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American Capital Agency Corp. Message Board

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  • ray858945 ray858945 Jan 29, 2013 2:51 PM Flag

    Re: Re: OT-NTI continued...

    jtrader ...

    Note that both of those oil companies do not pay significant divies ... about 2%. In contrast, NTI is going to pay it's free cashflow. If this was $1.00 [I think it will be more], then they have a 16% yield at $25.00. Even CLMT is only paying 8%. Once people see results from NTI, the PPS could rise to yield 10%, or a PPS of $40. The yield could even drop lower based on what other refiners pay [Hollyfrontier pays about 2% also]. And, the profit could be higher. The analysts have increased their 4th quarter estimate from $1.01 to $1.42, and it might still be too low. It is not too crazy to think that the stock could double from here ... that would be $1 million profit for Crazy Ray, not counting divies. It's not too late.

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    • I think that NTI, ALDW and CVRR all present similar excellent opportunities in that they are refiners with recent IPOs just getting recognition, with excellent distributions and a strong secular tail wind based on the Brent/Cushing spread, not to mention the Brent/Clearbrook spread. Any thoughts from the NTI board on the raking among these 3?

      Sentiment: Strong Buy

    • Good information, Ray. Thanks.

      The one thing I have been wondering about though is why general partner did the SPO before earnings and the dividend if they were expecting it to be such a high number? Why not let the stock price move higher first?

      I know they still own a large chunk but why not wait another month?

      • 3 Replies to jtrader64
      • jtrader ...

        I would be happy with the $1.00, but here's a couple of thoughts:

        [1] From what I've seen, the GP paid $800 million for 90 million shares, or about $8.90 per share. ((An even better question is why did Marathon sell?)) This was a private equity deal. It wasn't sold to "oil men" who might want to hold it for a while; it was sold to money men who wanted to sell some possibly to finance another deal ... hard to say ... but they won't starve based on what they have left.

        [2] The price of Brent has continued to go up [including today] ... maybe more than they thought it would ... there was a fair amount of short interest in the stock from people betting Brent would go down. We're seeing a little short squeeze now, and those things aren't easy to predict.

        [3] Unlike other management teams, the GP is a group of money guys who have a recurring need for the services of under-writers; they may have wanted to make sure the under-writers and their clients were happy. I'm happy.

        [4] Finally ... hey, it's the stock market!!

      • Those shares were held by the outgoing CEO, from what I understand. He was taking deferred pay after having done the job the board wanted him to do. It was planned from the start and I am grateful for the opportunity.

      • The 10.7mm shares were a private placement - share held by someone other than NTI (ex co- CEO) - no dilution. Maybe he knew something bad was coming, but I'm inclined to believe that the seller wanted the money for some other hot investment.

        12/21"s co-founder and Chief Executive Officer Mario Rodriguez has resigned effective today and that its co-founder, President and Chief Operating Officer Hank Kuchta, has assumed the role of Chief Executive Officer of the Partnership."
        1/17"public offering of 10,700,000 common units representing limited partner interests in the Partnership "

    • Hey "Crazy" Ray –

      I have to say, I like your investment style.
      Once you’ve done your DD and have the strength in your conviction, then you jump in with both feet.
      Ummmm…….. that sounds very similar to Xion’s and my style – imagine that! :-)

      The only difference with me is that I am still mostly a high risk – high rate of return kind of guy. 75% of my liquid capital is in the hands of VCs’ & Hedge Funds.
      When we win, we win big and they take more than their ample share of the profits. :-)
      I just get to “play” with the other 25%.

      Sure do hope you make that million…then maybe $30k per year won’t like such a large sum!

      All the best,
      Salty

 
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