Cdn.Superior, Nortel, Stelco moneyletter,CLL,KVL,...

[selkirk]

here is a round up of some stocks talked about previously in this forum.

Cdn. Superior was briefly discussed in this forum. one time a friend had some extra money (spends it like water) and wanted to invest in stocks. He got a stock tip who plays some penny stocks about Cdn. Superior. then around $2.50 cdn. also trades in the US.

the stock went above over $4 cdn. mainly because it was drilling on the cdn. east coast (Mariner I-85), the company has western cdn. properties but there was hope this well was going to be an elephant (large discovery/oil). Mr. Noval the CEO sold 1.1 millin shares at $3.75 along with other management before the bad news hit.

Cdn. Superior put out 12 press releases on the project as it was being drilled (drilling started in November). There is now a lawsuit probably more than one that is how these things work as the press releases ussually portrayed the drilling as going well.

it turns out that the well is a not economical and the companies shares fell back to $1.70 cdn.

The reason I never invested in Cdn. superior is that Mr. Novell was CEO, he ran a company called Cdn. 88 and shareholders never got rich off of that company, at least long term shareholders never did. Mr. Noval made out fine though, just in case your worried.

Told my friend to pay off a loan that was charging him 9.5%.
Cdn. superior went on a run as there was a chance they could hit
the east coast play well, should not have been surprised that Mr. Noval would promote it well and the stock would have a run. Mr. Noval and other shareholders made the money the shareholders got burned again, same as Cdn. 88 shareholders.


anyways always best to avoid bad management, I learned that lesson when I lost more than 20% on Connacher CLL, they promoted their company and only came up with 2/3 of the production they forcasted.

thanks
selkirk

 

[selkirk]

Stelco STE.a on Toronto was asked about the company this year. Basically said (it was around 1.60 roughlly ) that it might be a trade it you believe the steel sector is going to well.

However did not like management thought it was speculative because of its high debt and in 12-18 months the stock could be worth zero. A better play for a more conservative investor would be Dofasco, which thought was fully valued but paid a good yield.

should have added ipsco which made a move....anyways just bring it up because they are seeking creditors protectection in the courts.

trading at .67
what is upsetting is I read a column in "The MoneyLetter" run by Gordon Pape.

A column and a contributing editor wrote on Stelco
STE.a .66
" seems to be gaining stability under the Companies Creditors Arrangement Act. Recent pressure by the Canadian Auto Workers Union to block current company restructuring plans was nullified by the courts, clearing the way for stelco management to complete its work for the June 30 General shareholder meeting.

My advice : continue buying this attractivley priced stock"

should mention he calls it speculative plays: however in his portfolio is show him down 43.59% and yet he still believes in this stock.

make no sense; why would you still like and buy a stock that you are down over 40% on. This means you did not have the trade correct in the first place.

Apparently he has written 12 books I pity the person that bought or read them.

-Stelco is in trouble it has negative equity of $647 million.
- The union and management hate each other and do not seem to be working together.
- government may help to bail the company out, this is wrong to do, but having 20,000 people lose jobs (effected by liquidation) is not good politics.

the compnay should not have taxpayer money thrown at it, but probably will to some extent. however this will help the pension fund and the people who hold the debt the shareholders will get next to nothing.

it is sad people will read Gadsdens article and buy shares, and lose money.

stay away from STELCO.

thanks
selkirk

 

[selkirk]

another point on Gadsden recommendation for stelco STE.a. if you are bullish on the markets and the economy and think steel would go sharply higher and quickly; Stelco is running out of time.

maybe he thought it help would the company. However he is bearish on the markets and the world wide economy. so why pick a steel company with money problems.

the governments on the federal and provincial level may get involed as this would effect 20,000 people. the governments should try to help the pensioners but avoid bailing out the company. In cdn. and the US governments have gotten involved in this sector, it ussually means problems down the road, waste tax dollars, and hurts the companies that are well run, and did not take on large debt. ie. Dofassco.

does not matter what the governments do the shareholders will get very little. ZERO


Nortel is trading over $5 cdn. traded this stock (prediction thread) however now would sit on the sidelines and see what happens.

the company fired the CEO and will have to refile 3 years of financial reports. The company had trouble with accounting in 2001,2002,2003. It is believed some earlier results were made to look worse so that in 2003 management could claim the company was profitable and turned the corner.

managment earned millions in bonuses for a return to profitability that was basically fiction.


nortel is not going to zero (famous last words) they have over $3 billion in cash and the sector is slowly turning around. however would wait until it is clear they can keep a balance sheet. also the company at best may only be able to grow at 10-15% going forward.

if that is the case the stock is fully valued at this time.

thanks
selkirk