Avago Technologies Limited

AVGO : NASDAQ : US$34.43
BUY 
Target: US$42.00

COMPANY DESCRIPTION:
Avago Technologies Limited is a designer, developer and global supplier of analog semiconductor devices. Avago offers products in three primary target markets: wireless communications, wired infrastructure, and industrial and automotive electronics. Applications for Avago products include smartphones, connected tablets, consumer appliances, data networking and telecom equipment, and enterprise storage and servers.

UNEXPECTED INDUSTRIAL GROWTH DRIVES BEAT; ANTICIPATE H2 WIRELESS RECOVERY
Investment recommendation:

Avago reported solid Q2/F2013 results above low expectations due to a modest recovery in Industrial division sales and strong Wireless division sales to Samsung and other LTE smartphone OEMs that helped offset the iPhone transition at largest customer Foxconn (Apple). Further, Avago guided to strong sequential growth in all 3 divisions for the July quarter. We anticipate strong Wireless sales growth in 2H/F2013 due to strong FBAR filter demand for new LTE smartphone programs at leading smartphone customers such as Apple, Samsung and others.

Further, we believe Avago’s proprietary technologies, strong IP portfolio, and diverse customer base in several growth markets position the company for strong long-term growth and industry-leading margins. We reiterate our BUY rating and $42 target.
Investment highlights
 Q2/F2013 sales of $562M and pro forma EPS of $0.61 were above our $552M/$0.57 estimates due to strong sales of FBAR filters into ramping
LTE smartphone programs and surprising 4% Q/Q sales growth in the highest-margin Industrial division – versus guidance for low single digit
decline – driven by a broad increase in distributor sell-though. Solid Wireless sales despite the Apple product transition were consistent with our surveys indicating strong LTE smartphone sales, including the Galaxy S 4, as Samsung was a 10% Avago customer for the first time.
 Avago management guided to a 6%-9% Q/Q increase in revenue for the July quarter driven by solid Q/Q growth in all divisions, including highsingle- digit Q/Q growth in Wireless due to the initial sales ramp into new smartphone programs at Apple.
 Our bullish H2 Wireless outlook remains unchanged, though we slightly increase our F2013E pro forma EPS from $2.73 to $2.74 and our F2014
estimate from $3.19 to $3.21 due to a modestly increased outlook for Avago’s Industrial division.
Valuation:

Our $42 price target is based on shares trading at roughly 13x our F2014 pro forma EPS estimate.

Transocean : Ichan Creeps Up

English: Transocean Wildcat (Aker H-3 design) ...

English: Transocean Wildcat (Aker H-3 design) drilling rig in Cromarty Firth, Scotland. (Photo credit: Wikipedia)

Transocean

RIG : NYSE : US$58.17
I wonder what Bill Ackman thinks?

Carl Icahn disclosed his stake in Transocean increased to 5.6% late Friday, sending shares of the offshore driller higher. Additionally he has asked management to declare a dividend of at least $4 per share, and has said that if the company doesn‘t, he will propose it at the next shareholder meeting. He said, in a filing, ―Under Swiss law and the Issuer’s Articles of Association, a shareholder has the right to propose a dividend at a company’s annual meeting, and if a majority of shareholders support the proposal, the dividend is declared, whether or not the company’s board supports such  proposal.

Transocean responded in a statement that read, ―We will review Mr. Icahn’s filing carefully and respond in due course. We appreciate the opportunity to hear from our shareholders and look forward to continuing a dialogue with Mr. Icahn.

As always, the Transocean Board of Directors will set dividend policy on the basis of financial prudence and the best interest of
shareholders.‖ Transocean initiated a dividend in 2011, but was forced to abandon the payouts in an effort to maintain its
balance sheet and investment-grade rating on its debt

Brookfield Renewable Energy / Western Wind

English: Wind Turbines Zephyr and Freedom in M...

English: Wind Turbines Zephyr and Freedom in Moorhead, Minnesota http://www.eia.doe.gov/cneaf/solar.renewables/page/wind/wind.jpg Energy Information Administration http://www.mpsutility.com/capture.htm (Photo credit: Wikipedia)

( Western Wind is featured in The Apprentice Millionaire Portfolio from Amazon Books )

Brookfield Renewable Energy

(BEP.UN : TSX : $30.14)
Western Wind Energy

(WND : TSX-V : $2.51)

”Brookfield Renewable Energy Partners has increased its all-cash offer for the shares of Western Wind to $2.60/share from $2.50/share and has extended the expiry time of the offer to February 11, 2013 from January 28, 2013. BEP.UN indicates that 22% of independent shareholders have either entered into lock up agreements or have advised that they will tender the shares to the offer.

While this may seem like a no-brainer for Western Wind shareholders as it represents a 119% premium to the share price prior to the   nouncement that it was for sale (July 28, 2012)…we suspect the Western Wind CEO will continue to posture for an even sweeter bid. Just a couple days ago, BEP.UN demonstrated their frustration with Western Wind, saying there were terminating discussions. Upon making its offer in November 2012, the company said its preferred approach was to work with the Board and the advisors towards a Board supported transaction.

However the gloves have now come off. In a recent press release, BEP.UN said, ―Unfortunately, based on Western Wind’s conduct since
commencement of the Offer it appears that Western Wind, and in particular, its CEO, has no intention of selling the Company.
In fact, Brookfield Renewable’s recent discussions with Western Wind appear to have been orchestrated by the Company to enable it to issue its January 22, 2013 news release as well as its Notice of Change to its Supplementary Director’s Circular, and raise shareholder expectations that a revised proposal will be made, despite there being no agreement or understanding between the parties regarding a proposal or its terms.‖ BEP.UN also points to the fact that Western Wind said 56 parties were interested in acquiring the company, yet no alternative proposals have emerged.

Interestingly, management of Western Wind has also managed to convince its board of directors to approve early payments of their change of control payments (despite the fact that no sale was on the horizon). Ciachurski received approximately $3 million. Better yet, Ciachurski continues to have a special bonus arrangement in which he would receive another $3 million if he gets $3.00 a share for the company…aka…the battle is
likely not over .

Denison Mines – Uranium Sector Update

A billet of highly enriched uranium that was r...

A billet of highly enriched uranium that was recovered from scrap processed at the Y-12 National Security Complex Plant. Original and unrotated. Source: http://web.em.doe.gov/takstock/phochp3a.html (Photo credit: Wikipedia)

DENISON MINES (T-DML) $1.57 +0.09
UEX CORP. (T-UEX) $0.795 +0.045
UR ENERGY (T-URE) $0.935 +0.035

Yes the price of uranium is still in the toilet ($42.50 is just off the bottom), but one might still be hopeful.
The recent deal announced by Denison Mines shows that there is obviously hope by some of the players that with all the new nukes in China, India and Russia coming on stream, that nuclear has a future. Also the billion dollar take-over of Uranium One (UUU) shows that some of those
dollars are staying in the sector…
Scott Carlson of the Canaccord desk writes an aggressive/ hopeful piece: “Putting together an attractive package… leading to another bidding war? Denison Mines announced  Wednesday that it intends to add another piece to its already attractive portfolio of high-quality and strategically
located uranium development projects (and a significant interest in the McClean Lake Mill). DML has agreed to buy some uranium development and exploration properties for about $70 million in a bid to expand its holdings in Canada’s Athabasca Basin.

Bloomberg noted that DML is stepping up its exposure in the Athabasca Basin, home to the world richest high-grade uranium deposits, after last year selling its U.S. unit. Speculation at that time was that Denison was positioning itself to be acquired. Commenting Wednesday following the announcement of Denison’s most recent (proposed) deal, one Bay Street analyst stated that a bidding war for DML between Cameco (CCO) and Rio Tinto (RIO) may be next up.

Remember, the two industry giants went head to head in the battle over Hathor Exploration, with Rio eventually succeeding in the bidding war.

Another analyst commenting Wednesday noted that in addition to CCO and RIO, DML’s suite of assets may also attract Asian nuclear utilities. Separately, just over a week ago DML released an impressive updated Mineral Resource estimate for the high-grade Phoenix A and Phoenix B uranium deposits on its Wheeler River project in Northern Saskatchewan.”

Inmet Mining Corporation Target $ 82

Another Hostile Takeover

Another Hostile Takeover (Photo credit: Wikipedia)

Inmet Mining Corporation 
IMN : TSX : C$70.43
BUY  Target: C$82.00 

COMPANY DESCRIPTION:
Inmet is a Canadian-based, international mining company that produces copper, zinc and gold. Its three operations include Cayeli in Turkey, Pyhasalmi in Finland, and Las Cruces in Spain. The company is currently developing the very large Cobre Panama Cu-Mo-Ag-Au project in Panama (80% IMN).

Investment recommendation


Inmet Mining released slightly better than expected Q4/12 operating results (production of 27,600t Cu and 20,700t Zn were 1.6% and 25.7%
above our forecast) and issued initial 2013 production and cost guidance that was largely in line with our estimates. We are reiterating our BUY
rating and our 12-month target of C$82.00 per share.

Our C$82.00  target is based on a 50/50 weighting of our fundamental based target and our takeover based target. Our fundamentals based target of C$74.27 is based on a 50/50 weighting of 5.0x our 2013E EV/EBITDA ($64.98) and 1x our revised 8% NPV estimate ($83.57). Our takeover
based target of C$90.67 is based on an 8.5% premium to our 10% NPV estimate of C$83.57, representing the average takeover premium realized within our coverage universe over the past two years. In light of the currently outstanding C$72.00 per share hostile takeover offer from
First Quantum Minerals (TSX: FM), in our view, the Q4/12 operating results and 2013 guidance are likely to have little impact on the shares.
Investment highlights
 We now forecast 2013E-2015E total Cu production of 112,314t, 115,168t, and 115,242t (from 115,137t, 115,168t, and 115,242t).
Valuation
Inmet is currently trading at a 2013E and 2014E EV/EBITDA of 5.6x and 7.5x, and at a 15.7% discount to our 10% NPV estimate of C$83.57 per share, which compares with our mid-cap base metal producer coverage universe average of 8.1x, 6.7x, and a 16.0% discount to NPV.

Novus Energy Trading Alert

We have been waiting for the stock overhang to be removed. The stock could not get up to $ 1.10 because there was always 400- 500,000 shares available below that price.

This despite the company having put itself up for sale with the opening circular of December 17,2012.

Todays New Release helped volume yo overcome the overhang.

Here is the news release:

CALGARY, Jan. 15, 2013 /CNW/ - Novus Energy Inc. (“Novus” or the “Company”) (TSXV: NVS) is pleased to report it has met its corporate exit rate production target of 4,200 boe/d for 2012.

Estimated field level production for the last week of December averaged 4,234 boe/d with approximately 78% of these volumes comprised of oil and liquids. Based on field estimates, average production during December was 3,925 boe/d and fourth quarter 2012 volumes averaged 3,530 boe/d.

During the fourth quarter of 2012, Novus drilled 24 wells (24 net), all of which were Viking horizontal oil wells in the greater Dodsland area.  Throughout 2012, Novus drilled a total of 72 wells (72 net) and completed 68 wells (68 net), all of which were Viking horizontal oil wells in the greater Dodsland area.

During the most recently completed quarter, Novus drilled, completed and placed on production three key successful wells to the west of its Flaxcombe field.  The Company is pleased with the wells’ performance and believe they have the potential to validate a substantial amount of the Company’s land.  The western most well drilled in this successful extension is situated over 12 miles from the Flaxcombe field.  In 2013, Novus has drilled and cased three additional wells in the region and expects to bring them on production during the first quarter.  Novus controls approximately 14.5 sections of land in the region and with continued development success, the Company believes this land block may materially add to its drilling inventory.    Â

Novus now controls 210 net sections of Viking rights in the Greater Dodsland area of Saskatchewan and the Greater Provost area of Alberta.

Value Optimization Process

On December 4, 2012, Novus announced that it had retained Cormark Securities Inc. (“Cormark”), as lead, and FirstEnergy Capital Corp. (“FirstEnergy”) as its 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 data room is now available for interested and qualified parties who have entered into a confidentiality agreement with Novus. The Company has not established a definitive schedule to complete its review and consideration of options to optimize shareholder value, and does not intend to disclose 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.

LEVEL 2 with 1.3 million shares traded ( versus an average of less than 500,000 a day.

Level 2 Quote

r Shares Bid Price Ask Price Shares
40,500 1.090 1.100 62,300
11,600 1.080 1.110 57,400
37,500 1.070 1.120 50,100
34,600 1.060 1.130 28,000
27,000 1.050 1.140 26,000
32,200 1.040 1.150 35,800
51,000 1.030 1.160 1,200
172,300 1.020 1.190 28,400
9,000 1.010 1.200 24,600
62,500 1.000 1.210 11,000

AMP Gains – Bragging Rights on Arcan

Flag of Calgary

Flag of Calgary (Photo credit: Wikipedia)

as per our prior Trading Alert to you :

Arcan Resources, Ltd. is engaged in the exploration for, and the development and production of, petroleum and natural gas in Western Canada.

Arcan Resources, Ltd. (ARN.V)

 

1.37 Up 0.24(21.24%) 3:59PM EST

Prev Close: 1.13
Open: 1.17
Bid: 1.35
Ask: 1.37
1y Target Est: 1.28
Beta: N/A
Next Earnings Date: N/A
Day’s Range: 1.13 – 1.37
52wk Range: 0.60 – 6.24
Volume: 796,643
Avg Vol (3m): 598,330
Market Cap: 134.07M
P/E (ttm): N/A
EPS (ttm): N/A
Div & Yield: N/A (N/A)
Quotes delayed, except where indicated otherwise. Currency in CAD.
Arcan Resources, Ltd. (ARN.V)

Big players grab stakes in tiny Arcan Resources ( Calgary Herald)

Swan Hills light oil play the reward for PetroBakken, Crescent Point

CALGARY — Junior producer Arcan Resources Ltd. says gaining a second large intermediate oil producer as a shareholder proves the value of its light oil play in the Swan Hills area of northwestern Alberta.

Earlier this week, PetroBakken Energy Ltd. confirmed it had quietly acquired a 17 per cent stake in the company on the stock market.

That makes it the second-largest shareholder behind Crescent Point Energy Corp., which announced a 19 per cent stake in July 2011.

The stock market moves are unusual, analysts agreed, especially given Arcan’s willingness to let other companies farm-in on its extensive inventory of drilling locations in the Beaverhill Lake play.

“A significant portion of the stock is now held, not by regular investors, but by actual producing companies,” said analyst Geoff Ready, who covers Arcan for Haywood Securities of Calgary.

“I think it describes the difference of how companies are valued. The market is valuing companies on near-term production and cash flow and the other companies are looking at what their overall land and opportunity value is.”

Another analyst who asked not to be identified characterized the Arcan stock buys as “difficult to understand” on the part of either purchaser.

Arcan has been a bargain of late, with its shares closing Tuesday at $1.20, down from a 52-week high of $6.24 set last February.

PetroBakken said it paid just 89 cents each for seven million of the 17 million shares it recently picked up. Last year, Crescent Point said it paid $5.08 for eight million of its current stake of about 19 million.

Analyst Jeremy Kaliel of CIBC World Markets said in a note he counts the deal as a positive for PetroBakken, adding it positions the larger company if it decides to make a bid for Arcan.

“We view the announcement as a slight positive due to our positive bias to the play and the attractive entry price for PetroBakken,” he wrote.

“If PBN were to acquire Arcan at a 30 per cent premium, PBN’s debt would remain manageable … and with 49 per cent of its credit line undrawn.”

He added that if Crescent Point makes an offer for Arcan, PetroBakken would still likely profit because it paid so little for the shares.

Arcan reported recently that third-quarter production was 3,900 barrels of oil equivalent per day, down from 5,250 boe/d in the second quarter. The boom and bust numbers are common — its unconventional wells typically post flush initial production followed by steep declines.

Ready said the high cost of being a player in the deep Beaverhill Lake play, where horizontal, multi-stage fractured wells cost upwards of $4.5 million each, makes it very difficult for Arcan to go it alone.

He said the company is also saddled with high debt, a key factor in its spiralling share price.

Arcan said in its news release it doesn’t plan to make any changes to its operations because of the PetroBakken investment. A spokesman did not immediately return a request for comment.

Arcan and PetroBakken also announced a farm-in deal under which PetroBakken will earn up to a 50 per cent stake in 5,570 hectares of Arcan land by drilling five commitment wells and two option wells.

In its release, PetroBakken says it now has 20,000 net hectares of land in the play with 175 potential drilling locations identified. It reported it has drilled one well and participated in a partner’s well, and plans to drill up to seven more wells by March 31.

Crescent Point, meanwhile, said recently it is planning its first waterflood enhanced recovery pilot in the Beaverhill Lake play and said it has been undertaking unspecified consolidation acquisitions there.

In its five-year plan, it says it plans to double output to 6,500 boe/d from 3,000 boe/d now.

PetroBakken had overall third-quarter production of 38,500 boe/d, while Crescent Point noted 99,600 boe/d. Both are active in the Saskatchewan Bakken light oil play.

Beaverhill Lake is an oil reef play first discovered in the 1950s and originally tapped with vertical wells. New technologies have reopened the play.

PetroBakken Energy- Takeover of Arcan ?

PetroBakken Energy* (PBN : TSX : $10.47), Net Change: -0.26, % Change: -2.42%, Volume: 919,556
Arcan Resources* (ARN : TSX-V : $1.25), Net Change: 0.15, % Change: 13.64%, Volume: 1,600,124

Could Arcan be taken up sooner than later?

PetroBakken announced it recently participated in farm-in agreements with Arcan
for 21.5 (11.25 net) sections of land within the prospective Beaverhill Lake play at Swan Hills by drilling five commitment
wells and two option wells. Upon completion of these farm-in wells and combined with the company’s existing acreage, PBN
will have 90.5 (78 net) sections of land in this play with more than 175 potential net drilling locations identified.

PBN also announce it had acquired 7,055,500 common shares of ARN at an average price of $0.89 per share. As a result of this
acquisition, PBN now owns ~16.6 million common shares of ARN, representing 17% of the total issued and outstanding
common shares of ARN as of the date hereof, on a non-diluted basis. PBN says it acquired the ARN shares for investment
purposes only.

According to Bloomberg, as of October 12, 2011, Crescent Point Energy (CPG) held ~18.5 million shares of
ARN (~19% stake).

Novus Energy – Three Potential Suitors

Nov.28

Novus Energy

NVS  $1.08 up 1 cent on 15 Million shares
With the price of oil going down over the last while and costs in the business increasing rather dramatically, $85.00 oil is certainly not creating the joy in the oil patch of six and 12 months ago. And of course with all the talk of the fiscal cliff, it’s scary looking at the charts of all the oil and gas companies out there. There are very few of them trading at or near their high for the year and many are trading at significant discounts to where they might have been.
Novus Energy is one of the very few trading at lofty levels and on big volume and as we wrote , we know that discussions are ongoing about what next for the company.
Yesterday, Andrew McCreath on BNN talked about it as well. Andrew over the last while has picked up an audience for some of his insightful suggestions. We believe “Bridgediver” on Stockhouse  got it right in transcribing what McCreath said about Novus when he suggested, “but what is really interesting about this acquisition (of private production and land, by Raging River) is that they are buying all the land around a company called Novus, NVS, which is a company that I believe a group, 3 different companies are interested in buying and I would expect a transaction to occur early in Q1 of next year for that company (Novus).

Anyway, it looks like a good tuck-in acquisition for this company (Raging River).”
Our own thoughts in this ugly market is that Novus could end up with three situations…they could be bought out (which isn’t happening a lot these days); they could be merged with somebody such as a Raging River (which lately hasn’t worked out for companies like Pinecrest Energy and a long list of others); or nothing could happen (which we suspect could drop the price back to where it was a few weeks ago). So which one of the three scenarios will happen?…….

 

PEER 1 Network Enterprises Inc. BUY Target $3.30

Peer 1

Peer 1 (Photo credit: Wikipedia)

 

Nov. 13

PEER 1 Network Enterprises Inc.

PIX : TSX : C$2.84

COMPANY DESCRIPTION:
PEER 1 provides Internet data centre hosting and co-location services through its 19 data centres, 21 points-of-presence and 10 co-location facilities in North America and Europe. PEER 1’s customer base consist primarily of small-to-medium sized businesses (SMB) in North America and the U.K.
All amounts in C$ unless otherwise noted.

We continue to like Peer 1’s growth profile, expanding margins and medium-term take-out potential – While we have reduced our near term revenue forecasts and increased our capex estimates due to FQ1/13 results, this is offset by increased margin assumptions. We continue to see strong growth potential, especially in cloud services. We also believe that Peer 1 could be sold over the medium-term. Potential acquirers include telecom and cable providers, larger data centre companies and private equity firms.
While FQ1/13 (ending September) revenue was slightly lower than expected, margins exceeded – At US$39.3 million, consolidated revenue was slightly below our US$40.2 million forecast, but up a reported 24.7% YoY, driven by the acquisition of NetBenefit. Organic growth was 13%. Due to better than expected margins, EBITDA of US$10.8 million beat our US$10.4 million forecast and was up 37.1%. Recurring EPS of US$0.01 also was above our break-even forecast and the loss of US$0.01 in FQ1/12.
Capex was well above our forecast, but this was due to non-recurring infrastructure investments and success-driven server capex – Peer 1 reported capex of US$13.4 million, which was well above our US$7.0 million forecast and consensus of US$7.4 million. It was up 18.6% YoY. However, this was driven by non-recurring capex to support a new European partnership with an enterprise cloud developer, Tier 3, and demand driven server capex. As a result, the FCF loss of US$5.4 million was worse than our break-even forecast, but better than the US$6.9 million loss in FQ1/12. Management expects capex to return to a more normalized level of around US$8.0 million per quarter going forward.
Raising target to C$3.30 from C$3.20 due to increased EBITDA forecasts, maintaining BUY rating – Our new DCF-derived target price equates to an unchanged EV/2014E EBITDA of 8.2x. Peer 1 currently trades at only 8.2x calendar 2013E EBITDA, a significant discount to Equinix at 10.7x and Rackspace at 14.4x.

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