Wednesday, November 17, 2010

"A Bear Fights Soros and a Bullish Tide on InterOil" (IOC)

DealBook is on a roll today, here's their latest:

Is InterOil a great way to play Asia’s commodity boom or a overhyped company worth a fraction of its $3.4 billion market value?

In recent weeks, the debate has escalated over InterOil, a publicly traded exploration outfit drilling for natural gas in Papua New Guinea.

George Soros loves Interoil. The billionaire hedge fund king’s Soros Fund Management, which manages more than $20 billion, disclosed in a securities filing this month that it had nearly doubled its stake in InterOil. He owns about 5.3 million shares, or about 12 percent of the company. At $300 million, his InterOil stake is the third largest holding in his fund, according to the filing with the Securities and Exchange Commission.

A spokesman for Soros Fund Management declined to comment on the position. According to securities filings, he began buying the stock in early 2009 at around $33 a share. On Wednesday, InterOil’s shares were trading above $76.

Whitney Tilson hates InterOil. And unlike the Soros fund, Mr. Tilson, who manages $155 million in hedge fund assets at T2 Partners, isn’t shy about sharing his views. On Nov. 6, in a blast e-mail sent to 2,000 recipients, Mr. Tilson lambasted the company, which he has done periodically — and publicly — over the past year:
“This is a company that has NO RESERVES — not proven, probable or even possible; just a ‘contingent resource estimate’ from a firm that InterOil paid, after shopping among firms — and has NEVER delivered on its countless promises of huge natural resource finds in over 200 press releases over more than 10 years. Sure, there’s gas there — this isn’t Bre-X — but we think there’s only a tiny fraction of what IOC claims.”
We have quite a few posts on InterOil, use the search blog box, keyword IOC.