HYPD has completely fallen apart over the last couple of weeks, and the selling pressure and price drop has continued over the past two days.
At this point in time, I have no fundamental explanation for the drop. To my knowledge, nothing has changed at the company and they are moving forward on several fronts to let investors know how and when they will begin the process of drilling their West African concession.
I am hoping to get some information directly from the company for this weekend’s edition, but at this time there is nothing to report.
In lieu of having nothing to report on the corporate side, let’s take a look at the technical picture:
Here’s a very long term look at the chart going back to the summer of ’03 when this stock started its 1.5 year move up the charts.
As usual, I have included both support/resistance and a trendline. Technically, there is nothing positive in this chart right now. As you can see, the long term trend line, which was breeched a couple of days ago, was broken decisevely to the downside. The stock paused for a couple of days right at Fibonacc’s 38.2% retracement level, and then disintigrated.
I am very intrigued with the possibility of an exciting buying opportunity, but I believe caution is warranted at this time. Clearly, there is panic selling, and I would choose to wait until the panic is over before considering a buy.
However, if the stock does drop to Fibonacci’s 61.8% retracement of $1.60 and holds that level, I might consider buying to take advantage of this weakness once we have confirmation that nothing has changed at the company.
If you are a long term investor and just holding a position waiting for the Guinea concession to be developed, all this drama is nothing but a gut check. They are either going to develop the concession or they aren’t, and no one knows the final outcome at this point in time.
Look for an update in a regular edition once I have some information.
It appears that the intraday volume today to get the price moving up from its low of 1.75 is higher than the volume prior to the sell off…does that mean that a new support level of $2 ?
Editor: I believe it is too early to tell. Everytime you have a waterfall sell off like this, there is the inevitable “dead cat” bounce. I would like to see the stock trade sideways on lighter volume for a few days before declaring $2 as the new support level.
No explanation??? Check out the 3/26/04 8-K filing. 960,000 privately placed shares saw their one year anniversary in the first two weeks of the year, and 6.2 million more hit the one year mark at various points from Jan 14 through March. (If not in every edition, at the very least review the private financings quarterly – this drop, AGSI’s recent drop, AMW’s initial drop from 1.65 to 1.10, and the start of NTDL’s fall from grace should not have been surprises.)
Editor: True, but just because shares become eligible to be free trading doesn’t mean anyone has to sell. In the recent Yahoo insider filings there haven’t been any filed for sale recently. The market is probably pricing in a potential excess supply ahead of time. Ultimately, if they get the Guinea project launched, none of this will matter. If they don’t, it will be a failed idea.
Listening to the 05′ shareholder’s conference, there seems to be a great amount of resources involved to developing the shallow wells in Lousiana. This seems to me that the company (with high oil prices and low lying fruit, (shallow wells))would be strongly considering the route of self financing the first well or two in Guinea. With obvious success they may then be in the cat-bird seat when approaching a deeper pocketed partner. If that is the case, I rationalize the recent selling are investors who are frustrated and/or bored with what at first looked to be a quick killing? What are your thoughts?
Editor: Certainly the recent drop in the stock is totally related to the potential sale of 144 shares. There are approximately 4 million that come eligible over the next several months at a cost basis of $.80. Whether there are real sellers or market makers pushing the stock down to encourage selling, I can’t say. The game play you lay out would be a strong way for the company to go.
Bought HYPD this week at $2.50. Will look to average down on big pullback. Like story.
Editor: As did I at $2.60. I can’t say what is going to happen in the short term. I believe the current swoon is 100% technical in nature- tha market is adjusting to the 4 million shares at $.80 that are eligible to be free trading over the next several months. However, if they announce a plan to start drilling in Guinea, the market might absorb any supply in short order. I can’t predict with any certainty what will happen. Seems like it’s a horse race between liquidity and corporate developments.
…I spoke with Chris…can’t remember his last name…at HYPD on Thursday. He said everyone down there is excited about what they’re doing and the short- and longterm prospects. Asked about the dump…his reply was that there were many shares out @~.80. And looking at filings…there were many filed for sale that had not yet been sold. I personally more than doubled my position and feel quite comfortable. If it drops more, I’ll be buying more. Don’t like all the sales…doesn’t really look like shorting…but hey!, people do what they think they have to do. jt
Editor: You must be a glass half full kind of guy. Like Chris, I believe the drop in the stock is not related to the company’s fundamentals, just a technical situation. Whether it’s real selling or market makers I can’t say, but long term it is meaningless.
Wouldn’t the deep pocket players wait till hypd is out of the picture and go in by themselves.
Editor: According to HYPD’s SEC filings, they can’t. HYPD has an exclusive with the Republic of Guinea for the concession. Many new developments happen this way- a small company finds it and proves it out, then a big company buys in.
Can anyone explain US Oils involvement as mentioned in todays 10QSB report. “Under our agreement with US Oil, we will pay US Oil $1,600,000 if SCS obtains third party financing for the Guinea development project. If paid, the fee will increase the cost of the Unproved Oil and Gas properties at the time of payment. As such, it will increase the cost of sales over the oil and gas production period as part of the periodic amortization of the Proved Properties, or, if the development of the properties does not culminate in oil and gas production, the cost will be charged to expense as an impairment. Additionally, US Oil will receive a 3% royalty if oil and gas is produced on our Guinea project. ”
Editor: Simple- they originally bought the rights to the concession from US Oil. This must have been part of the purchase agreement.
Please comment on how this affects HYPD and the stockholders. Quotes & News: symbol/fund/keyword Quote/Chart/NewsProfileNews SearchInteractive ChartingAnalyst EstimatesInsider TradingFinancialsOption ChainSEC FilingsDiscussionHistorical QuoteIndustry AnalysisChoose Your Broker- – - – - -Market AdvisersFree Annual ReportNewsletter Directory Find symbol Search News Site Index SPONSORED LINKS Get listed here Forex Trading and News with FXCM Learn currency trading with real-time rates, news, charts, and a free demo trading account from FXCM – the leading market maker for Forex trading. http://www.fxcm.com Start Currency Trading Today – Risk Free 24-hour commission-free trading, 100-to-1 leverage of your capital, free forex trading software and more. Sign up for your free market trial and receive personalized one-on-one training. http://www.gftforex.com Southridge Capital Management LLC Dismissed as Defendant by Georgia Court In Suit Brought By Hyperdynamics Investor to Pursue Counter-Claims Against Hyperdynamics For Breach of Stock Purchase Agreement 4/12/2005 11:18:15 AM RIDGEFIELD, Conn., April 12, 2005 /PRNewswire via COMTEX/ — On April 7, 2005, Georgia Superior Court Judge T. Jackson Bedford, Jr., dismissed Southridge Capital and others after granting their motions to dismiss for lack of personal jurisdiction in the case brought by Hyperdynamics, Inc. (HYPD) Stephen Hicks, principal of Southridge stated, “We feel vindicated by the ruling and are pleased by the Court’s action. The ruling is a further indication that Hyperdynamics’ odyssey through the Georgia courts is finally coming to close. We now intend to seek any and all appropriate relief from HYPD and others for damages they incurred defending the dismissed claims.” Wellington LLC, the investor sub-advised by Southridge, remains in the case as a defendant (insofar as it had stipulated to jurisdiction in Georgia) and is a counterclaim plaintiff. Wellington intends to vigorously pursue its counterclaims against HYPD including the enforcement of a mandatory conversion provision whereby it would be entitled to receive approximately 3.8 million shares of HYPD common stock or approximately 8.25% of the outstanding shares of HYPD at a mandatory conversion price of $0.40, in addition to significant monetary damages, including statutory interest, arising from HYPD’s breach of its agreements with Wellington. SOURCE Southridge Capital Management LLC
Editor: I don’t have a comment. Seems like a non-event to me that may go on for years. Some judge decided he didn’t have jurisdiction. They will sue them somewhere else, and this will go on for years.