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InterOil Daily Distortions no.24

October 31st, 2008 · 1 Comment

InterOil’s share price collapse from the mid twenties to ten was, although bad in itself, not worse than most other small energy companies with a need for funding, and the whole market was terrible in these few weeks. However, there seem to have been special forces at work.

Last year, T Boone Pickens bought about 3M shares, 1M for his fund and 2M for his private account. The timing of his purchase especially were grounds for confidence for those long in InterOil, as it was just after the results of Elk2 were announced which the market took as very disappointing (the shares sold off from 40+ to 20 in three days).

Apparently, Boone read something in these results which many others didn’t, and the fact that he’s an industry legend and has a masters in geology did help to restore some confidence.

But now, the whole fund, BP Capital Management seems to be liquidated because Boone was hit by redemptions just at a time when his bets on energy futures were going south, so he liquidated the whole fund (according to CNBC)!

This could be a significant part of the large lurch downwards in the share price recently. However, this mishap is not lost on some:

  • As all of you know, the value Interoil to shareholders is the refinery/retail assets plus the value of an option on E&P assets. Pickens participation was cited by STP and many other pumpers here as “proof” that the option was good. For many investors, it gave credibility to a management team that many had correctly questioned for some time. In fact, Pickens participation is likely the reason why the market was valuing the option at absurd levels. It remains to be seen if this option will expire as worthless or will be in the money as many longs here expect. But the man who somehow verified the credibility of managment is now gone. [Bostonkenmore]

Of course, it’s seconded by that other mainstay of this series, the croocked professor from UCLA (see our Daily Distortion from no.11 onwards). (Sussman covered as well but keeps on reading the board and bashing the stock. Do as he does or do as he says?)

  • there’s T Boone’s exit. I never thought that meant anything, but the longs played that for everything it was worth. Now that he’s gone, they again pooh-pooh it, like it was never a big deal, then or now. [Eric Sussman]

Let’s examine this logic a little closer. Sussman “didn’t think it meant anything” that a guy with the background knowledge of Boone (being able to actually understand the drilling logs and test results) does invest at a moment when there was scepticism in the market. We might do a follow up showing some things that do matter to this funny guy.., but we certainly aren’t “pooh-poohing” it, as:

  1. Boone was forced to sell.
  2. He didn’t just sell IOC, he sold everything.

Yet, somehow, that is supposed to mean that he has changed his mind on InterOil? Hardly. It’s quite similar to what happened to the CEO of Chesapeake, who got a margin call on his stake in his own company, and was forced to liquidate these.

Does that mean he didn’t have faith in his company anymore? No, in fact, one could say the opposite. The fact that he bought shares in his own company on margin could be considered as demonstration of great faith).

It’s curious for a guy who, in his own words, has covered recently (and promised to be back only in November, a promise he clearly could not keep for even a day). So he has no position in the stock whatsoever yet he keeps hanging around the message board all day. We wonder why.. And then there are statements like this:

  • This is again another mistatement of fact. Several companies have expressed interest in PNG oil companies. NONE have offered to build an LNG plant or even take a stake in an existing project. [Bostonkenmore]

Well..

  • INDIA’S largest liquefied natural gas importer and joint venture is reportedly moving to participate in explored gas blocks within Papua New Guinea as well as considering its own LNG plant. [Postcourier.com]

And he starts to froth from the mouth any time someone attacks the process of naked shorting, like Mark Mitchell:

  • Mark Mitchell is not a journalist. He is a front and a fraud for the anti-semitic scumbag Patrick Byrne. His deepcapture blog is despicable and deeply offensive. [Bostonkenmore]
  • People like Mark Mitchell, Patrick Byrne and the naked short gang exist only to defend companies that are completely crooked at best, and in some cases tools of organized crime. [Bostonkenmore]

When we published figures with permission from buyins.net (who get these directly from the SEC) on the amount of delivery failures in InterOil shares, unable to come up with anything substantial against that, he reacts predictably:

  • Buyins is just another scam website like deepcapture. [Bostonkenmore]

Why would a guy with no stake in a company hang around it’s message board all day and violently react to anything that might even suggest that there is illegal short selling going on?

He isn’t too pleased about us reporting about that either, and this is just the tip of the iceberg (the more insulting ones have been removed by Yahoo):

  • Really its only necessary to point out what a scumbag you are and to laugh hysterically as you are proven to be a fraud. [Bostonkenmore]
  • This guy is a scumbag or a snake. If you go to his site, watch your wallet. [Bostonkenmore]
  • I think that this admission fully destroies your credibility. I don’t buy that you didn’t remember your first impression of the article. Or are you really that crazy? [Bostonkenmore]

He finally found something against us. He managed to dig up a message from almost two years ago (!) in which we said “nice article” (apart from pointing out some omissions) about an article by Duhigg. On second reading, we did change our minds about that article, and we had forgotten about that.

It’s hardly a crime, and we even went as far to apologize, but he lashed on with.

  • I think that this admission fully destroies your credibility. I don’t buy that you didn’t remember your first impression of the article. Or are you really that crazy? [Bostonkenmore]

Well, we leave that conclusion to him, but why a guy with no position in a stock keeps on bashing it all day on it’s message board and goes to the trouble of digging up two year old postings that showed that somebody changed his mind on something, we leave that up to you to figure out…

Tags: Daily Distortions

1 response so far ↓

  • 1 Jim Tate // Oct 31, 2008 at 8:18 pm

    Several Snakes on the Yahoo message boards. Worthless low life who post for $2 a post so they post a lot.