From the research report:
...InterOil Corp. (IOC, $62.01, Overweight, Price Target $120)...Investment conclusion: The primary investment debate concerning IOC is whether they will be able to execute their upstream sell-down and enter into an LNG and condensate agreement on attractive terms.
We believe that the relative attractiveness of IOC’s assets will attract partners at attractive prices and that these partnerships will transform the company and unlock its asset value. Negative media claims, as highlighted on Friday, mischaracterize the investment debate, in our view. As per previous negative claims (inability to discover hydrocarbons in PNG or sufficient
resource to support LNG trains), we believe these recent negative claims will be disproven.
What's new: Late last week, a confluence of negative reports triggered a 12% sell-off in IOC’s shares into the March quarter-end, a more vulnerable period for funds.
These reports written by entities with a disclosed short interest focus on a plaintiff’s 2009 legal filings (not new) involving the CEO and cite statements made in a late 2009 bankruptcy filing (not new). We believe these claims were taken out of context and do not represent a
material risk to IOC or change our views on the stock.
The irony is that last week other news flow, with two major LNG deals being completed in Australia, was actually supportive of IOC. We continue to expect either a condensate or LNG deal in April/May: either event would challenge the position of “doubters.”
What’s really new: Australasian LNG environment remains supportive. Recent transactions provide positive momentum on both Asian interest and pricing, with Shell/PetroChina acquiring the remaining shares of Arrow Energy for $0.87/mcf and CNOOC agreeing to purchase 3.6 mmtpa for 20 years for approximately 10.75/mcf to $21.75/mcf, depending on crude prices.
We view Australian CBM precedent transactions as close to a 60% discount to IOC’s offering due to higher LNG costs, a higher tax regime and no liquids content....MORE
*From our post "Manipulating the Dow Jones Industrial Average":
*Speaking of specialists in the old days, one of my favorite stories is how Joe Kennedy and the boys decided to form a pool to manipulate the Google of the 1920's, RCA. From our June '07 post "Robert Kennedy Jr., Global Warming and Wall Street":See also the Libby-Owens-Ford pool. Good times, good times.
...Already a wealthy man Joe Kennedy had another Wall Street trick up his sleeve, a classic pump-and dump. In 1929 he and some other rascals got together to run the .com of the day, Radio Corporation of America.
What a run it was! The pool picked up $5 million in ten days. My BLS inflation calculator says that's a bit over $60 million today (although the PBS special linked below says $100 million).
When the question arose as to who should manage the pool the answer was easy. Who better than the specialist in the stock, Michael J. Meehan! PBS did a good job on their show "The Crash of 1929", even interviewing Meehan's grandson. Here are some of my links, Senate Hearings (4 page PDF), 1948 SEC chief counsel memo on the Act of '33 (5 page PDF), Colliers story on the early SEC.
One of Joe Kennedy's most quoted comments:"It's easy to make money in this market," said Kennedy, famously, to an associate. "We'd better get in before they pass a law against it."