Wall Street Cheat Sheet recently published this interview conducted by Lori Ann LaRocco with Dr. Joseph Mason a Senior Fellow at The Wharton School. The interview covers the topic of the annual cost of freezing drilling permits in the Gulf of Mexico. Readers of this site know that I am bullish on the deepwater drilling industry (you can read my write-ups on Transocean (RIG), Noble (NE) and Rowan (RDC)):
LL: You have produced several research reports on . . .
→ Read More: Annual cost of the Gulf Drilling freeze to the US (RIG, NE, RDC)
Usually earnings calls are pretty bland, with a recitation of the figures that everyone is looking at already, followed by Q&A designed to help fill out the analyst’s model (gotta get next Q’s estimates down to 4 decimal places!). The utility of these calls for value investors is often low, as analysts like to focus on the ultra short-term (see Saj’s post here). Even if not strictly useful, sometimes they can be entertaining. Today I came across this . . .
→ Read More: Earnings Calls: Getting Hot in Here (GNK, MS)
I have written about Diana Shipping (DSX) here and here. It is the best operator in the industry, with an extremely conservative balance sheet, strong returns on equity, and stable free cash flow performance. A recent report by Soozhana Choi, an analyst at Deutsche Bank AG in Singapore suggests that the recent Japanese earthquake/tsunami will lead to a considerable recovery for the bulk dry industry in the medium term:
“After an initial drop-off (corresponding to low . . .
→ Read More: Shipbuilding industry set for “considerable recovery” as Japan rebuilds (DSX, GNK)
Quick follow up on my earlier post. Trading in Chinese fertilizer producer China Agritech (CAGC), another reverse-merger company, was halted on Monday. Later in the day, it dismissed its auditor, Chinese affiliate of Ernst & Young.
The affiliate, Ernst & Young Hua Ming, had also been engaged to test China Agritech’s internal accounting and financial controls, as required by U.S. regulators under the Sarbanes-Oxley Act. According to China Agritech in its press release Monday, “the . . .
→ Read More: Encore! Trading in this chinese reverse merger also halted (CAGC)
Cash on a company’s balance sheet leads to mixed feelings for value investors. While cash is the easiest asset to value and provides companies with the most flexibility, it also presents a major risk in the hands of the wrong management team which may choose to spend it on empire building or projects with poor returns. Value investors would prefer the cash be distributed to shareholders, but managements prefer to keep it in case an opportunity arises for its use. . . .
→ Read More: The growth of corporate America’s cash hoard