On HDY- the stock is not trading to new highs on Friday news, which to me is a short term technical negative, and a major positive to those who don’t own the stock and are looking to get in like myself. If I were a shareholder, I would swell 1/2 now.
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Are you saying we should accumulate HDY?
Editor: Absolutely, but I believe it can be done on dips. I don’t believe you need to buy this stock when it is hot and everyone wants it.
HDY closed on Friday @2.72. It closed today @3.23. That a close up to me…I don’t consider AHs a “close” since that market is a totally different bird. Nevertheless…you can wait, but more news is forthcoming. Actually, the truth is…I don’t really care what you do…so I won’t be back. At least you admitted you were wrong. And I do know you are a trader, so I shouldn’t be surprised that you are recommending people to sell half!! Whatever. PEOPLE HERE: unless you are traders with significant skill at it–buy and hold HDY long and don’t pay attention to this editor. OK…I feel better. jt
Editor: The purpose of this BLOG is to provide a forum for people to provide varying points of view. I am a trader. I know it. If you are not, then your strategy is appropriate. Tennis players don’t have to play golf, and vice versa.
If you buy the stock when it’s hot and everyone wants it, don’t you think that’ll be when the price is high, and not in a dip? I would think you want to buy when no one wants it. Like now.
Editor: I totally agree with your thought. Nice to read a little sanity with so many emotionally attached to this company. If you have read my stuff, you know I accumulate stocks when they make 61.8% retracements (fibonacci ratios). For those that don’t understand it or don’t have the software, you can follow this BLOG for the number.
Good luck to all those who follow your strategy. They will have a good buy while waiting for HDY to fall to $61.80 after it hits $100 in about a year.
Editor: $100 billion market cap?- that’s a realistic expectation. Probably $10 to $20 in a year if they get a big name partner and hit oil.
Hyperdynamics Corporation (HDY) A few observations: ) The first initial agreement towards a final contract granting drilling permits to HDY from the Guinea Govt was reached in 2002. 2) 4 years later, no permits granted and that agreement to be amended in 2006. 3) Condition: A) Before final signing amended 2006 agreement, HDY is first to establish and sponsor a USA humanitarian fund for the people of Guinea. 4) Condition B) In addition to the fund, per the new 2006 protocol letter, HDY agrees to make advance payments to Guinea against future royalties on production revenues. ( The word “extortion” keeps coming to mind ). HDY is heavily invested in this Guinea project and cannot walk away from it now. Understandable. The Guinea Govt knows this and is going to abuse their position and extort all they can from HDY before granting the permits. It is just matter of time and payola as I expect HDY will finally succeed in getting the permits. I wish them well. Unfortunately for HDY, corruption is alive and well in the Republic of Guinea. You were right in your earlier remarks. It is very interesting the way that this deal is playing out. Thanks WF
Editor: Thanks for you contribution. I think investors are a little too emotionally involved in the stock, and not looking at the facts. However, this company still has a lot of upside potential and has been a very good trader. I still expect higher, and possibly much higher levels down the road.
To your point in #2. For HDY to have a $100 billion marketcap, that is a share price of about $2,300 with todays outstanding shares. at $100, that’s ONLY about $4.3 billion. For what they have and signing bonus possibilities, I think $100 is optimistic in 12 months, but possible.
Editor: Thank you for your contribution. XOM currently trades at a 380 billion market cap. There’s is no doubt in my mind they can achieve more than 1% of the value of the largest market cap company on the planet within one year.
Not a lot of volume but the stock goes up 6.77% on 4/5. If good news comes out the volume could send this stock high quickly. I own some at 2.4 and don’t know if it can drop back to that level or not. There is a lower gap at 2.8 that could fill. The last 3 times the price was at similar levels it tanked. Year to date its up a solid 85%+ with a flat 200 day average. All we need is some buyers here and this one will rise very quick.
Editor: It would appear sellers are exhausted. $2.80 would probably be the ideal level- it would be a 50% retracement of the lastest move and fill the gap. However, not likely to see the way the stock is trading without some negative news.
have you repurchased HDY shares? Flight attendants please prepare for take-off….
Editor: Going to shortly. Quite right.
Am I reading and understanding your commetns correctly? You think HDY can hit $100 in 12 months (if the get a new PSA, permits and drill)?
Editor: I don’t believe there is a snow ball’s chance in hell the stock could trade to $100 on those events. $10 would be a very optimistic target. Is $100 possible- sure- if it is proven there are billions of barrels of oil they own the rights to off the coast of Guinea. It would be many years down the road, and if the oil is there, it is more likely they would be bought out long before the stock traded to $100.
Let me first start out by saying I always appreciate your advice, whether I take it or not. This last time I did not take it and am glad. However, if it were not for you and your fine forum on stocks, I probably would not have come across this stock. That being said, let’s get back to this market cap thing. If you believe that HDY can reach, 1% of XOM, as you said 3.8 billion, not providing for dilution (potentially a big factor) I calculated HDY’s shares about 87 dollars. Correct my math please, if I am wrong. HDY is about about 2.30 share price at 100 million. 3.8 billion is 38 times greater than 100 million so if you multiply 2.30 * 3.8 you get about 87 a share. If we believe that HDY can hit a billion dollar maket cap that is about 23 dollars a share. Also, I have not provided for the dilution factor (which you may know more about than me). I would like to hear your thoughts on these numbers.
Editor: Thanks for the contribution. As to being right or wrong- you win a few, you lose a few. I am especially proud of my recent call on DXCM- that was as good as it gets. That having been said, I am not going to commit a lot of time and energy to computing the potential valuation at various price levels. As you rightly point out, the company will have substantial dillution as they have little or no money right now, and would have none if their stock didn’t trade so well. It cannot be computed because I don’t know the future. For example- if they find a partner to put up all the cash for the initial drill sites there might be no dillution. If they fund it themselves, there could be massive dillution. Here’s how I see the step to success: 1. Get the drilling permits 2. Get a big name deep pockets partner to jv the project. 3. Drill the initial test wells. 4. Get sellable hydrocarbons out of the intial test wells and get proven reserves. 5. Fully develop the entire concession and have it generate huge cash flow.
Now- the company has stated it might finance the initial test wells out of its own pocket- this would equate to substantial dillution. If they were getting started today, it could easily take 5 to 10 years to complete this process, if the oil is there. That’s the big picture as I see it. Lots of steps and lots of opportunities to trade in and out. I missed the last one, but I’ll probably get the next one.
Please comment on the recent anouncement regarding potential partners. Thanks
Editor: Will do a new BLOG entry on it later today. This is a direction I have always written they would have to go. However, based on the way the stock is trading, it seems to me the market is getting impatient for them to actually have a signed deal and drilling permits.