Saturday, October 31, 2009

Value Investors Versus High Frequency Trading

Our Kind Of Market—Cheap Small-Caps
-Excerpts From A Recent Investment Newsletter

Small and mid-cap stocks should not be confused with lower quality stocks no matter their price
or capitalization. Witness all the so-called “blue chip” large-cap stocks that have been
decimated, including Lehman Brothers, Bear Stearns, Merrill Lynch, AIG, General Motors, GE,
Nortel. We appreciate, more than most, after an ugly year-and-a-half, that small-caps inhibit
our ability to trade.

But we believe we have come through a rare period of panic and that we
should not abandon the philosophy that worked so well for so long—trading off liquidity for
ultra-value—for lower risk and much higher return. So we continue our commitment to the
high quality small-caps we hold, including Corridor, Orca, St Andrew, Sterling and Petrolifera,
together representing about half of most growth accounts.

Our 3-year targets for just these five
companies suggest returns above 40% annualized which should justify any wait.
Though Corridor Resources has appreciated 150% from its March low, it still represents
extreme value.

It remains 72% below its '08 high mostly because smaller-cap Canadian
resource stocks are still, on average, 60% off their highs and the price of natural gas is also way
below its high. Based on current cash flow prospects and the value of its existing Hiram Brook
proven and probable reserves, Corridor is undervalued.

The stock should continue to rise from the recovery in natural gas prices and the continued drilling of Hiram Brook wells which should add to production, cash flow and reserves.
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In early September the company announced improved flow rates from its first two wells
fractured with a new propane technique. Both wells were boomers. And while it’s unclear as to
whether the initial high flow rates (about 4 times that previously experienced) were attributable
to the new propane methodology or simply better geology, the results have the ability to make
the company’s economics even better.

At the old flow rates, and assuming $6 gas (where the
forward curve is now), the company’s IRR on each new well drilled was an already respectable
19% per annum. The new flow rates push this substantially higher—and though thus far it’s
only been two wells with the enhanced flow rates, it could be a complete game changer.
In July, independent consultants estimated Corridor’s shale gas potential in the lower Frederick
Brook formation at a whopping net 59.1 TCF of gas-in-place.

This naturally fractured, very thick shale resource could be one of the best in North America and is being looked at by larger players as potential joint venture partners who could bring capital and expertise to develop it.

With the enhanced flow rates from the Hiram Brook and recent higher gas prices, Corridor is
likely closing in on its ability to develop the Frederick Brook.
The company also has a potential valuable Salt Springs gas storage facility, a 2 billion barrel
potential oil prospect in the Laurentian Gulf (“Old Harry”), and its Anticosti Island prospect.
Old Harry alone, which could start drilling in a couple of years (after regulatory approval), also
likely with a partner, could add significantly to the company’s value. All worth the wait.
Orca Exploration has also recovered from its 52-week low, up over 80%, but it still trades at
less than one-third of its growing $11 net asset value.

The company’s earnings should begin to
ramp up over the next few quarters. In the meantime, Orca trades at only 4x 2010 estimated
earnings. The company may seek opportunities to grow through acquisitions, but ultimately we
expect its Tanzanian assets to be sold, much in the same way as its Chairman, David Lyons,
maximized value for the shareholders of Pan-Ocean Energy. We’ll wait patiently for this
reward. Former colleague, money manager John Clark, once said, “A value investor can often
wait 5 years, only to make his money in an hour.”


Sterling Resources landed a farm-in partner for its Breagh field in late July selling one-third of
its working interest in the Breagh field and surrounding interests for CDN$103 million. The net
asset value thereby increased and is nearly double Sterling’s current share price. Sterling
remains undervalued, with significant exploration potential that could drive its underlying value
even higher.

We are awaiting an imminent production announcement from St Andrew Goldfields. The
company won its royalty dispute over its Holt property and, though it was appealed, the
company will likely produce from Holt in 2011. Meanwhile, initial ounces will come from the
Holloway mine and its Hislop open pit. We expect at least 85,000 oz in 2010 providing the
company substantial free cash flow.

Once Holt is added the company should produce
110,000 oz in 2011. With a cost of about US$500 per oz and tax pools over $160 million, its
free cash flow should justify a substantially higher share price. Exploration success and higher
gold prices could be an added bonus.
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We’ve waited a long time for the payoff from St Andrew and now everything seems to be
falling into place. Worth its wait in gold.

Petrolifera Petroleum raised $50 million in August to reduce a good portion of its debt and
allow its capital spending program to continue. We participated in the issue at $.88 for a share
and a half warrant too. The La Pinta-1 exploration well in Colombia, the producing Argentinian
assets and the prospective Colombian and vast Peruvian properties justify a value over $3 per
share.

After selling about two-thirds of our Ruby Tuesday position following the stock’s nearly
800% climb from its March 9th low, the stock subsequently sold off and we began adding to the
position again when our SVA™ work gave the buy signal. The shares trade at a very attractive
20% free-cash-flow yield.

The company raised $65 million in July to repay debt and recently
announced earnings ahead of expectations. Restaurant traffic growth is now positive and
customer satisfaction is scoring very well.

At 8x free cash flow, Ruby’s fair value is about
$11 today, and should rise to $18 in three years compared to its current $6.88 share price (a
prospective 38% per year return). We continue to believe the shares are very undervalued and
have been adding to the position on the most recent pullback.

Our Kind Of Market—Cheap Big-Caps

Interestingly, because stocks got so low in the Panic, lowest quality stocks outperformed
2-to-1 year to date. In this process, many high quality U.S. blue chips, including safe-
dependable stocks, have become abnormally cheap relative to their fair market values and the
overall market, trading at levels not seen for many years. And we have begun buying them
because we really know their natural growth will continue, they will ultimately be reappraised
higher, and though based on our 2-year targets they offer relatively lower prospective
annualized returns of about 25% compared to our small-caps, overall returns could be higher if
targets are reached sooner. In addition, we may be able to enhance returns by trading them
using our SVA™ work. This cohort includes Aetna, Clorox, CVS Caremark, and Kroger.

And we currently monitor a universe of other undervalued big-caps to add whenever they reach their “floors”—buy points in our work. For clients who have contributed new funds we have also
added Johnson & Johnson, Burger King, Berkshire Hathaway, Becton Dickinson and
Wal-Mart—all with prospective annualized 2-year returns above 20%.

Uncertainty presents opportunities for those willing to turn over enough rocks to be able to
distinguish between short-term uncertainties and long-term risks. Unemployment and deflation
uncertainty, anathema to grocers, is a short-term phenomenon that we have recently sought to
exploit.

This uncertainty has driven sentiment towards U.S. grocers to near cycle lows as
evident by the group’s trough multiples and near 52-week low share prices. We recently
initiated a position in Kroger, undoubtedly the best run U.S. grocer thanks to its organic growth
history, which has created a store culture unmatched in food retailing.

Given its diversified store base, both geographically and demographically, Kroger is able to effectively compete against Wal-Mart. The higher food costs and lower unemployment we perceive in the coming years will provide considerable tailwinds for Kroger’s earnings and improve investor sentiment.

At today’s valuation we can afford to wait. We forecast $2.50 per share of annual earnings in
7
2 years even if there is minimal inflation and little improvement in employment. At
14x earnings, Kroger’s fair value is roughly $32 today and expected to be $37 in two years for a
potential 27% annualized rate of return including the dividend.
We also recently bought Clorox—the U.S. consumer products supplier of name brands such as
Clorox, Ajax, Liquid-Plumr, ArmorAll, Pine-Sol and Glad for 13x earnings, though it almost
always trades right around our fair market value, now about $78 or 18x earnings, and growing
by at least 9% per year. And we collect a 3.4% dividend while we wait. So, at a minimum, we
should get the growth rate of 9% plus the dividend yield of 3.4% for an aggregate 12.4% per
year. Should the stock revert back up to fair market value in short order, as it should do from
this very unusual occasion where the share price has detached so far from reality, then we will
enjoy a considerable capital gain.

Our 2-year expected rate of return is 31% per year.

We still hold a position in Aetna, which in our view is the best run national health insurer with
the best plan designs and top underwriting standards. Yet even though Aetna still meets our
required rate of return, trading well below our fair market value appraisal (trading at 8x 2010
free cash flow versus our 14x fair value assessment), we recently sold one-third of our position
as our SVA™ work gave us a sell signal indicating at least temporary potential weakness in the
stock.

But the undervaluation is extreme and provides a margin of safety offsetting
uncertainties regarding healthcare insurer profit margins from President Obama’s healthcare
reform. We are encouraged that the U.S. government may not include a “public-plan option” as
part of its proposed healthcare reform. That increases our confidence in our fair market value
assessment of Aetna which we still expect to garner at least 8% operating margins (versus
11% 2004-2007) or $4-$5 of annual earnings per share. Aetna’s fair value is in the mid-$50s
today and we expect it to grow to the mid-$60s in three years versus its current $26.65 share
price. A 37% annualized return.

Merely by waiting. We are anxiously awaiting the
opportunity to buy back the shares we sold when the SVA™ work provides a buy signal. We
continue to be attracted to the U.S. healthcare space and also hold a sizable CVS Caremark
position. In the case of CVS we recently added to our position on a pullback to an SVA™ buy
point. CVS also offers a potential 2-year annualized 28% rate of return.
We recently divested our entire McKesson position (other than in the Trapeze Value Trust
where we sold call options against our position, earning options premium which effectively
reduces our cost—a conservative strategy we’d like to employ more widely for clients) because,
after the stock’s recent appreciation, upside relative to our fair market value no longer met our
hurdle compared to other opportunities.

A “Short” Wait
We have one short-sale position, recently initiated—overvalued mobile handset manufacturer,
Palm. Unlike our Kroger and Clorox investments, we are shorting a highly uncertain and
extremely high risk business that is exceedingly expensive. For those that haven’t seen the Bell
or Sprint advertisements, the perennial second-tier Palm recently rolled out a new mobile
handset called the Pre. Sell-side analysts and industry commentators have championed the new
device propelling Palm’s shares over 500% (to $18.09) since the beginning of the year.

We are not wagering that the Pre is a flawed device, rather that the odds of success are stacked against 8 Palm and, even if wildly successful, the company was more than fairly priced. Competition is fierce from incumbents such as Research in Motion (Blackberry) and Apple (iPhone). Plus new entrants fueled by Google’s mobile platform as well as others with proven vendor relationships (Nokia and Motorola) have pre-Christmas launches pending. Increased competition should limit handset shipments and lower Pre’s already reduced selling price. Sprint recently lowered the Pre’s price by 25% only 4 months after its launch while Palm lowered sales volume guidance for its upcoming quarter.

Perversely, the stock remained within 10% of its 52-week
high when we shorted it and sentiment was hugely bullish. Our short-term target for the stock is
$11.
We will continue to seek out other overvalued short-sale opportunities, particularly as the
market rises to fair value.

Glad We Waited

Etruscan Resources and Firstgold were the last two of our holdings where we were concerned
about the company finances and, thankfully, both found financing opportunities. Etruscan
raised $43 million from Endeavour Financial (a resource based merchant banker) leaving
Endeavour with a 54% stake in the company.

The deal allows Etruscan to pay down debt,
remove most of its costly hedges and breathing room for its operations at its Youga mine, now
finally running closer to its target capacity. Firstgold has had an offer from Northwest
Non-Ferrous International Investment Company, the subsidiary of a Chinese mining
conglomerate, to acquire 51% of its shares and all its debt obligations.

The transaction is
expected to close by mid-December, finally allowing a critical path to proceed for its Relief
Canyon mine in Nevada to start production early in 2010.
There were several other positive material changes for other smaller holdings recently. Malaga
completed a rights issue (in which we participated) providing the funds to double its production
from its current 250 t/d to 500 t/d by next spring, justifying a value 5 times its current share
price.

The resulting increased cash flow should allow the company to drill off its considerable
tungsten veins, likely driving the value even higher.
At the end of September, Cano Petroleum announced a merger with Resaca Exploitation. The
combined entity will have greater scale and the two companies are highly complimentary, both
being secondary and tertiary recovery operators with mature, long-life oil production.

We did sell some shares on the immediate and substantial increase after the announcement though we believe the true value is much higher and ought to be realized as the combined entity shows substantial growth over the next couple of years—the proven reserve value alone is 3 times the current share price. And higher oil prices should increase that value.

Canoro Resources had a senior management change with Robert Wynne, the former CFO of
Pan-Ocean, taking over as CEO of Canoro. We welcome a reenergizing of the company whose
share price still languishes at less than one-quarter of its reserve value.
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TG World Energy settled a lawsuit with its partner and can now move more freely ahead with its
drilling plans. In the meantime, the company still trades for less than the cash on its balance
sheet. Combining the cash per share with our conservative appraisal of TG’s business, we value
it at over 3 times the current share price.
Income Accounts—Paid While You Wait
Finding quality income investments with meaningful yields is becoming challenging as bonds—
which fluctuate in price too—at these historically low rates should probably generally be
avoided. The debt of high quality, well-known corporations is yielding annual returns of only
4%-6%. Which is why we are looking at lesser known companies.
We added the 10.5% Secured Notes of gold miner Jaguar Mining in the quarter just ended. We
purchased the debt at a roughly 10.3% yield to maturity, which was extremely attractive relative
to the company’s 14x interest coverage, 10x asset coverage and considerable equity market
value ($900 million) relative to the $85 million debt issue. It was the only debt of the company
and maintains a first claim on the company’s Brazilian assets. Subsequent to our purchase,
Jaguar announced a new 4.5% convertible debt issue of which some of the proceeds will be used
to retire our Notes in mid-November at $105 giving holders a premium over par.


We still think the royalty trust, Pizza Pizza Royalty Fund, and high dividend paying (12.5%)
Student Transportation of America are both solid holdings with double-digit current yields and
the potential for strong capital gains over the next 3 years as each trades well below fair market
value today (hence the high yields). And each provides recession proof necessaries—food and
school busing.

There are also some higher yielding, yet safe, U.S. corporate bonds which we’re now analyzing
given the ascent of the Canadian dollar which is removing much of the risk of exposing
ourselves to U.S. dollar based income assets—to date we have not wanted to offset any U.S.
bond gains with a depreciating U.S. dollar.

In the last few quarters we marked down to market the prices of a number of our income
positions. Most of our income positions are not publicly listed and as the prices of comparable
high-yielding income securities were falling, we marked our income securities down in price
too, to comparable yields. As well, the rough economy and very poor capital markets impaired
the assets of some of the businesses.

With material positive changes anticipated, we should be
able to mark positions back up as asset values rise or as positions approach maturity (most
mature over the next 2 years). The only security subject to further markdown in both the second
and third quarters was Richards Oil and Gas debentures.
Lately, there have been positive material changes for the businesses of most of the other income
holdings.
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Specialty Foods Group is enjoying very strong year-to-date earnings and has considerable cash
on hand relative to our debenture which is the only debt outstanding. St Andrew’s anticipated
production should bring in enough free cash flow to easily retire all our 12% debentures at
maturity in December 2010. As well, we believe the company is likely to beat its earnings
hurdle triggering an extra 10% bonus payment under the terms of the debenture. The warrants
held by the debentureholders, exercisable at $.44, are also now in the money. Avcorp Industries
just completed its financing which should fully fund its business and afford the breathing room
until the larger contracts kick in over the next couple of years. The First Metals and Blue Note
Mining reorganizations were completed and we received cash and freely tradeable shares (plus
new debentures in the case of First Metals).

The High River Gold takeover bid allowed
Severstal Resources, its majority shareholder, to boost its stake to 62%. We’re confident that
our small debt portion, due in 2011, will be paid off in full at maturity. Lanesborough REIT
continues to sell assets, the proceeds of which are freeing up capital to be used to repay our
debentures due next February.

Arctic Glacier Income Fund just settled a lawsuit with the U.S.
Justice Department for much less than the market expected which doubled the unit price.
We think our income portfolios, which have a current income yield of about 10% per year,
should also provide a few percent per year of capital gains over the next 2 years as most recover
to par at maturity, for a potential 15%-20% total annual return from our income holdings.

Waiting Calmly

Because of the inordinately low returns currently available on income securities, we think, as a
preferable alternative, accounts seeking lower risk investments could currently consider an
equity component of the defensive, safe-dependable U.S. stocks that are now unusual bargains.
We can now buy world-class companies such as Kroger, CVS Caremark and Clorox—all of
which have decent growth rates (the latter two at double digits) and reasonable dividend
yields—with a margin of safety as they trade below market multiples whereas each normally
trades at a premium. We think each of these, and others that are similar, should provide a 20%+
annual rate of return over the next 2 years—an unusual opportunity to get blue chip and growing companies at 75¢, or less, on the dollar, especially so since the overall market has now
recovered to about 90¢ on the dollar.

These safe-dependable businesses grow relentlessly as evidenced by their underlying fair market value growth throughout the current recession. Their share prices fell less and therefore
recovered less, thus far.

The icing on the cake are the tax implications. Bonds yielding 4%-6% leave an investor with a
paltry 2%-4% after-tax, versus profits on stocks which are subject to capital gains taxes rather
than income taxes, with nearly 80% of the gain as an after-tax return.

In other words, the after-tax return on, say, Clorox could be over 20% per year over the next 2 or 3 years, well above the meager after-tax return that can be earned safely on bonds.
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The Virtue Of Patience

Successful stock investing requires patience. Value investors trade off risk for patience. The
biblical figure, Job, could have been a value investor. In the past we’ve held individual stocks
that provided little return for lengthy periods, even as the business prospered, only to make a
large gain from some market event—the company being “discovered” or taken over. Patience is
especially required in the case of lesser known names, such as Orca for example, a very low risk
investment which trades “by appointment”, but which we believe could be a triple just to reach
its current fair value, not even accounting for future growth.

It has long life reserves, increasing
production profile, no debt and is cheap on every metric including expected cash flow and
earnings and net present value. All one needs to do is wait.

Hopefully for a more attenuated
period given the recent market recovery and our belief in its continuation.
Herb says he feels most comfortable feeling lonely and holding what’s unpopular. And having
to wait for recognition.

Therefore, natural gas. St Andrew. Republicans. Narrow neckties.
His Nobel Peace Prize.

The famous speculator of the 1920s, Jesse P. Livermore said, “…

I’ve found that the big money was never made in the buying or selling, the big money was made in the waiting.”

Friday, October 30, 2009

QEC-T:Buy Low To Sell High Its Ready To Run News Pending!




Vic Vallance FP Trading Says Unrisked Potential is $41.42 per share
You can buy it today for $2.33 cents and hold on till retirement as a millionaire.
Talisman is the biggest partner looking for billions!

The Company participated in a recent discovery of a potential giant shale gas field in the Lowlands, Quebec with its partners Forest Oil & Talisman Energy. Questerre is also developing a portfolio of assets including resource style plays such as the Bakken/Torquay light oil play in Antler, Saskatchewan and the Jean Marie gas play in Greater Sierra, British Columbia.

Michael Binnion, President and Chief Executive Officer of Questerre, commented, "The first well in the pilot horizontal well program is a key milestone towards commercializing the Utica shale play. We are looking forward to confirmation from the horizontal wells of the consistently excellent vertical well test results from the middle Utica."











TSX falls as enthusiasm over U.S. growth fades;

TSX falls as enthusiasm over U.S. growth fades; Canadian economy shrinks in Aug.53 minutes ago via Canadian Press

TORONTO - The Toronto stock market was lower Friday morning but hanging on to the majority of the previous session's big gains as the Canadian economy showed unexpected weakness during the summer.

The S&P/TSX composite index was down 99.8 points to 10,975.4 as Statistics Canada reported gross domestic product shrank 0.1 per cent during August following a flat showing in July. Economists had expected a 0.1 per cent rise.

The TSX surged 270 points Thursday in the wake of news that the American economy grew at an annualized 3.5 per cent pace in the third quarter. It was the first quarterly growth since early 2008 but there is concern that much of that growth was fuelled by government stimulus programs.

Statistics Canada said the shrinkage during August was largely due to slides in oil-and-gas extraction and manufacturing.

However, analysts thought the news wasn't all that bad.

"The modest decline in August GDP does not defeat the point that the Canadian economy has turned the corner, and as we saw in the U.S. yesterday, Canada's recession is in the rear-view mirror," said BMO Capital Markets senior economist Robert Kavcic.

"However, tempering the recovery are those sectors negatively impacted by sluggish U.S. demand and the strong Canadian dollar, and that could pose some downside risk to the Bank of Canada's two per cent growth call for the third quarter."

The loonie was down 1.14 cents to 92.58 cents US.

Lower commodity prices weighed on the Toronto market following strong gains in oil and metal prices Thursday.

The December crude contract on the New York Mercantile Exchange lost 78 cents to US$79.09 after jumping almost US$2.50 Thursday. The energy sector was down 1.2 per cent. Canadian Natural Resources (TSX:CNQ) lost $1.28 to $71.18.

The gold sector lost almost two per cent as the December bullion contract on the Nymex lost $3.40 to US$1,043.70 an ounce. Barrick Gold Corp. (TSX:ABX) fell $1 to $38.66.

The December copper contract shed three cents to US$3 a pound amid a drop of 1.84 per cent in the base metals sector.

Financials were also a weight, down 1.25 per cent as TD Bank (TSX:TD) moved $1.03 lower to $62.56.

The telecom sector was the major advancer with shares in Canada's three big telecoms - Rogers, (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T) - all ahead after the CRTC ruled Thursday that Toronto-based Globalive isn't Canadian enough to compete as a new national cellphone company. The broadcast regulator said Globalive doesn't meet the Canadian ownership and control requirements to operate as a telecommunications carrier. Rogers shares gained $1.65 to $32.63, Telus shares were up 64 cents to $33.49 and BCE advanced 50 cents to $26.10.

The TSX Venture Exchange inched 1.5 points lower to 1,308.92.

New York indexes also backed off following Thursday's strong gains.

The Dow Jones industrial average lost 75.2 points to 9,887.4 after running up 200 points on Thursday.

The Nasdaq composite index dipped 10.3 points to 2,087.25 while the S&P 500 index dropped 7.4 points to 1,058.7.

In U.S. economic news Friday morning, the Commerce Department said U.S. consumer spending dropped 0.5 per cent in September, which matched economists' expectations. Personal incomes were unchanged as workers contend with rising unemployment and a squeeze on wages.

There was good news from a reading of the midwestern U.S. manufacturing sector.

The Chicago Purchasing Managers Index jumped to 54.2, showing expansion for only the second time since September, 2008. That was far better than the 48.5 reading that had been expected.

Canadian investors have plenty of fresh earnings reports to consider.

Imperial Oil Ltd. (TSX:IMO) reported after Thursday's market close that quarterly profits fell 61 per cent from a year ago, when oil and natural gas prices were much higher. The energy producer and oil refiner earned $547 million or 64 cents a share, above analyst estimates of 58 cents.

Its shares were up 20 cents to $40.43.

IGM Financial Inc. (TSX:IGM) reported third-quarter profit dropped to $167.4 million from $198.7 million a year ago as revenues slipped. IGM Financial, a member of the Power Financial group of companies, operates under the Investors Group, Mackenzie Financial and Investment Planning Counsel banners. Its shares were off 42 cents to $39.77.

Eldorado Gold Corp. (TSX:ELD) reported a third-quarter profit of US$30.2 million, up from a year ago, as the company increased gold sales. The Vancouver-based gold miner earned US$30.2 million for the quarter compared with a profit of $17 million a year ago. Revenue totalled $82.6 million, up from $68.2 million and its shares faded 26 cents to $11.92.

Tim Hortons Inc. (TSX:THI) shares declined 35 cents to $31.44 as it said Friday its revenue increased to $563.6 million in the third quarter, up 10.7 per cent from just under $509 million in the comparable quarter of 2008. Despite the sales growth, net income fell to $61.2 million or 34 cents per share in the quarter, down 22.3 per cent from a year ago. Tim Hortons said the lower profit was due to $23.1 million in costs associated with reorganizing the company into a Canadian legal entity.

In other corporate news, Husky Energy Inc. (TSX:HSE) says it has completed and tested two promising exploratory wells to evaluate the shale gas potential in the Montney and Doig formations in northeastern British Columbia. Huskey said late Thursday the drilling results were "very encouraging." Its shares were 32 cents higher to $28.78.

Overseas, Hong Kong's Hang Seng jumped 2.3 per cent while Japan's Nikkei 225 stock average gained 1.5 per cent.

London's FTSE 100 index was off 0.09 per cent, Frankfurt's DAX dipped 0.82 per cent and the Paris CAC 40 was down 0.67 per cent.

Thursday, October 29, 2009

Leaders On Nasdaq, TSX TSX-V - High % Gainers




Oil drags TSX to two-month low



Toronto's main stock index skidded to its lowest close in nearly two months yesterday as a drop in oil prices shook EnCana Corp. (ECA/TSX) and other energy companies amid anxiety about the strength of economic recovery, while gold miners also weighed.

EnCana shares ended down 4% at $59.74, Suncor Energy Inc. (SU/TSX) shed 3.2% to $35.82, and Canadian Natural Resources Ltd. (CNQ/TSX) fell 3.6% to $70.50. The companies were the three biggest drags on the TSX index.

The latest slide in the heavily weighted energy sector came as oil prices fell more than 2% on worries about demand in the United States, the world's largest fuel consumer. Oil closed at US$77.46, down US$2.09.

Shares of gold miners were also among the key drags on the TSX as the price of bullion hit a three-week low in the face of a stronger U.S. dollar, which makes bullion more expensive for non-U.S. dollar holders.

Shares in Kinross Gold Corp. (K/ TSX) fell 4.6% to $19.36, while Barrick Gold Corp. (ABX/TSX) dropped 3.5% to $37.04.

The S&P/TSX composite index fell 248.21 points, or 2.25%, to 10,805.33. It was the TSX's lowest level since Sept. 3, and its fourth straight lower close.

The index, however, is still up 44% from the five-year low in hit in March.

Syncrude stake comes up for grabs

Syncrude stake comes up for grabs

Canadian Oil Sands most logical taker

Carrie Tait, Financial Post Published: Thursday, October 29, 2009



A slice of Syncrude Canada Ltd. may soon be up for grabs, and the logical -- and self-professed hungry -- buyer is Canadian Oil Sands Trust, industry experts say.

ConocoPhillips Inc., which in early October said it is looking to offload about $10-billion in assets, yesterday pinpointed its 9.03% stake in Syncrude as potential property it may put on the block.

"[Syncrude] is a good investment, but we think that there is plenty of interest," Jim Mulva, ConocoPhillips chief executive, said during his company's third-quarter conference call.

Randy Ollenberger, a Calgary-based analyst at BMO Capital Markets, is among those betting Syncrude's largest stakeholder will snap up ConocoPhillips' stake.

"Canadian Oil Sands is the logical buyer," he said. "[It] could raise equity, plus take on additional debt, to acquire the stake."

ConocoPhillips' interest in the oil sands mining operation, based on Canadian Oil Sands' stock price, is worth about $3.6-billion.

Phil Skolnick, an analyst at Genuity Capital Markets in Calgary, calculates Canadian Oil Sands, at its current unit price, would have to issue about 100 million shares to get the deal done.

Should Canadian Oil Sands seek loans, it may have to tinker with its debt targets. The company has $1.1-billion in net debt, as of Sept. 30, up from $1-billion at the end of 2008.

"We have a net debt target of approximately $1.6-billion by the end of 2010," Canadian Oil Sands said in its third-quarter results, released yesterday.

Mike Tims, chairman of Peters & Co., a Calgary-based investment bank, contends that while sovereign wealth funds and other entities may angle for the stake, existing Syncrude partners make the most sense.

"Canadian Oil Sands and Imperial [Oil Ltd.] would particularly leap out," Mr. Tims said.

However, Imperial Oil may take a pass because it has its plate full with its new Kearl oil-sands project. Suncor Energy Inc., which became a 12% owner in the rival project when it absorbed Petro-Canada, also has a number of expensive opportunities among the assets it owns.

Imperial, controlled by Exxon Mobil Corp. through its 69.6% stake in the Canadian outfit, owns 25% of Syncrude and operates the project. Imperial declined to comment, as did Canadian Oil Sands.

Syncrude produced 340,000 barrels of oil per per day in September.

Oil Sands, which owns 36.74% of Syncrude, has picked up stakes from former partners in the past.

It paid $475-million for a 1.25% interest from Talisman Energy Inc. in 2007, and bought almost 14% from EnCana Corp. through two deals in 2003.

" We have consolidated some interests in the past, and we would generally have an interest in new ones coming up," Marcel Coutu, Canadian Oil Sands chief executive, told Bloomberg two weeks ago.

State-owned oil companies from China and South Korea both have Canadian energy deals going through the regulatory process.

While it is clear these countries are prowling for opportunity, Mr. Tims says they may take a pass on the Syncrude stake.

"I strongly suspect they will prefer assets where they can actually be in control," he said. "But there may be other kinds of more investment-oriented entities that would buy it purely on the economics -- there are lots of sovereign wealth funds in the world."

Canadian Oil Sands made $247-million, or 51¢ per unit, in the third quarter, down from $604-million ($1.25) in the same quarter last year, it said in a statement yesterday.

Long Lake production target put on hold

Long Lake production target put on hold
Nathan Vanderklippe


To the very long list of Long Lake's woes, add this one: Its owners no longer know when it will reach full production. Through the years of operational problems and resulting delays that have plagued the $6.1-billion oil sands project, Nexen Inc. and OPTI Canada Ltd. have maintained target dates for achieving its designed throughput. At one point, that date was late 2009. Then, late 2010. Yesterday, the market winced when OPTI chief executive officer Chris Slubicki said it won't meet that deadline - and declined to provide a new one. "Many of our operational issues are behind us," he told analysts. "We are expecting through 2010 vastly increasing bitumen and [premium sweet crude] production and that's what's important to us. When that will lead to at or near exactly full capacity is difficult to forecast." For OPTI's long-suffering investors, it was the latest blow to confidence in the project. NXY (TSX) fell 59 cents to $23.40; OPC (TSX) slipped 26 cents to $2.19.

Wednesday, October 28, 2009

Gold, Diamonds And More Gold


Total Meltdown Of Market Today...But Some Up Winners



Profit taking sends TSX sharply lower; higher US$ sends commodities, C$ lower




Profit taking sends TSX sharply lower; higher US$ sends commodities, C$ lower

20 minutes ago via Canadian Press

TORONTO - The Toronto stock market sustained triple-digit losses for a fourth consecutive session Wednesday as a rising U.S. dollar sent commodity prices and the Canadian dollar sharply lower.

The S&P/TSX composite index was off early lows as financial stocks turned positive, but at mid-afternoon the index had tumbled 124.7 points to 10,929.9. Investors were also discouraged as hopes for recovery of the American housing sector suffered a setback, further raising doubts about the strength of the U.S. economy.

Sales of new homes in the U.S. dropped unexpectedly last month, falling 3.6 per cent to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Economists had expected a rise of 2.6 per cent. The median sales price of US$204,800 was off 9.1 per cent from a year earlier, but up 2.5 per cent from August.

The TSX was already down about four per cent over the last three sessions before this latest slide. Analysts pointed out that a round of profit taking wasn't surprising, considering the TSX had gained about 50 per cent since the lows of March with hardly a break.

But that gain was based on hopes for a strong economic rebound being in place by late this year and recent economic data, including a report Tuesday that showed an unexpected drop in U.S. consumer confidence, have shaken those hopes.

"I'm expecting that the recovery won't be as robust as everybody thinks it is," said Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver.

"If I step back and ask what should I be expecting in the next six months to a year, I think you have to say to yourself, maybe this little puppy is not as robust as we thought it would be. We might trend down from the highs that we have had recently."

The resurgent greenback sent the Canadian dollar down 0.98 of a cent to 92.82 cents US after going as low as 92.64 cents US.

All TSX sectors were negative with the energy group down 1.96 per cent as the December crude contract on the New York Mercantile Exchange dropped $1.98 to US$77.57 a barrel despite data from the American Petroleum Institute showing a decline of 3.5 million barrels in crude inventories last week. EnCana Corp. (TSX:ECA) declined $1.64 to C$60.59 on the TSX.

Nexen Inc. (TSX:NXY) reported that its profit in the third quarter fell to $122 million or 23 cents a share, down 86 per cent from the same time last year, beating analyst estimates by a penny a share. Nexen's revenue was cut in half to $1.1 billion and its shares were down 28 cents to $23.71.

Mining stocks were also under pressure as the December copper contract on the New York Mercantile Exchange backed off 6.85 cents to US$2.93 a pound and the base metals sector lost 5.3 per cent. Teck Resources (TSX:TCK.B) dropped $1.95 to $31.11.

Sherritt International Corp. (TSX:S) reported that net income fell to $55.9 million or 19 cents per share in the third quarter, down from $133.1 million or 45 cents per share a year earlier because of lower commodity prices "largely due to the impact of relatively weakened global industrial demand on the base metals market."

Revenue fell 18.5 per cent to $389.6 million and its shares stepped back 43 cents to $6.82.

The gold sector was down 1.37 per cent as December bullion on the Nymex lost $4.90 to US$1,030.50 an ounce. Kinross Gold Inc. (TSX:K) faded 60 cents to $19.70.

Groups outside the commodity sectors were also down sharply.

The tech sector declined 2.38 per cent and Research In Motion Ltd. (TSX:RIM) moved down $1.84 to $65.86 while the industrial sector moved down 1.3 per cent with Canadian National Railways (TSX:CNR) down 59 cents to $51.28.

The TSX Venture Exchange eased 37.08 points to 1,269.38.

Economic data also depressed New York markets and the Dow Jones industrial average was off 52.6 points to 9,829.6.

The Nasdaq composite index gave back 38.23 points to 2,077.86 while the S&P 500 index was down 12.7 points to 1,050.7.

In other Canadian earnings news, Maple Leaf Foods Inc. (TSX:MFI) shares ran up 49 cents to $10.95 as the company said quarterly net income came in at $22.5 million or 17 cents a share, compared to a net loss of $12.9 million or 10 cents a share a year ago. Last year's third-quarter had felt the brunt of a Listeria-induced recall at a Maple Leaf plant in Toronto.

Quarterly revenues for the company dipped to $1.29 million from $1.34 million last year.

Methanex Corp. (TSX:MX) fell to a third-quarter loss of $831,000 or a penny per share as revenue fell due to lower methanol prices. Analysts were expecting a loss of four cents a share and its shares were down 25 cents to $18.74.

In the U.S., ConocoPhillips said Wednesday that low natural gas prices and thin margins from its gasoline refining business drove profits down 71 per cent in the third quarter, but the oil company is ramping up production as crude prices jump.

The third-largest U.S. oil company made $1.5 billion, or $1 per share, for the quarter while revenue totalled $41.3 billion, down from $71.4 billion in the year ago quarter.

At noon: TSX says goodbye to 11,000


At noon: TSX says goodbye to 11,000

Wednesday, October 28, 2009

Print this article


Canada bore the brunt of a decline in North American stock market indexes on Wednesday, after investors continued to fret over the economic rebound.

At noon, the S[amp]amp;P/TSX composite index was down 200 points or 1.8 per cent, to 10,853. All 10 subindexes were down, led by declines of 2 per cent or more by materials, information technology and energy stocks. Financials fell 1.3 per cent.

The September report on durable goods orders in the United States, which was merely in line with expectations, fed concerns that the preliminary reading on U.S. third quarter gross domestic product – to be released on Thursday – will perhaps not be as rosy as some observers had hoped. Already, economists at Goldman Sachs have reduced their forecast to 2.7 per cent growth from 3 per cent growth previously.

As well, new home sales in September fell 3.6 per cent, dashing expectations.

In the United States, the Dow Jones industrial average was down 28 points or 0.3 per cent, to 9854. The broader S[amp]amp;P 500 was down 9 points or 0.9 per cent, to 1054.

There, the action was more mixed, with seven of the 10 subindexes in negative territory. Materials and financials led the declines, falling more than 2 per cent each. Consumer discretionary stocks and energy stocks fell 1.6 per cent each.

Defensive areas of the market fared much better. Telecom services rose 1.7 per cent, consumer staples rose 0.2 per cent and utilities rose less than 0.1 per cent.[amp]nbsp;
[amp]nbsp;

© Copyright The Globe and Mail

DEE-T

Delphi Energy to raise $6.36-million with FT financing

News Release

Mr. David Reid reports

DELPHI ENERGY ANNOUNCES FLOW-THROUGH FINANCING

Delphi Energy Corp. has entered into a private placement financing agreement with a syndicate of underwriters, led by National Bank Financial Inc., to issue on a "bought-deal" basis, three million flow-through common shares of Delphi at an issue price of $2.12 per share resulting in gross proceeds of $6.36-million. Proceeds of the offering will be used to expand Delphi's continuing capital program in northwest Alberta at Hythe, Wapiti/Gold Creek and Bigstone, incurring expenditures eligible for Canadian exploration expenses which will be renounced to subscribers of the flow-through common shares effective on or before Dec. 31, 2009. Closing is expected to occur on or about Nov. 16, 2009.

QEC-T:Ready To Run Again! News Pending!

The Up Trend Continues
With The Results That are pending From The Horizontal Well





QEC Announces Pilot Horizontal Program Commences in Quebec

00:15 EDT Friday, September 25, 2009

Print this article

CALGARY, ALBERTA--(Marketwire - Sept. 25, 2009) -

NOT FOR DISTRIBUTION ON U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Questerre Energy Corporation ("Questerre" or the "Company") (TSX:QEC)(OSLO:QEC) announced today that the operator will spud the first horizontal well targeting the middle Utica in the St. Lawrence Lowlands this week.

The St. Edouard #1A horizontal well will be situated adjacent to the St. Edouard #1 vertical well that tested at 700 mcf/d from the middle Utica interval. Subject to final results, the well will be fracture stimulated and production tested. During stimulation, the existing vertical well will serve as a monitor for real-time micro-seismic imaging to validate stimulation effectiveness.

Michael Binnion, President and Chief Executive Officer of Questerre, commented, "The first well in the pilot horizontal well program is a key milestone towards commercializing the Utica shale play. We are looking forward to confirmation from the horizontal wells of the consistently excellent vertical well test results from the middle Utica."

This news release contains certain statements which constitute forward-looking statements or information ("forward-looking statements"). Although the Company believes that the expectations reflected in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information available to the Company. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward looking statements. As such, readers are cautioned not to place undue reliance on the forward looking statements, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, the Company does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

This news release does not constitute an offer of securities for sale in the United States. These securities may not be offered or sold in the United States absent registration or an available exemption from registration under the United States Securities Act of 1933, as amended.

Questerre is a Calgary-based independent resource company actively engaged in the exploration, development and acquisition of high-impact exploration and development oil and gas projects in Canada.



OPTI Canada posts $12-million profit


CALGARY
OPTI Canada posts $12-million profit

RTGAM

CALGARY - OPTI Canada Inc. announces third-quarter net earnings of $12-million, recovering from year earlier loss of $32-million. Revenues down to $38-million, from $125-million a year ago.

CALGARY, Oct. 28 /CNW/ - OPTI Canada Inc. (OPTI) announced today the Company's financial and operating results for the quarter ended September 30, 2009.


The Long Lake Project (the Project) is the first to use OPTI's integrated OrCrude(TM) process. Our proprietary process is designed to substantially reduce operating costs compared to other oil sands projects while producing a high quality, sweet synthetic crude oil.


"We had a good quarter operationally. Our objectives in the third quarter were to complete the planned turnaround and to start-up the final components of the Upgrader, which are the thermal cracker and the solvent deasphalter. Both of these objectives were successfully accomplished and the Project is now positioned to ramp-up with improved PSC(TM) yield and enhanced steam generation capabilities," said Chris Slubicki, President and Chief Executive Officer.

FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------
Three months Nine months Year
ended ended ended
September 30, September 30, December 31,
In millions 2009 2009 2008
(as revised)
-------------------------------------------------------------------------
Net earnings (loss) $ 12 $ (95) $ (477)(1)
Total oil sands expenditures(2) 31 128 706
Working capital (deficiency) 10 10 (25)
Shareholders' equity $ 1,523 $ 1,523 $ 1,471
Common shares outstanding
(basic)(3) 282 282 196
-------------------------------------------------------------------------
Notes:
(1) Includes $369 million pre-tax asset impairment provision related to
working interest sale to Nexen.
(2) Capital expenditures related to Phase 1 and future phase development.
Capitalized interest, hedging gains/losses and non-cash additions or
charges are excluded.
(3) Common shares outstanding at September 30, 2009 after giving effect
to the exercise of stock options would be approximately 287 million
common shares.



Energy, mining deals seen accelerating


Jeffrey Jones and Pav Jordan
Monday, October 26, 2009

Calgary and Toronto — Canada's energy and mining sectors are riding a wave of acquisitions by Asian companies that are flush with cash and hungry for resources to fuel rapidly expanding economies, a trend not expected to let up soon.

Deals such as Korea National Oil Corp.'s $1.8-billion bid for Harvest Energy Trust last week are aided by difficulties some Canadian companies have in funding their operations because of the financial crisis.

“We've been saying that the sectors which are the most susceptible to such M&A [mergers and acquisitions] are the resource and energy sectors, and I still believe this to be the case,” said Alain Auclair, head of investment banking for UBS Securities Canada.

“You still see the Asian countries with access to capital or strong balance sheets that can deploy cash quickly to seize opportunities. I think it's a trend that we're going to keep seeing, especially for companies who might be under pressure from a balance sheet perspective.”

That is the case with debt-heavy Harvest, known for its Western Canadian oil and gas operations and a refinery on the East Coast, one it could not afford to expand by itself.

Two weeks ago, China's No. 2 nickel miner, Jilin Jien Nickel Industry, and Canada's Goldbrook Ventures offered to buy mining developer Canadian Royalties Inc. for nearly $200-million to help feed China's appetite for metals.

The number of such deals will only increase as China, Korea and other Asian nations seek to own the production of resources such as nickel or oil, instead of having to buy them on international markets.

South Korea, for example, aims to pump 300,000 barrels of oil a day by 2012 as it expands its manufacturing economy. It is currently the world's fifth-largest oil importer.

In August, state-owned PetroChina paid $1.9-billion for a 60 per cent stake in two planned oil sands projects owned by Athabasca Oil Corp. That was China's largest Canadian oil acquisition to date.

The deal helped fuel the shares of small developers such as Opti Canada Inc. and UTS Energy Corp. , as investors wagered they might be the next to be absorbed by the Asian wave. Both are minority partners in large projects in Western Canada.

At a time when publicly traded businesses are struggling under the weight of a global economic crisis, state-owned oil companies can deploy cash for multibillion-dollar projects without having to seek shareholder approval.

“They couldn't care less about the balance of this year, or next year, even the year after,” FirstEnergy Capital Corp analyst William Lacey said. “They're looking at the next 10-20 years, and the internal demands and they are going to meet those demands.”

Bob Schulz, a professor of strategy and global management at the University of Calgary's Haskayne School of Business, said big, but not blockbuster, deals will continue to be the order of the day in Canada's oil patch.

“Big, positive and probably in $1-billion to $2-billion bite-size chunks,” said Mr. Schulz.

Those transactions are large enough to give new companies a a foothold in long-term projects like oil sands developments, but not of a scale to cause alarm in the United States, Canada's largest energy and minerals export market, Mr. Schulz said.

Canada has been coveted as a storehouse for natural resources for hundreds of years, and investors in oil, gas and minerals enjoy minimal political risk.

In energy circles, it is best known for the oil sands, the largest deposits of crude outside the Middle East.

Developing the unconventional oil using mining or underground steam techniques is costly, and numerous small players have been culled to make way for major companies with deep pockets.

Harvest is not an oil sands developer, but KNOC made a foray into that part of the business in 2006 by acquiring an oil sands property from Newmont Mining Corp.

Analysts say buyers will get a boost from legal changes in Canada that force most Canadian income trusts to convert to traditional corporations by 2011, when their favored tax status terminates.

The changes will force many, sometimes highly leveraged, trusts to either become corporations, merge or get squeezed financially, making many into attractive targets.

© Copyright The Globe and Mail

Tuesday, October 27, 2009

Technically Speaking Time To Buy These









Bankers Pet and Wavefront Running Up!


Opti opc-t As a Trade = $$$ Anonymous Buying

Anonymous is buying ahead of conference call and financials release


OPTI Canada to Host Third Quarter 2009 Results Conference Call on October 28, 2009

17:30 EDT Wednesday, October 21, 2009

Print this article

TSX: OPC

CALGARY, Oct. 21 /CNW/ - OPTI Canada Inc. (OPTI) announced today that it will conduct a conference call at 6:30 a.m. Mountain Time (8:30 a.m. Eastern Time) on Wednesday, October 28, 2009 to review the Company's third quarter 2009 financial and operating results. Chris Slubicki, President and Chief Executive Officer, and Travis Beatty, Chief Financial Officer, will host the call. To participate in the conference call, dial:

    <<                   (800) 814-4860 (North American Toll-Free)                   (416) 644-3419 (Alternate)     >> 

Please reference the OPTI Canada conference call with Chris Slubicki when speaking with the Operator.

A replay of the call will be available until November 11, 2009, inclusive. To access the replay, call (416) 640-1917 or (877) 289-8525 and enter passcode 4176079, followed by the pound (No.) sign.

This call will also be webcast, and can be accessed on OPTI Canada's website under "Presentations and Webcasts" in the "For Investors" section. The webcast will be available for replay for a period of 30 days. The webcast may alternatively be accessed at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2852960.

About OPTI

OPTI Canada Inc. is a Calgary, Alberta-based company focused on developing major oil sands projects in Canada using our proprietary OrCrude(TM) process. Our first project, Phase 1 of Long Lake, consists of 72,000 barrels per day of SAGD (steam assisted gravity drainage) oil production integrated with an upgrading facility.

The upgrader uses the OrCrude(TM) process combined with commercially available hydrocracking and gasification. Through gasification, this configuration substantially reduces the exposure to and the need to purchase natural gas.

On a 100 percent basis, the Project is expected to produce 58,500 bbl/d of products, primarily 39 degree API Premium Sweet Crude with low sulphur content, making it a highly desirable refinery feedstock. Due to its premium characteristics, we expect PSC(TM) to sell at a price similar to West Texas Intermediate (WTI) crude oil.

The Long Lake Project is being operated in a joint venture with Nexen Inc. OPTI holds a 35 percent working interest in the joint venture. OPTI's common shares trade on the Toronto Stock Exchange under the symbol OPC.

Additional information regarding the Long Lake Project is available at

http://www.longlake.ca.




Get Ready For an Explosive Short Covering Rally Before Oct 28 2009 Financials






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