Daily Archives: September 1, 2007

IPO FILING: El Paso Pipeline Partners, L.P. (EP, EPB, BSR)

After the close Friday, while no one was there to see it, we had a fairly interesting spin-off announcement.  El Paso Corp. (NYSE:EP) filed with the SEC to make its El Paso Pipeline Partners, L.P. a seperate public company.  This is another one of the famed MLP spin-offs that have been so popular over the last few years with oil companies and investors.

MLP operators and recent spin-offs have seen a bit of a breather and selling in the recent weeks, but there are still many such entities out there that can be and will likely be unlocked in the near future.  You can track the overall performance of the group by looking at a key ETF that has been public a very short time: BEAR STEARNS ALERIAN ETF (NYSE:BSR), which is down about 10% from its post-launch highs. The company has filed up to $603,750,000 for registration purposes of 25 million units and the underlying El Paso Corp. has a current market cap of $11.1 Billion.  So this does offer some value to be unlocked, but on the surface it may only be 5%.  This will have the proposed ticker of "EPB" on the NYSE.

Here are the underwiters on the filing: Lehman Brothers, Citi, Goldman Sachs & Co., UBS Investment Bank, and Tudor Pickering.  We will follow up with what percentages go where in this company versus the underlying MLP and ownership percentages in a future story ahead of the actual IPO.  YOU CAN SEE A SPECIAL "ABOUT US COPY" FROM THE PROSPECTUS ON PAGE TWO HERE BELOW IF YOU WISH.

Jon C. Ogg
September 1, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces 24/7 Wall St. LLC’s Special Situation Investing Newsletter and he does not own securities in the companies he covers.

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Posted on: September 1, 2007 – 3:42 pm in ETF, IPOs, Oil & Gas, , , , ,

Gene Logic: A Discount Value Pick, Or A Major Value Trap? (GLGC)

Genel Logic (NASDAQ:GLGC) is a stock that is either one incredible value stock in biotech land, or it is just another major value trap.  Even after the last market malaise, we are still in a world where you have to lie, cheat, and steal to buy non-financial companies at what is perceived to be trading at "under net tangible book value."

This weekend I was reviewing some of my older value stock lists and hi-beta mega-outperforming stocks from prior years, and Gene Logic was one of the more interesting names.  Gene Logic was one of the picks from 2004 that hadn’t done that well at all the year before and would in fact still qualify as one of those stumbling biotechs that still trades under book value.  The problem is that at then end of 2003 or early 2004 (January 4, 2004 was report date) shares were at $5.19 and they are currently down more than 75% from that time.  Some of these other value picks rose 200% or even more since then, but not this one.

Compare 2004 to 2007 stats:

  • Gene Logic Price on January 4, 2004: $5.19; implied stats at the time: Market Cap $159M; Net Liquid Assets $115M; CashBurn/Qtr $7M; Revenue/Qtr. $17M.
  • Review compared to today: Stock price $1.28; Market Cap $41.2M; Net Liquid Assets $58.5M; CashBurn/Qtr $7M to $9M; Revenue/Qtr. $5+M.                         

What is funny is that if you go compare then to today, this picture just has refused to get better even if you consider the net value is under the market cap.  In any money-losing company trading at sub-book value you have to factor in the cash burn rates and look a few quarters out to see if it is real or if it is a trap.  Depending on what you model for revenues this will be back at book value in only one or two more quarters and it looks and acts like it has gone on life support. 

It would probably only cause upset stomachs to go back and ask investors from early 2000 how they liked this stock when it was well above $50.00.  If you look at Gene Logic of 2007 compared to 2000 you will probably think that those days are not just unlikely, they are probably impossible.  Interestingly enough, this just signed a repositioning pact last Monday with Solvay to discover new development paths for multiple clinical candidates.  The week before it signed a pact with Merck-KGaA-Serono. Shares hardly budged on the news releases. It also has signed a new senior vice president of clinical development to help its focus on its 70+ compounds under evaluation.

Gene Logic shares closed Friday at $1.28, and the stock has traded as low as $1.17 and as high as $2.88 over the last 52-weeks.  The company has two more or maybe three more quarterly reports that this stock trades under book value if the stock price and market cap were to stay static here.  After that, shareholders may try to pressure the company to just liquidate and return the assets slick.  There is obviously some value here.  It’s just hard to tell if this is a creaming value stock in micro-cap land or if this is just another perpetual money-losing biotech value trap.

This one will either become a phoenix that arises from the ashes, or it will become just another biotech zombie like so many other biotech and therapeutic companies.  This is one where you will also have to fend entirely for yourself since it has virtually no analysts that cover the microcap stock.

Jon C. Ogg
September 1, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces 24/7 Wall St. LLC’s Special Situation Investing Newsletter and he does not own securities in the companies he covers.

Posted on: September 1, 2007 – 3:18 pm in Biotech, Value Investing, ,

Who Is Ford Kidding

The head of Ford (F) says that a tough economic environment will not undermine that company’s turnaround. According to an interview with Bloomberg. “We put together a pretty robust transformation plan," said Alan Mulally.

But, it is hard to believe that the company’s management thinks that the housing crisis and gas prices will not hurt sales more than planned. Current negotiations with the UAW, key to cost cutting, are not close to being finished.

The Automotive Consulting Group looks at the world a little a little more realistically: “Given their precarious financial situation” Ford faces more risk from an economic downturn than GM (GM) and Chrysler LLC."

Douglas A. McIntyre

Posted on: September 1, 2007 – 12:03 pm in Autos, ,

AMD Begins A Comeback

AMD (AMD) shares rose almost 5% on Friday, and closed at $13.02. News out of Seagate (STX) indicated that PC shipments may be up more than forecast.

But, it also appears that AMD is beginning to ship chips that are competitive with Intel (INTC) again.

According to The Inquirer, the new AMD Barcelona will ship 2.0 GHz, less than expected, but that is expected to move toward 3.0 GHz before the end of the year.

Also, Neal Nelson & Associates released a report which showed that AMD Opterons where more were more energy-efficient in a number of servers that INTC Xeons were.

Douglas A. McIntyre

Posted on: September 1, 2007 – 11:56 am in Semiconductor, ,

Google Cuts Deal With AP: Blow To Other News Sites

From Silicon Alley Insider

Google just made life more difficult for many online publishers: The search giant has struck a deal with the AP and three other newswires to host their stories on its Google News page instead of sending readers to the stories on other sites.

A host of publishers who run AP stories currently enjoy a nice traffic boost from Google News, which displays AP headlines but publishes links to outside sites. Now, says AP writer Michael Liedtke, that will change  continued here…

Posted on: September 1, 2007 – 8:08 am in Media,

This Week on StockHouse August 27 to 31

More volatility plagued the markets this week as the credit situation broadened and deepened, drawing more banks, funds and investors into the fray. Earnings season wound down as the Labour Day holiday approached, and the markets anticipated the return of new players with the arrival of September.

The Stockhouse Top Five contains a list of the most prolific and most clicked-on posters, bloggers, Boards and articles on the site. [http://www.stockhouse.ca/shfn/article.asp?edtID=20149]

Stockhouse Publisher Darin Diehl delivered the goods again in Publisher’s Notebook. [http://www.stockhouse.ca/shfn/editorial.asp?edtID=20147] This week’s edition contains specific guidelines for contributing articles to the site. Still have questions? Email us at submissions@stockhouse.com.

Who out there has made the leap from BullBoard poster and SH reader to front page writer, you ask? Here are two articles by the Stockhouse community, well worth your time.

Stockhouse poster gabrielgray, active on a handful of BullBoards, arrives with his twisted take on the on-going credit crunch. Alphabet soup, anyone? [http://www.stockhouse.ca/shfn/article.asp?edtID=20126]

Want to know what Selodong and Batu Hijau have in common? Gold, that’s what. Learn more by reading part one of Kevin Graham’s in-depth, two part analysis of Southern Arc Minerals (TSX: V.SA, BullBoards) [http://www.stockhouse.ca/bullboards/forum.asp?symbol=SA&table=list] in The “Batu Hijau Junior.” [http://www.stockhouse.ca/shfn/article.asp?edtID=20152]

Stay tuned for more from the Stockhouse community next week, including options trading strategies and part two of Kevin Graham’s insightful study.

And from our on-going contributors…

Danny Deadlock brought Chinese demand into the equation for one of his favourite gold stocks in Microcap Monday. [http://www.stockhouse.ca/shfn/editorial.asp?edtID=20133]

Don Rodgers walked readers through a few technical trading strategies in Trading Discipline. [http://www.stockhouse.ca/shfn/editorial.asp?edtID=20137]

Steven Saville looked at the relationship between silver and gold under various market conditions. [http://www.stockhouse.com/shfn/editorial.asp?edtID=20143]

Mike Paulenoff of MPTrader.com shared his views of where markets are headed in Weekly Wizards. [http://www.stockhouse.ca/shfn/editorial.asp?edtID=20144]

Greg Silberman outlined a bear market scenario based on current market conditions. [http://www.stockhouse.ca/shfn/editorial.asp?edtID=20151]

Nancy Zambell got back to basics with her report on five common money mistakes in part one of a two-part Financially Fit. [http://www.stockhouse.ca/shfn/editorial.asp?edtid=20156&page=2]

John J. De Goey introduced readers to a new method of passive investment called “fundamental indexing” in STANDUP Advice. [http://www.stockhouse.ca/shfn/editorial.asp?edtID=20157]

Posted on: September 1, 2007 – 8:05 am in Press Digest