Mixed day for Contrarian Investor uk portfolio

Despite an RNS, stating that Bowleven (BLVN) had started on the Sapele-1 sidetrack Sapele-1ST in the Douala Basin, offshore Cameroon, the shares fell 3p to 331p. The aim of Sapele-1ST is to appraise the Deep Omicron oil discovery encountered in the Sapele-1 exploration well. The well is to be drilled to an estimated vertical depth of circa 3,682 metres (4,761 metres measured depth) approximately 2 kilometres from the Deep Omicron oil discovery in the original vertical well. Drilling is expected to take approximately 40 to 50 days. Bowleven also announced that The Vantage Sapphire jack-up rig has now been contracted and the Sapele-2 well will spud around mid March 2011.

Xcite Energy (XEL) dropped 11.5p (3.5%) to 326p after this morning's news that the reserves report would be available at the end of March rather than early in the month. See earlier post: http://contrarianinvestoruk.blogspot.com/2011/02/xcite-energy-reserves-report-delayed.html

On a more positive note, Sirius (SXX) continued its rebound, rising 5% to 13.4p as realisation returns that the stock was oversold on the fall out from last week's Libyan crisis. Copper company, Weatherly (WTI) also rose 4.4% to 12.88p on strong metal prices. Even Rockhopper (RKH) managed a small gain to finish at 233p.

HSBC results subdue FTSE 100

A poorly received set of results from banking group, HSBC, sent the shares down 4.7% and helped the FTSE 100 finish down 7 points at 5,994. The Dow Industrials are currently up 70 to 12,201 as oil weakened marginally to $97 (U.S. WTI).

HSBC more than doubled its profits to over $19 billion (£11.7 billion) in 2010 versus $7.1 billion in 2009,  as bad debt provisions fell, but a reduced return on equity target due to new capital requirements failed to impress investors. Analysts had also hoped for a profit over $20 billion.  Expenses rose nearly 10% to $37.7 billion with the company blaming new bonus taxes , technology spending and increased marketing costs. 

A steadier day overall with events in North Africa calming down somewhat after last week's panic.

Buffett's Berkshire Hathaway issues annual shareholder letter for 2010

Berkshire Hathaway has released its 2010 Annual Shareholder letter (see full letter at http://www.berkshirehathaway.com/letters/2010ltr.pdf).

Some key highlights are:

• The per share book value of Class and Class B stock increased by 13% in 2010. Over the last 46 years, book value has grown from $19 to $95,453, a rate of 20.2% compounded annually (compared with 9.4% for the S&P 500 with dividends included)
• On the acquisition of Burlington North Santa Fe (rail road company) - It now appears this railroad company will increase Berkshire's "normal" earning power by nearly 40% pre-tax and by well over 30% after tax. Berkshire bought the outstanding 77% of Burlington on November 3, 2009, for $100 per share in cash and stock - a deal valued at $44 billion.
• Money will always flow toward opportunity, and there is an abundance of that in America. Commentators today often talk of "great opportunity". But think back, for example, to December 6, 1941, October 18, 1987 and September 20, 2001. No matter how serene today may be, tomorrow is always uncertain.
• Cultures self propagate. Winston Churchill once said "You shape your houses and then they shape you.". That wisdom applies to businesses as well. Bureaucratic procedures beget more bureaucracy, and imperial corporate palaces induce imperious behaviour. (As one wag put it, "You know you're no longer CEO when you get in the back seat of your car and it doesn't move."). At Berkshire's "world headquarters" our annual rent is $270,212. Moreover, the home office investment in furniture, art, Coke dispenser, lunch room, high tech equipment - you name it-totals $301,363. As long as Charlie and I treat your money as if it were your own, Berkshire's managersare likely to be careful with it as well.

On the latter point, I wish more of the fund managers on Wall Street and in London had the same attitude as Mr Buffett and Charlie Munger! The "sage of omaha's" treat for the day is his Diet Coke and steak in the local diner, not Krug and a Michelin star lunch. Less costs = more returns for investors.

The succession to Buffett and Munger is the key question for Berkshire Hathaway investors given their respective, 80 years and 85 years. It will be a hard act to follow. Why can't we have a Berkshire type fund on this side of the Atlantic that could have said to have delivered twice the FTSE All share over decades?

MeDaVinci up 17% today on Express article

I see that MeDaVinci is up 17% today following a positive write-up in the Express on the change to Orogen Gold. Whoops!!

Well it makes my review published at the weekend a little ill timed, I bet the bulls are crying with laughter! However, in fairness to myself, I did point out that the shares would rise short term on the Orogen acquisition noise and PR. But, and this is a big but, I have concerns about this company in general. I guess this is the curse of a blogger, sometimes a review based on all the facts doesn't matter a damn, when private investors pile in on near term sentiment.

But new investors in MVC, please be careful of a "pump and dump", especially with a penny share! Don't just rely on newspaper tips!

Of course, I might be completely wrong on MVC and its going to be a ten bagger. Fair play if it does and good luck to holders. It just doesn't fit the Contrarian Investor uk risk profile. Funny, this AIM share game!

Xcite Energy price fall offers another top up opportunity

So we have a 1 month delay in the reserves.upgrade. Nothing sinister in the RNS. The shares are down 6.5% on the news so its top up time. Bought more at 326p. I am being very greedy, when others are fearful! With 15,000 barrels flowing per day from early 2012, from a North Sea field, seems sensible to me!

Xcite Energy reserves report delayed until end March

Xcite Energy said this morning in an RNS that it hopes to complete an updated reserves report by the end of March, versus the late February or early March timing expected moving the shares down 5 percent at the open.

Xcite said the delay was warranted because it was better to “take the time necessary to maximise the value”. The reserves report will be focused on the first stage production of Bentley, though it will also provide a further update to the resources on a field-wide basis and will allow it to update the Competent Persons Report from 2009 which had indicate reserves of 166 million barrels (109-235 mm barrels).

TRACS (AGR Group) is assessing the Bentley Field, using data from the well 9/3b-6 test conducted in December 2010, which flowed above expectations at 2900 barrels a day despite weather issues and the heavy oil characteristics. The well test also confirmed an oil column which was larger than anticipated, making it likely the reserves report will be good and greater than 250 million barrels.

“The success of the Bentley 9/3b-6 well test requires Xcite to re-assess all material aspects of the reservoir model as the starting point for the input to the reserves report,”

“The information and data available from the well is still in the process of being received and collated and the company intends to use as much of this material as possible for input to the reserves report.”

“The company expects the completion of the reserves report to be around the end of March 2011, but will take the time necessary to maximise the value of the report,”

Looks like a case of waiting a month and trading on any new dips. The prospects for Xcite are superb!

Contrarian Investor UK company reviews to end February 2011

The following company assessments have been made to February 2011:

• Gulf Keystone Petreoleum (GKP)- http://contrarianinvestoruk.blogspot.com/2011/02/gulf-keystone-petroleum-interesting.html
• Xcite Energy(XEL) -http://contrarianinvestoruk.blogspot.com/2011/01/xcite-energy-should-prove-highly.html
• Range Resources (RRL)- http://contrarianinvestoruk.blogspot.com/2011/02/range-resources-look-to-have-good.html
• Weatherly International (WTI)- http://contrarianinvestoruk.blogspot.com/2011/01/weatherly-international-namibian-copper.html
• MeDaVinci (MVC) (Orogen Gold)- http://contrarianinvestoruk.blogspot.com/2011/02/medavinci-ugly-duckling-could-it-be.html
• Vialogy (VIY) - http://contrarianinvestoruk.blogspot.com/2011/02/vialogy-some-good-technology-but-can-it.html
• Sareum Holdings (SAR) - http://contrarianinvestoruk.blogspot.com/2011/02/sareum-holdings-pharmaceutical-cancer.html

Of the 7 companies reviews, Weatherly, Xcite Energy have made it into the Contrarian Investor UK portfolio, though Range Resources was close.