Buy on Rumor - PKZ

[AceHigh]

Oil is hot right now and rumors abound that Petrokazakhstan, Inc. (PKZ) will be taken over. PKZ drills for oil and gas in Kazakhstan and would make a good target for the big oil companies and China. It is probably a good buy on it's own with a low p/e and oil demand strong through the summer.

Rumors of takeover:
http://biz.yahoo.com/cbsmb/050627/3c9bf8f295f84252ad876296bafb9ce4.html?.v=1

Stock is up 15% already today.

Disclosure - I own shares of this stock.

[adios]

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Disclosure - I own shares of this stock.

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Me too /images/graemlins/smile.gif. Obviously the company is being shopped around. The issues are with government ordered discontinuation of "flaming" at drilling sites and Lukoil conflicts thus the low PE and still low despite the runnup today. Read rumors about companies from India and China being potential bidders. I just had shares because I thought it was stupid cheap.

[parttimepro]

Seems like there is a severe political risk for this one. Like most ex-Soviet central Asian nations, Kazakhstan is essentially a kleptocracy. I would be extremely wary of nationalization a la Yukos in Russia.

[AceHigh]

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Seems like there is a severe political risk for this one.

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That's why it's p/e is so low. Recent issues with LUKOS and government have scared investors. But I think you overestimated the risk, like the market does from time to time. That's why I bought earlier this spring, I thought market had overweighted the risk.

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I would be extremely wary of nationalization a la Yukos in Russia.

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Unlikely. Government will probably be happy to improve relations with China, if buyer turns out to be Chinese company. Remember they are a small country between 2 powerful ones (Russia and China) they would like good relations with both.

[AceHigh]

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I just had shares because I thought it was stupid cheap.

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My thoughts exactly, too cheap and oil demand going up. Cheapness makes attractive for takeover, especially to China.

[adios]

I agree there's risk but the issue is are you compensated enough for taking the risk? In other words it's the same question I asked James Boston about the home builders, what multiple should it have?

[AceHigh]

PKZ announced in received takeover bids today.

http://biz.yahoo.com/prnews/050815/to288.html?.v=10

[KaneKungFu123]

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PKZ announced in received takeover bids today.

http://biz.yahoo.com/prnews/050815/to288.html?.v=10

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you are awesome man.

i remember you posting about home builders. still like that stock?

[AceHigh]

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i remember you posting about home builders. still like that stock?

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Yes, in fact now is probably a good time to buy homebuilders. They are a little beat up, and I expect them to bounce back.

[eggzz]

So am I to assume all of the value has been drained from this stock? (PKZ) When you posted on this in June it was at 36, prior to that, six weeks prior it was at 25 now at 46. Very nice.

Are you selling your position or holding?

[AceHigh]

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So am I to assume all of the value has been drained from this stock? ... Are you selling your position or holding?

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I am holding. I thought this stock would rise more the last 2 days. My guess is a bid will have to be in the 50's to get accepted. Rumor has it LUKOIL submitted a bid for 45 and it was rejected without being considered. Some have put ONGC's bid at 4.3 billion which would be a stock price of around 56+. There might still be time to buy, and hope to get a quick turnaround of 10-25%.

[KaneKungFu123]

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So am I to assume all of the value has been drained from this stock? ... Are you selling your position or holding?

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I am holding. I thought this stock would rise more the last 2 days. My guess is a bid will have to be in the 50's to get accepted. Rumor has it LUKOIL submitted a bid for 45 and it was rejected without being considered. Some have put ONGC's bid at 4.3 billion which would be a stock price of around 56+. There might still be time to buy, and hope to get a quick turnaround of 10-25%.

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AceHigh is a Money Machine (http://biz.yahoo.com/ap/050816/petrokazakhstan_bids.html?.v=2)

4.18B offer. Its market cap is currently 3.6B. Does that mean 4.18/3.6B = 1.6 = The stock should jump 16%??

[AceHigh]

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4.18B offer. Its market cap is currently 3.6B. Does that mean 4.18/3.6B = 1.6 = The stock should jump 16%??

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Yes. But since the deal won't close for awhile and other factors it probably will be something short of the full offer.

BTW, I get 4.18/3.36 x 45.40 = 56.45 for projected by out price.