There is not a whole lot happening at the moment. Let’s discuss our featured companies one by one.
EFUT. Buy and hold. This one we believe will take care of itself. Earnings are due at the end of the month, we have little news, and what news there was is good. New big customers, new websites with the potential to develop in yet other cash streams, and the slow grind of getting companies first to sign up as customers, then, after a year, getting monthly service fees is expanding nicely.
What about the share price? We said many times before, it will take-off one of these days, probably when you least expect it, or after earnings. The move is likely to be substantial because this is a growth company that, albeit not without risk (it’s a competitive landscape), is executing very well and leveraging it’s assets.
DRYS. It consolidated despite stellar earnings, as we expected. Whether there is another leg up depends almost entirely on the dry-shipping day rates on which it so depends. We think there is still significant upside, but this is by no means an easy call. That Baltic dry index (BDI) is terribly volatile and is at all-time highs.
The way to play it is, as with another risky bet in our featured list, as a hedged play.
IOC. InterOil is that other risky bet. We’re very close to getting results of a second DST test, these could very well come in the next couple of days. We expect higher gas flows compared to the first one, as they have drilled deeper (not by a lot though, only 56 more meters), and could have cleaned the skin from the damage of stabilizing the pressures.
A dirty skin could dramatically influence gas flows, so we’re quite curious about the results. The volume has tapered off pretty dramatically today, perhaps this is quietness before the storm..
TPLM. Triangle, our other gas play, the one with 69Tcf is one for patience. Events here happen twice or three times a year, and in the mean time, there is not a whole lot to say. We think that the third party report confirming this enormous gas find (although only something like 10% or so will be recoverable, but that is still a huge number) has made it an interesting take-over target.
On it’s own, there are a couple of opposing forces. On the positive side, that huge amount of gas (and there could very well be further discoveries as they only covered 40% of the field so far). On the negative side are time and money. These could trigger ugly financing deals were only barely respectable financiers have incentives to lower the stock price in order to convert more shares, setting off a negative spiral.
These dangers, although not acute, could be taken out completely if Triangle partners with some bigger player. That could also speed up the development of the property. Big gas needs big money, it’s as simple as that, really.