posted on 4/7/2014 at 7:25pm EST.Value investing is an investment philosophy that emphasizes investing in stocks that sell for less than their intrinsic value. This is in contrast to the other most widely talked about investing style, growth investing. Whereas growth investing generally involves investing in stocks with increasing sales, profits, and often times stock prices, value investing generally means investing in the stocks of companies that sell below book value, though it can also mean stocks that sell for a low P/E, P/(F)CF, P/S, or some other valuation metric (usually a combination of many). The idea behind value investing is a simple one: to find stocks that for one reason or another have been overlooked...CONTINUE READING
posted on 3/31/2014 at 2:45pm EST.Being a contrarian value investor, value traps are something that I have to be especially careful of. Value traps are like mirages in a desert, from a distance looking like a life-giving oasis but upon closer inspection turning into nothing but sand, and, while mirages have led men to their untimely end, so too have value traps ended a financial journey far too soon. This is why one must be especially diligent when it comes to investing in a seemingly cheap stock. While all the hallmarks of a cheap stock (low P/E, P/B, P/S, etc.) may be present, the stock may still not be cheap...CONTINUE READING
posted on 3/20/2014 at 12:43pm EST.
Disclosure: I own shares of TGA. On March 15th 2014, Transglobe Energy (TGA) and Caracal Energy (LON:CRCL) announced plans to merge. This will create a medium sized, ~$1.8 billion E&P company focused on Africa, mainly Chad and Egypt. After the merger, Caracal will list on the TSX while Transglobe will delist from both the TSX as well as NASDAQ. The proposed arrangement will give shareholders of TGA 1.23 shares of the new entity for every share of TGA they own. This is where I believe a possible arbitrage opportunity may currently exist...CONTINUE READING
posted on 3/17/2014 at 12:14pm EST.I hate this market, I really do. Every day it seems the market is reaching a new high. While I'm sure plenty of growth and momentum investors are cheering and fantasizing about the yachts they are going to buy, I'm staring with dismay at my monitor. I imagine for many value investors like myself, this market is downright depressing. Even more than that, it's boring! While I'm sure there are plenty of others who completely disagree with me the fact of the matter is that I really hate this market. Here's why: Even more than watching a stock I own go up, I love seeking out and finding a really cheap stock. Not just any old stock, but one that has that perfect combination of positive net assets, potential for even modest growth, and a really low bar set by investors who have given up on the company. Throw in a near-term catalyst and you have yourself a wonderful thing...CONTINUE READING
posted on 3/9/2014 at 12:53am EST.
Disclosure: I own shares of TGA. Transglobe Energy (TGA) is a Canadian oil producer with assets in Egypt and Yemen. Since most of TGA's assets are located in Egypt, the ongoing turmoil in that country has caused investors in large part to shun the stock. Until recently, Transglobe Energy's Canadian stock listing on the Toronto Stock Exchange, TGL (Transglobe is dual listed), was actually the second most shorted stock on the TSX. This selling pressure has created an opportunity for long-term investors.
Except for 2013, TGA has been a fast growing company. Average production per day went from 7,342 barrels of oil per day ("Bopd") in 2008 to an average of 17,432 Bopd in 2012 according to their 4th quarter 2013 and year end results (they stated an average of 17,496 in their 2012 Annual Report so I'm not sure which figure is accurate so I used the lesser number, 17,432, for my calculations.) This is a growth rate of ~137% over four years or ~34.4% per year...CONTINUE READING
posted on 3/1/2014
Disclosure: I own shares of BTU, CLD, TCK. Back in March of 2012, I started to get back into investing in stocks. I've been interested in the stock market since I was nine years old but in March of 2012 I hadn't actually invested in any individual stocks for a number of years. Needless to say, I was rusty. Looking at the market in early 2012, I saw what appeared to be a value opportunity: coal. The sector was (and currently still is) despised. Investors, like the general public, had largely turned their backs (and wallets) on the industry that was increasingly becoming the whipping boy of the market. The coal industry could do nothing right it seemed. It certainly didn't help that the Obama administration pushed policies that made it harder to profitably mine and burn coal. This was exacerbated by the extremely low natural gas prices at the time as well. These two forces, low natural gas prices and increasing regulatory pressure, seemed to have sealed the coal industry's fate, or had they?...CONTINUE READING