Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
A very good video to watch however I am not convinced by his explanation of losing money on the hedges. Someone posted on here that the company is hedging by buying put options and if that is the case then the only loss is on the cost of buying those options as i3 will still benefit from the increase in the underlying. If the company for example buys the $90 put options for $2 and the price of oil goes to $120 from $90 then the options will expire worthless, i.e. they would have lost $2 buying the hedge but will make an extra $30 from the price increase in the underlying. Selling calls to deliver to the market will be a different story so apologies if I have got this wrong maybe someone can confirm to me the exact hedging strategy ?
I wouldn't be surprised if more bidders start to enter the fray. What the bid process has highlighted is that North Sea oil and gas producers are very cheap and given the uncertainty over Russian gas supplies into Europe going forward it may be a way for a rival to secure some production. These are just my thoughts and nothing more but it doesn't feel done yet.
That is a pretty poor excuse as clients are contracted with IG surely it is their responsibility to rectify the situation and not blame a third party. Try raising the issue under a TCF complaint and suggest going to the FCA to see if that gives them a little encouragement to try harder.
I'm pleased you have spotted this ARK as I have felt for a while that someone has written an Algo that translates the move in oil into a basket of underlying stocks, unfortunately where they have messed up is that a linear 1% fall/rise in the oil price does not translate to a 1% fall/rise in the profits of the underlying so whilst I am not pleased that the oil stocks seem to be getting manipulated I feel they will get caught out the wrong side of a move to value.
Buying a put option gives the holder the right to sell so for example if i3 had bought the $110 put option when the price was trading at $115 for say $2 then if the price of oil breaks below $108 the hedge is making money. If oil trades up above $117 then the cost of the hedge has been negated by the rise in the underlying price and you certainly wouldn't exercise a sell option at $110 so just let the hedge lapse.
Share buy backs are not the magic bullet that some people believe they are, to buy back 10% of the issued equity that some posters are talking about would cost around £30m at current share price. Firstly there seems to be an assumption that buying 10% of the shares will increase the share price by 10% or more when there is no evidence of such a correlation existing, the latest example of this I can note is AWE where a director has just purchased around 13% of the company and just look what has happened to the share price.
Secondly what you are actually doing is creating a false market by introducing a buyer so market makers and other participants can actually ramp the price knowing they can sell higher which then brings in more selling and you end up with a price that is lower after the buy back than when you started.
The best way to attract more buyers is to make the company look more attractive to invest into, I would much rather that £30m be spent increasing production and unlocking the long term potential of the company and not wasting it on short term measures that have no guarantee of success.
People calling for a buyback need to clarify whether they are purchased for cancellation or kept in treasury to re issue at a later date but personally I don't believe that from experience buybacks for cancellation provide a tangible benefit for the cost. I am also not a big fan of consolidations in the scenario that i3 finds itself in, my experience is that the higher share price gives an excuse for the market makers to drift the price downwards and it provides a platform for traders to short a higher price and gives them more room to play with.
I would rather i3 spent the money on increasing development and production, making more money is a better way than the aforementioned to raise the share price.
It was a good video to watch and I would like to emphasise the point he makes that rate of usage growth may have slowed but it is still growing highlighting the divergence between physical price and the share prices of last weeks selloff. Maybe controversial but I would be careful of listening to recession talk at the moment, the major indexes are trading around 20% off their highs before we are even in a technical recession and already the Fed is talking about the curve flattening. I am not a recession denier but it seems a lot of people have got themselves short prior to the event and if it's a softer landing than what is being predicted we could see a huge short squeeze in the markets. At the moment fear is the only driver but when the fear subsides watch for the upside. None of this is advice, just an observation.
ARK87 I think you have made the perfect point that they are both undervalued I mean for i3 to be down over 20% from it's recent highs and PTAL around 25% it's like someone is treating these shares like a leveraged oil fund.
I think some people have got themselves too short on fear and wouldn't be surprised to see a short squeeze here. Fundamentals are that oil and gas usage are going up year on year and the recent volatility is I feel fear driven. Interesting to see that PTAL has a larger market cap than i3, considerably more debt whereas i3 has none, seem to both produce roughly the same amount and i3 operates in a much more politically stable environment. These are very quick fag packet observations so forgive me if I am completely wrong but in my mind highlights that i3 is fundamentally undervalued.
4.5 million have traded in the last 2 days so someone has reduced quite a large holding, my take is that with no RNS out someone has either decided to throw in the towel or it's an enforced liquidation due to a margin call and with a stock this size the market makers are going to lower the price 20-30% to get the size away. I don't believe anyone is shorting this as it's very difficult to borrow market maker stock in size and also I don't feel any risk department in a professional company would allow it.