Tuesday – Big Box Bounce

Posted on by zman

Market Sentiment Watch: Investors are pleased with WMT and HD driving gains in the futures markets this morning. My own research trips to Depot of late have noted a fuller parking lot and longer lines at the checkouts. In energy land, things remain pin drop quiet following earnings. Broad market and the energy space appear due for modest bounce. 

Ecodata Watch:

  • PPI came in at 0.2% vs 0.1% forecast. Core was up 0.3% vs 0.2% expected
  • Housing starts were 546,000 (up 1.7%) vs a 555,000 forecast; June starts were also revised lower
  • We get Industrial Production at 9:15 am EST, 0.6% forecast

BP Spill Watch:

  • U.S. govt.  / BP will decide on the bottom kill procedure "soon" ...
  • ... but they also tell BP to either swap out the blowout preventer or come up with another device to ensure it doesn't blow out again. Any other well and we'd have called this a day by now. Killed, dead, tot, toast. But oh, no, not this one. For this one we have to come up with the MOABOPs.
  • The Dept. of the Interior says it will conduct a full environmental review of deepwater drilling and of the Gulf of Mexico, both of which could further delay future drilling
  • Interior also said it would limit the use of environmental waivers in the futures, instead taking each well on a case by case basis. Read that as more delays.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today – Max Pain
  5. Odds & Ends

Holdings Watch:

  • ZCAT (Zman Catalyst portfolio):
    • $6,000
    • 87% Cash
    • Yesterday’s Trades:
      • None
  • ZIM (Zman Inefficient Markets portfolio)
    • $3,400
    • 5% Cash
    • Yesterday’s Trades:
      • None

Commodity Watch Crude oil eased $0.15 to close at $75.24 yesterday, a five week low having just fallen from a 3 month high. This morning crude is trading up nearly a buck. I suspect crude is due for a resting period in the mid $70s. 

  • Early Read On Oil Inventories:

    • Crude: DOWN 1.0 mm barrels
    • Gasoline: DOWN 0.25 mm barrels
    • Distillates: UP 1.5 mm barrels

Natural gas fell $0.10 (2.3%) to close at $4.23 yesterday, it's weakest level since May. The gass E&P group is not paying attention to natural gas right now which is sinking as the heat in the U.S. subsides and tropical activity looks a great deal less threatening than it did at the beginning of the season.  This morning gas is trading flat.

  • Tropics Watch: All quiet on the tropical front.

Crack Spread Update

Key Thoughts:

  • Refiner stock performance has been nothing to write home about.

  • Valuations remain low. Revisions since the last month (before 2Q vs after 2Q10 earnings) have been overwhelmingly positive with 2Q beats and upward guidance for 3Q and 4Q and modest boosts to next year's numbers. If history has taught us anything about estimates in this space it is that they are highly fluid, turning quickly with moves in near term spreads. Exception to the previous comment in WNR, ALJ and DK which all saw estimates fell slightly after the second quarter.

  • Nutshell: I suspect that bloated distillate inventories, a re-weakening in the U.S. economy, and a warmer than normal winter will conspire to push cracks toward 5 year lows and further restrain efforts to rally the group this winter.

Stuff We Care About Today

Max Pain: Selected names, note EOG has the biggest potential gain to Max, WLL the biggest loss.

Other Stuff

  • APC finds oil in Mozambique, no details, company still evaluating but it was reported by a local paper.
  • Hedge funds add energy names -story talking about additions by Icahn, Mindich, and Singh. See story here.
  • POT rebuffs buyout offer from BHP.
  • CVX announces massive gas discovery in Carnavon Basin in Western Australia. 
  • Large Cap Orange Charts for tomorrow's post
  • Working up a more detailed GST profile, updating the EGY profile.

Odds & Ends

Analyst Watch:

  • Ticonderoga (who?) Initiates on the Sector:

    • Buys for TLM, APA, NFX, DVN
    • Neutrals for EOG, APC, CHK, SWN
  • BHI - Susquehanna ups to Positive
  • BHI - Barclays cuts target $3 to $46, stays equal-weight

152 thoughts on “Tuesday – Big Box Bounce”

  2. TED, TED… it's over, dude.  We will need to find something else to tell us which way the wind is blowing.  (Unless TED starts to get feisty again.)
     
    TED Spread +19.6 bps… back under 20.  My work here is done.  Ciao.

    Reply

  3. New items in sd presentation
     
    2011 ng hedges for 11 bcf at 4.96 
    q3 10… 6.74 bcf at 7.48
    > this is new and how the hell did they write 6.74 at 7.48 when the curve is in the 4's. The must of stolen the play from chks playbook trading some oil hedges for higher ng
    ( recall the earnings conf call and they said they took off ie cashed in remaining 2010 ng hedges which helped q2) actually on 2nd thought hurt sd as people figured out they had a loss without the mickey mouse accounting gimmick and sold hard

    Reply

  5. Jefferies starting a Catalyst Watch, dude, get your own name for it at least.

    Futures continuing to edge higher.

    POT = doohhh!!! for me at least as I do watch it, saw the fires, the wheat exports halt, the wheat prices and now BHP. Oh well, not really my space.

    Re Cigx, saw Lilly abandoning their big next Alz. drug today.

    Reply

  6. Housing starts and building permits less than economists predicted. 
     
    Good.  Need to blast through current inventory first.

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  7. CIGX — still haven't gotten my email confirm from my order last Tuesday.  hmmmm….
     
    However, all of our comments y'day were sent to CIGX management (not verbatim, just the jist).  THEY want this to go well, more than anyone else (obviously).  Will report back when I get any useful update (Dog-Days of August… people take longer to respond).

    Reply

  8. Housing Bubble……..
    Treasury Housing Conf…live….CSPAN 2 9am…… —

    9:00 am EDT
    Approx. 4 hr. 30 min.
    Department of Housing and Urban
    Develop.
    LIVE Housing Finance
    Shaun Donovan;

    Reply

  12. WLL and EOG – looking for nice opening bounces today.

     

    WLT and other coals should make a move back on some stronger comments out of China. What a yo-yo sentiment is in that space.

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  19. JB – can you take a look at WLT – wondering if we get rejected at the 200 day, recent add to the ZLT but it is very much a mo-mo stock. Thoughts?

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  21. Bill – those estimates don't look like they belong to this week, much more bullish than the ones I have in the post which are from Bloomberg. I do think we get one last hurrah for the year on gasoline demand and it comes with this week's report and next. Given that utilization has tripped back below 90%, the Platt's bigger than expected draw on gasoline stocks is completely reasonable.

    I'm down with Robry, big heat last week and I think a part of the prior week's gas in there as well which would explain why I was low to the number last week.

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  22. WHX trading on fear of a repeat of last quarter's action. Last night the RBC analyst who downgraded it to Underperform after last quarter's number reiterated his Underperform and $11 target.

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  24. Morning all.  Resistance at 1090,1092,1097.  Support at 1079,1074.  Time wise we are likely to make a top tomorrow and then consolidate into the end of the week/early next week before pushing higher again.

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  26. "POT holders"…. that is funny!
     
    Serious congrats, tho.  M&A can be a lot of fun to wake up to.

    Reply

  28. Thank you RMD, that gives them a good grounding in the fundamentals.

    WLT jumping higher, doubling the rest of the group.

    Reply

  29. RE: #19 WLT, I have WLT breaking out above the 100 and 200 day SMA, the 30 min looks great right now, major resistance at $79-$80, support at $76.25

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  30. Thanks much JB, much appreciated.

    How’s your McClellan chart looking to you now?

    Got a read passed on in an email siting a number of bullish tech signals on the S&P 500 at the moment.

    Reply

  31. BOP and EXXI holders, Feds out saying that while deep water is going to see more well by well scrutiny, the same will not be true for shallow water. RBC saying the new framework on permitting will free up the log jam of shallow water permits that now exists.

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  32. #31 — perhaps wind of that is what pushed the sails of EXXI and MMR yesterday. Thanks for pointing it out.

    Reply

  33. WLL making another run at the triple top level (while EOG can’t get out of the penalty box over their increased spending, still expecting it to run). JB, can you look at WLL? Thanks.

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  36. Is anybody else feeling like they should be rolling over their in-the-money or near-the-money EOG calls to Sept?

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  40. EGY continuing to outperform today. Gotta love a company that does what it says it will do. Small management team, but (finally) getting some growth-y oriented stuff done.

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  43. listened to AXAS conf. call: trying to u/s co. difficult when their standard comment seems to be “we’ll have a game plan to announce soon”..in EFS, Alberta Bakken (did not participate in recent lease sale “luckily”), and Niobrara (no pressure as it is HBP). Bakken dalays due to frac crews (which I vaguely remember co. had arranged before). Sounds like they are working on a sale/JV in the EFS though old notes only show 7,500 net acres. Seems they are in far more areas than they would have money or expertise. Are largely hedged (~80%) through ’13 in oil and gas.

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  45. RMD – Speaking of single digit midgets, listened to the GST call last night, interesting, growth about to really step up but I can’t find a way to call it cheap unless I start giving them good $ for their Marcellus acres.

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  47. WLL – taking another leg up. I have some August 90 calls I am milking higher. Will be taking off the table today or tomorrow. Concern would be the oil numbers, also Max Pain at $80. Triple top resistance looks like just over $93. I also hold it in the ZLT, may sell it if the 4th time is not a break out and rebuy on the inevitable pullback from that technical event. Stock remains best deal in the Bakken on a P/CF basis.

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  51. ZTRADE – ZIM – WLL

    WLL – Sold the (10) August $90 calls for $2.15, up 42% with the stock at 91.60. I continue to hold the common in the ZLT.

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  52. Pati — thanks for pointing that out. It’s a pretty big market, for anyone who can crack the code to break the cigarette smoking habit. Ref: news on Michael Douglas. Sad to hear. Throat cancer is tough…

    Reply

  55. RAJA nat gas piece questioning their bearish gas view now that the Street has embraced the view and in light of production flattening. No answer, esp. as have no view into ’11 production, but they are thinking about it: We’re not yet ready to change our tune, as the availability of the domestic supply remains a structural problem for the natural gas market. That said, recent production trends have us scratching our heads.

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  56. RMD – From all of the 2Q calls it is apparent their is quite the backlog of wells to be fracced in both S. Texas the Haynesville that could add more gas to the system late in the year. Pretty to hard to fight the extra supply of gas on the liquids rich side along with all the shale gas coming from the land grab/get it HBP drilling. I think gas is range bound for some time with maybe a sharp but temporary dip in the shoulders.

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  58. re 49 web site indicates its a vaccine with about 50% better than Chantix abstinence rate after 12 months, but still less than 30%. Agree with BOP- its a big space and while I’m certainly no expert, I don’t see a wow factor that will put CigRx into the ash tray.

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  62. RMD- One of my best flights ever was Quantas Biz Class to Australia and New Zealand. (What made it even better was using US Airways frequent flier miles!)

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  64. skimo — something that CIGX is not talking about (but that smokers know) is that smoking helps curb the craving to eat. Sadly, a lot of younger women use the smoking technique to help with the “diet” (it’s a dirty little secret in L.A.). But, just like smoking a cigarette curbs hunger, taking a CigRx tablet does too. It’s not a wildly-obvious appetite suppressant… but neither is smoking.

    Just pointing this out. Mngmt at CIGX have known about this for a long time. At one point (and don’t hold this against the company) Lindsey Lohan was packin’ Star product around the L.A. scene, trying to curb her smoking habit (but still suppress the urge to splurge).

    Reply

  65. ZTRADE – ZCAT – EOG

    Sold the EOG $95 Calls for 1.11, down 77%. Will stick with the EOG September calls over in the ZIM for now.

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  69. RMD, just booked my kid a flight on Air New Zealand last week, heck of a sale going on then, not sure if still ongoing.

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  70. re 68 – he had not changed his forecast for a busy season as of several days ago.

    Bill – thanks, I took on too much WLT for a starter position so am going to shave, was thinking to buy into the Bulker space, avoiding the Capes and looking for Supes/Handy’s.

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  72. MIDDAY OVERVIEW

    · Overseas momentum carried through to US Equities: SP Futures and European stocks rallied this morning on back of successful European sovereign debt auctions (Spain & Ireland), better eco data (i.e. China Leading Economic Index, US IP), a slew of M&A announcements, indications that Japan is preparing to introduce additional stimulus measures and better than expected US earnings reports (WMT, HD, SKS, URBN). Stocks opened the session up +10pts before quickly running into resistance at the 50day MA of 1088. After pushing up against that level 4x, equities broke through to the upside around 10:45am and moved to session highs. Supporting equities heading into the middle of the day were comments from Fed Pres Bullard in a WSJ interview. Bullard said that the Fed might need to commence a program of moderate purchases of Treasuries if inflation continues to fall. Flows on the desk are more index driven w/single-stock activity a little lighter. HFs active on the buyside are mostly covering while MFs on the buyside are more patient w/over-the-day type orders (i.e. not aggressive/chasing) after using yesterday’s pullback to add to positions.

    · Housing – Today’s much anticipated Housing Conference in Washington kicked off but few incremental headlines have hit so far (Geithner did put out a statement earlier saying that Fannie & Freddie will not return to the role they played in conservatorship). Housing datapoints have been mixed with Housing starts (546K vs. St. 560K) & Building Permits (565K vs. 580K) below expectations while HD earnings came in better than feared and commented that Aug was trending better than July.

    · Retail earnings today have come in better on the whole with shares of WMT (+2%), HD (+3.4), SKS (+3%) and URBN (+3.5) all rallying while just ANF (dn 9%) sold-off (inventories ended the Q up 47% yoy weighing on the stock). Commentary on the consumer though was relatively cautious with WMT saying that customers continue to spend cautiously (esp. on discretionary products) and that the payroll cycle remains pronounced however, HD’s Aug improved vs. July. On the Back-To-School front, commentary so far has been limited from retailers with the main theme being that consumers are shopping closer to need (i.e. the start of the school year in early Sept.).

    · Equity sectors – Materials are the best sector in the market, moving up over 2.75% on strength in ferts. PTV (announced it was being acquired by Reynolds Holdings), and iron ore / steel names. Industrials are up close to 2.25% on strength in higher beta multis/machinery, transports, and homebuilders. Discretionary is up around 2%, outperforming on strength in HD (earnings) and retailers, although ANF lags on earnings. Tech is up around 1.75% on strength in semis (SOX up 2%), A, and TLAB. Telecom is slightly below the tape, but helped by strength in S. Energy is higher but also a bit below the tape on weakness in refiners and as integrateds move up, but lag the group. Utilities are higher as well, although underperforming a bit as investors look for higher beta and more cyclical stocks to chase the rally. Financials are underperforming a bit on weakness in WFC and a few regional banks. Healthcare is up around 1.25%, lagging the tape on weakness in LLY after it halted development of its Alzheimer’s Disease drug as well as weakness in GENZ and CERN. Staples are up around 1%, underperforming on weakness in TSN and KFT and as investors rotate out of the lower beta group to add beta.

    · Commodities: Commodities are up across the board with the dollar weakening for the 2nd day in a row; Crude Oil is up over 1% while Natural Gas has posted a more modest gain. Copper is the strongest commodity, trading near its highs up ~1.8%. Gold has melted higher and has posted a slight gain.

    · FX: USD (DXY) has pulled back for the 2nd day in a row and is dn. ~0.5%. Elsewhere, the euro has continued to move higher while the dollar has gained against the pound & yen.

    · Corp. Credit: Corp Credit has rallied alongside stocks; HY 14 is up 11/16pts IG 14 is has tightened 4 1/2bps.

    · Treasuries: Treasuries have pared their gains from yesterday; today the Fed’s Bullard said if inflation were to fall, he would support asset purchases (WSJ) The 2s are yielding 0.516% and the 10s are yielding 2.634%; the 2-10 spread has steepened a bit from yesterday to yield 2.118%.

    · Europe: The Euro Stoxx has rallied this morning with the Euro Stoxx 50 gaining ~1.5%. The German DAX was up ~1.6% with Consumer Services and Consumer Goods leading the way higher, despite the August ZEW survey coming in weaker than expected [Bloomberg] Spain issued debt – Sold Eur5.5B of T-Bills (the maximum goal set for the auction), issued Eur4.34B of 12-month bills, and auctioned off 18-month bills.[Bloomberg]The French CAC one of the strongest indices, after trading lower for the past 5 sessions; strongest stocks included: Dexia, Peugeot, Credit Agricole, and Arcelormittal.

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  74. KOG…still early in the day, but a bit concerning that the Mkt is so strong today and KOG can’t get above the 200 day SMA, I’m thinking this price action is suggesting that KOG could be going lower, especially on the next macro mkt swing lower…the 200 day has been strong resistance since the share announcment, next major support is at $2.50 and KOG remains on a P&F sell signal…just a heads up if you are sitting on a big shorter term profit…

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  75. EOG …. been watching the trade and chart patterns the past few days.

    Technically, its looking much better (i think this was a forced selloff anyway). Even good.

    If it can break thru and hold about 95, there should be more upside this week (depends on the market also).

    FWIW (& I am no master technician, but I am getting better !)

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  77. Pack – thanks, I agree. I just wanted to get the $95s off while they were still worth something. No idea what rest of week holds for broad markets but thinking it will be sloooowwwww.

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  79. Toying with a WildZ in BP. Right now, the delta on the BP $40 August calls is 0.12. Those are offered $0.09. Stock may react to anything at this point, including a move that the govt. is going to at least let them finish.

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  90. BP Fleece Watch: I think I just heard on CNBC that Louisiana is going to ask BP to pay shrimpers an extra 30% over what they “would have gotten paid” this season.

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  91. Max pain – put POT in the max pain site.

    Max pain = $100

    There will be a lot of weeping and gnashing of teeth if you were on the wrong side of that one with 3 days to go to expiration.

    Z – do you follow BHP and thier oil expolits at all?

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  98. RE my comment the other day about pipelines and differentials – The pipelines are now apportioning volumes from the producers.

    Could shift mroe revenue out of Q3 and be another impact.

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  101. Mainly affecting volumes out of Alberta and the western provinces to the east coast and gulf coast.

    The churn between 1224 and 1227 was almost a given. The interesting part, as mentioned yesterday, will be whether gold can weekly close cleanly above 1228. Based on the price action, churn, and inability to reactively force the price back down immediately well below 1224, I’m going to say that it should close above.

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  103. FTK engineering questions from Fri.’s cc:
    co. seems to be transitioning from gas to oil, & vertical to horizontal focused; how difficult are these changes and does the competition get easier or harder?
    Points I found intriguing:
    goal in pos. net income run-rate by yr. end. Pricing power is getting better. Think they had first frac products. Stimoil an EOR in development (used by EOG and Enerplus in GW & Niobrara, early in EFS). Cavo closed bearing motor intro 6 mo. ago, now ~40% of motor sales. International takes longer (hello, TAT) but signed dear in Turkey-TAT?. Teledrift MWD +28% in 2Q, HS, Permian, Saudi, Argentina. 33mm FD shares. FIG Partners relationship, caller seemed to know co. Mentioned consolidation in industry on cc (ALY). Called co, will update when I hear back. I own a small bit and liked what I heard on cc.

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  104. Updating my orange chart data for the large caps. NBL had a very interesting quarter, interesting chart as well. Will be looking at them more as I transition to not really bothering with CHK for a time.

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  106. Please stop looking at max pain. Its a nonsense indicator. The calculations do not take into account when options were bought or sold or for how much.

    It is useless.

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  107. Pack – I only look at it as another thing to think about. I agree that if stocks have moved sharply leading up to expiry that it will be well off but it’s hard to deny that often stocks gravitate to the MP number towards the end of the week and then get stuck at it. I’ve seen it happen too many times to call it useless.

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  109. Z – I agree that many stocks get pinned at a particular strike price.

    My observation however is that this does not often correlate with max pain.

    I think you can do better by simply observing where a stock is trading in the week of options expiration, and trying to figure out where that pin will be.

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  111. We may see a pop to the 1103 – 1106 area and then consolidate/correct into the end of the week.
    Today is going to have the bears worried. We retraced 50% of the fall. 62% comes in at 1106.

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  112. Nicky – I guessed we were due for a bounce when I overheard a freshly minted broker espouse a good sized drop in the market yesterday at soccer practice.

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  113. EGY behaving well [$5.97 + .32 or +5.66%] in response to PR (yesterday) on JV with Total. Volume is light and appears to be almost totally retail.

    As BOP mentioned, TOTAL is the perfect JV partner for Mutamba, as they have extensive on-shore ops/people/facilities in Gabon……..their Atora field (18,000 b/d) is immediately adjacent to Vaalco’s Mutamba Iroru on shore concession.

    Am also hearing Total mentioned as a potential PSA partner for Vaalco’s Block 5 in shallow offshore Angola.

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  114. Cramer touted WFT yesterday. Said it could be a possible takeout target.
    Up 3% today. Any thoughts?
    apbd

    Reply

  116. I own a little call position there and am greatly for any assistance he can provide in expiry week. I liked the quarter (which is saying something with these guys) and the fact that they will probably have another good one this quarter. Street has come up a couple of pennies to $0.17 for 3Q since the call, that’s probably all of the rise in est they are going to get for now, thinking they come in at or a penny above but its’ early. This one corrected hard with the market last week and I probably should add some of this and/or HAL for September positions. May due that in the ZIM next week as it only took the good news of the quarter into account for a few days before the market whacked it.

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  118. crys — hadn’t thought about EGY + Total = Block 5 (Angola). But i LIKE that thought. Thank you!

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  120. My vote for most intersting ep stock story for 2010 is Sandridge

    Its an amazing pos falling day after day after day

    I made a huge mistake getting into the name.

    Im now convinced that debt does mattter and they have too much of it. They also have a lot of idle assets and Ward cant bring himself to shedding anything substantial hoping against hope for a ng turn around

    the 82 % number is due to the gas assets were written off (impairment) at year end due to low price ie 3.79 ng ergo tehy arent worth anything.

    Sd guidance shows all in cost of almost 8 dollar an mcf. Last time I look, ng was below 8.

    They are redirecting almost all cap ex to oil , which means they wont be able to meet the oxy commitment for co2 in the new century plant exposing them to penalties

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  121. SD – at all time lows, it’s got to be on some folks M&A radar at this point.

    TEV here is $4.5 B with 288 MMBOE in reserves, that puts a market valuation on them of $17.36 / BOE or $2.90 / Mcfe. Not yet what I’d call cheap but definitely moving in that direction.

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  122. Thanks Bill, will be looking at them below $4 I think. At some point, someone else will step in and Tom won’t be making the decision on what gets monetized.

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  123. Debt always matters. But, it’s like getting into a car and driving from Point A to Point B. The faster you drive (or, the more debt you have) the less time it takes to get to destination B.

    However, faster you go, the more you need to be sure that you’re in a good car and you’re a great driver. If you go too fast (for your car or your abilities as a driver), you run off the road and end up in the ditch. Then the tow truck (bond holders) comes, pries you out of the car, takes away your keys, kicks you to the curb, and you gotta walk home. Game over. Destination never reached.

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  124. ward still thinks he has a bright future as he is bldg himself a 100 m campus in okc and has a nba suite for the thunder games.

    i think he wants to keep up with aubrey but aubrey is better capitalized at the moment and he has brought in jv partners which saved his butt

    TPH (research) put out a sell to 3.00, 2 weeks after the investment banking side of their house told ARD holders that the sd offer for ard was fair and that sd was worth 7.50.

    When I questioned this to Pickering at TPH , he told me about the Chinese Wall and then promptly cancelled my access to the daily TPH email.

    Thank you TPH. Someone (ard holders) should sue your butt

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  125. CigRx:

    I questioned Star Scientific about the rollout delays (copying InVentiv and Thomas H Lee Partners). Received a very quick response from the VP Investor Relations:

    After the August 5 CigRx launch we uncovered a couple of process issues that inevitably can result from systems with multiple vendors communicating across platforms. We have been confirming over the past 48 hours that all orders that pre-date August 14 have been shipped to customers, or are on their way today. A number of those shipments have been sent via expedited shipping to get CigRx to customers in a timely way.

    I do want to make it clear that InVentiv Health is not involved in any way with Ultracart; GSW, a division of InVentiv, has partnered with us in the marketing of CigRx. I would be happy to reach out to any of your friends and associates who have questions or concerns, and to work through each issue individually.

    Received a follow up that orders placed through yesterday were on the way today

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  126. 122 agreed

    I don’t understand what he is waiting for.

    He could say he hired Goldman to explore strategic alternatives which might help.

    At this point, I feel he is tainted and must go. He also is chairman of the BOD so that wont happen unless the bankers demand it

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  127. Bill – got your email on that. I thought you were amazingly polite to them on the matter. Hard to believe they canned your access over it … babies.

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  128. Bob — thank you for asking the question! I was trying to get the behind-the-scenes color, when going in the front door was the right approach. I was told it had nothing to do with inVentiv or Star, but did not know the name of the distribution company handling/filling orders from the website. So… the CigRx I ordered on August 10th should be here tomorrow. Right?

    Will report back, if I can add any more color. Thanks again. Nicely done.

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  129. bop ty for 123..agreed.

    How active do bond holders get (in running a company) or are they usually passive as long as interest is being paid.

    reading the history of the ARD deal, SD bankers suggested to sd they look at ARD. Im sure they liked the equity infusion

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  131. bill — bankers and bondholders have NO RIGHT to tell mngmt what to do, until a covenant is breached and/or a debt or coupon payment is missed. (And then you have to wait for the 30-day cure-period to pass, if you’re a bondholder.)

    So debtholders have to just stand by the side of the road, until the driver (management) or the car (asset quality/cash flow) screw up. It can be frustrating, as a bondholder, to see that wreck coming… but you have no legal authority to stop anything…. until a covenant is broken.

    Equity holders, however, are sitting in the back seat of the car. THEY should be the ones, SCREAMING THEIR HEADS OFF about the driver. THEY are the ones who stand to lose EVERYTHING, if the car goes off the road.

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  133. #123, #131-Thanks BOP for the discussion-this always raises the question for me, anyway, where in the hell is the Board in all of this-they are usually hand picked by the CEO and usually lap dogs-it amazes me that the lawyers do not see this as a fertile field for breach of fiduciary duty

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  134. 131 ty for that

    Ward was touchy (defensive) when someone questioned him on violating covenants and wondering out loud i wonder if the hedge actions were taken to help out on covenant compliance rather than to juice up q2

    The passengers in the back seat are screaming like they have an E ticket for a ride at disney

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  135. 133. In the case of sd, the chairman of the board is the ceo so where is the oversight… the checks and balance. There is none

    I am surprised as well that washington hasn’t outlawed the practice of the ceo sitting on the board let alone being the chairman of the board as well as the ceo

    It’s poor corporate governance as far as i’m concerned

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  138. bill — just to put it in perspective… not all boards are dysfunctional. And (having been on a couple) it actually is important to have the CEO on the Board. However, it’s a good idea to separate the CEO and Chairman positions.

    You know, Boards can be independent and STILL dysfunctional. They only know what they are told… or what they ask. And far too many board members are more concerned with getting their Board Fees and “when’s T-off time?” than doing their job.

    That said, it’s NOT the job of the Board to micro-manage the company. “Too many cooks…” and all that (ref: BP/Govt/Macondo decisions). The best way to insure the CEO does his job right is to pick the right person and incentize him the right way.

    Nothing is perfect. But — trust me — you DO NOT want Washington or Trial Lawyers 2nd guessing Boards at every step. Most work. Some don’t. A handful are toxic. But, like SarbOx, don’t bring down the whole system just b/c there are a few problems.

    Just a few of my (unwanted) opinions…

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  144. Been gone a couple of days and return to the blessed event:

    #139 WLL exchange: Not just converting WLLprA for the 2.3033 conversion ratio but topping the cake with $14.50 cash. Closed today at 221.50 so still a couple of bucks to be made but not much. One hell of a ride since the deal stumbled out of the gate June ’09.

    Stay tuned for chapter two when it’s evil twin EXXI does the same on it’s 7.25% issue (EEXXF conversion ratio 43.8596 trading last at 163.66).

    Coming soon to a theater near you.

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  145. Also on the SD comments earlier:

    Ward’s future may well be determined by some real smart puppies at Fairfax Financial who are heavily invested in the common and private converts with strikes around 11.00. Can’t be happy with that but these folks have the jack to decide to save the company if they want to. and on their terms.

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  146. elijah — sadly, those EXXI 7.25s have call protection until 12/14. Those were some of the most attractive (for investors) and unattractive (for the company) securities I have seen issued in a long time. (Not as bad as the KSU 13s issued at 88.4 in Dec ’08, tho, at the depth of the credit meltdown).

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  148. Re: #30 $NYMO, McClellan at 3.14, suggests that the risks to the upside and downside are equally balanced

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  150. Bushear  Reachtor
    Not able  to obtain substantiation from other  sources, however,  a  usually credible source in Israel  is reporting  that within  the last three days   the  Iranians accidentally  shot down one of their  few  remaining F4 [Phantoms] with a Russian  S100  Anti-aircraft  missile  5 miles  North of the Bushear  Reactor…..apparently   reflecting command/control  problems within  different  elements of  the   Iranian  Revolutionary Guard…..i.e. one  group scrambled the aircract, but  the  missile radar group was not  told……..and apparently  Iran does not  have  IFF [identify Friend/ Foe]……..so the misile/radar  defense  REvolutionary Guard group  shot  their  own aircraft down.
    Additionally ,  same  source  reports early in August   threee (3)  unmarked drones crashed into the dome  of  the  Busheaar  Reactor [guess who is sending a  message to whom]. All three drones  hit  the dome  in the same day……..A  LOW COST  WAY  OF SAYING WE CAN REACH  YOUR   NUCLEAR WEAPONS FACILITIES  WHENEVER WE WANT……….AND ALSO  OF  MEASURING  THE   IRANIAN  AIR DEFENSE RESPONSE  CAPABILITIES…………understand  the drones  flew NOE [nap of the earth].

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  152. bill, I think your SD thoughts are right-on. Bankers can point out the crunch coming and "suggest" you do something…or it will be hell-to-pay and who will do your next bank agreement with that kind of leverage?  B of D independence: HA! Remember Tom is "related" to Aubrey in mgt style;  Tom probably needs to be made whole on his options about now? Please.
    TPH: shame on you, but what's new.  A hungry AE will call soon and you will be good to go as mgt does not keep track of such minutia.
    Ever heard of a debt junky?  Ever heard of CHK? I'm getting off my soapbox now.

    Reply

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