous revenue came mostly from its licensing division, where Hasbro and other companies would roll out toys, backpacks, and an endless list of goods donning the likes of Spider-Man, the Hulk or the Fantastic Four. Just think of all that junk they give away with kids meals at fast food restaurants, and the licensing royalties they mean for Marvel.

The movie business is a hard one, so this is a big gamble. But in my opinion, Marvel’s starting out on this bold path with the perfect movie. Iron Man is not the typical superhero flick, where an average dude’s (or dudette's) life is turned upside down by some bizarre twist of fate, leaving him (or her) with super-human abilities. It’s almost exactly the opposite, in that its a self-absorbed, money-grubbing billionaire that has a life altering experience and changes his future through his own ingenuity and the self-realization that he should be a better person. Iron Man has a solid cast, with Robert Downey Jr. in the title role and Jeff Bridges, Terrence Howard and Gwyneth Paltrow backing him up. Wrap it all up with one of my all-time favourite directors in Jon Favreau (Made, Elf), and it’s almost too good to be true. The Tony Stark/Iron Man character also seems like a natural for Downey, given the similarities between his real life drug problems and Tony Stark’s alcoholism, which will hopefully lend his character that much more depth.

So far, it’s looking like reviews are positive, and there really is no particular competition this week for the box office. Marvel has been working toward being it’s own studio company for a long time, so if Iron Man is the success that I’m hoping for, it will be a jubilant Annual General Meeting next week.

Marvel has made one other recent deal that makes me think they’ve got their heads on straight and that they are really thinking of the big picture. And that’s hedging your bets on the small screen. With the rising cost of movie theatre tickets, the cheaper big-screen televisions, and expanded HD channels, more and more families are choosing to wait to watch the big releases when they come to cable. Marvel’s recent deal with the FX channel for exclusive rights to some of its future releases could bring in big profits, and it establishes a new practice for Marvel going forward.

The Marvel snowball will just keep growing, now that Marvel wooed Ira Rubenstein from Sony's digital division to head up its new Global Media Digital Group. This spring has brought one big news release after another, and in my mind, Marvel keeps doing the right things to grow their brand.

So here's to hoping this weekend will be a Marvel-ous beginning to the summer blockbuster season!

Riding the Bronco

While the market feels a lot like a bucking bronco right now, I am not talking in such broad metaphors here. This entry is about one of my new stock stars: Bronco Energy. Over the past six years, I have followed the oil sands development pretty closely, just from reading the local papers. Almost two years ago, I ended up becoming much more acquainted with the oil sands business researching a report I wrote on Upgrader impacts to the municipality I work for. Okay, if you're really interested, you can find the report here. (And for my co-workers that just clicked on that: ha, made you do work stuff!)

But learning about the oil sands business and how heavy oil is produced and marketed, really gave me insight into the oil sands runaway train. Is it sustainable? I really don't think so. Definitely not environmentally, very likely not growth-wise or financially in the long-term. There's just not the labour to do it or the infrastructure. So something will need to be addressed. But in the meantime, there are those companies that are already out there with completed projects, and quite a few more that are coming on stream soon or are just starting to produce.

Right around the time that I worked on that Upgrader report, I thought that I would start investing in the oil sands by buying some of the producers or small up-and-comers. I bought Canadian Natural Resources(CNQ.to, CNQ) solely because I thought the way they managed their labour force was brilliant. They built their own airstrips so they wouldn't have to use the strained Ft. Mac airport. They hired labour from Asia. They provided their own on-site housing camps. In this tight Alberta labour market, they were saying all the right things to me. They did piss off a lot of unions, etc., through their actions, but in the long run I think they did a great job controlling costs in the insane Alberta boom.

My second pick was a smaller venture: Connacher Oil & Gas (CLL.to). I liked Connacher because they were thinking very holistically to me: they had a refinery in Montana making a small profit and some conventional oil wells to help bring in cash, and they had some proven management. Unfortunately for me, they also had some awesome pumpers on the various stock discussion boards. So once I fell for Connacher, I got swept up in the frenzy and bought too high. And then the bubble burst, and it plummeted. I hung on for a long time, and even averaged down by purchasing more every once in awhile when I was sure that it bottomed (yeah, right!). I was intent on holding on to Connacher as well as Canadian Natural, because I really liked the stories behind them.

However, all that changed when Premier Stelmach ordered the royalty review last fall. Canadian Natural, which also has a huge natural gas component, was set to be really hurt by the royalty review. Connacher, a smaller company with lots of capital costs mounting, seemed really risky when nobody knew how big of a hit the new royalty scheme would be. So I ended up bailing from both. At a loss no less. That being said, I may look at CNQ again, given their exposure to natural gas.

Okay, so by now you are thinking... wait, wasn't she going to talk about Bronco Energy?

You see, once Stelmach rained on the Alberta oil sands fiesta, I started hunting for other options. I found that Saskatchewan has Oil Sands Quest (BQI), with it's freakin' huge oil sands property. And I'm not just being funny here, it really is freakin' huge. So just on resource value alone, that's not a bad option. Plus, Saskatchewan has lower royalties, good labour, and their stock price is not too bad with the dollar at par (since it's listed only in the US). On the downside, it's a long way from production. I think the company is thinking 2012 for start-up, but that still seems a little optimistic to me. Plus, I don't see how they have addressed the transport issue of the heavy oil yet (as Saskatchewan doesn't have the huge network of pipelines that Alberta does). I do have a small amount of BQI, but I mostly own it from pure speculation.

So, my second find, and the one that I think has more immediate upside, is Bronco Energy (BCF.to). Ta da! We actually made it to the discussion of Bronco.

The reason I like Bronco? It has all of the upside of the oil sands: good location between Edmonton and Ft. Mac, good access to labour and infrastructure (as strained as it is), and a supportive business environment. It also has strong management, with a CEO that has brought heavy oil projects into production in the past, and a lot of the key players have worked with Canadian Natural getting the Horizon project off the ground. But it's also got the added bonus of no royalty review problems. That's right, our little Bronco is on First Nations land. It's under Federal jurisdiction, boys and girls... not Alberta! And it's also a small company for the oil sands, at a market cap of a mere $500 million (and a few months ago it was only $350 million or so). Compare that to say, a Suncor Energy ($48 billion), Canadian Natural ($41 billion) or Canadian Oil Sands Trust ($21 billion), then we're talking really small potatoes. So that means growth potential.

And that's the best part about Bronco, it's just starting it's growth spurt. It's just pulling out of it's capital heavy development stage, which is that hardest part of the game for oil sands, as the amount of capital expenditure needed to get the projects going is staggering. So with the production starting up, the riskiest time for Bronco Energy is over. Bronco's Annual Report (pdf link) was released on April 1, 2008, which sets the production target at the end of Q2 2008 at 4,000 to 6,000 bopd.

But one other good thing about Bronco is that it has two facets to the company: the oil sands projects and it's wholly owned Bronco Drilling subsidiary. The small drilling business gives Bronco the ability to schedule their own drilling, without the need to wait for rigs during peak use times. But it also gives Bronco the opportunity to lease out the rigs for profit when they are not in use, maximizing their capital outlay. Recently Bronco's been drilling on their own lands, proving up resources (and doing a great job at that). As discussed in the previous entry on Precision Drilling, rigs were not in high demand in Western Canada for years due to soft natural gas prices. So this was a great time for Bronco to be purchasing and utilizing their own rigs. With natural gas on the rise now, those rigs could be leased for more cash if the company needs it. It's a fantastic little security net for a company in the volatile oil sector.

With oil prices at an all-time high, Bronco's had a nice run up in the past few months (probably about 40% from where I bought in). But I think that Bronco is still relatively little-known in the investment world, with no first-call analysts following it. So as (or if!) oil prices start to come down, I may try to add more to my position if the stock has weak days. With production coming on though, I'm hoping that there won't be too many of these in the near-term.

Falcon Flies

This blog entry started as a post in the Mexico Mike Forums, but because I wanted to expand on the topic a bit, and give part of my own history with Falcon Oil & Gas, I decided to bring some of my hyperbolic or colorful writing over here. Anyone interested in investing in Falcon, can read the entire thread in the link above to get a good sense of the kind of shenanigans that have gone on with this stock in the past few years.

This also follows up a bit on a previous blog entry I did about Natural Gas.

As background, Falcon Oil & Gas (FO.v) sent out a news release (NR) stating that Exxon will be putting their Mako Trough property, a potentially staggering natural gas resource in Hungary, into development. That means moving their Mako Trough resources into the next stage of flow testing, which CEO Bruner could never do.

So why is this a big deal? Because Europe is growing and they rely heavily on natural gas (for now). Russia controls a large percentage of the natural gas resources available to Europe, as well as the pipelines that supply Europe with their gas supply. And they play hardball, so Europe's quaking a little. Yeah, the Euro is doing some major domination with their currency, but the group of countries are not a strong enough gang to stand up to big, bad Russia. After all, it takes a lot of wimpy kids to take down the school bully.

Falcon's gas resource in the Mako Trough property, is therefore, in Martha Stewart terms, a good thing for Europe. Especially since it wrests control of a big natural gas resource from Russia.

So back to the original discussion on smartinvestment.ca:

stevens wrote:
From waiting for ridiculously overdue flow test results, to go directly to a JV announcement is definitely a huge surprise. Next to Margaret Kent at CMM, Bruner is my least favorite CEO, but at least FO has a deposit that a major is interested in testing. I still don't understand why Shlumberger and all the rest couldn't come up with flow test results for us but I'm happy that Exxon is taking an interest. Don't even bother worrying about the millions Exxon will pay FO. Bruner will suck that up like a six pack on Saturday night.

Still, this is REAL NEWS!!!!! Amazing for FO. Just remember that in the past FO has always risen BEFORE news and gone down ON news.

nerudite wrote:
You are so right. So I was surprised yesterday to see that FO.v actually ended the day in the green (and by a decent percentage).

After thinking about this for a bit last night, I actually feel fairly positive about this deal. With other jrs., I would probably be a little disappointed, because you want to keep control over such a huge resource just for the sheer upside potential if it goes into production. But in this case, I think Bruner would never get it off the ground, and if you're going to have a white knight, it might as well be someone with unlimited capital like Exxon at this point in time.

So I think I'll hold on for now, and see what a new exploration team does with Falcon's massive natural gas resource. After my initial burn and Bruner's bungling a few years back, it's tempting to get out after an 80% run up from where I bought in this time around. Especially now that I'm a little in the green overall. But I'm intrigued about the Exxon thing, so I'm in for the next chapter of FO's crazy soap opera.

That kind of sums it all up. And stevens really nailed it when it came to Bruner. I have a little history with this stock, mostly because I got totally swept up in the potential of Falcon's massive resources when I bought initially (in the upper-$3.00 range) a few years back. And then after the big correction of the market in May 2006, the company became one of the most heavily manipulated stocks I've ever seen. I ended up selling at a loss just to get out of the drama, and then about six months later Bruner put out the white flag, and the SP gradually tanked to somewhere in the $.20s. I bought in somewhere in the $0.50 range (too lazy to average out the different purchases for the purpose of this blog), thinking it wouldn't go lower, but it did and for quite awhile. So it's close to doubling since I repurchased the stock, and normally I'd take some money off the table. But I think that the Mako resources are now in better hands, and in the long run that will be good for the stock. The Mako Trough, while a big resource, is also very deep in the ground. But if anyone can get it out of there, it'll be Exxon.

And for all of the anti-Americanism out there in the world today, I think that European utilities are breathing a sigh of relief that at least another American company has control of the resource so they may have options someday. A new bully has come to school to even out the natural gas playing field.