Tuesday, April 06, 2004
As of 8:05 Monday morning my broker account is empty of cash. Following encouraging results from my insurance holding Chaucer, more shares were purchased. All my chips are now at stake.
Chaucer trounced market expectations, announcing earnings per share at 9.5p and
tangible assets at 37.9p. My valuation heuristic puts Chaucer on a fair value of 66p. I broke my thirty percent margin of safety rule and bought just over two and a half thousand pounds worth at 54.75p, a twenty percent discount to fair value.
In the previous week, Dana Petroleum announced full year results at 26.5p and clarified the magnitude of their recent gas find offshore Mauritania. I'm ambivalent on this one, earnings were disappointing (expectations were 30p per share) but the drilling report gave some cheer, though the 1 trillion cubic feet gas is most likely insufficient to make commercial, other finds in West Africa prove there is a lot of oil and gas out there - it's just a gamble on whether Dana will find any. That chance isn't reflected in the price however. Dana is so cheap any exploration assets in West Africa, Indonesia or anywhere else the company has concessions is currently being priced at 0p in a detailed analysis of the company - the production assets in the North Sea etc. sum to approximately the current share price. I'm of the prejudice that an oil exploration/production outfit with potential for further finds is worth paying twelve times earnings for. That makes my Dana fair value 318p. The trouble is, the majority that move the market don't consider Dana's exploration assets to have real potential. I doubt they ever will, unless Dana starts finding oil at the end of the bit. Dana is drilling in Indonesia in May, I'll be re-visiting my appraisal when the company informs the market in their next 'drilling report'.
In the meantime the prices of Dana and Chaucer have made progress in the market, as have my remaining holdings, Ben Bailey and Mayborn. The portfolio is up significantly since my innaugural blog.
The Artful Dodger
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Chaucer trounced market expectations, announcing earnings per share at 9.5p and
tangible assets at 37.9p. My valuation heuristic puts Chaucer on a fair value of 66p. I broke my thirty percent margin of safety rule and bought just over two and a half thousand pounds worth at 54.75p, a twenty percent discount to fair value.
In the previous week, Dana Petroleum announced full year results at 26.5p and clarified the magnitude of their recent gas find offshore Mauritania. I'm ambivalent on this one, earnings were disappointing (expectations were 30p per share) but the drilling report gave some cheer, though the 1 trillion cubic feet gas is most likely insufficient to make commercial, other finds in West Africa prove there is a lot of oil and gas out there - it's just a gamble on whether Dana will find any. That chance isn't reflected in the price however. Dana is so cheap any exploration assets in West Africa, Indonesia or anywhere else the company has concessions is currently being priced at 0p in a detailed analysis of the company - the production assets in the North Sea etc. sum to approximately the current share price. I'm of the prejudice that an oil exploration/production outfit with potential for further finds is worth paying twelve times earnings for. That makes my Dana fair value 318p. The trouble is, the majority that move the market don't consider Dana's exploration assets to have real potential. I doubt they ever will, unless Dana starts finding oil at the end of the bit. Dana is drilling in Indonesia in May, I'll be re-visiting my appraisal when the company informs the market in their next 'drilling report'.
In the meantime the prices of Dana and Chaucer have made progress in the market, as have my remaining holdings, Ben Bailey and Mayborn. The portfolio is up significantly since my innaugural blog.
The Artful Dodger
