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Halcon Resources Corp. Message Board

  • valueman60 valueman60 Nov 15, 2012 8:51 AM Flag

    Much ado

    It has been becoming more clear that the recent activity has been nothing more than "deat cat" or technical bounce to punish aggressive shorts and to save some deals as explained below.
    With the drop of the shares to below $5.50, the Petro Hunt and specifically the Canadian Pension Plan committment to buy $300 million shares at $7.16 a share was beginning to have its foundation crumble into dust. After all, would not you be squirming if your huge investment dropped by more than 25 percent BEFORE you even closed the deal? HK desperately needs those funds for capex, and cannot raise more money in the debt market ( struggled to raise $750 million at very high interest rates and unfavorable clauses in the indenture terms) and with the shares trashed, issuing more stock (God forbid) is not an option.
    So what was Floyd to do?
    He orchestrated the insider buying in an act of desperation. So we saw massive short covering lift the shares to $6, but then NATURAL long sellers, not short sellers have come in to take advantage of the price rise. Without significant earnings, very high debt, lower oil prices, bad macro factors and negative outlook, it is a fertile environment for sellers.
    While I am still hopeful that Floyd can pull this off, is has become clear that the short term is filled with strong headwinds, and I expect the shares to languish , it may be 3-5 years instead of the 2-4 years I had previously hoped for a payoff and I am concerned that even then it will not be as great as I once hoped for.

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