Sam Antar: I haven’t been impressed with him lately

Sam Antar is the convicted felon CFO of Crazy Eddie, a retail fraud back in the 80s.  His website whitecollarfraud.com is actually excellent and worth reading as it explains his participation in the fraud.  Currently, Antar is a “reformed” fraud fighter that writes about fraud and “educates” others on how to spot a fraud.  I am highly skeptical of his current work on his blog at whitecollarfraud.blogspot.com.

In Antar I see shades of his (former?) buddy Barry Minkow, a “reformed” fraud fighter who decided to commit fraud again and landed in jail for a second time.

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Corporate waste at Baja Mining

Baja Mining has beautiful headquarters.  Check out the website of the company that helped decorate it:

This is the kind of nonsense that goes on in the junior mining world.

Baja Mining is currently a penny stock.  Its shares literally trade for a penny.

*Disclosure: No position.

Rex Energy Part 2: Infrastructure problems

I could be completely wrong here, but Rex Energy is forced to limit production on some of its wells because the area lacks the right infrastructure.

Why would anybody want to invest in independent oil and gas?

The current situation doesn’t make a lot of sense to me.  The management teams at these companies don’t give investors enough information to value the assets.  I think that investors would demand such information.  They should know the historical and projected decline curves of their company’s assets (for each basin the wells are in).  This is very basic information that investors need to perform their due diligence.

Another way of looking at it is to examine how a private market buyer would perform due diligence.  When an oil and gas company wants to sell its assets to private market buyers, it typically opens a data room.  I’m sure they provide a large volume of technical data far beyond decline curve data (e.g. reservoir models, data on porosity, pressure, 3-D seismic, etc. etc.).  Institutional investors and analysts simply don’t perform that level of due diligence.

Canada Lithium / Sirocco merger

In my opinion, the announced merger makes a lot of sense for Canada Lithium and not a lot of sense for Sirocco Mining (TSE:SIM).  I’m incredibly bearish on Canada Lithium and think that its mine will be uneconomic in its first year of full commercial production.  Peter Secker (Canada Lithium’s CEO) has made an incredibly smart move by merging Canada Lithium with Sirocco.

New long and short positions Dec 2013

New positions I have initiated without doing thorough research.  (I’m not kidding when I say that I haven’t done much research…)

Rex Energy (REXX)

Rex Energy is a $1B independent oil & gas company.  In many ways it is similar to other independent E&Ps (mediocre track record of value creation/destruction, high insider pay, constantly raising capital, etc. etc.).  Its most recent secondary offering was a year ago in 2012 when it sold shares for $9.25/share (for proceeds of $8.81 before dilution from the over-allotment option).  The current share price is $19.07.

While its balance sheet is not as deceptive/aggressive as Miller Energy or TransGlobe Energy, Rex has large liabilities that look a little suspicious.

The trade is a little crowded as 15.6% of the float is sold short.