Wednesday, December 17, 2014

The Talisman mercy killing:

A clip from BNN - The TSX ended more than 1 percent higher on Tuesday boosted by a 46 percent surge in Talisman Energy shares after Repsol said it would pay $13 billion for the producer; and - according to the business media the CEO of long-struggling Talisman Energy Inc. (TSX:TLM) says a multibillion-dollar takeover by Spanish energy giant Repsol is the best possible outcome for shareholders and he expects the deal will receive federal approval. To recap - Talisman Energy Inc. (TLM) closed Dec 16 at $ 8.84 up 2.87 for a one day gain of 48.07%.

That reminds me of a business headline in the Calgary Herald – September 21, 2012 (I kept the paper) “Nexen CEO excited by deal,” referring to the July takeover offer by the Chinese CNOOC - the stock popped about 50 percent on the news. Those lucky shareholders! The reality is that long term investors actually lost money on both deals. In the case of Nexen the post deal close of about $17 was actually lower than he mid 2006 prices. In fact the only winners were the Nexen buyers of the lows of 2008 and 2011. In the case of Talisman the only shareholders who made money were the buyers during the recent eight week collapse beginning in October 2014. There could be more exciting times ahead for long term energy investors

Thursday, December 11, 2014

Tesla and the bearish rising wedge:

According to Investopedia; “a rising wedge is a bearish pattern that signals that the security is likely to head in a downward direction. The trendlines of this pattern converge, with both trendlines slanted in an upward direction. As the price moves towards the apex of the pattern, momentum is weakening. A move below the lower support would be viewed by traders as a reversal in the upward trend.”

In other words – in a normal up trend one could place two parallel trend lines bounding the rising highs and lows and create a rising price channel. But aggressive selling into each rally sets up a series of weaker highs which causes the upper trend line to tilt down toward the lower trend line to create a wedge. Some famous bearish rising wedges were INTEL March – September 2000 and the US$ index October 2000 – January 2002

Here we see Tesla Motors Inc (TSLA) falling down out of a large rising wedge – not as big as the First Solar (FSLR) wedge but still a worry. 

Wednesday, December 10, 2014

They all loved Crescent Point Energy:

Many “experts” quoted on still love Crescent Point Energy Corp. (CPG) - over the past two months they ranked the stock to be a hold (4), a top pick (2), a buy (9) and only 2 don’t buys. So now at mid day at $22.43 CPG is down 10% and the yield has soared to 11%. One of the recent comments of an expert (a few weeks ago at $35) says “He is quite optimistic on the energy space in general, but you always need to be picking good quality companies. Forgetting about the dividend, he likes this company’s growth profile”. Just to refresh - last July the price peak was about $47 and at the time just about all of the experts loved Crescent Point with “buys” dominating the last July – August window.

So here is the root of the problem - when “experts” get on business media – most talk their book. In other words few ever disclose what they intend to buy – or intend to sell – they just disclose what they own. So when they all own and love Crescent Point – who is left to buy?