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Saturday, May 21, 2005

Pearl Energy @ 1.02 ( Oil / Singapore ) 5 comments



(P.S: Sorry for any disturbances the advertisements above may have caused you)

Main issues

1.Doubts over surge immediately after IPO


Would you sell off an asset which you know could be worth or market-valued at 20% more in one to two months' time? Surely not. You would wait for the news to come through, then sell at that elevated price.

But the former illogical action is what Pearl Energy did when it listed at 70 cents in mid-April. Within weeks of its listing, it announced oil flows from several PSCs (Production Sharing Contracts) which moved its share price up to as high as 1.20 over the past two weeks. Why then, did it not wait and list at a higher price after all this news was announced? One possibility is that they were in urgent need of listing money which is probably not likely given that exploration and development expenses can often be classified under payables to be paid up from future oil flow revenues. The other possiblity, of course, is that the market's recent evaluation of what the company is worth (>1.00) is different from the insider investors' evaluation (0.70).

I would trust the insiders' judgment much more than the market's judgment, especially when the time difference when each judgment was made is only a matter of one month.

References:
(1) The numerous events happening right after IPO
(2) An example of payment in kind from future oilflows by SPC

 

 

5 Comments:

Anonymous tankie said...

Hmmm... maybe the insiders want to get additional placement shares on the cheap? Yet another case for CAD???

6/14/2005 11:49 PM  
Blogger DanielXX said...

Hey the insiders already have shares and these were going to be diluted big-time by the IPO. Why would the big shareholders (and probably most in the know) want to do that?

There are oil plays and there are oil plays. I have to say I was wrong on this one since recently the stock rose to as high as 1.70 (I made my "don't buy" call near $1) but my doubts remain.

6/15/2005 7:54 AM  
Anonymous tankie said...

Without a listing, it'd be more difficult for the original shareholders to sell their shares. With a listing, it's very easy and they can sell any part of their holdings any time. It's also a way to reward their supporters thro' placement shares during IPO. What better way to make sure everyone make money than to guarantee that the share price will go up after listing.

Whatever it is, my experience is that the surest way not to lose money in investment is to trust your own judgement if you'd done your studies, even if the market thinks otherwise. Look at CSM. IPO was $5 but investors chased it all the way to $20? $30? Today, it's $1+ but even then, like you mentioned in your other post, it's not even worth that!

6/15/2005 10:25 AM  
Anonymous SuperHotTrader! said...

Yes you're wrong but not just on this one ...you are wrong on almost every single stock you asked people not to buy. Its a joke when people read all the articles you wasted your time typing...and all the "learned" Warren Buffett quotes and all the books you wasted your time reading.... you have No understanding of the markets, don't pretend to be Buffett or some smart alec, your track record is a joke for all to see!

6/23/2005 6:45 PM  
Blogger kimberly said...

I think we can approach all the natual resources like solar energy or win energy. But never waste all this good alternative that we have. Actually i visited a site called costa rica investment opportunities result very interesting most of all their natural resources this country presents.

7/31/2010 2:28 PM  

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