Novus Energy : China Connection ? Jack A. Bass Managed Accounts

Novus 2

Novus 2 (Photo credit: Wikipedia)

Novus Energy* (NVS : TSX-V : $0.86)
Chinese buyers emerge? The Hong Kong Economic Times reports that China-based Yanchang Petroleum International Ltd.
plans to acquire Novus Energy for C$500 million (or ~C$2.00 per share). At the time of this writing, Yanchang shares remain
halted in Hong Kong and Novus was halted on the TSX Venture Exchange. Recall, Novus reported Q2/13 results last week and commented on its ongoing value maximization process.

The company confirmed that it is currently in exclusive negotiations with respect to a potential transaction. In that regard, Novus received an order of the Court of Queen’s Bench of Alberta, as well as confirmation from the TSX Venture Exchange, that it may delay its annual general meeting of shareholders until October 24, 2013. This may save the company the expense of holding an additional meeting, should the company undertake a transaction which requires shareholder approval. On December 4, 2012, Novus announced that it had retained financial advisors to assist the Special Committee of the Board of Directors in exploring and evaluating a broad range of options to optimize shareholder value. The company cautions that there can be no assurance that a potential transaction will result from the current negotiations, and Novus does not intend to disclose future developments with respect to the process unless and until the Board of Directors has approved a specific transaction or otherwise determines that disclosure is appropriate or required.

Novus’ Q2/13 production averaged 3,452 boe/d (80% liquids) falling short of Canaccord  forecast of 3,844 boe/d and consensus of 3,939 boe/d. Production was down 15% quarter-over-quarter due to weather conditions which adversely affected its field operations. Second-quarter CFPS of $0.07 was commensurately below Toth’s estimate and consensus of $0.08 given reduced production volumes.

The company has ramped up activity in Q3 with current production of 4,050 boe/d. Subsequent to June 30, Novus has drilled an additional 17 wells in the Dodsland area with continued focus on well costs that have averaged ~$875,000.

Yahoo Looking At Pubmatic and Rubicon

Image representing Yahoo! as depicted in Crunc...

Image via CrunchBase

rubicon lychee

rubicon lychee (Photo credit: osde8info)

Nov. 21

According to Business Insider Yahoo is seeking to expand via Merger and Acquisition and has set its criteria when analyzing targets:

Yahoo’s business is pretty simple.

It makes money by selling ads on Web pages.

This is the formula:

Number Of Visits To Web Pages X Rate Yahoo Can Charge For Ads On Those Pages = Revenues

That formula means there are only two ways for CEO Marissa Mayer to grow the business.

  • Method One: She can increase the number of visits to Yahoo Web pages. The way Yahoo does that is by creating new popular products and media.
  • Method Two: She can increase the rate Yahoo charges to put ads on Web pages. The way Yahoo does that is by using ad tech to find out as much as it can about the people looking at its Web pages, and, in “real-time” sell that inventory to buyers willing to pay more to reach certain demographics.
Mayer is going to embrace both methods.

Mayer’s favorite thing to work on is consumer-facing products. So she’s going to personally invest lots of time in “method one.”

As for “method two,” Mayer would like to delegate.

The problem is that Yahoo does not currently have a team running ad tech that Mayer trusts.

There is a reason for this.

Back in 2007, Yahoo acquired a hot ad tech company called Right Media for $680 million.

This deal brought a huge amount of ad tech leadership into Yahoo.

But since then, Right Media leaders Michael WalrathBill WiseWendi Sturgis, and Ramsey McGrory all quit to take senior roles at other companies (or, in the case of Walrath, start investing in companies).

In short, Yahoo botched the integration of its huge acquisition. This happened for the same reasons that Yahoo as a whole has suffered over the past five years. It had a horrible board that hired under-performing CEOs.

All that said, our sources say that Yahoo believes it still owns a solid brand in the name “Right Media” or “RMX” – even if Right Media’s leadership is gone and its technology has rotted.

So Mayer’s plan, according to our sources, is to buy an ad tech company with a strong executive bench, and install it as the new leadership of Yahoo RMX.

There are lots of candidates Yahoo is considering, but our sources say there are two current favorites.

The one Yahoo likes best, according to a Yahoo source, is called Rubicon. Founded in 2007, Rubicon’s clients are publishers. Rubicon helps them categorize their ad inventory and sell it to the highest-bidding marketers. Yahoo would acquire it, and essentially become its sole client. Yahoo especially likes the depth of Rubicon’s executive bench.

The problem with Rubicon is that it has raised more than $50 million from startup investors. Startup investors expect a 5x to 10x return on their money. So Rubicon is not cheap. It’d cost Yahoo several hundred million dollars to buy.

During Yahoo’s last earnings call, Mayer said that Yahoo will be acquiring companies, but only in the tens and low hundreds of millions of dollars range.

A second Yahoo source cautions us, however, that Yahoo could buy Rubicon if it wanted to.

It’s true; industry M&A bankers say that between Yahoo’s cash and its reasonably liquid assets, like a stake in Yahoo Japan, Yahoo has about $10 billion it could spend.

Our Yahoo source says just don’t expect Mayer to run out and spend a billion dollars on something like Pinterest.

So perhaps Rubicon’s price is not too rich for Yahoo.

If it is, however, the first Yahoo source tells us the next company on its list is one called PubMatic. Like Rubicon, Pubmatic’s clients are publishers. It helps them optimize their inventory.

Over the summer, Evercore put out a note that said acquiring a couple of companies, including PubMatic, could increase Yahoo EBITDA by $400 million. Mayer didn’t miss that detail.

The problem with PubMatic, from Yahoo’s perspective, is that it does not have a deep bench of executives or technical people.

A source close to Pubmatic tells us the reason its executives may not seem as strong as Rubicon’s is that PubMatic is not going through a fundraising process, and executives have not spent a lot of time prepping for meetings with investors. This source says PubMatic CEO Rajeev Goel does not want to distract his team.

This source says that Rubicon, meanwhile, has hired Merrill Lynch/Bank Of America and is in the middle of a fundraising process.

To be clear, it is not certain that Yahoo will buy Rubicon, PubMatic, or even any ad tech firm.

What can report, for sure, is that two Yahoo sources tell us that Yahoo wants to buy an ad tech company in order to install a new team to run RMX. One of these Yahoo sources says that the current favorites are Rubicon and Pubmatic.


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TAG Oil Expanding In New Zealand

A fisherman statue at Greymouth.

A fisherman statue at Greymouth. (Photo credit: Wikipedia)

TAG Oil  (TAO : TSX : $7.00)

Nov. 1

TAG Oil acknowledged medai reports about a $ 534 M offer for New Zealand-based oil & gas producer Greymouth Petroleum. TAO reports that as part of its ordinary course of business identifies and, when deemed to be accretive, pursues new business opportunities. TAO however did not submit an offer to acquire Greymouth. TAO did submit a non-binding indicative expression of interest (EOI) stating an interest to potentially acquire the assets of Greymouth or all of, or a majority of, Greymouth shares. The EOI was subject to many conditions such as satisfactory due diligence, board approval, funding consisting of debt and equity on terms acceptable to TAO and the negotiation of a definitive agreement should TAO want to proceed.

No formal due diligence has been conducted and no definitive agreement has been entered into or is being negotiated. Garth Johnson, TAO CEO, commented, “The non-binding expression of interest (EOI) TAG submitted in relation to Greymouth was not an offer, it was TAG expressing an interest in looking at an opportunity, subject to strict confidentiality that appears to have been breached. As part of TAG’s normal course of operations our team continually identifies and reviews potential opportunities that are deemed to be accretive to TAG’s valuation and routinely conducts rigorous due diligence on potential opportunities and Greymouth was one that was identified to be evaluated.” All parties that had access to the non-binding EOI are subject to confidentiality restrictions.

Greymouth is a closely held an oil & gas producer with projects in New Zealand‟s Taranaki and Great South Basins and in Chile. The company is 86% owned by Chairman and CEO Mark Dunphy and associated interests. The remaining 14% is owned by former Greymouth COO John Sturgess. Greymouth is New Zealand’s second-ranked private petroleum production company by daily oil production.

Abercrombie & Fitch – Hiding From Shareholders ?

Abercrombie & Fitch Ad in Tokyo

Abercrombie & Fitch Ad in Tokyo (Photo credit: seanmccann)

Abercrombie & Fitch (ANF : NYSE : US$38.54)

Sept. 14

Abercrombie & Fitch has hired Goldman Sachs (GS) as an advisor to help ward off pressure from investors, according to a source close to the matter. While the source did not specify the details of the pressure or name the investors, CNBC speculates that Goldman was brought in to help keep activist investor Relational Investors at bay.

Relational holds a 3.8% stake in Abercrombie, and has a history of taking stakes in companies in order to lobby for a change. Abercrombie declined to comment on the move; however one Wall Street analyst speculates that the company would likely be considering all of its alternatives, including going private, in its consultations with Goldman. She commented, “Ultimately, this company has to rebuild its brand and recalibrate in the U.S., and that’s most likely done best in a private setting.”

Abercrombie has had a spotty showing over its last few quarters due to disappointing sales and an increase in discounted merchandise. Last month,  management cut its full-year outlook and reported a 52% decline in Q2 earnings, while analysts expressed concern with high  inventory levels and markdowns as well as the possibility of missed fashion trends.

 

 

Talisman Energy – CEO Out – Shareholders Restive

Logo Ontario Teachers' Pension Plan

Logo Ontario Teachers’ Pension Plan (Photo credit: Wikipedia)

Sept. 11

Talisman Energy* (TLM : TSX : $14.13 )

  Hal Kvisle, former President and CEO of TransCanada (TRPbeen appointed President and CEO. Kvisle was viewed as a very competent CEO and the market appeared to like him when he was at TransCanada. Given he was already a director of TLM, there should be no learning curve for him. 

Canaccord Genuity :thesis has been that frustrated shareholders of TLM would like to see a similar end result. Shareholders could make a push of some sort as well, and therefore TLM either fixes itself or it gets sold.

Recall at the end of August, the Globe and Mail reported that Ontario Teachers’ Pension Plan (OTPP) and hedge fund West Face Capital, have become TLM’s largest shareholders. In the second quarter, OTPP added 12.3 million shares of TLM to hold 17.4 million, or 1.7% of the company. Meantime, West Face in the second quarter bought 10.8 million TLM shares to hold just over 1% of the company. Prior to the second quarter, West Face held none. Neither OTPP and West Face have made no public indication that they plan to stage an activist campaign.

The Globe and Mail notes that OTPP and West Face disclosed their filings in a 13F filings, rather than 13Ds that signal activist intent. In the spring of 2009, OTPP and West Face, both played key key roles in pushing for the sale of Petro-Canada to Suncor Energy..

The price CNOOC is paying for NXY equates to ~20% upside to TLM, which currently trades at ~5.0x.

 

 

Has Warren Buffett A New Target ? ( Forbes )

August 15
or is he getting ready to Pass The Torch ?
WASHINGTON, DC - JUNE 05:  Warren Buffett, cha...Buffett cut long-held holdings of J&J, P&G and Kraft Foods. Why? (Image credit: Getty Images via @daylife)

Berkshire Hathaway took the ax to some of the longest-held names in its stock portfolio last quarter, sparking questions over just how much sway Warren Buffett is sharing with his recently-installed investing colleagues.

to help manage a chunk of the firm’s approximately $75 billion equity portfolio. Both managers were expected to start small and gradually manage more and more of the company’s holdings until ultimately taking over whenever Buffett steps down.

An SEC filing Tuesday detailing Berkshire’s portfolio at the close of the second quarter revealed significant cuts to holdings in Johnson & JohnsonProcter & Gamble and Kraft Foods, all stalwarts of Buffett’s portfolio.

Deal Journal’s Erik Holm says the cuts may represent a changing of the guard to some small degree, with Buffett sharing more investing responsibility with his younger colleagues:

The moves, disclosed in a regulatory filing Tuesday, reveal an uncommonly active quarter for Berkshire leader Warren Buffett and Berkshire’s new portfolio managersTodd Combs and Ted Weschler.…

Tom Russo, a longtime Berkshire shareholder who manages more than $5 billion as a partner at Gardner Russo & Gardner, theorized that Buffett was selling off the positions to allocate more capital to Combs and Weschler, who are expected to take on ever-larger slices of Berkshire’s investment portfolio in coming years.

The cuts were substantial, and did come from some of the biggest positions in the Berkshire portfolio: J&J, P&G and Kraft were three of 14 equity positions worth more than a billion dollars at the end of 2011. Positions of that size are assumed to be Buffett’s bailiwick, considering the Oracle of Omaha told  shareholders earlier this year that his two deputies each had their mandates raised by a billion dollars and manage about $2.75 billion.

At recent prices, and with the caveat that it is quite possible Berkshire’s positions have changed since June 30, Buffett holds $706 million worth of J&J, just under $4 billion in P&G and $2.4 billion in Kraft. Those positions were cut by two-thirds, a fifth and a quarter from March 31. But it is not a guarantee that the cash raised from paring those stakes found its way into the baskets of Combs and Weschler

While the logic makes sense, another longtime Berkshire shareholder, money manager and Forbes contributor Martin Sosnoff, thinks the portfolio reduction – the overall equity portfolio was trimmed to $74.3 billion from $75.3 billion — might mean Buffett is readying another big acquisition along the lines of his 2010 takeover of Burlington Northern Santa Fe.

Sosnoff, who manages $6 billion at Atalanta Sosnoff Capital writes that while Buffett may be conserving capital in the face of ”investment waters filled with riptides ,” he thinks there is just as good a chance the world’s third-richest man is readying for one last mega-play, another opportunity to step up to the plate when few others can or will. Remember, Buffett also stepped up with sorely-needed capital in 2008 for Goldman Sachs Group and General Electric — bets that paid off handsomely — and again in 2011 for Bank of America.

Apple After Pinterest Rival Fancy

Fancy

Fancy (Photo credit: woordenaar)

August 6

Fancy That !

Apple is in talks to acquire The Fancy, a fast-growing social commerce site backed by cofounders of Twitter and Facebook, Business Insiderhas learned.The objective: to secure a role for Apple in the growing e-commerce market, putting the 400 million-plus users with credit cards on file with Apple’s iTunesStore to work shopping—with Apple getting a cut of the action.While The Fancy is far smaller than archrival Pinterest, which similarly lets users make lists of things they find interesting, the 20-person New York startup, led by cofounder and CEO Joe Einhorn, is much farther along in linking its users to transactions. The Fancy takes a 10 percent cut of purchases. Last we checked in, sales were exploding.

There is no signed deal and no guarantee one will happen. We do not know the price Apple has proposed to pay for The Fancy or how recently talks took place.

However, given what we’ve learned, it was apparently no coincidence that Einhorn and Apple CEO Tim Cook met at Allen & Co.’s Sun Valley conference earlier this year. The notoriously private Cook, who does not visibly participate in any well-known social media sites, started using The Fancy shortly afterwards.

The Fancy raised a $10 million round at a reported valuation of $100 million last fall, led by PPR, the French luxury conglomerate behind Gucci. It previously raised $6 million in 2010; $2.7 million of that round went to Einhorn and his cofounder, his brother Jack Einhorn, according to an SEC filing. Investment bank Allen & Co. was an early investor.

It would be reasonable to think its investors would expect a healthy return—call it 3 to 5 times what they paid. (Consider that nothing more than informed speculation, based on similar deals.)

Twitter cofounder Jack Dorsey and Facebook co-founder Chris Hughes are on the board, along with LeRoy Kim of Allen & Co. and James Pallotta, the owner of the Boston Celtics. Marc Andreessen and Ben Horowitz, the co-founders of venture-capital firm Andreessen Horowitz, are also investors.

Apple is not known for making big, splashy acquisitions. But a source familiar with Apple’s acquisition strategy noted to us that The Fancy is at a stage where Apple typically buys companies.

For example, in recent years, it has bought several companies to bolster its online offerings, like Chomp, an app search engine; Lala.com, an online music service; and Placebase, a digital mapping company. It is in the process of trying to buy AuthenTec, a mobile security company.

Still, how can a two-year-old company with 20 employees possibly be worth that much to Apple?

Apple’s history in e-commerce stretches back almost 15 years to November 10, 1997, when it opened its first online store. On April 28, 2003, it got into digital commerce with the iTunes Music Store. Those foundations in e-commerce let it roll out the iPhone‘s App Store. As Apple’s sales of mobile devices exploded, so did its rolls of online customers registered with a credit card.

But as its tentative moves into general e-commerce have shown, sending those customers on a shopping spree isn’t a simple matter. PassBook, a new online wallet introduced in the latest version of iOS, Apple’s mobile operating system, lets users store discounts, gift cards, and airline tickets—but it doesn’t let people spend money with stored credit cards.

The Fancy could change all that by giving Apple a clear route to converting people’s interest in an object into a sale.

Apple could well build an e-commerce layer into its operating system and let application developers hook into it, giving them a way to make money besides advertising.

The Fancy has recently rolled out a system that gives users a cut of the sales their lists of objects generate.

Einhorn’s company began life as a project called Thing Daemon, or ThingD, which aimed to be a universal database of things. In February, it adopted a model focused around e-commerce—and its business has taken off since.

The Fancy’s offices are situated above an Apple Store in New York City. We don’t think that has anything to do with anything, but it’s funny, given the circumstances.

Einhorn declined to comment. Apple, Dorsey, Hughes, and PPR did not respond to requests for comment

As Forecast By AMP : Best Buy Founder Offers $8.8 Billion

English:

English: (Photo credit: Wikipedia)

Best Buy Founder Offers $8.8 Billion to Buy Out Company

August 6

Richard Schulze, the founder of Best Buy, offered to buy the electronics retailer on Monday for as much as $8.8 billion.

Mr. Schulze, who resigned from the company’s board in June, said he would offer Best Buy shareholders between $24 and $26 for each of their shares in the electronics company, according to a letter sent to the board that he made public.

The offer represents a premium of 36 percent on the low end of his offer and a premium of 47 percent on the high end from the company’s closing share price on Friday. In pre-market trading on Monday, Best Buy shares were up 24 percent, to $22

“There is no question that now is the moment of truth for Best Buy and that immediate and substantial changes are needed for the company to return to its market-leading ways,” Mr. Schulze said in a statement. “I am deeply concerned that further delay and indecision will cause additional loss of both value and talented leaders who are now uncertain of the company’s future.”

With a 20.1 percent stake in the company, the Best Buy founder is the company’s largest shareholder.

In his letter, Mr. Schulze said he had held discussions with several private equity firms interested in participating in the deal, as well as with former Best Buy senior executives, including Brad Anderson and Allen Lenzmeier.

“Bold and extensive changes are needed for Best Buy to return to market leadership,” Mr. Schulz wrote. “The company’s best chance for renewed success will be to implement these changes under a different ownership structure.”

The Best Buy founder said he planned to fund the acquisition by contributing $1 billion of his own money, securing investments from private equity firms as well as debt financing.

In his letter, Mr. Schulz that “Credit Suisse, who I have retained as my financial advisor, is highly confident that it can arrange the necessary debt financing.”

Best Buy has $2.2 billion in debt and $1.1 billion in cash on hand, according to Capital IQ data.

In addition to Credit Suisse, the law firm Shearman & Sterling is advising Mr. Schulze.

Cameco Could Buy Stake In URENCO

Cameco

Cameco (Photo credit: Wikipedia)

August 3

Cameco Corp. has as much as $3-billion of potential liquidity at its disposal, putting the company in a good position to make acquisitions and capitalize on an expected recovery in the uranium market. But what should it buy?

BMO Capital Markets analyst Edward Sterck ran the numbers, and determined that buying a minority stake in European enrichment company URENCO would be the best move. The deal would make Cameco a more fully integrated nuclear company, as it is not currently involved in enrichment.

URENCO is owned by a group of governments and utilities in Britain, the Netherlands and Germany. All of the owners are studying potential sales, so there is an opportunity to get in.

Mr. Sterck estimated that buying a one-third stake would likely cost between $1.5-billion and $2.5-billion, though the price could be lower with all the owners looking to sell. He calculated that an acquisition price above $1.8-billion would be dilutive to Cameco’s net present value, but the benefits would increase over time as debt gets paid down.

And then there is the earnings impact. He expects the acquisition would boost Cameco’s forecast profit by about 20%.

“The potential impact to earnings is significant,” Mr. Sterck wrote.

He also studied potential Cameco acquisitions of Paladin Energy Ltd., Denison Mines Corp. and a stand-alone uranium project, but determined that they would all be less accretive than URENCO.

Peet’s Coffee and Tea / Starbucks Takeover ?

Peet's Coffee and Tea

Peet’s Coffee and Tea (Photo credit: aroslis)

Peet’s Coffee and Tea (PEET : NASDAQ : US$75.40)
Starbucks (SBUX : NASDAQ : US$45.28)

August 1

Shares of Peet’s Coffee & Tea have been trading above the $73.50 per share bid received from Joh. A. Benckiser last week, as it appears investors think the company could be sold at a higher price.

Some analysts believe that Starbucks could be the one to throw in a counterbid. While rising coffee prices have hurt the bottom and top line of several coffee products, Peet’s managed to boost sales in supermarkets by 30% in 2011 as customers continued to snap up its gourmet
coffee offerings. One Wall Street banker said Peet’s would give Starbucks “an entrée into the gourmet market” and that “if
you’re going to get a counterbid, you’re going to get something that has the appearance of a knockout counterbid.”

Another brokerage notes that by purchasing Peet’s, Starbucks would be able to prevent Peet’s from expanding its coffee shop footprint.
The brokerage went on to say that Peet’s “is perceived as a more premium offering than Starbucks on the grocery shelf, and
they have been able to charge $1 more per 12-ounce bag on the grocery shelf.” Starbucks could use its existing distribution
channels to roll out Peet’s products in grocery stores and its own coffee shops, specifically internationally.

Starbucks has struggled to penetrate the European market, and offering a completely separate brand may help the company gain traction. In
addition to Starbucks, JM Smucker (SJM), maker of Folger’s coffee, and Kraft (KFT), which makes Maxwell House, may also be interested in buying Peet’s.

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