Big Thoughts and Little Updates

Friday File musings on a couple of our holdings, as well as the "big picture" and a couple personal speculations I've made recently

By Travis Johnson, Stock Gumshoe, October 4, 2013

Let me warn you up front that today’s missive might be more error-filled and brief than you’ve come to expect — thanks to a sprained thumb I’m hen-pecking my way across the keyboard and, truth be told, I’m already a bit grouchy after having slugged it out with this first sentence.

But still, I can’t keep my opinions bottled up for too long and we have a few updates to share this week — so let’s get to it.

First, I should let you know that in case you missed yesterday’s note I added a speculative position in East West Petroleum (EW.V, EWPMF) to my personal portfolio this week. This after having been reminded of it by Frank Curzio’s new teaser for Phase 1. That now makes two speculative energy stocks added to the portfolio in recent weeks, and neither is a stock to which I’m married — both will be catalyst driven in the coming months, and if the catalysts don’t work out as I hope I may well sell. Both East West Petroleum and Americas Petrogas (BOE.V, APEOF), the other stock I speculated in recently, are sitting on assets that are likely to be worth multiples of their market cap — but assets aren’t everything, particularly if operating results or political risk eat into their value or force them to eat cash to protect or define the assets. I don’t have enough conviction to take a 50% loss in either one, so if we hit a big swoon I’m likely to sell.

I expect we’ll hear something about asset sales (or something similar) from Americas Petrogas within the next couple months, given that they’ve retained a major investment bank, and we should also have flow tests from New Zealand and an initial drilling result from Romania within the next several months to give us more of a handle on East West’s immediate prospects — so absent a crash in these shares, I’m waiting to see what the world brings us on these companies between now and January. Sometimes these kinds of catalyst-driven plays work well — as with Africa Oil (AOI.V, AOIFF), which I bought following some teaser ad campaigns and before drilling results. If they work extremely well and the company still has excellent prospects I’m likely to take some profits and let some shares ride if the valuation is still supportable — that’s ...

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