Research
*Research published here is selective and posted 7 days or more after distribution to clientsEnCana / Cenovus – Pure Play Natural Gas Strategy to Pay Off Well
December 1st, 2009
Since its formation in 2002, EnCana (ECA) has struggled to differentiate its two core assets. That struggle has especially hurt its oilsands interests, and has resulted in a share price that underperformed rivals. We believe the spinoff event will act as a positive catalyst enhancing shareholders value. We have an Absolute Buy rating on the parent (EnCana) and Buy rating on the Spinoff entity (Cenovus). Also an earlier Spinoff transaction of a Canadian company “Bankers Petroleum” operating in Oil & Gas sector which was done with a similar Spinoff rationale has performed exceedingly well. The Bankers Petroleum stock on which we had an Absolute Buy rating has generated 507% return since YTD. When we draw a parallel between the two spinoff stories, we are confident that this spinoff will also add value to shareholders.
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LMC (Entertainment) Split-Off: Games People Play
November 19th, 2009
Liberty Media (LSTZA) - Value discovery is a favorite play of management and this Split-Off primarily allows the market to value the entertainment assets more fairly. But the real benefit of the transaction would accrue to Mr. Malone, who will enjoy more voting power over DIRECTV (DTV), once the merger goes through. The transaction benefits him in two ways:
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Julius Baer/GAM – Pure Private Banking a Compelling Story While GAM to be a Turnaround Story
September 30th, 2009The Julius Baer Holding split (on September 30th 2009) will result in two independently listed companies, with Julius Baer Group solely concentrating on providing high-quality services to private banking clients and GAM Holding focusing on active asset management. The extraordinary general meeting held on June 30th 2009, approved Julius Baer Holding to be renamed GAM Holding, with current shareholders of Julius Baer Holding to own two shares: GAM Holding (the current share) and Julius Baer Group (the newly listed company), which will be paid in the form of a dividend in kind (one for one).
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OIL India Privatization – ‘Subscribe’ – Second largest E&P Company in India
September 2nd, 2009Oil India Ltd is soon to be privatized with an IPO through a 100% book building process with a price band of INR 950-1,050 per share and expects to raise funds in the range of INR 25.1bn- INR 27.8bn, through the fresh issue of shares. The IPO is valued at a FY10E P/B of 2.0x-2.2x. We believe this is reasonably priced as compared to its Peer average FY10E P/B of 3.1x
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PDE – Drilling Deep to Find Value
August 24th, 2009On Aug 4, 2009, the board of directors of Pride International (PDE) made a strategic decision to focus on Deepwater and decided to Spinoff its Mat Jack-up rig, which caters to shallow water drilling. The Mat Jack-up rig revenues in the Gulf of Mexico (GoM) has been declining over the last few quarters with a sharp fall in utilization and day rates. Pride management is justified in dumping this low growth business to focus on the high growth Deepwater drilling business, which has high utilization and day rates.
All the steps preceding the Spinoff are complete. For each share of PDE that a shareholder owned at the close of business on Aug 14, 2009, the record date, they will receive 1/15 of a share of Seahawk (HAWK) stock on the Spinoff date.
