"What eludes my analytical nature is why most evaluation opinions tendered towards HK are from traditionalist thinkers. Conclusions based on comparative earnings are, in my opinion, missing the proverbial "boat", entirely!
The reason investors like Warren Buffet have extraordinary results is no secret. He views companys as potential ownership candidates by respecting earnings but placing emphasis on cultural need for product (which affects organic growth) coupled with stock prices he considers as undervalued.
Fellow Alpha contributor, Michael Filloon, brought HK to his readers' (and my) attention earlier this year, and did a fine job of providing completion results, noting superior lease positions and demonstrating the company's production potential as you have also done. I began following the stock and adding positions soon after.
But, from a "Buffet" type analysis, what made me pull the trigger, was the radical increase in shareholders' stock equity. And this is where 'traditional' financial analysis fails the average comparison. For instance, if in spending $5 million to drill and complete a well that has proven recoverable reserves equal to $25 million, do we show the gain in assets anywhere as income? Where can we show the increase in value on an Income Statement? Obviously, we've taken an asset with a lease cost of, for instance, $100,000, spent $5 Million on improvements and effectively enhanced its value by nearly $20 Million. Repeat that process 5 times from a drilling pad and we have created a $125 Million asset- but no income! Ah, the injustice.... and oversight!
The question is, then, if the company grew its inventory by $25 million, does that ADD to company profitability, or is profit only measurable when oil is actually sold and revenues are generated? I understand the variables that come into play to try and convert 'non-realized income' and assign a present value to it, but, potential is potential and realized income is realized income. So who s
Sell and take your loss...
I think you should sell this "pig." Clearly, you don't believe in management. Why hang around and suffer more losses? I don't care if you're long or short.
"Muted cheer-leading?" I'm down $20K at the moment. I chose to invest in HK. I don't think the stock is a pig. I think they're having growing pains...I've been investing for years. "If you can't afford to pay, you should not play." Charles "Chuckles" Cohen
Now, enough of your #$%$.