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Author: TMFPyad Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 51834  
Subject: Soco International Date: 08/08/1999 16:13
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George asked for my views on this company.

It is in oil exploration, a category similar to mining, and especially new mines. It is thus ultra high risk, similar to penny shares.

Eps in such companies is subject to massive fluctuations as might be expected. The very low PTB of 0.4 at 62p is a reflection of the high risk inherent in this business and because the exploration areas involved are not in exactly politically stable parts of the world - Russia, Vietnam etc. Companies with assets in such places, not only in oil and minerals exploration, will often trade at PTB <1.

No dividends have been paid. Cap is around £42m. Gearing is negative.

In my view this is nowhere near being a value share. It is high risk gamble like all oil and mineral ex. companies especially new ones like this.

If you want to play the high risk mining game, go for large companies Anglo Gold, Rio Tinto and so on. Stick with the majors such as this, avoid the tiny companies like Soco. Unless you really want to take a gamble. But this is not investment. In my view.

regards
pyad
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Author: geebee2 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 735 of 51834
Subject: Re: Soco International Date: 08/08/1999 17:01
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pyad,

I would agree that the asset value should not be taken too seriously, what interests me is that Soco apparently have good production, so there is not much risk on the 'exploration' side, I think the risk is all bound up in the crude oil price. The reason for the poor historic performance is apparently purely down to this.

What interests me is that the same can be said of BP Amoco, whose forward P/E is something like 25 (for 2000), whereas Soco will be on a forward P/E of under 4 for the year 2000, if the analysts are to be believed.

Now, as I said, I don't have a great understanding of the company, but I don't agree with your reasoning, which seems a bit emotional (if it actually turned out to be pure exploration with no proven production that would be different). Incidentally I believe that BP Amoco is at least 30% over-valued at present.

I appreciate your point that smaller companies involve greater risk, so gambling the house on a Soco is hardly to be recommended. I do wish I had taken the plunge at 40p though, so that I wasn't dithering at 60p+ :) I have dithered several times over oil related companies this year, and have regretted it. Greenway holdings was one.

If I could be reasonably sure that my analysis (that they have good production) was correct I would go for it. As it is I'm not sure.

I guess my perspective on small companies is different - over the last 12 months I have 'gambled' extensively on them, and seen handsome returns (just look at the way small companies have outperformed the FTSE-100 this year, and since last October). I think the systemic risk is still with the over-analysed big companies which still have inflated valuations.

Admittedly accidents are likely, I have had one (not a value play). This does mean that holding only 3 or 4 stocks is risky, unless your research is exceptionally thorough (which mine certainly isn't).

I just read my Sunday Telegraph, where Doug Morrison recommends ('worth a punt') Energy Capital Investment Company. They claim it is 'relatively low risk' and is at a 52% discount to net assets (I'm not so sure of this though). Apparently it provides 'mezzanine' finance to mainly US partnerships, and has not recovered despite the oil price rise (the fall was apparently linked to the fall). It is rather tiny, I'll admit, also highly geared. Lot's of director buying.

I'm fairly sure there is value in some small oil-related companies at present, I wish I knew better how to find it. (Have to say I'm not keen on EEN though!)

geebee

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Author: TMFPyad Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 737 of 51834
Subject: Re: Soco International Date: 08/08/1999 17:21
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Hello George

I still don't think this is a value play. Certainly not my style anyway, but few others would see it as such either I think. But you knew that already when you asked my opinion. It fails on several counts.

And in any event you said you don't fully understand it. Never buy shares in something you don't understand is my advice. And never buy shares tipped in a newspaper either.

I wish you luck if you go in. Include me out though!

regards
pyad

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Author: geebee2 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 740 of 51834
Subject: Re: Soco International Date: 08/08/1999 17:37
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> And in any event you said you don't fully understand it. Never buy shares in something you don't understand is my advice.

I'd never buy shares in anything if I followed that!
Life is too short.

Mind you, oil is a reasonably simple business, put a pipe into the ground, let the oil come up, and sell it.
I guess it is the politics which makes things complicated, plus the variable oil price.

> I wish you luck if you go in. Include me out though!

I can't blame you at all. These oil companies must have an awful lot of risk - weird foreign goverments who can change the rules, confiscate assets, impose new taxes, etc,etc.

This is what has kept me out up to now.

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Author: boblyons Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 741 of 51834
Subject: Re: Soco International Date: 08/08/1999 20:51
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geebee2,

"Mind you, oil is a reasonably simple business, put a pipe into the ground, let the oil come up, and sell it."

Nothing could be further from the truth. Oil exploration is an extremely risky and expensive business and production is both technically demanding and challenging. This is particularly the case presently as prospects are becoming more marginal and it is major challenge to develop discoveries economically. A very good exploration prospect will carry a risk of 1 in 4, i.e. 75% chance of failure. Cost of exploration wells vary considerably, but they are never cheap. Soco do have production, however, the only way the company can grow and increase shareholder value is by replacement of reserves. The two ways to replace reserves are by exploration or acquisition. I do not know enough about Soco to understand fully their portfolio, but I would suspect the major part of their reserves replacement are forecast from exploration successes. All this is risk the company takes without considering any political implications or oil price fluctuations. Tread very carefully, as I said I do not know a great deal about their portfolio, however, from what I do know I would treat them as a gamble at best. I would certainly not consider them to be a value play.

Good luck if you go in.

Bob

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Author: geebee2 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 743 of 51834
Subject: Re: Soco International Date: 08/08/1999 22:01
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> Nothing could be further from the truth. Oil exploration is an extremely risky and expensive business and production is both technically demanding and challenging.

But pretty simple to understand (not in detail, just the general idea).

Thanks for your comments though, it sounds as if you have a fair bit of knowledge in this area.

Another one is Sibir energy, where the apparently positive news flow (agreements with Yeltsin, and chairman buying substantial amount of shares) doesn't seem to have been reflected in the share price.

Technically this one looks the most promising to me(maybe even higher risk than Soco, but a bigger potential upside).

On risk : generally I find that to invest well you need to almost have a love of so-called 'risk'. Well that is my style anyway :) I'm always very wary of situations where people claim risk is low. Glaxo and BP Amoco might be prime examples.

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Author: GHH Big red star, 1000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 748 of 51834
Subject: Re: Soco International Date: 09/08/1999 07:56
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GHH >>pyad

I have just posted under the fool alert facility that you should do some simple research before posting such drivel. I'm sorry but it annoys me when people like you sound off on something you clearly know nothing about.

Unless you can talk with authority, keep quiet!

For your info Soco currently has net cash of around £14m.

Also according to T. Hoare Soco has the best cash inflow in the sector, for 2000 assuming $16 oil (oil now $19.50) they claim Soco will have cash flow of 28p. Hence at current oil prices cash flow is around 34p a share! (Their cash flow changes by $2m for every $1 change in the oil price)

Regarding NAV, Soco has UK assets which they are looking to sell for around £6m, Tunisian assets which are non core and may be sold for £7m (they have received offers in this region) and Yemen, which is a core holding and worth around £18m. Add in the cash and NAV (non Russia, Vietnam and Mongolia) is £49m.

Their Permtex (in partership with LUKoil) Russian asset is the only one to receive an EBRD loan last year. As Russian assets go it is one of the best and SG value it in excess of Soco's current cap.

With oil at $19 Soco is a blatant value play.



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Author: geebee2 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 749 of 51834
Subject: Re: Soco International Date: 09/08/1999 08:35
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Nice to see a lively discussion, whether it will help me make up my mind is another matter :)



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Author: TMFPyad Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 750 of 51834
Subject: Re: Soco International Date: 09/08/1999 10:00
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Hello Paul (GHH)
I have just posted under the fool alert facility that you should do some simple research before posting such drivel. I'm sorry but it annoys me when people like you sound off on something you clearly know nothing about.

Unless you can talk with authority, keep quiet!


I have no intention of keeping quiet. You can post as many fool alerts as you want, you will not stop me from saying anything I like. In exactly the same way as you can. The difference is that I am not trying to stop you whereas you would like to stop me. The Fool boards are for everyone to express an opinion including me. Not for personal abuse. Disagree with me if you like but have the decency to be polite about it.

And if my views annoy you, then tough. You suffer from a pretty thin skin. But at least I don't launch personal attacks on people just because I don't like their comments on shares here. Anyone posting shares here is inviting comment. That is why they post, they wish to see others' views. But few people want to see the kind of insulting stuff you think is fit for airing. Abuse is something that will get you nowhere.

And I repeat, whether you like it or not, in my view Soco is not a value play by my standards. It is a tinpot little company involved in dodgy areas of the world. A very high risk oil play. It may win or not, I don't know, but it is far too risky to warrant the title of a value share. But that's my opinion. You have yours, but I would ask you if you wish to post here to be polite to people. Thanks.

regards
pyad


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Author: GHH Big red star, 1000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 758 of 51834
Subject: Re: Soco International Date: 09/08/1999 14:37
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GHH >> Pyad

If I posted something that was factually incorrect I would expect a rocket up my backside.

More so if I was in a position of respect, TMF GHH!

Please don't hide behind freedom of speech, you have a responsibility to do proper research before giving opinions and especially so called facts - Soco has over £14m net cash, not negative gearing.

You owe an apology to anyone who sold Soco because of this and lost out on today's price rise.

I apologise if my last post was overly agressive.


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Author: gbsedjuaibmmail Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 759 of 51834
Subject: Re: Soco International Date: 09/08/1999 15:03
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<Please don't hide behind freedom of speech, you have a responsibility to do proper research before giving opinions and especially so called facts - Soco has over £14m net cash, not negative gearing.>

Gearing is another word for debt. If I am geared, then I owe money. Therefore negative gearing means the amount that I owe is negative, in other words that I have net cash.


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Author: theoe Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 760 of 51834
Subject: Re: Soco International Date: 09/08/1999 15:26
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<you have a responsibility to do proper research before giving opinions and especially so called facts >

No - anyone buying shares should do their own research, all Pyad does is give his opinions, which we are generally grateful for. But I would not buy shares soley based on his or anyones opinions.

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Author: GHH Big red star, 1000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 761 of 51834
Subject: Re: Soco International Date: 09/08/1999 15:27
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If thats what Pyad meant then I owe him another apology.

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Author: TMFPyad Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 762 of 51834
Subject: Re: Soco International Date: 09/08/1999 15:33
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Paul

Please don't hide behind freedom of speech, you have a responsibility to do proper research before giving opinions and especially so called facts - Soco has over £14m net cash, not negative gearing.

You owe an apology to anyone who sold Soco because of this and lost out on today's price rise.


Negative gearing means net cash. Gearing is usually positive, ie borrowings. Negative gearing means that the company has net cash balances because these exceed any borrowings. We are talking about the same thing.

If you look in REFS, as an example, they show the gearing as -1.96%. Negative gearing equal to net cash.

I trust after your ranting and outbursts against me you will have the decency to admit you are wrong.

regards
pyad

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Author: GHH Big red star, 1000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 763 of 51834
Subject: Re: Soco International Date: 09/08/1999 16:20
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GHH >> Pyad

I accept that I misunderstood your reference to negative gearing and I apologise.

However I still say that you are guilty of inadequate research, you admit to believing negative gearing to be 1.96%, this is patently wrong and ignores the cash investments plus the $14m recently received from Torobex.

You apparently dismissed this stock on the back of one page of historic data from REFS.

You had no idea of forecast cash flows, net cash, asset allocation (the market cap was more than covered by cash, UK, Tunia and Yemen assets - Russia, Vietnam and Mongolia in for free).

Before you mouth off a company you should at least read the accounts, latest info (re Torobex).

To get back to basics:

When the shares were 60p, Soco had 20p net cash, cash flow for next year of over 30p (at current oil prices) and traded at a significant discount to NAV excluding Russia. Soco has the best net cash/ cash flow in the sector!

The management are well regarded, the Vietnam block was much sought after by the majors and Soco did well to get a stake. Mongolia is frontier explo, high risk/high reward but Soco likely to only proceed with a farm in partner - done the seismic.

Torobex should bring in some interesting expoitation projects, therefore lower risk than explo.

You said Soco a tin pot company, very high risk.

Please explain why.



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Author: geebee2 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 764 of 51834
Subject: Re: Soco International Date: 09/08/1999 16:45
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pyad> It is a tinpot little company involved in dodgy areas of the world.

I'd think the 'tinpot little' is rather over-doing things, not really rational, 'small' would be my term.

Also, why is 'negative gearing' a bad thing?

Isn't it good for a company such as Soco to have a reasonable amount of cash?

I'd be worried investing here if the gearing was high.

Anyway, like most of my value plays, it seems to have zoomed into the stratosphere today, before I got round to buying any. Back to the drawing board. Maybe I will buy first and ask questions later next time!

Geebee



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Author: Bullet10 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 765 of 51834
Subject: Re: Soco International Date: 09/08/1999 17:06
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I'd be worried investing here if the gearing was high.

Are you referring to this particular company or any company with high gearing?
Surely depends on the cash flow (and specifically, Free Cash Flow), and reason for the high debt level and how the company accounts for it.
e.g. short- or long-term borrowings, an issue of convertibles.


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Author: geebee2 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 766 of 51834
Subject: Re: Soco International Date: 09/08/1999 18:11
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> Are you referring to this particular company or any company with high gearing?

This particular company. Suppose that for some reason the oil price was low again for a few years, then with high gearing there would be nothing to pay the interest on borrowings, as production would probably have to be cut back until the oil price recovered. Having some cash to pay for fixed expenses would come in handy.

For a company with a steady predictable income high gearing is probably ok. Difficult to think of any such company in this day and age though! One might have thought that utilities qualified, but with the government/regulator changing the goalposts at will I don't think is exactly true.

I suppose gearing is ok if the borrowing is directly related to immediate business - say a company that borrows short term to buy materials/equipment for a contract and collects the money a few months later. Provided the customer is credit-worthy.

All comments welcome. Or maybe I should go read a book, but this is more fun.


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Author: Bullet10 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 770 of 51834
Subject: Re: Soco International Date: 09/08/1999 20:47
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Or maybe I should go read a book, but this is more fun.

Don't want to sound sarcastic, but...
The point about borrowing is that, other things being equal, the valuation of a company basically is Debt+Equity. Comparing two companies, one with more debt than the other and with the same total value, (earnings are calculated after interest), the one with more debt will have a higher P/E because its earnings are lower due to the interst payments. The point about borrowings is that it you will take into account WACC (Weighted Average Cost of Capital) when evaluating returns.
Could go into this further, but I hope you get the drift.

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Author: TMFPyad Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 772 of 51834
Subject: Re: Soco International Date: 09/08/1999 22:33
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George

Also, why is 'negative gearing' a bad thing?

Negative gearing is a good thing. Net cash is one of the things I look for in value shares. I never said it was a bad thing. I think you have become confused by the postings of GHH.

regards
pyad

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Author: geebee2 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 774 of 51834
Subject: Re: Soco International Date: 09/08/1999 23:06
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In your posting at the start of this thread (giving reasons which I took to be why you didn't think it was 'value') you said:

<<
No dividends have been paid. Cap is around £42m. Gearing is negative.

In my view this is nowhere near being a value share. It is high risk gamble like all oil and mineral ex. companies especially new ones like this.
>>

From the context (I assume that not having paid a dividend is a negative factor, as is the fairly small cap) I assumed that the negative gearing was also bad in your opinion.

As a footnote, apparently the reason for today's rise was a tip in "Red hot penny shares". I'm not chasing them (they have after all risen a long way in the last few months, further than I realised when I first posted), especially in view of renewed uncertainty in Russia (Yeltsin has fired yet another prime minister).

I'd also hold back on Sibir at the moment for this reason (which is even more of a gamble, but then the discount to NAV is greater, in spite of the substantial director buying). But this is getting away from value.

regards,
geebee

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Author: TMFPyad Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 775 of 51834
Subject: Re: Soco International Date: 09/08/1999 23:21
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Hello George

I did not intend negative gearing to be seen as a negative point! In fact it is one of the few good points about this share. Whereas the two previous point are negative - for my style - no divs and cap<100m. I was trying to contrast those with the plus point on gearing.

You know my style I think and this share does not qualify on loads of counts. That does not mean people might not make a fortune, or lose one, on it. Just that I'm not interested. I stick firmly to my own way. There are in fact very few shares that ever attract me enough to invest in them as people will know, and that suits me. This one does not even come close.

But everyone has their own style, I've never claimed that mine is the only one to follow.

regards
pyad

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Author: GHH Big red star, 1000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 776 of 51834
Subject: Re: Soco International Date: 10/08/1999 08:28
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GHH >> pyad

When you answer my last posting could you please also comment on today's Telegraph article:

Soco up on a re-rating with consensus forecasts for eps risen from 2.7p to 8.4p for this year and from 5.3p to 16p for next year.



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Author: geebee2 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 777 of 51834
Subject: Re: Soco International Date: 10/08/1999 10:33
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As a final note, for the record I have settled on a modest investment in Dana oil @9p. Not exactly a value choice, but I like the news flow here [ especially the MMI story, plus fairly recent news (see http://www.nasdaq-uk.com/asp/quotes_news.asp?symbol=DNX.uk&selected=DNX.uk) ].

I'm hoping for future broker upgrades.

Wish me luck as I kiss my money good-bye (about £1800)!

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Author: LongWayHome Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 778 of 51834
Subject: Re: Soco International Date: 10/08/1999 12:43
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When you answer my last posting could you please also comment on today's Telegraph article:

Soco up on a re-rating with consensus forecasts for eps risen from 2.7p to 8.4p for this year and
from 5.3p to 16p for next year.


I read this post and thought how much of a day trader
you sounded...then i checked your info.
Anyway, this kind of cheap shot is quite pathetic.
Just because Pyad says he would not be interested in a
share neither means it will go up or down - it means he
would not buy it since it does not fulfill his value
criteria which are known to be extrememly strict.
Gloating about some re-rating within a week
or so of a suggestion smacks of tipsterism.

David

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Author: Ooooops One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 779 of 51834
Subject: Re: Soco International Date: 10/08/1999 14:45
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David
Your comments seem to lack shall we say a little vision. As there are many ways to invest, there are also many ways to pick a value stock. The announcement of earnings upgrades is a realisation of why many of us bought soco some time ago. We believed with its very strong cashflow and good management that a strong rise in the price of oil would re-rate (or re value) this stock. The past few months have indeed proved this. The fact that it is an exploration company with some exciting prospects are efectively thrown in for free!
Cheers
Phil

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Author: theoe Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 780 of 51834
Subject: Re: Soco International Date: 10/08/1999 14:58
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Actually I agree with Long Way Home there is a nasty tone to GHH's comments. This is more of a discussion board than anything else, it is not for tipping or pointing the finger of hindsight.




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Author: GHH Big red star, 1000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 781 of 51834
Subject: Re: Soco International Date: 10/08/1999 15:17
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David

I accused Pyad of giving a forthright opinion without bothering to do the basic research.

Whatever his investment criteria, no matter how good they may be, I believe this to be irresponsible and arrogant.

All of us have a responsibilty to be diligent, especially Pyad since he is clearly well regarded and a TMF.

Yesterday Soco was 61p, it had circa. 20p per share net cash, cash flow for year 2000 of circa. 30p and traded at a significant discount to NAV (even excluding Russia).

Yet Pyad called Soco a 'tin pot' company without presenting any solid evidence why. This does not appear to correlate with the Telegraph article citing eps for next year of 16p and a re-rating.



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Author: mipper One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 782 of 51834
Subject: Re: Soco International Date: 10/08/1999 15:52
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I don't suppose there's any chance of dragging this board out of the playground, is there?

It's not that your discussion isn't entertaining, but it's starting to grate just a tad now.

mipper

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Author: TMFAlan Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 788 of 51834
Subject: Re: Soco International Date: 10/08/1999 20:27
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Hi GHH,

<I accused Pyad of giving a forthright opinion without bothering to do the basic research.

Whatever his investment criteria, no matter how good they may be, I believe this to be irresponsible and arrogant>


Personally, I thought it was perfectly obvious that Pyad was referring to Soco in the context of his usual value criteria and had done his research in accordance with them. If you look at those criteria, he was right to reject the company. I'm not saying it's a bad company (I know nothing about oil companies), just that it does not fit Pyad's value criteria.

If he was being unfair to anyone, it was just the company, surely. And that, I think, is very different to responding by being nasty to people personally on these boards.

We welcome open disagreement here, but we should all concentrate on the content of peoples' messages, and hold back our anger when our egos get bruised.

As for irresponsible, no-one who posts on these boards has any responsibility whatsoever for any investment decisions taken by anyone else, and we go to great pains to make this clear. Do your own research, based on your own criteria, and make your own decisions.

<Yet Pyad called Soco a 'tin pot' company without presenting any solid evidence why>

Hey, he calls all small companies that he doesn't like 'tin pot'. Does that really upset you that much? He's said far worse things about some of my favourite companies, but I don't get upset. I just accept that people have different styles and different opinions about different companies.

mipper said <I don't suppose there's any chance of dragging this board out of the playground, is there?

It's not that your discussion isn't entertaining, but it's starting to grate just a tad now>


Hear, hear. Let's please keep these boards for friendly discussion (and disagreement of course) and leave the name-calling and personal insults for other message boards, shall we?

Foolish regards,
Alan



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Author: Ooooops One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 789 of 51834
Subject: Re: Soco International Date: 10/08/1999 21:54
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Perhaps its time pyad relaxed his criteria for a value share. Soco have increased in value over 100% in a few months, why? Are they drilling some mega prospect somewhere, no clearly the only reason they have risen is because they were undervalued at 33p. So the question is were they a value share? Quite clearly the answer is yes. pyad will be saying Sirdar and Tinsley Eliza dont qualify next!!!! Incidentally both shares I have made over 50% +circa 10% divis on in the last 7 months.
Cheers
Phil

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Author: TMFAlan Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 792 of 51834
Subject: Re: Soco International Date: 10/08/1999 22:26
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Hi Phil,

<Perhaps its time pyad relaxed his criteria for a value share. Soco have increased in value over 100% in a few months, why? Are they drilling some mega prospect somewhere, no clearly the only reason they have risen is because they were undervalued at 33p. So the question is were they a value share? Quite clearly the answer is yes>

You can't be serious about suggesting Pyad change his strategy, can you?

The term "value share" is ambiguous. If you define a value share as any share that goes up in value, then yes you are right, Soco is a value share. Similarly, if you define any share that grows as a growth share, Soco is a growth share too. But such simple definitions are not useful enough to form the basis of an investmemnt strategy.

No strategy ever attempts to find all of the shares that will rise, so finding a share that does rise, but which does not match the criteria of a particular strategy does not negate the value of that strategy. Personally, I think it would be pretty stupid to develop a successful investment strategy and then change it every time you find a share that has risen and which did not match your criteria.

I'm pleased that your own strategy has been so successful Phil, but if I suggested you should change it simply because I had found a share that rose impressively but which you had not bought, I suspect you would tell me (quite rightly) where to go.

To each his own,
Alan


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Author: geebee2 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 793 of 51834
Subject: Re: Soco International Date: 10/08/1999 22:47
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I think there are many misunderstandings here.

One point is that some investors work hard to discover value before it appears in the published year-end accounts. That is they follow the news carefully, analysing the companies position, digging deep, and thinking ahead.

I think this is very good, although it is hard work.

Pyad's approach seems to be more to go on historic published results, which may be fine, although I suspect it will work increasingly less well in the internet age. He also makes use of his good knowledge of accounting, which is also fine.

My own approach is to be very flexible, try to make best use of everything I can lay my hands on, and keep both thinking and trying to find out what others are thinking. I'll invest in practically anything, any sector, big/small/mid/AIM caps, value, growth, momentum shares etc. when I think the time is right. I also try to learn from my mistakes, analyse why/where I went wrong, and try not to repeat the mistake in future. I'm also open to ideas such as technical analysis, if I think there is a rational basis to it.

I haven't got onto Ofex yet, or foreign stocks, but I won't rule them out in principle. The same goes for short positions, bonds, options,convertibles...

Each to his own style, the main thing is to keep thinking and work to your personal strengths. If that means a tracker or mechanical strategy, fine.

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Author: GHH Big red star, 1000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 796 of 51834
Subject: Re: Soco International Date: 11/08/1999 09:24
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Alan

<Personally, I thought it was perfectly obvious that Pyad was referring to Soco in the context of his usual value criteria and had done his research in accordance with them.>

I thought Pyad was judging Soco on one out of date sheet of Company Refs. He called Soco 'ultra high risk' without realising that it had a third of its market cap in net cash, that its price to cash flow multiple is easily the best in the whole E & P sector, possibly the entire UK stock market, that it traded at a significant discount to NAV excluding Russia and Vietnam.

Soco does not appear 'ultra high risk', perhaps Pyad can explain. Otherwise my contention remains that he did not research the stock sufficently and was therefore wrong to give a superficial opinion that affects other people's wallets.


<If he was being unfair to anyone, it was just the company, surely.>

Please! We all influence peoples investment decisions. Despite all the 'rely on your own research' caveats, we still lose people money, or the opportunity to make money, with inacurate postings.

<And that, I think, is very different to responding by being nasty to people personally on these boards.>

I accept this. I have already apologised to Pyad for my aggresive and rude tone.

<We welcome open disagreement here, but we should all concentrate on the content of peoples' messages, and hold back our anger when our egos get bruised.>

I have a bugbear about people posting strong opinions without the supporting evidence/research.

<As for irresponsible, no-one who posts on these boards has any responsibility whatsoever for any investment decisions taken by anyone else, and we go to great pains to make this clear. Do your own research, based on your own criteria, and make your own decisions.>

People should do their own research etc but the reality is that we have a responsibility to post info as accurately as we can. Surely you agree?

<Hey, he calls all small companies that he doesn't like 'tin pot'. Does that really upset you that much? He's said far worse things about some of my favourite companies, but I don't get upset. I just accept that people have different styles and different opinions about different companies.>

Tin pot is a derisory term, my only gripe is that he did not substantiate this remark.


To conclude, I was wrong to attack Pyad so aggresively and have shot myself in both feet doing so.

However, this does not alter the fact that Soco had fallen from over 400p on the back of the oil price, Russian crisis and slow progress in Mongolia.

The oil price has recovered from $10 to over $20 and currently looks set to go higher. NAV's and cash flows have improved dramatically but Soco's share price has lagged behind.

Regards

Paul




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Author: paulvarnes Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 798 of 51834
Subject: Re: Soco International Date: 11/08/1999 09:56
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<My own approach is to be very flexible, try to make best use of everything I can lay my hands on, and keep both thinking and trying to find out what others are thinking. I'll invest in practically anything, any sector, big/small/mid/AIM caps, value, growth, momentum shares etc. when I think the time is right. I also try to learn from my mistakes, analyse why/where I went wrong, and try not to repeat the mistake in future. I'm also open to ideas such as technical analysis, if I think there is a rational basis to it.> good post

My approach too. I personally find that some of the selection methods used by investors far too analyitical for my style and I don't pretend that I understand them all. I have shares in companies that I bought > 10 years ago and I can't for the life of me remember what (if any) criteria I used to select them. But I have enjoyed following their fortunes and in the main good dividends from them over the years, and when it comes time to sell it will probably be because I want the money to do something else like a holiday or a car.

This thread has been a little (well a lot) more personal than the usual posts but I have learnt a lot from some of the contributions made by the, shall we say, less involved protagonists.

It takes all kinds of Fools

PaulV

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Author: brownjx Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 808 of 51834
Subject: Re: Soco International Date: 11/08/1999 16:37
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"Whatever his investment criteria, no matter how good they may be, I believe this to be
irresponsible and arrogant"

How anyone could describe PYAD as arrogant is beyond belief ! Are you sure we're all talking about the same person.

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