These are my notes and instant reactions from a presentation at the Value Investing Congress, the notes below might contain errors, paraphrases, incorrect quotes, or misinterpretations.
David Neuhauser from Livermore Partners planned his presentation primarily about Pacific Rubiales Energy (PRE.TO, PEGFF), but since he started investing in it in the first quarter it released good numbers and allayed investor fears… and went up by about 50% in the month of March. So he decided to share some other ideas.
He says his firm is value driven but opportunistic — he thinks it’s not enough to just find value and wait, he thinks sometimes a bit of activism is required.
Past ideas: a portfolio highlight of his last year was Volt Information Sciences (VISI), which was a deep value investment — it’s a staffing firm, and they are still trying to extract more value by continuing to “right size” the comany and prepare it for relisting on a major exchange this year.
He thinks the stock, which has already moved from $7 to $10, should have upside still — he thinks intrinsic value is closer to $15-20 per share. (This one dropped from $10 to $8 in March, so it’s cheaper now).
Another special situation he liked and still likes is Occidental Petroleum (OXY) — he helped to remove the “egregious” Chairman, Ray Irani, a year ago, while Irani was trying to re-take the CEO position.
The company is refocusing and looking to monetize and spin off some of their valuable US and Middle East assets. He still likes it and holds it.
He also thinks that companies in the energy business are becoming much more efficient and pushing capital discipline.
Another example of a successful investment last year is TriOil (TOL.TO), a Canadian junior that they wanted to sell to a strategic buyer after years of dilutive capital raisings (they were bought).
So … since Pacific Rubiales jumped up so dramatically last month, he decided to share a different idea:
Zargon Oil & Gas (ZAR in Canada, ZARFF on the pink sheets) — this is a enhanced oil recovery company, they focus on production, not on finding. He met them at a conference in 2012, when they were hated because the big project they were investing in wouldn’t produce for two years, it got down to $6-8 a share but had a lot of value — ...