Investing in Companies with Solid Assets: Expert Portfolio Manager James C. Roumell Shares One of His Top Picks, Ultra Petroleum (UPL), and Why This Company has the Potential to Double EBITDA

Wall Street Transcript

67 WALL STREET, New York - June 4, 2013 - The Wall Street Transcript has just published its Multicap Value Investing Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investing in Financial Services - Large Cap Investing - Value Investing - High Quality Companies - Bottom-up Investing - All-Cap Growth Investing

Companies include: Tecumseh Products Company (TECUA), Apple Inc. (AAPL), Merck & Co. Inc. (MRK), Berkshire Hathaway Inc. (BRK-A), Dell Inc. (DELL), Transocean Ltd. (RIG), Sears Holdings Corporation (SHLD), J. C. Penney Company, Inc. (JCP), Ultra Petroleum Corp. (UPL) and many more.

In the following excerpt from the Multicap Value Investing Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What about Ultra Petroleum? Why do you own that company?

Mr. Roumell: We think Ultra (UPL) has great assets. They are long-life assets. They have an average life of about 17 years. We're bullish long-term on natural gas, but more importantly, with Ultra you don't have to be that bullish on natural gas. Because they are such a low-cost producer, they don't need dramatically high prices to succeed.

The industry median all-in lifting cost is $6.31 per Mcfe, and Ultra's is at $3.00. They anticipate that if gas prices go from $3.50 to $4.50 per Mcf, they can double Ultra's EBITDA from $600 million to $1.2 billion. There is a lot of leverage in the model, it's a very well run business. Michael, the CEO, has $75 million worth of stock.

We just met with them a couple of months ago. We see more and more utilities as is described in the first-quarter letter converting to natural gas. We think eventually, you'll have LNG where they will be exporting of natural gas.

Also, short of LNG, they really think they will be shipping down to Mexico, which doesn't require all the building, the LNG facilities that are needed to ship natural gas abroad. They think there is a big opportunity by going south of the border. It fits the out-of-favor paradigm perfectly. It is also well capitalized.

A few years ago, Ultra touched $100 a share. Our average cost is $18.5, and the number of bullish analysts on the stock was 25% when we bought our first share. The number of bullish analysts was 80% when the stock was trading close to $100.

TWST: You sell when you meet your price targets. Are there other reasons you would sell something out of a portfolio?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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