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Intimidate the Opponent Players with a Basketball Banner

Basketball is one of the most popular games in the world, this game is played by two teams of five players that oppose on another on a rectangular court with the primary objective of shooting the ball in the basket. It was believed to be invented in 1891 by a gym teacher from the United States. And since then it has made its way to many schools and organization around the world. Be it professional or amateur players we cannot deny the fact that the thought of intimidating the players has once come to mind.

Basketball Banner

Here are some ways to intimidate players

Stand Tall

When basketball was invented, it was believed to be a game for the tall people since Americans are known to be tall people but because the game is being played even by non-Americans the word standing tall does not necessarily mean being physically tall. This refers to showing proper posture to convey confidence. Acting confidently can lead to feeling more confident and can intimidate another player.

Maintain Eye-Contact

Looking at your opponent in the eye will make them feel uncomfortable. Maintain a firm eye contact and avoid breaking their gaze, if you are not comfortable doing that looking at your opponent forehead will also do the trick.

Showcase your Skills

Players can easily get intimidated if they know that the opponent is good at what he does. A good advice is to practice your talent in front of your opponent before the competition begins. If you have mastered some complicated manoeuvres or you have the three-point shot skills demonstrating it in front of the opponent will convey a message that you are skilled in the game. But if you are not good at a trick avoid doing that in front of them as it might shake your own confidence and ruin the trick.

Prepare for the Competition

This includes a lot of things like knowing your own abilities, practicing and honing your skills and focusing on strategies and plan. You need to master all the things mentioned above and more to become a good player in the court.

For Coaches and Parents- Support Your Team

Being a player of a team is a very brave act anyone can do, because it involves pressure aside from physical and mental test that they have to undergo in each game. If you are a coach, a parent or a friend or supporter your part is very important too. Players needs support and encouragement to help them inspired to play and win the game one way to do that is by coming to their games and getting a sport banner for them, a famous website in the South and Northern California names Team Sports Banner is making beautiful and durable basketball penchants, banners and cut-outs. They also offer accessories that you can use to show your support to your team. If you haven’t already, visit the website today and start intimidating the opponent team with their beautiful sports banner.

Michael Fowler Says Forget the Majors, Buy the Midtiers

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According to Michael Fowler, senior mining analyst with Loewen, Ondaatje & McCutcheon, the major gold producers have gorged on debt and sold off their seed corn. In other words, they pursued exactly the wrong strategy in the past and are now paying the piper. The intermediates, on the other hand, have better balance sheets, positive cash flow and prospects for growth. In this interview with The Gold Report, Fowler highlights five producers prospering against the odds, and three companies with near-term projects likely to be taken out.

Mentioned Companies: St Andrew Goldfields, Pretium Resources, Centamin, Franco-Nevada, Goldcorp, Guyana Goldfields, Newstrike Capital, Randgold Resources, SEMAFO, Torex Gold Resources,  Wesdome Gold Mines
The Gold Report: What are your forecasts for gold and silver prices in 2015?

Michael Fowler: I think gold could go lower in U.S. dollars in the next three months. I stress U.S. dollars because the price of gold is rising in many currencies, such as in Canadian and Australian dollars. This will be a boon to producers in those countries, as will the significant declines in energy costs.

The average gold price should be slightly down: $1,150–1,200/oz. Negative factors for gold are the strong U.S. dollar and lower inflation. These, however, will be offset by strong physical demand from Asia, China in particular. Silver follows gold, so I expect a 2015 average of $16/oz.

TGR: The gold-silver price ratio, which for several years had been at a historic high of 65, has now reached 75. Will that ratio be maintained?

Pretium Resources Inc. has a very high-grade deposit, which suggests the ability to be financed.

MF: I think we will probably see a range of 65–70. Historically, silver has outperformed gold on the way up and underperformed gold on the way down.

TGR: Again, traditionally, geopolitical turmoil has been good for gold. We had a great deal of such turmoil in 2014, and it doesn’t seem as if 2015 will be any calmer. For instance, January brings the prospect of elections possibly leading to the exit of Greece from the euro. Could 2015 be the year gold’s value as a safe haven in a scary world is reaffirmed?

MF: I think the world has always been a scary place. Certainly, the Eurozone descending into crisis would be positive for gold. That said, the gold market in the longer term reacts more strongly to phenomena such as inflation, currency strength and monetary growth than to various political skirmishes.

TGR: Keeping in mind what you noted about the cost savings deriving from currency declines and lower energy costs, is gold production sustainable at $1,200/oz? Can we expect a significant drop in gold production?

MF: We should see a significant gold production fall from 2016 onward.I think the industry got it completely wrong. Producers should have been hoarding cash during the boom years so they could deploy it now. Instead, most of the big gold producers took on huge amounts of debt and are now selling off assets. Capital expenditures have been curtailed, and that will lead to a lower reserve and resource basis and, eventually, lower production.

TGR: Today, even projects with published all-in costs well below $1,000/oz are having difficulty raising capital. What does this tell us about the future health of the gold explorers?

MF: Essentially there’s no money going into the sector. At $1,200/oz, few junior deposits make sense.

TGR: The bear market in mining equities began in April 2011. Assuming that sentiment in the gold sector becomes positive again, how fast will financing come back? Are we talking months, or more than a year?

MF: Should my gold price forecast be wrong, and gold rises in price quickly, that would be a catalyst for many investors to get back into the gold market. Another catalyst would be major discovery, but that doesn’t seem to be on the horizon. For the juniors, there’s always a lag effect. Even assuming a big increase in the gold price, they would still be many months from a recovery.

MF: Three specific companies on my list would be Pretium Resources Inc. (PVG:TSX; PVG:NYSE), Torex Gold Resources Inc. (TXG:TSX) and Guyana Goldfields Inc. (GUY:TSX).

TGR: Despite rock-bottom asset prices, 2014 was not a brisk year for mergers and acquisitions (M&A) in the gold sectors. Will M&As pick up in 2015?

MF: I don’t expect much change. There are many impediments to an increase in M&A. Two that are especially important are soaring general and administrative expenses and golden parachutes for management.

TGR: What can be done about the latter?

MF: Well, most companies with oversized compensation contracts are probably not going to get taken over. They’re going to be put on the waste pile. Basically, shareholders should have a vote on these parachute clauses at annual general meetings, but that isn’t happening at the moment. That’s something regulators could focus on moving forward.

“What’s exciting about St Andrew Goldfields Ltd. is the Taylor deposit, its next development play.“

TGR: Doesn’t this suggest a significant structural advantage for intermediate or junior producers?

MF: Yes, even though some juniors do have outsized parachute clauses for management. So juniors with modest parachute clauses make themselves much more interesting for M&As.

TGR: What type of company is most likely to be taken out in 2015?

Takeover targets must be able to demonstrate good actual or potential returns on investment. The three companies I just named have that. Torex and Guyana Goldfields are both financed to production. Pretium isn’t but it has a very high-grade deposit, which suggests the ability to be financed.

TGR: In the current depressed environment, is mining jurisdiction more important than ever?

MF: I don’t really think timing matters. I’ve always preferred companies in countries with defined mining codes and overall stability. Canada, the U.S. and Australia are at the top of that list. Outside these areas, you’re always dealing with the potential for changes in tax regimes, royalty regimes or environmental regimes.

TGR: Let me ask you about Canada in this regard. The federal government has passed a Yukon environmental bill, which some observers believe to be calamitous. In British Columbia, the courts have given undefined rights over all Crown Land to Indian bands. And Ontario’s new mining regulations are controversial. In the light of these changes, does Canada remain one of the best jurisdictions?

MF: These changes cannot be considered in isolation. Worse changes have been made elsewhere. For example, Zambia just increased royalties up to about 20%, and Mexico has greatly increased royalties as well.

Canada should be considered on a province-by-province basis. What’s going on in British Columbia is quite difficult, but the First Nations situation is much more settled in Ontario, Québec and points east.

TGR: Which junior producers do you follow in Québec and Ontario?

MF: St Andrew Goldfields Ltd. (SAS:TSX) and Wesdome Gold Mines Ltd. (WDO:TSX). Wesdome has a property in Québec but also has major properties in Ontario. St Andrew Goldfields has properties right up to the Québec border on the Destor-Porcupine Fault line. These are two companies I really like. Wesdome is doing very well right now. It’s a small producer, but it has been finding parallel zones to its deposit in Wawa, Ontario, and the grade of the deposit is very high: 10 grams per ton (10 g/t). Wesdome has turned around its operation and is making good money.

TGR: Wesdome has effectively doubled its share price since October. How much of this is due to the recent rise in the price of gold, and how much is the market’s validation of what the company is doing?

MF: I don’t think that the upside is finished on Wesdome, to answer that question. Part of the reason for the share rise is the fall of the Canadian dollar, but more important than that is the company’s discovery of very high grade parallel zones to the Eagle River production facility.

TGR: Wesdome has had good assays results from Dubuisson North in Quebec, including 45 g/t over 5 meters (5m) and 3.4 g/t over 25m. Could this be a high-grade gold discovery?

MF: Dubuisson is really an exploration target at the moment. It could be a factor in two or three years. The real exciting thing for Wesdome is what’s going on in Ontario in Wawa, where it is producing about 45,000–50,000 ounces (45–50 Koz) gold per year. Wesdome found a parallel zone that can be accessed from the production shaft there. The company could actually increase its production at that mine at a lower cost.

TGR: St Andrew announced on Jan. 9 annual production of almost 91 Koz gold. Its stock rose $0.01 in response. Does that indicate a production figure pretty much in line with what was predicted?

MF: Yes, St Andrew revised its guidance upward about six months ago. What’s exciting about St Andrew is its Taylor deposit, the company’s next development play. That is a high-grade system as well. St Andrew is processing a bulk sample from the Taylor deposit as we speak. Bottom line on St Andrew is that it could increase its production, not this year, but in 2016. Its balance sheet is pretty good as well.

TGR: What do you think about St Andrew’s all-in sustaining costs?

MF: Well, they’re high, at $1,060/oz, but they’re coming down. St Andrew is doing a good job of efficiently mining what it has. St Andrew has a royalty issue with Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), which is not going to go away any time soon, but Taylor will lessen the royalty load after it goes into production.

TGR: Earlier you mentioned Torex Gold. What specifically do you like about the company?

MF: Torex has a very high-grade mine, El Limon-Guajes, in Mexico, which is fully financed. Torex has good management that has built mines before. And it has another good Mexico discovery. Torex has some good backing and good shareholders.

TGR: How prospective is the Guerrero Gold Belt?

MF: It’s a good belt and very prospective. There are little companies around Torex, and Newstrike Capital Inc. (NES:TSX.V), which looks very interesting as well. There are some difficulties in Mexico, as I have mentioned. There’s the royalty increase and the increase in drug cartel-related violence.

TGR: Going back to Pretium, when do you expect Brucejack to go into production?

MF: Something like 2018, if the company hasn’t been taken out by then.

TGR: Pretium’s share price has been rocketing, up 5.2% on Jan. 9 and 4.6% on Jan. 12 on no material news. Does this suggest rumors of an imminent takeout?

MF: There are always takeover rumors around companies like Pretium. And there’s the New Year bounce in share prices. Torex was up 5% Jan. 9, and so was Guyana Goldfields. The majors need to do something to increase production. Goldcorp Inc. (G:TSX; GG:NYSE) is a potential suitor for Pretium, and some of the midtiers could potentially get involved as well. The midtier producers now have significantly better balance sheets than the bigger producers, which is really strange.

TGR: Does Pretium intend to begin operations modestly at Brucejack?

MF: Pretium calls it modest, but my personal opinion is that it wants to mine this deposit at about 2,000 tons a day (2,000 tpd). If Pretium is taken out, the new owner will do its own feasibility, and will size its own mill, and so forth. It may be totally different from what Pretium is talking about right now.

Brucejack is exceptionally high grade. Who knows exactly how high? It’s difficult to determine reserves or resources from a deposit as nuggety as this.

TGR: How close is Guyana Goldfields’ Aurora gold project to production?

MF: A progressive start-up should begin in the middle of 2015. Guyana will initially mine the high-grade open-pit material. I was down in Guyana not long ago, and everything seems to be on time and on budget.

TGR: Have all of the details been worked out regarding Aurora’s financing?

MF: Yes, unless there’s a huge overrun in capital expenditure. I mean we’re talking about financing for the first two or three years. According to the feasibility plan, Aurora will be open-pit initially, and it will then go underground. I don’t know whether it will go underground, to be honest. My feeling is that Guyana Goldfields will keep Aurora as an open-pit deposit.

TGR: If Aurora is a success, will we see a gold rush in the country of Guyana?

MF: It’s part of the Guyana Shield. Many years ago, South America and Africa were joined at the hip. The shield area goes through Suriname, French Guiana, Brazil and into Africa and is very prospective for gold. Guyana does have a history of gold mining. The biggest issue for Guyana is infrastructure, which is not really that good. If the country had infrastructure similar to what we have in Canada, we’d have a lot of gold mines there already. But Guyana has worked out its mining code, and although the royalty rate is quite high, the country has a reasonably stable mining regime.

TGR: Which other gold companies would you like to mention?

MF: I like the midtier gold producers, three in particular: Randgold Resources Ltd. (GOLD:NASDAQ; RRS:LSE), SEMAFO Inc. (SMF:TSX; SMF:OMX) and Centamin Plc (CEE:TSX; CNT:ASX, CEY:LSE). I don’t like the majors. They took on too much debt, have been selling off assets and, as a result, have little growth potential. The midtiers tend to have good balance sheets and good growth. They’ve got their costs under control and are cash flowing.

TGR: Randgold has been mentioned as a company that might be aggressive in M&A. Do you agree?

MF: I don’t think it’s going to be aggressive at all. Randgold is more interested in its organic growth profile. This is a company that is aggressive once every, say, five years or so.

TGR: SEMAFO suffered some very bad press a few years ago. Has it turned it around in Africa?

MF: Five years ago, SEMAFO didn’t have a very good mine. The company survived and found the Mana deposit in Burkina Faso. Then around that deposit SEMAFO found the Siou deposit, which is the big catalyst and source of increased production. Its production costs are fairly low. It’s efficient mining. Management has matured. I think it’s a pretty good situation still.

TGR: Centamin took a huge hit last week after it released its Q4/14 production and 2015 guidance. Was that an overreaction?

MF: Yes, I don’t know what some analysts were thinking. The company gave guidance, and with Q4/14 production of 128 Koz, Centamin basically came in with the guidance. Centamin is outperforming in the longer term. This year, with 420 Koz, it will show more production growth. The problem with the land title should go away. The regime in charge in Egypt is likely positive to Centamin.

TGR: After almost four years of dashed hopes for gold investors, why should they be optimistic in 2015?

MF: They should be optimistic because everybody is pessimistic. Already, Canadian dollar gold prices are actually in a bull market, and so are Australian dollar gold prices. Input costs are going down significantly. Despite my opinion that gold prices are going sideways to slightly down in 2015, the gold equity market will do reasonably well this year.

TGR: Michael, thank you for your time and your insights.

Michael Fowler, senior mining analyst with Loewen, Ondaatje, McCutcheon Ltd., has worked in the investment industry since 1987 as a base and precious metals mining analyst for numerous high-profile firms. His coverage list included the major North American gold mining companies, but is now focused on small- to mid-sized companies. Previously, Fowler worked as a geophysicist involved in mineral exploration for 10 years. He was involved in the discovery of the high-grade Cigar Lake uranium mine in Northern Saskatchewan in the early 1980s. Fowler holds a Master of Business Administration from Cranfield University, UK; a Master of Science in mineral exploration from Leicester University, UK; and a Bachelor of Science in geology with geophysics from Liverpool University, UK. He is a member of the Institution of Materials in the UK and a member of the Canadian Institute of Mining and Metallurgy.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:
1) Kevin Michael Grace conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Pretium Resources Inc., Guyana Goldfields Inc. and St Andrew Goldfields Ltd. Franco-Nevada Corp. and Goldcorp Inc. are not affiliated with Streetwise Reports. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
3) Michael Fowler: I own, or my family owns, shares of the following companies mentioned in this interview: Guyana Goldfields Inc. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Tesla to double in the next year? Trader says yes

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Earlier this year when Joe Fahmy of Zor Capital predicted shares of Zillow (Z) had the potential to double in fairly short-order the idea seemed aggressive, to be generous. Four months later Zillow is more than 50% higher and short sellers are getting their positions foreclosed on by margin clerks across Wall Street.

In the attached clip Fahmy says the same sort of explosive move higher could be in the cards for controversial electric car maker Tesla Motors (TSLA). Cars and houses are both purchases subject to loans and economic strength but the business models couldn’t be more different. What the two stocks have in common are relative strength and legions of haters.

“Last week was one of the worst weeks in over two and a half years for the S&P 500 (^GSPC) and Tesla had a very strong week on great volume fueled by very strong earnings and (shares) are approaching new highs” Fahmy explains. “As soon as we get out of this correction or pullback or whatever you want to call it I think Tesla is in a similar situation (to Zillow in late March). Great earnings, highly shorted, highly hated, disruptive technology we think Tesla could double in the next 6 to 12 months.”

It’s remarkably easy to poke holes in the bullish case for Tesla, starting with the fact that it still sells very few cars and the $30 billion market cap looks nothing short of insane compared to established car makers like General Motors (GM) or Ford (F).

In the case of Tesla not having GM’s baggage in terms of recalls and government probes is very much in the upstart’s favor. Stock picking isn’t a game of lifetime achievement. It’s a question of which company has the greater potential over the next decade or two. At the moment, and I’ll concede this is bull market optimism talking, Tesla has a less mine-laden path to profitability than the beaten up husk of what once was proud General Motors.

Never forget that stocks and companies are separate entities. I’ve been a self-loathing shareholder of Tesla for quite a while and that could change at any time. It’s a momentum name for a bull market, not a suicide pact company that I’m going to hold come hell or high water.

Watchlist Analysts Forecast Continued Blue Sky for Biotech Industry

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For the last two years the biotech sector has experienced market-beating gains, even taking into account the industry-wide hiccup in early 2014. Can this trend continue? The five analysts who selected names for The Life Sciences Report‘s 2015 Small-Cap Biotech Watchlist spend their days considering this question; it comes into play with every recommendation they make. The topic came up in various contexts during the Watchlist panel at the 2015 Biotech Showcase: Here are four factors investors should consider as they move into 2015.

While the focus of the 2015 Small-Cap Biotech Watchlist panel was on names that made the cut, the five analysts also highlighted factors playing into the vigor of the space that investors should be on the lookout for, including the need for ongoing scientific innovation and changes in the pricing and regulatory environments. The panelists asked to select the 2015 Small-Cap Biotech Watchlist were George Zavoico of MLV & Co., Joe Pantginis of ROTH Capital Partners, Bert Hazlett of Ladenburg Thalmann & Co., Reni Benjamin of H.C. Wainwright & Co., and moderator Mara Goldstein of Cantor Fitzgerald.

1. Signs the Biotech Market Will Continue to Grow

Overall, the biotech market looks like it will remain robust for the foreseeable future, according to Benjamin. This should last until “some sort of sea change, whether it’s macro, pricing pressure, or something else that causes generalists to come out of the sector. But there are several factors that should power this market for at least the next several years.”

“The funding cycle over the last couple of years has left many small-cap companies in a much, much better financial position than they ever have been in.”—Reni Benjamin

First up, according to Benjamin: a scarcity of innovation in big pharma. “Pharma companies continue to jettison their research and development (R&D) divisions left and right,” he said, and instead look to biotechs for innovations that will power future growth. “The funding cycle over the last couple of years has left many small-cap companies in a much, much better financial position than they ever have been in. That’s very good from a development point of view, because a lot of the small-cap companies we cover are running the right-size trials. . .Small-cap biotechs are running randomized Phase 2 studies that allow us to make much more educated and confident bets on products going forward.”

Benjamin also pointed to M&A. “If pharma doesn’t have an R&D division, it has to acquire or merge with other companies. . .there is really a significant push to acquire assets in development. Biotech is the only game in town for these bigger players that don’t have R&D divisions.”
Then, there is pricing. “Pricing so far has not been an issue,” Benjamin said. But “It definitely could derail the train at one point. It’s something that all investors should keep an eye on because once that sort of shot is fired across the bow, you may see—and this might be an interesting point for us to discuss—something like what happened back in the 2000 genomic bubble. . .The second some sort of significant clampdown occurs, let’s say, at the government level or the insurance level, that’s going to cause a lot of investors to take some pause, because right now, the sky is the limit.”

2. Is the Price Right?

The subject of pricing sparked comment from other analysts on the panel as well.

When a company has “an opportunity to position a novel drug in an otherwise commoditized environment, it can take price on it,” Goldstein observed. And “for products that are truly novel, that’s where we think you will tend to see the premium pricing be maintained.”

But pharmacoeconomics—determining whether the price of the drug is worth the social and economic benefit—will be the deciding factor. Benjamin noted that currently, a gene therapy in Europe sells for $1.4M, and that remains acceptable.

“For products that are truly novel, we think you will tend to see premium pricing maintained.”—Mara Goldstein

“Everybody is looking at what the United Kingdom is doing,” said Zavoico. “The National Institute for Health and Care Excellence (NICE) doesn’t add drugs to its formulary when it thinks the clinical and societal benefit is not sufficient to justify the cost to the healthcare system.” He doesn’t think that kind of action will happen in the States, but advised investors to bear in mind that some variation on the European model could take hold here, adding that the political climate for major policy change just isn’t there, but that third-party payers may act on their own to rein in costs.

“There’s a coming problem in oncology,” observed Pantginis, recounting how the topic of pricing came up at a major cancer conference in 2014. Expensive targeted drugs—and combinations of expensive targeted drugs—are being used more often in lieu of traditional chemotherapies. “Right now, the blanket statement is if you garner a survival benefit, you’re going to get reimbursed,” he said. Then he noted that a doctor from MD Anderson told a panel at the conference that “the rising drug costs violate the Hippocratic oath of not causing harm to your patients.”

3. Get a Grip on Risk/Reward

The analysts also took on the issue of how and when companies should abandon drug candidates.

“I’m a big believer that if a drug fails the primary endpoint, the trial has failed,” said Benjamin. “A lot of biotech companies love to talk about going to the FDA with positive secondary endpoints—that the FDA is much friendlier right now.” But this is not necessarily true, and “from a valuation perspective, it’s easy for us to just take that revenue line right out of the model. The next step is to look at the rest of the pipeline. A lot of these companies are not one-trick ponies. They have a pipeline. They have other assets that could generate value.”

“Small-cap biotechs are running randomized Phase 2 studies that allow us to make much more educated and confident bets on products going forward”—Reni Benjamin

“We do have companies that have very binary endpoints,” Goldstein said. “Those have a very different risk/reward profile. You have to go in with eyes wide open and understand that irrespective of what you think of the data, it’s a very long road to redemption once a trial has failed for a company. I look at the universe in two different ways: stocks that have binary endpoints but offsets. . .and then those that exclusively fit this binary endpoint model.”

“Let’s face it, every compound that’s being developed is a billion-dollar compound, right?” Benjamin added. “If you’re not developing a billion-dollar compound, you’re not a biotech company. But if you’re in Phase 1 and you have a $1B market potential, there’s no investor on God’s green earth who’s going to value your company anywhere near that market potential. It’s all risk-adjusted. That’s something that we would definitely do after a Phase 3 failure.”

4. Consider Select Immunotherapy Companies for Future Growth

With all the focus on immuno-oncology, the analysts were optimistic about the prospects for sustainable valuations among companies working in this field. As Goldstein observed, “We have seen this subsector of oncology gyrate through various levels of investor enthusiasm, from wildly interested to unapologetically uninterested. Many will point to Dendreon Corp.’s (DNDN:NASDAQ) Provenge (sipuleucel-T) as a reason to believe that the overall commercial opportunity is limited. But we think that the argument is product-specific, rather than all encompassing.”

It really first comes down to, again, clinical data,” said Pantginis. “In the vaccine space, we need another win, because it’s been sullied by what happened with Dendreon. Investors and others throw these things into the same basket, even though different companies have different approaches with regard to immunotherapy. We need another Phase 3 win. We need another approval. Celldex Therapeutics Inc. (CLDX:NASDAQ) had some very good data with rindopepimut in recurrent glioblastoma. That could potentially be the next cancer vaccine win in the U.S., but it’s really going to come down to the clinical data.”

Valuations for these small molecule checkpoint inhibitors are pretty solid,” said Benjamin. “You have compelling data, you have approved products and you have big pharma licensing with small-cap biotechs. . .those are sustainable activities that are planting a foundational valuation on this entire class. We’re hopeful that it’s only up from here.”

Dr. Reni Benjamin is a managing director and equity research analyst at H.C. Wainwright & Co. His expertise and coverage focuses on companies in the oncology and stem cell sectors. Benjamin has been ranked among the top analysts for recommendation performance and earnings accuracy by StarMine, has been cited in a variety of sources including The Wall Street Journal, Bloomberg Businessweek, Financial Times and Smart Money, and has made appearances on Bloomberg television/radio and CNBC. He authored a chapter in “The Delivery of Regenerative Medicines and Their Impact on Healthcare,” has presented at various regional and international conferences, and has been published in peer-reviewed journals. He currently serves on the UAB School of Health Professions’ Deans Advisory Board. Prior to joining H.C. Wainwright, Benjamin was a managing director and senior biotechnology analyst at both Burrill Securities and Rodman & Renshaw. He was also an associate analyst at Needham and Company. Benjamin earned his doctorate from the University of Alabama at Birmingham in biochemistry and molecular genetics by discovering and characterizing a novel gene implicated in germ cell development. He earned a bachelor’s degree in biology from Allegheny College.

Mara Goldstein joined Cantor Fitzgerald & Co. from Thomson Reuters, where she served as director of research for Reuters Insight. Goldstein was initially responsible for the firm’s healthcare research practice, and later assumed responsibility for all research activities and sectors. Prior to that, Goldstein was an executive director and senior pharmaceutical analyst at CIBC World Markets. At Cantor, Goldstein covers the biotechnology sector. Goldstein also worked at Alex Brown & Sons and CS First Boston. She holds a bachelor’s degree in economics from Purdue University.

Joseph Pantginis, Ph.D., joined ROTH Capital Partners in 2009. Prior to joining ROTH, Pantginis was a senior biotech analyst at Merriman Curhan Ford (now Merriman Holdings Inc.). Pantginis was also a senior biotechnology analyst at Canaccord Adams, focusing on the oncology, inflammation and infectious disease spaces. Prior to Canaccord Adams he was a biotech analyst at several firms, including JbHanauer & Co., First Albany Corp., Commerce Capital Markets Inc. and Ladenburg Thalmann & Co. Inc. Prior to his tenure on Wall Street, Pantginis served as an associate manager/scientist of Regeneron Pharmaceuticals’ Retrovirus Core Facility. Pantginis received a master’s degree in business administration (finance) from Pace University; a doctorate in molecular genetics and a master’s degree from Albert Einstein College of Medicine; and a bachelor’s degree from Fordham University.

Dr. George Zavoico, managing director and senior equity analyst at MLV & Co., has more than 10 years of experience as a life sciences equity analyst writing research on publicly traded equities. His principal focus is on biotechnology, biopharmaceutical, specialty pharmaceutical, and molecular diagnostics companies. He received The Financial Times/Starmine Award two years in a row for being among the top-ranked earnings estimators in the biotechnology sector. Previously, Zavoico was an equity research analyst in the healthcare sector at Westport Capital Markets and Cantor Fitzgerald. Prior to working as an analyst, Zavoico established his own consulting company serving the biotech and pharmaceutical industries, providing competitive intelligence and marketing research, due diligence services and guidance in regulatory affairs. Zavoico began his career as a senior research scientist at Bristol-Myers Squibb Co., moving on to management positions at Alexion Pharmaceuticals Inc. and T Cell Sciences Inc. (now Celldex Therapeutics Inc.). Zavoico has a bachelor’s degree in biology from St. Lawrence University and a Ph.D. in physiology from the University of Virginia. He held post-doctoral fellowships at the University of Connecticut School of Medicine and Harvard Medical School/Brigham & Women’s Hospital. He has published more than 30 papers in peer-reviewed journals and has coauthored four book chapters.

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DISCLOSURE:
1) Tracy Salcedo-Chourré prepared this article for Streetwise Reports LLC, publisher ofThe Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
3) Reni Benjamin: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Mara Goldstein: For important disclosures on companies mentioned, please go towww.cantor.com/futuresdisclosures.
5) Joseph Pantginis: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
6) George Zavoico: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
7) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
8) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
9) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Apple set to expand phone size — and profits

iphone-6-retail-box-concept

Expectations are rising for Apple’s (AAPL) newest iPhones, coming next month, which will carry larger screens and possibly fatter profit margins.

With Apple’s rumored iPhone introduction less than a month away, Asian factories have already cranked up production on the next version of the popular smartphone, generating numerous leaks of new features. Apple shares are up 16% over the past three months, as anticipation builds. After closing at $99.16 on Monday, the stock is nearing its all-time high, adjusted for the June split, of $100.72, reached in September, 2012. In afternoon trade on Tuesday, shares are at $100.29.

Investors and analysts say a larger screen is likely the top new iPhone feature, based on the leaks and credible media reports. Such a move would also be consistent with Apple’s strategy of revamping the iPhone’s physical appearance every two years, as it last did in 2012.

Apple’s current models offer just a 4-inch screen, but the 2014 versions are expected to provide 4.7-inch and possibly even 5.5-inch views. The 4.7-inch model would be around the same size as some of the most popular phones over the past few years that run Google’s (GOOGL) Android software.

Is bigger better?

Amid the solid leaks of models with bigger screens come somewhat less certain rumors of new pricing tactics. Unlike last year, when Wall Street wanted but didn’t get a cheaper iPhone to sell better in emerging markets, this year the focus is on higher prices. If Apple introduces a 5.5-inch model, it will certainly cost more, but some analysts think even the 4.7-inch model could carry a $100 premium. That could offset a normal decrease in profit margins that Apple typically suffers in the quarter when it rolls out a major new product.

Screen size was the most important design feature among U.S. smartphone buyers in the first quarter, coming well ahead of design attractiveness and quality of materials, according to a survey by Kantar Worldpanel Comtech. High-speed LTE broadband capability was the most popular function buyers sought, beating out camera quality and battery life.

Some phone makers have added even larger than 4.7-inch screens lately, such as HTC’s One M8 model with a 5-inch screen or Samsung’s Galaxy S5 with a 5.1-inch screen. But those models collectively haven’t sold as well as hoped, says Ben Bajarin, principal industry analyst at Creative Strategies.

“It’s a foregone conclusion, given the leaks, that there is a 4.7-inch model, which I think is the right size for many markets,” he says. “Anything above 5 inches has not done well in Western markets.”

Analysts and reporters have also spotted prototypes of a 5.5-inch iPhone, but whether Apple will opt to offer a device in the so-called phablet category is unknown. Samsung and others have been successful, mainly in Asia, selling phablet devices, which offer the connectivity of a phone combined with the larger screen size of a tablet.

“The big screen is especially important in Asia, where phablet-style phones have become very mainstream,” says Jan Dawson, chief analyst at Jackdaw Research. Assuming the rumors are true, “they’ll win more converts from Android than they normally do, because there are people who are choosing Android simply because it offers larger screens and the iPhone hasn’t.”

Bigger screens could also help Apple cure a perception problem among investors that it is losing sales to otherwise inferior competitors. While overall U.S. smartphone sales growth has slowed dramatically, the market for phones larger than 4.5 inches more than doubled in the past year, according to Comscore. So a screen upgrade would be the most significant new feature for shareholders, says John Bright, an analyst at Avondale partners. “Apple has been lagging its competitors in terms of visual appeal,” he says.

Rising projections

Analysts are raising projections for iPhone sales, based on the desirability of models with larger screens and surveys showing significant pent up demand for upgrades. Citigroup (C) analyst Jim Suva projects Apple will sell 140 million of the high-end model “iPhone 6″ in the 12 months after it is released.

One survey in June by RBC Capital Markets found 50% of consumers who planned to upgrade a phone wanted to buy an iPhone, and 35% of the remainder who didn’t want an iPhone would reconsider if a larger screen model were offered.

Another possible upgrade could be that Apple will replace the Gorilla Glass, made by Corning (GLW), in iPhone screens with an even tougher material made entirely or partially from synthetic sapphire crystal. Apple last year purchased a plant in Arizona and contracted with GT Advanced Technologies (GTAT) to make sapphire materials. Shares of GT have nearly tripled over the past year.

Tougher, shatterproof glass would provide an appealing selling point, as Youtuber Marques Brownlee has been exploring recently.

A final important aspect of every year’s new iPhones is Apple’s upgrade to the iOS software. Apple unveiled iOS 8 in June at its developers conference and showed off several potentially enticing new features, including a health tracking system called HealthKit and a home automationcontrol center dubbed HomeKit.

HealthKit is likely to take off more quickly, as many consumers are already tracking exercise and health data with existing apps and products. Apple may even offer its own health band to aid in tracking, says Gartner analyst Van Baker. A watch-like device, the much rumored “iWatch,” is also a possibility, he says: “The health band segment is not huge right now but just because it’s Apple, they’d probably do pretty well.”

Michael Waring Has Seen the Energy Downturn Movie Before, and He’s Not Worried

anxiousmoney
With oil and gas prices down, it’s time to cull the herd, sell marginal producers and double down on the strong ones in your portfolio, says Michael Waring, founder of Galileo Global Equity Advisors Inc. In this interview with The Energy Report, Waring explains that this kind of correction happens every 10 years in this space. It presents opportunities for companies to improve and investors to profit—and he names four companies he considers most likely to succeed.
Mentioned Companies: Canadian Energy Services and Technology, Paramount Resources,
Secure Energy Services, Whitecap Resources

The Energy Report: Michael, you said in November that the Organization of the Petroleum Exporting Countries (OPEC) expected the U.S. to share in reducing production growth to help stabilize the oil market. Have events justified that expectation?

Michael Waring: Events have not. But I think we need to address that statement. I don’t believe that the Saudis are out to hurt Iran, to punish the Russians or to take down shale oil production in the U.S. I don’t think this is some Machiavellian scheme. I think it is simply a question of market share. The Saudis are saying they have the lowest operating costs in the world, so why should they be the first guys to cut? It makes more sense that the more expensive guys cut production first. When you say it that way, you can actually understand the point the Saudis are trying to make here. It wouldn’t be logical to assume that Russia or the U.S. would voluntarily take production down, but it’s going to be forced on them by lower prices.

And the Saudis have really talked the price down. When you look at the rhetoric of the last two months, they’ve gone out of their way to drive it down. I think the basic attitude has been that if the high-cost guys don’t want to voluntarily reduce production, we’ll make them reduce it by lowering the price to the point where it hurts.

TER: Will those low prices do permanent damage to the North American industry?

MW: I wouldn’t use the word permanent, but damage is being done that will take probably more than a couple of years to recover from.

I think that the smaller oil and gas companies on the shale oil and gas treadmill—and I refer to it as a treadmill because they have to keep drilling aggressively if they want to keep their production flat or growing—have a real problem now because the banks won’t lend to them, the bond markets are closed to them and they can’t issue equity because the stocks have collapsed. You’ll see consolidation. And it’s going to shake a lot of the marginal guys out of the business.

“Investors want to use this as an opportunity to clean house and go high grade into the companies that will give good torque on the way up.”

This happens every 10 years in the oil and gas industry. It is a commodity business after all, and what’s happened to the price isn’t way out of line with what’s happened in the past. This is actually a good thing about the industry: It tends to be self-correcting and cleansing. What happens at a moment like this is that the good guys, with really good plays, are solid and secure. It’s the marginal guys that get squeezed out, and the marginal guys tend to drive the cost up over time because everybody is outbidding for services. If you clean all those guys out, then you have a reset back to a lower cost base, and a focus on oil and gas plays that make sense and generate a good economic return through full-cycle pricing.

TER: What should investors do in this market?

MW: In our own portfolio, if we have two or three names in the energy sector that we were interested in, or that we owned but didn’t have a high degree of conviction in, we would use this as an opportunity to sell those names and double down on the two or three stocks that we have a high degree of conviction in—that we know will dramatically outperform coming out the other side. That’s a key. Investors probably want to use this as an opportunity to clean house on the energy portion of their portfolios and go high grade into the companies that will give good torque on the way up.

TER: Is there a silver lining for oil and gas investors in this dark cloud of falling prices?

MW: In every previous cycle, prices 6–12 months after the bottom are up quite sharply. I don’t know the exact timing this time around, but I do know that the harder and faster prices come down, the harder and faster they’re going to go up. That’s typically been the case, unless you want to utter those very dangerous words: “This time is different.”

The point I would make is that we have an opportunity to buy shares in companies where the stock price is down 50–60%, but the business models are not impaired and the companies have a solid asset base. We are actually being given a gift. If you can look out one year, it will be a gift to own these stocks at fabulous, attractive valuations.

TER: The Energy Information Administration (EIA) is forecasting Brent crude averaging $58/barrel ($58/bbl) in 2015 and $75/bbl in 2016. What’s your forecast?

MW: We wouldn’t be too far off that. I just had to send an estimate out to a client, and we’re thinking $70–75/bbl oil in 2016, and we’re depending on natural gas at $2.75–3.25 per thousand cubic feet ($2.75–3.25.Mcf).

TER: Is that oil price Brent or West Texas Intermediate (WTI)?

MW: That’s WTI. I wouldn’t say they’re trading at parity, but the gap between Brent and WTI has narrowed dramatically.

TER: Do you expect that to remain the case? They’ve been running $3–4/bbl apart.

MW: On a go-forward basis, I’m expecting it to remain narrower than it’s been historically, or for the last two years, let’s say.

TER: The EIA’s forecast seems to point to an extended period for lower prices. What oil and gas investments are safe in such a market?

MW: We have to remain focused on the fundamentals behind the business. It’s a moment where psychology has taken hold, and people have forgotten, overlooked or can’t be bothered with the fundamentals. The fundamentals of each company on its own will tell us what we need to know. If you look at the supermajors and large-cap oil companies, from Suncor Energy Inc. (SU:TSX; SU:NYSE) to Canadian Natural Resources Ltd. (CNQ:TSX; CNQ:NYSE)—we don’t own those names and those aren’t part of our universe—any company of that stature is going to be just fine. Likewise, a company like PrairieSky Royalty Ltd. (PSK:TSX) on the royalty side is going to be fine. It’s debt free with a lot of cash. There are ways to play this sector at the moment, looking at companies with very attractive valuations, solid balance sheets, and secure assets and cash flow going forward. Something like PrairieSky, in my mind, would certainly fit the bill.

TER: Are you expecting mergers and acquisitions (M&A)?

MW: I think there will be consolidation in the business. I think that’s inevitable. Having weak players without a lot of choices in terms of flexibility going forward will lead to mergers and consolidations. But good companies with good asset bases won’t have to be in the M&A game. All they need to do is focus on those assets.

TER: You have a diverse portfolio of companies. Are the companies you’re referring to in that portfolio?

MW: Yes, they are. We have a concentrated list of holdings in oil and gas. Oil and gas currently makes up about 20% of our mutual fund holdings. We have a fairly concentrated list of four or five names that we like a lot.

TER: Can you talk a little about some of those?

MW: Sure. The first one would be Paramount Resources Ltd. (POU:TSX). I think at one point late last summer, this was a $65/share stock. It cut down to $22/share. It’s currently $29/share. This is a natural gas and liquids producer. It has exposure to a play in Western Canada, along with a company called Seven Generations Energy Ltd. (VII:TSX). These two companies together probably have the most attractive rock in the Western Canadian sedimentary basin. The returns from this play are the highest we can identify out there, because of the high level of liquids and condensate produced alongside the natural gas.

“What happens at a moment like this is that the good guys, with really good plays, are solid and secure.”

Paramount has decided to build its own infrastructure and its own gas processing plant, as opposed to using a midstream company like a Keyera Corp. (KEY:TSX) or Pembina Pipeline Corp. (PPA:TSX; PBA:NYSE). What that means is that on a go-forward basis, Paramount will capture more margin and have lower operating costs and greater control over its operations than a company using a third-party midstreamer.

We’re very excited about this company. It is currently producing 37,000 barrels a day (37 Mbbl/d) from a gas plant that it brought on last June. It is adding a piece of equipment in the plant that will allow it to deal with all the condensate and liquids coming out of these wells. When that is complete in March, corporate production will increase to 70–75 Mbbl/d in 2015. The company will have a dramatic increase in production and a dramatic increase in cash flow.

The knock against the company is that it borrowed a lot of money to build up this plant. It was a $250 million ($250M) capital expenditure, so the debt numbers look high. But we would argue that once it is up and running at 75 Mbbl/d, on an annualized basis, the cash flow is going to be $700M at $65/bbl oil. We think the debt/cash flow numbers are going to dramatically improve. In this environment, how many companies can double production in the next four to six months? Understand, the money is all spent. The company has 45 wells standing behind pipe to support this plant once the stabilizer comes onstream. There’s nothing that Paramount has to do at the margins. It’s a slam dunk.

The risk is that we want to see this stabilizer come onstream smoothly. It’s going to have a startup period, but the main plant itself was started up last spring, and Paramount has been able to bring that on pretty steadily, without any problems or interruptions. This is a name we like a lot. We think when prices finally bottom, this stock will recover very quickly.

TER: What other companies do you like?

MW: One is Secure Energy Services Inc. (SES:TSX). This company deals in oil field waste and water disposal. This is a razor blade-type story, because Secure Energy provides a service to the industry, and whether prices are up or down, the industry needs to deal with waste and water. As wells mature in Western Canada, they tend to have higher water production over time, so the older a well gets, the more water it produces. This is probably the most solid of all the service businesses that we know of.

Management at Secure Energy is great. I’ve known the guys for 15 years, maybe longer, and they’ve done an excellent job to date, since the company has come public. Secure has been beaten up along with other oil service names, but it stands apart. This company will stay busy—maybe not at the same level, but it’s going to stay busy.

“The Saudi attitude has been that if the high-cost guys don’t voluntarily reduce production, we’ll make them reduce it by lowering the price until it hurts.”

Then I’d mention Canadian Energy Services and Technology Corp. (CEU:TSX). It provides drilling fluids to the oil and gas industry. Part of the business is tied to oil well drilling, because the company makes specialized fluids needed to drill complex horizontal wells. But it also produces chemicals used by the industry to stimulate production from existing wells. This is a consumable-chemistry company, not a true oil and gas service company. Again, it doesn’t have to go out and invest in all kinds of steel and iron. What it invests in is research and development in a chemistry laboratory.

We like this company. It has tremendous free cash flow because it doesn’t have to buy and sit on equipment. We think, again, this is a name that will come rocketing back when the time is right. EOG Resources Inc. (EOG:NYSE), in the States, is the biggest operator in the Eagle Ford Basin—one of the best at what it does. It uses Canadian Energy Services for all of its drilling fluids, so that should tell you something about the quality of the product.

The last company—a straight oil company—is Whitecap Resources Inc. (WCP:TSX.V). It has top management and light oil. It has a dividend yield of something like 7.25%. The all-in payout ratio is about 100% at current prices, but that compares very favorably to most other dividend-paying companies in the space. Whitecap has maintained a very steady payout ratio. It is very good on the operating cost side. Again, this one will come bouncing back when the psychology finally turns in the oil market.

TER: A lot of energy service companies are suffering because of lower demand from their customers. Are Canadian Energy Services and Secure Energy Services having that problem?

MW: To date, no, they are not. It’s not to say that at some point. . .Come spring breakup, will activity fall off? Yes, it probably will. These companies will not be completely immune to a slowdown in the industry, but they’ll be a whole lot more immune than, let’s say, contract drillers and other service companies. And they’ll provide really good torque on the upside. Again, when the psychology turns and people decide it’s not the end of the world for the energy industry, names like this will be the first out of the box to bounce back.

TER: What is going to give them a leg up?

MW: I think it’s the high-quality nature of what they do. Both companies provide something very specialized, as opposed to a fleet of generic drilling rigs. They are not commodity-type businesses. In the case of Canadian Energy Services, when it gets involved with a company like EOG Resources, it tailors its drilling fluids to suit the needs of EOG in that particular field. Once it gets engaged with a customer, it’s very hard for that customer to go somewhere else just because somebody can shave 10% off the price. This is very specialized stuff. Once you get that relationship going, you have to really screw up to lose that relationship.

TER: What are Paramount Resources and Whitecap Resources doing to ensure they can survive in this low-price market?

MW: Both are watching their capex very carefully. Paramount does not pay a dividend; Whitecap does. It has a history of raising that dividend, and has done so every couple of quarters consecutively since it became public. Just before Christmas, Whitecap said it was expecting to raise the dividend in January this year, but it has decided to defer that increase until it sees how things shake out.

“The harder and faster prices come down, the harder and faster they’re going to go up.”

In both cases, it’s a function of how quickly these companies want to grow, or whether they want to slow down the growth rate. They have the luxury of deciding their fates, of determining how quickly the business grows or whether they’re going to throttle back on capital expenditures and slow it down.

TER: What qualities in a company catch your attention and keep you interested?

MW: I think in oil and gas, first and foremost, it has to be the management team. I don’t know any other business where companies end up reinvesting so much capital in the business. If you’re not good at what you do—if you’re not good on the cost side—you can blow your brains out and destroy capital very quickly. Investors should get a read on management—look at the track record, the pedigree, etc. Operating costs and netbacks tell you a lot about the caliber and diligence of management. Those are very important metrics to look at.

Second, investors need to assess the geology of the company’s holdings. Asset quality can vary greatly between companies. To use Paramount as an example, you can’t own better rock in Western Canada. Maybe somebody will find something else in the future, but at the moment, this company has some of the best acreage in the business. Understanding something about the geology is helpful.

It’s never easy going through the down times. I’ve been to this movie before, and quite frankly I’m tired of seeing it. Each movie plays out a little differently, but it always ends up the same. At the moment it feels like it’s the end of the world, it will never come back, etc., etc. But it always feels this way. Every cycle, it always feels this way.

TER: Thank you for your insights.

Before forming Galileo Global Equity Advisors Inc. in 2000, Michael Waring served from 1985 to 1999 as a vice president, director and portfolio manager at KBSH Capital Management Inc., a private investment management firm with over $10B under management. Waring obtained his master’s degree in business administration from the University of Western Ontario, is a CFA charter holder and a member of the Toronto CFA Society.

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DISCLOSURE:
1) Tom Armistead conducted this interview for Streetwise Reports LLC, publisher ofThe Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
3) Michael Waring: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Paramount Resources Ltd., PrairieSky Royalty Ltd., Secure Energy Services Inc., Keyera Corp., Canadian Energy Services and Technology Corp., Whitecap Resources Inc. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.