Encana Corporation Update

ECA : NYSE : US$21.59
ECA : TSX
HOLD 
Target: US$25.00 

Energy — Oil and Gas, Exploration and Production
FRIDAY NIGHT LIGHTS
We maintain our HOLD rating but raise our target to $25 (from $24) post
ECA’s announced planned acquisition of Athlon Energy (ATHL : NASDAQ :
$58.32 | HOLD, covered by Eli Kantor). We applaud ECA for a high-quality
entry into a premier U.S. oil play; one that has multi-zone upside potential.
However, we do believe there are some key questions that need to be
addressed over time:
1. Are the 50 MBOE/d 2015 average and 200-250 MBOE/d by 2019 targets
achievable? Yes, in our view; but it will require improvements in drill
times. Prior to ECA’s announcement, Canaccord Genuity estimated 2015
production for ATHL to be 41 MBOE/d. Now this assumes about $965
million of capex and 6 rigs by year-end. Nevertheless, even when
assuming the 7 rigs by year-end 2015 that ECA plans to go to, we are
still short ~5 MBOE/d of ECA’s 50 MBOE/d target for the year. With
respect to the longer-term target, assuming 7 rigs per year still gets us
to only about 140 MBOE/d average for 2019. The aforementioned
assume a spud to rig release timing of 27 days. Therefore, reducing it to
15 days, which is in line with what Pioneer Natural Resources (PXD :
NYSE : $201.96 | HOLD, covered by Eli Kantor) is targeting, yields ECA’s
targets. However, there is one other potential bottleneck for the outer
years, and that is infrastructure (i.e. plants) to handle the increased
production capacity that ECA is targeting as well as potential cost
inflation/capacity constraints due to increased services competition.
2. Did the company pay up for the asset? Yes, to an extent. As shown in
Figure 1, the transaction is about 20% dilutive on an EV/DACF basis.
Even when assuming 50 MBOE/d of production in 2015 for ATHL, it is
still 15% dilutive. However, there is some accretion on an NPV basis
when assuming over 5,000 hz locations (vs. the 1,850 locations ATHL
assumes which looks conservative as we discuss later in this note),
hence our target increase. Also it used high priced PrairieSky paper to
help fund the acquisition.
3. Will ECA be successful in retaining ATHL employees? Only time will tell
on this one. If the ATHL management team sets up a new company,
there is risk of departures, albeit limited in the near-term by any
potential non-competes imposed on top management of ATHL

Bombardier Inc.

BBD.B : TSX : C$3.50

BUY
Target: C$5.50

 

COMPANY DESCRIPTION:
Bombardier operates in two major and roughly equally sized
segments: 1) aerospace equipment including business jets and
small airliners, and 2) rail equipment. Products are sold and
manufactured on a global basis.
All amounts in C$ unless otherwise noted.

Transportation and Industrials — Airlines and Aerospace
BT PRESIDENT MEETING AND EUROPEAN TOUR
BUY for margin expansion potential, new products
We continue to recommend BUYing Bombardier (BBD) due to 1)
surprisingly good CSeries order flow at the Farnborough air show, 2)
increased focus on improving profitability at Bombardier Aerospace (BA),
and 3) margin improvement potential from the weak Canadian dollar.
BT continues to hold potential
BBD held an investor trip to Europe this week. Key stops included a
meeting with Bombardier Transportation (BT) President, Dr. Lutz Bertling
and plant tours of BT’s largest facility, Henningsdorf, and the Bombardier
Aerospace (BA) CSeries wing plant in Belfast. Takeaways include:
 BT sales growth looks positive. Growth should be in the 5-10% per
year range for the next 3 years, and 3-5% per year thereafter;
 BT still believes 8% EBIT margins are quite possible, which would
be a big pickup from the 6% targeted for 2014;
 The CSeries continues to progress, with production wings moving
through the Belfast plant. Belfast’s composite technology also
appears impressive and proprietary.
Forecast bumped on BT sales discussion; target bumped on forecast
The BT sales guidance was higher than we were projecting, so we
increased our forecast to be in line with the growth rates outlined by
management. Our target increased on our new forecast.
Valuation maintained at a premium level
We are maintaining our valuation multiple at 9.0x EV/NTM EBITDA in
one year (9.0x Q2/15E EV to Q3/15E – Q2/16E EBITDA). Our valuation
remains at a premium level, reflecting the significant EPS growth
potential from BBD’s new product and other opportunities.

 

SAGE Therapeutics BUY Target Price $40

SAGE : NASDAQ : US$29.05
BUY 
Target: US$40.00

COMPANY DESCRIPTION:
SAGE Therapeutics is a development/clinical stage
biopharmaceutical company founded in 2010 that is
focused on developing and commercializing drugs to
treat central nervous system (CNS) disorders where no
effective or FDA approved options exist.
Life Sciences — Biotechnology
SAGE-547 CHANCE OF SUCCESS FAVORABLE IN TOUGH DISEASE
Investment highlights
Estimate $980M US peak sales for SAGE-547
We estimate $980M US peak sales from ~13,300 SRSE patients,
representing 55% of total super refractory status epilepticus (SRSE)
patients and 13.8% of all ~96,000 patients treated for status epilepticus
in the hospital. We assume a cost of ~$75,000 per patient annually,
which we believe is appropriate for the hospital setting given these
patients are critically ill and are on last lines of therapy.
SAGE-547 has clear mechanism of action
SAGE-547’s mechanism is well understood, upregulating GABA at two
synapses (α1 and α 4) while current therapies only hit GABA at α1
receptor. We believe this gives the drug an advantage over other
therapies because the dual interaction can potentiate stronger GABA
duration, leading to improved seizure control.
Current therapies remain ineffective
Current therapies remain ineffective in controlling SRSE (response rates
<40%) or have intolerable side effects, giving SAGE-547 a low risk of
penetrating in this market. Additionally, we want to emphasize the
severity of this disease where patients in the ICU carry a mortality risk
of close to ~50%, making this an area of high unmet medical need.
Expect positive SAGE-547 weaning data in December
We expect positive data for SAGE-547 when patients are weaned off
drug and brought out of coma in December for at least n=10 patients.
Previous data suggested resolution of SRSE in 9/10 patients, whereas
new data will discuss weaning patients off drug and reversing coma

T-Mobile US BUY Target Price $39

TMUS : NYSE : US$28.49
BUY 
Target: US$39.00

COMPANY DESCRIPTION:
The fourth largest wireless carrier in the US by
subscribers, T-Mobile US was established with the merger
between MetroPCS and T-Mobile USA, formerly a unit of
Deutsche Telekom. The company is majority owned by
Deutsche Telekom and is headquartered in Bellevue,
Washington.
All amounts in US$ unless otherwise noted.

Telecommunications
ON THE ROAD WITH MANAGEMENT;
ADD MOMENTUM CONTINUES; BUY
Investment recommendation
Our two-day non-deal roadshow in the Midwest served to solidify our
view that the company’s dynamic, aggressive pricing strategy is
continuing to drive postpaid add share. While the focus on the margin
seems to have shifted from lowering prices as part of the Un-carrier
strategy to offering more data at the same prices with targeted
promotional activity highlighting network quality, strong momentum
continues as evidenced by management’s disclosure earlier this month
of 552k postpaid and 208k prepaid net adds in August alone. These
results suggest upside to our Q3/14 estimates of 580k and 106k,
respectively. Management also discussed a number of key industry
issues, including upcoming spectrum auctions, competitors’ network
build plans and the potential for large-scale M&A. Maintain BUY.
Investment highlights
 More targeted promotions continues to lead the industry in terms of aggressive pricing, the
magnitude of disruption has been lower. Recent promotional activity
– i.e., four lines for $100, slated to end this month – appears to be
more limited, with a longer-term intent to offer more data and
ancillary services at comparable price points.
Network goals – The company has been accumulating low-band
spectrum throughout the year in the secondary market and
discussed the possibility of expanding coverage to 300M POPs. Such
a move, however, would likely be contingent on the results of the
upcoming AWS and broadcast auctions.
 Maintain BUY, $39 target – Management’s aggressive strategy is
enabling market share gains and, though we believe the absence of
a credible, immediate-term acquirer eliminates some M&A upside
potential, we continue to recommend T-Mobile US

Gold Action/ Direction Continues Down : Braggin’ Rights To JAB

You can review my past articles to confirm my calls:

1) BUY when gold was below $ 900

2) Steady reductions in all positions for Jack A. Bass Managed Funds

     from $ 1800 til today.

 

Now What ?

We continue to see more downside risk in the next several days- from The Crude Oil Trader blog this quote which I second: ” as the next major level of support is 1,180 & if that price level is broken prices could slide rather dramatically. Gold prices settled last Friday at 1,216 finishing slightly lower for the trading week as volatility has certainly increased as prices were up $20 a couple of days back on the news of the coalition & the United States bombing ISIS but then prices came right back down as I still think lower prices are ahead as there’s no reason to own gold right now especially with a very strong U.S dollar so continue to play this to the downside making sure you place your stop above the 2 week high.”

No stocks are being spared .

In my book ” The Gold Investors Handbook” – available on Amazon – I pick B2Gold ( BTO) as my top junior . It moves lower and is so very tempting but there is no way to call a bottom. Wait and buy when there is a turn rather than catch all the falling knives.Use the book to develop your own gold watchlist . In the meantime there are so many better places to earn money with less risk.

The ever lower prices for Yamana are almost painful to watch – but there is less pain in the sideline compared to watching your portfolio wither away.

It is criminal in my less than humble opinion the Sprott and Peter Schiff continue to urge investors to buy into the conspiracy theory of manipulation of the commodity price. The printing press in the U.S. runs at full speed 24 hours a day – but the fact is there is still no inflation and no inflation on the horizon. This undermines a central argument for owning gold. Mining costs continue to escalate and thus pressure mining returns at lower commodity prices.

Even the Ukraine and Middle East turmoil and have not proved to be much of a factor to boost gold as a safe haven in times of trouble. Gold bugs are reduced to hoping the stock market stops its advance and the economic recovery in the U.S. runs out of steam.Right now dividend paying stocks in a recovery are more attractive than the gold sector.

The Challenge – a guarantee of a minimum of 12 % for your annual investment return

Investors and pensions need efficient methods to screen, research, perform due diligence and monitor managers in their quest to deliver returns. They need to know the data they are using is accurate and fresh — and represents the best options available worldwide across every asset class. They must take into account their own assets and liabilities and the impact to portfolio risk while screening strategies and tracking exposures. They also need polished reports and presentations to provide evidence of a sound, inclusive selection processes for regulators and committees.

Placing these decisions in Jack A. Bass Managed Accounts removes the work from your hands to ours .

Meeting the Challenge

Jack A. Bass Managed Accounts offers a comprehensive suite of solutions for screening and monitoring, as well as risk assessment leveraging the data of the most important databases. In fact, 89% of surveyed clients agree that Jack A. Bass Managed Accounts helps them save their time during the due diligence process, while 75% of pension clients agreed .

The answer to When? – is always NOW ! – not tomorrow.
Contact Information

Information must proceed action and that is why we offer a no cost / no obligation inquiry service if you are not already a client.

Email info@jackbassteam.com OR

Call Jack direct at 604-868-3202 Pacific Time  10:00- 4:00 monday to Friday

( Same time zone as Los Angeles)

Travel Schedule / Meeting with Clients – Sept .17 – Returning Sept .29

Current Fixed Dates / Cities

September:

Halifax ,Nova Scotia Canada Sept. 21 2014

New York City,NY Sept. 27 , 2014

October

Vancouver, Canada Oct . 11, 2014
Seattle, Washington Oct. 18 , 2014

Cost $199 all inclusive

One hour ( one on one)
Please reserve by email to info@jackbassteam.com OR
Call Jack direct at 604-858-3202

Please email or call to arrange individual appointments – other than the named cities.
All email will be answered after . Sept. 30

In the same way that I urge investors to use an adviser I too have a business coach.  I complained that my performance of a 31% gain in 2013 was not gaining me the respect or new clients to which I thought I was entitled.

He challenged me :
a) I was not ” entitled ” to anything more than I earned by performance
b) My performance allowed me to guarantee an annual 12 % return or I will forfeit the 1 % annual fee and the 20 % performance fee.

The Challenge – a guarantee of a minimum of 12 % for your annual investment return

Investors and pensions need efficient methods to screen, research, perform due diligence and monitor managers in their quest to deliver returns. They need to know the data they are using is accurate and fresh — and represents the best options available worldwide across every asset class. They must take into account their own assets and liabilities and the impact to portfolio risk while screening strategies and tracking exposures. They also need polished reports and presentations to provide evidence of a sound, inclusive selection processes for regulators and committees.

Placing these decisions in Jack A. Bass Managed Accounts removes the work from your hands to ours .

Meeting the Challenge

Jack A. Bass Managed Accounts offers a comprehensive suite of solutions for screening and monitoring, as well as risk assessment leveraging the data of the most important databases. In fact, 89% of surveyed clients agree that Jack A. Bass Managed Accounts helps them save their time during the due diligence process, while 75% of pension clients agreed .

The answer to When? – is always NOW ! – not tomorrow.
Contact Information

Information must proceed action and that is why we offer a no cost / no obligation inquiry service if you are not already a client.

Email info@jackbassteam.com OR

Call Jack direct at 604-868-3202 Pacific Time  10:00- 4:00

Same time zone as Los Angeles

Bellatrix Exploration Ltd Update BUY Target Price $ 14

BXE : TSX : C$7.55
BXE : NYSE
BUY 
Target: C$14.00

COMPANY DESCRIPTION:
Bellatrix Exploration is an intermediate sized exploration
and production company with operations in Western
Canada primarily focused on multi-zone opportunities in
west central Alberta.
All amounts in C$ unless otherwise noted.

Third Party  CONSTRAINTS
Energy — Oil and Gas, Exploration and Production

Investment recommendation
Bellatrix provided a brief operational update in which it highlighted two
unexpected plant turnarounds anticipated to impact corporate
production in late September. Although disappointing from a near-term
perspective; the continued effect from third-party facility impacts clearly
supports the company’s decision to construct its deep cut plant at Alder
Flats in 2015. We have revised our near-term production estimates
modestly to reflect the expected downtime in September and have taken
a slightly more cautious view in 2015. Given the reduced forecast, we
have modestly trimmed our target to C$14.00 and maintain a BUY
rating. Our fundamental view on the stock remains unchanged and with
a forecast 85% return to target, we see significant upside potential in the
stock. Our target price is based on 0.9x NAV and a 6.0x 2015E EV/DACF
multiple.
Investment highlights
Q3/14 volumes slightly lower. BXE has guided towards a Q3/14 average
of ~40.5 mboe/d, versus previous expectations in the 41.5 mboe/d
range. Our revised forecasts capture this update and maintain an
outlook where BXE reaches 48,000 boe/d by year end, which is
contingent on tie-ins to third-party facilities expected in Nov/Dec.
Stock significantly oversold at current levels. Since May 7, the stock has
underperformed the Energy Index by ~36%, largely as a result of
temporary operational challenges. At current strip pricing and even
assuming a downside case where production volumes average 5% below
our forecasts, implied valuation remains extremely compelling at 4.4x.
Valuation
Bellatrix trades at a 0.5x multiple to NAV, 3.6x EV/DACF, and $35,100
per BOEPD based on our 2015 estimates; a substantial discount to its peer group at 0.8x NAV, 7.1x EV/DACF, and $68,400/BOEPD.

Apple’s New iPhones Face Shipping Delays

Apple Inc. (AAPL)’s new iPhones will take as many as four weeks to ship, a sign that early demand for the smartphones is outstripping supply.

The iPhone 6 Plus, which has a larger display, will take three to four weeks for shoppers who pre-ordered online yesterday, according to Apple’s website, as people rushed to buy the handset hours after the company began taking pre-orders. Certain iPhone 6 models, which have a slightly smaller screen, will take seven to 10 business days to arrive, though some versions are still available for delivery on Sept. 19 when the devices are set to go on sale in stores. Pre-orders through some individual carriers’ websites indicate shipments could take even longer.

“Response to iPhone 6 and iPhone 6 Plus has been incredible, with a record number of pre-orders overnight,” said Trudy Muller, a spokeswoman with Cupertino, California-based Apple.

Apple this week unveiled the new smartphones with rounded edges, thinner frames and higher-resolution displays, and they became available for pre-order starting at 3 a.m. New York time yesterday. Chief Executive Officer Tim Cook is counting on the new devices to usher in demand for other products he introduced this week, from the iPhone-compatible Apple Watch to the credit card-substituting Apple Pay service.
Demand for the latest iPhone is the greatest AT&T Inc. has seen in two years, Ralph de la Vega, CEO of its mobile division, said yesterday at a Goldman Sachs media conference.

“Every time there is a change in design, and this is clearly a change in design for Apple, there is an uptake,” de la Vega said. “I think there’s going to be a great uptake, which is good for us.”

Familiar Pattern

This isn’t the first time Apple and phone carriers have seen iPhone models delayed well before they were available in stores. In 2012, the iPhone 5 was delayed for shipment by a week after a rush of orders, and in 2011 the iPhone 4S sold out at AT&T, Verizon Wireless, and Sprint Nextel Corp. only five days after pre-orders began.

“The iPhone 6 Plus experiences severe supply constraints,” Brian White, an analyst at Cantor Fitzgerald, wrote in a note to investors.

The iPhone 6 has a 4.7-inch display and the iPhone 6 Plus has a 5.5-inch one, while the previous iPhones have a 4-inch screen. The iPhone 6 costs $199 to $399 with a two-year contract, while the 6 Plus is priced at $299 to $499. The devices will come in silver, gold and space gray.

“It’s the biggest advancement ever in iPhone history,” Cook said yesterday in an interview with Charlie Rose at Bloomberg headquarters in New York. “We think that the upgrade cycle here and the number of people that will switch from other smartphones — it will be enormous.”

Twitter Gripes

Customers took to Twitter to complain of difficulties loading Apple’s website to place pre-orders. The website had problems loading at about 3:22 a.m. New York time yesterday, according to Isitdownrightnow.com, a site that tracks Internet issues.

Shares of Apple rose less than 1 percent to $101.66 at the close in New York yesterday. The stock is up 27 percent this year.

While the company normally doesn’t disclose figures for its production runs of new products, it typically has a supply of its new devices in stores on the first day.

Carriers, which often offer deals when a new iPhone comes out to lure more data-hungry smartphone users and bolster their market share, are again offering incentives that may be bolstering interest.

Carrier Incentives

Verizon is promoting a “Trade In & Trade Up” smartphone sale on its website, offering $100 to $300 for used devices. AT&T said earlier this week it will let customers swap in their old iPhone for a new iPhone 6 and as much as a $300 credit. Sprint is offering the “iPhone for Life” plan, which for $70 a month lets users rent the iPhone 6 and upgrade to a new version every two years, while T-Mobile US Inc. says it will top the best trade-in price with an added $50.

“Right now, we’re in an online, preorder phase, and will share info on in-store when it becomes available,” Debra Lewis, a Verizon spokeswoman, said in an e-mail.

While AT&T is planning on having new iPhones in stores by Sept. 19, the company won’t comment on which specific models will be available, said Mark Siegel, a spokesman for the carrier.

Legere Apologizes

T-Mobile will have the iPhone 6 Plus in stock in stores when the device goes on sale next week, said Tolena Thorburn, a spokeswoman for the Bellevue, Washington-based company. The company’s website was unable to process orders part of yesterday, with its site carrying a message attributing the errors to “strong demand for preorder devices.”

T-Mobile CEO John Legere apologized to customers on Twitter, saying “demand has been huge but we are on it.”

Michelle Mermelstein, a spokeswoman for Sprint, declined to comment on whether the Overland Park, Kansas-based company would have the iPhone 6 Plus in stores on Sept. 19.

The iPhone remains the most important piece of Apple’s business.

The handset accounted for about half of Apple’s $171 billion in revenue in its last fiscal year, and with sales of the iPad slowing, the company needs to keep the iPhone a blockbuster to maintain growth.

The handsets will initially be available in a limited set of markets — including the U.S., Australia, Canada, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the U.K. – – for pre-order and shipping on Sept. 19, the company has said. China, one of Apple’s biggest markets, won’t get the new devices at first, though the company said it plans to have the phones in 115 countries by the end of the year.

Continental Resources BUY

CLR : NYSE : US$72.88
BUY 
Target: US$92.00

COMPANY DESCRIPTION:
Continental Resources is a U.S. exploration and
production company with operations in the Williston
Basin (ND & MT) and the SCOOP play (OK). CLR is
headquartered in Oklahoma City, OK.
Energy — Oil and Gas, Exploration and Production
A LARGE SERVING OF THE WB WITH A “SCOOP” ON TOP; INITIATE WITH BUY
Investment recommendation
CLR is the largest leaseholder in the Williston Basin (WB) with 1.2 million
net acres and is also an industry leader in downspace and enhanced
completions testing in the play. Successful downspacing can add
meaningful value for shareholders, as could increased EURs from
improved completion techniques. Additional upside could come from the
development of the SCOOP in Oklahoma, where the company is the
largest leaseholder and producer in the play. CLR’s upcoming analyst day
could provide meaningful catalysts on all fronts. We initiate coverage with
a BUY rating and $92 price target.
Investment highlights
 Continued success in WB downspacing can add further upside to
NAV. CLR will conduct three more 660 foot (160-acres) density tests
this year, the results of which could serve as major catalysts when
released, likely by year’s end. Its first such test in McKenzie County
posted strong IP rates in the Bakken and the Three Forks (TF)
benches. These next three pads will target other areas of the WB.
 We feel enhanced completions techniques, including the use of
slickwater fracs and increased proppant volumes, should have a
positive impact on EURs going forward. CLR’s latest wells employing
these techniques have solidly outperformed offset wells. It plans more
enhanced completions at its next high-density pads.
 We believe the SCOOP will continue to grow at very robust rates
(~50% Y/Y in 2015E) and thereby bolster CLR’s oil/condensate
volumes in the coming years. The testing of extended and stacked
laterals are positive steps, in our view, towards adding further upside
to its already solid position in that play.
 The company is on very solid ground with regard to liquidity, in our
view. Combined with internal cash flow generation, CLR should have
more than ample capital to fund WB and SCOOP development.
Valuation
Our $92 price target is based on a 10% discount to a ~$103 NAV

Whiting Petroleum

WLL : NYSE : US$83.53
BUY 
Target: US$108.00
COMPANY DESCRIPTION:
Whiting Petroleum engages in the acquisition,
development, exploitation, exploration, and production of
oil and gas properties. The company primarily focuses in
the Permian Basin, Rocky Mountains, Mid-Continent, Gulf
Coast, and Michigan regions of the United States.

Energy — Oil and Gas, Exploration and Production
POISED TO UNLOCK EVEN MORE OF THE WB & NIOBRARA; INITIATE BUY
Investment recommendation
We believe WLL has substantial upside given its ~845K net acres (pro
forma) in the core of the Williston Basin (WB), which can be further
exploited via downspacing and enhanced completion techniques. The
pending acquisition of KOG bolsters its inventory in the core of the WB.
Strong production growth in the Niobrara excites us as well. WLL trades
at a discount to its peers that we consider unwarranted. In our view,
continued solid execution will result in a narrowing of the valuation gap.
Thus, we initiate coverage with a BUY rating and $108 target.
Investment highlights
 WLL is testing enhanced completion techniques in its latest
Bakken/Three Forks (TF) wells; if successful, we believe they can
add meaningful upside to EURs and rates of return. Additional tests
of slickwater fracs and coiled tubing completions are planned for
this year. Cemented liner/plug & perf completions have already
yielded a 23% improvement in EURs at little incremental cost.
 The pending acquisition of KOG would enhance WLL’s inventory in
some of the best areas of the WB. The combined entity would have
>3,400 net future drilling locations. WLL plans to up the rig count to
26 by the end of 2015. It also intends to lower KOG’s average well
costs to $8.5M from $9.2M, which we consider very achievable. The
deal should be accretive on all relevant metrics starting next year.
 We foresee rapid production growth in the Niobrara (~2.5x y/y
growth in 2015E). At its Redtail acreage, it is testing tighter spacing
in the B bench and also wells in the C bench; results from its 32-
well Horsetail Pad should come in January. Success there could
double its Redtail inventory to ~3,300 net locations from ~1,650.
 The company should have ample liquidity to fund continued drilling
efforts in the WB and Niobrara. Even with the assumption of KOG’s
~$2.3B of debt, the balance sheet remains in solid shape.
Valuation
Our $108 price target represents a 10% discount to a ~$120 NAV

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