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doing securities analysis vs. getting inside information

Rhodes Holdings LLC:

Confidential information is very important to most of us in the merchant banking industry since we are continually reviewing the prospects of public companies, private companies, and individuals ideas. This is an issues that we all need to be aware of and know what the SEC is focusing its enforcements on.

Originally posted on PRACTICAL STOCK INVESTING:

the “mosaic” theory

When I became a securities analyst in 1978, the mosaic theory was what was commonly understood as being an adequate defense for an analyst accused of trading on inside (that is, material, non-public) information.

An example:  I’m interviewing the CFO of a large company I know is in negotiations over a very lucrative project in China.  This firm has a smaller, publicly traded partner, for whom this project could, say, triple its earning power.  After a series of questions, I tell the CFO that I’m estimating the company’s interest expense for next year will be $200 million.  I ask if this sounds right.  He responds that it will more likely be $250 million.

I know the company’s cost of debt is about 5%, so the added interest expense means new borrowing of $1 billion.  The only reason to do so would be to fund the China project…

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Posted by on December 20, 2014 in BLOG

 

Oil drops like a rock – is it good or bad?

So the price of oil broke through $70 this month and who knows where it will settle or how long before it comes up again.  Living in the Houston, Texas are (Sugar Land is a suburb), everyone is touched by the oil & gas industry, so everyone talks about the happenings in the oil patch incessantly (including me).  I thought that I’d bring out some interesting comments that I have heard lately:

Comments that have surprised me…

Of course everyone is talking about how Saudi Arabia is trying to squash the Eagle Ford and Bakken shale oil production in the U.S., but when I discussed this with one individual in government they said, “Saudi Arabia is actually helping the United States deal with Russia.  Russia makes most of the money that balances its budget and allows it to exert control over the world through gas sales in the winter and oil sales to Europe and Asia.  With oil prices below $90, Russia is running deep in the red and it can’t afford to mess with the gas supply to Europe through made up “pipeline problems’.

Here some proof – the Ruble is being sold off hugely and the dollar is up – which helps Saudi Arabia and the U.S. as Saudi Arabia holds lots of U.S. Treasuries.  See the Wall Street Journal article entitled ‘Sell Off in Russian Ruble steps up‘.

To add to that, Saudi Arabia needs oil at $93 to balance its own budget.  See this older article in the Wall Street Journal entitled “Oil-Price Slump Strains Budgets of Some OPEC Members.’  There is an updated article from December that shows Russia as well.  The reason Saudi Arabia can survive and thrive with lower oil is because it has a couple of years of monetary reserves to withstand just such a price slide.

Oil companies clean house

Now for the bad news – oil companies are cleaning house again.  It seems every time there is a slump in oil prices, every oil company and oil services company announced layoffs.  Here are some of the highlights:

- ‘BP to spend $1 billion to cut jobs, restructure‘, HBJ on December 10

- ‘Halliburton to cut 1,000 jobs‘, HBJ on December 11; it should also be noted that Halliburton just bought one of its largest rivals and probably wanted to thin the ranks already, so what a perfect time to double down on the layoffs

Why not control their hiring practices and hire more slowly?  That’s what most other industries do.  In the oil industry though, companies need to bulk up almost instantaneously to take advantage of the opportunities that present themselves – take the Eagle Ford for instance.  When the money became available, let’s say 2010 through today is only four years and estimates of as many as 200,000 people work in that play today – zero to that is a huge growth rate.  And the Bakken and other plays are just as large in numbers.

Because of the huge run up in people needed, the large players don’t have the opportunity to thin the ranks and cull out inefficient managers and other employees, so when a downturn happens, every company takes the opportunity to do so.

So what oil play do I believe will be en vogue now?

I believe that oil will hover in this low price ($55 – 85) level for no more than two years and then move up to the level we have seen for the previous couple of years ($85 – 105).  Why?  Well, if you look at the OPEC producers, Russia and the U.S., we all would rather see oil at $100 than $50 – and most of their budgets depend upon oil being high.

When I look at Exxon, I see a bank.  Exxon funds projects for the next fifty to seventy five years, so a blip in the price of oil today rarely if ever effects their long term planning.  In fact, Exxon recently said they do their projects planning for $40 oil – all of us should look for oil projects that make sense at the level, but alas, most of those projects require billions of dollars and not the millions of dollars that most of us could put together (or tens of thousands of dollars that just about anyone could put together for a project).  Take a look at this article entitled ‘Exxon: North America will be a net exporter, oil will last 150 years‘ in the HBJ.

For me, I continue to like investing in stripper wells – wells that produce less than 10 BOPD (barrels of oil per day) or 60,000 cubic feet (Mcf) of natural gas per day.  The cost is low, sometimes as little as $25,000 per well for drilling and completion, and the plug and abandonment (P&A) liability is low as well.  Normally these come in packages containing many wells – I saw one with 500 wells the other day.


Copyright © 2014 by Rhodes Holdings LLC, all rights reserved.

 
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Posted by on December 15, 2014 in BLOG, Business

 

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Liberty Energy Corp. executes farm-in agreement with Delta S Energy LLC

Houston, TX / ACCESSWIRE / October 28, 2014 / Liberty Energy Corp. (‘LBYE’ or ‘the Company’) announces today the funding of a farm-in agreement with Delta S Energy LLC to make improvements to four (4) of the Company’s existing wells and upgrade infrastructure assets on their Baylor County leases. As part of the agreement, Delta S Energy LLC was granted the first right option “… to purchase all or part of the available working interests in the first 3 new drills to be spud on the leases for the period ending 12/31/14…”

 

Robert C. Rhodes, Delta S Energy LLC representative commented on this initial Liberty Energy Corp. project, “We invest in ‘base hits’ like purchasing a fractional working interest in wells with production history, and Liberty Energy Corp.’s leases provide us a great playing field. We funded Delta S Energy LLC with the expectation of partnering with companies like LBYE to leverage our experience with public companies and expect future opportunities with LBYE like our initial agreement.”

 

“We like the investment by Delta S Energy LLC into our Baylor County leases as it represents an independent endorsement of our production with upside corporate mandate. These capital improvements will increase production and improve infrastructure. This meets both short and long term objectives of the Company” stated CEO, Arthur Roy.

 

ABOUT LIBERTY

Liberty Energy Corp. (LBYE) is an independent oil & gas company dedicated to sourcing, exploring, developing and producing U.S. onshore oil and gas reserves. Headquartered in Houston, Texas, the Company has acquired several leases with extensive potential for future development. Further information at: http://www.LibertyEnergyCorp.com or email rkarpel@libertyenergycorp.com

 

About Delta S Energy LLC

 

Delta S Energy LLC is a recently funded organization that invests in oil & gas projects with low risk profiles and return on investment time horizons of less than twelve (12) months. Delta S Energy LLC is a sister organization to Rhodes Holdings LLC, which provides strategic consulting for public companies. Further information on Rhodes Holdings LLC is provided at http://RhodesHoldings.wordpress.com.

 

Safe Harbor Statement

 

Certain statements in this press release are forward-looking and involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Liberty Energy Corp. bases these forward-looking statements on current expectations and projections about future events, based on information currently available. The forward-looking statements contained in this press release may also include statements relating to Liberty Energy Corp.’s anticipated financial performance, business prospects, new developments, strategies and similar matters. Liberty Energy Corp. disclaims any obligation to update any of its forward-looking statements, except as may be required by law. Please read our full disclaimer at http://www.libertyenergycorp.com/contact/disclaimer/.

 

Contact

 

Rita Karpel, Investor Relations
Liberty Energy Corp.
rkarpel@libertyenergycorp.com
832-663-2688 (Phone) 832-459-7335

 

Robert C. Rhodes
Delta S Energy LLC
Robert.Rhodes@Rhodes-Holdings.com
281-435-3917 (Phone)

 

SOURCE: Liberty Energy Corp.

 

 
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Posted by on October 28, 2014 in Business, News

 

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American Liberty cancels majority of stock

Houston, Texas (Wednesday, October 1, 2014) – American Liberty Petroleum Corp. announces today that it will cancel over sixty three percent (63%) of the company’s outstanding Common Stock shares. Three major shareholders have signed an agreement to exchange stock certificates, owned by them and already submitted to the company’s CFO, for one million (1,000,000) Common Stock shares each – for a total of over sixty eight million (68,469,993) Common Stock shares being cancelled and three million (3,000,000) being issued.

These shareholders, including the Chief Executive Officer prior to Mr. Rhodes, believe that our current management team and its plan focusing on enhancing shareholder value will bring major benefits to our shareholders,” said Steven M. Plumb, American Liberty Petroleum Corp.’s Chief Financial Officer. “With 107,389,051 Common Stock shares outstanding as of the filing of our last 10Q, we are cancelling over sixty three percent (63%) of the outstanding Common Stock shares.

The previously disclosed letter of intent for acquisition of Avant Diagnostics Inc. contemplates a closing date by October 1st, 2014, based upon successful conclusion of due diligence, which is ongoing by both parties. The parties have signed an amended letter of intent providing for a later closing, October 31, after Avant Diagnostics Inc. submits a PCAOB audit to the company as part of the due diligence.

Shareholders should also note that Mr. Hunter M.A. Carr no longer has any position nor ownership in American Liberty Petroleum Corp. The Board of Directors accepted Mr. Carr’s resignation as Chairman on August 30, 2014.


 

About American Liberty Petroleum Corp.

American Liberty Petroleum Corp. (‘OREO’, http://americanlibertypetroleum.com/) is a fully reporting, development stage publicly traded company seeking acquisitions in the Gulf Coast oil & gas services business segment. OREO’s current management team, Robert C. Rhodes (CEO) and Steven M. Plumb (CFO), are actively involved in the search for acquisitions.


 

About Avant Diagnostics Inc.

Avant Diagnostics, Inc. (‘Avant’, http://avantdiagnostics.com) is a medical technology company based on the completion of the human genome sequencing project. Avant is developing specialized tests that are cutting edge in medical diagnostic testing and the OvaDx® Pre-Symptomatic Ovarian Cancer Screening Test is a leading breakthrough in commercializing these tests.

Genetic research is increasingly focused on identifying the variations of the specific genes in the genome. These variations are what define individual characteristics, including disease states or a statistical propensity for disease. The implications are far-reaching and impact not only the research community, but also the individual patients and the medical providers. Diagnostic tests that detect diseases very early in their progression will provide options for earlier treatments that may improve the patient’s quality of life and prognosis by delaying or preventing disease progression or even death. Medical providers will incur major cost savings by avoiding costly late stage disease treatments.


 

Safe Harbor

The statements in this press release that relate to American Liberty Petroleum Corp.’s expectations with regard to the future impact on American Liberty Petroleum Corp.’s results from new products and services in development, including any planned acquisitions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The results anticipated by any or all of these forward-looking statements might not occur. American Liberty Petroleum Corp. undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in American Liberty Petroleum Corp.’s plans or expectations.

Investor Contact

Robert C. Rhodes
American Liberty Petroleum Corp.
investors@americanlibertypetroleum.com

Steven Scott or Gregg Linn
Avant Diagnostics, Inc.
investors@avantdiagnostics.com


© 2014 by American Liberty Petroleum Corp, all rights reserved.  Distributed here by permission.

 
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Posted by on October 2, 2014 in News

 

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Public companies, who are your shareholders…

Since Rhodes Holdings LLC does work out (when they get into dire situations, we are engaged to help work out of the situation, bringing everyone to the table and putting a plan together that gets everyone to the goal) on public companies and provides ongoing support for public companies who are SEC reporting (1934 Act registered), we cover processes that aren’t necessarily covered by “Being Public 101“.  This is a class that we provide to new clients to ensure that they understand all of the intricate details and interactions of the public disclosure process.

If you are interested in retaining us (Rhodes Holdings LLC) for work out services, interested in the “Being Public 101″ class for your company, or just working with us to walk through the reporting process with your SEC professionals, please contact us either from our Contact Us Page, e-mailing info@rhodes-holdings.com, or calling 281-435-3917.  Here are a few miscellaneous topics that have come up recently for a few clients…


CUSIP

Most public companies have only one registered security that is traded in the public markets – most frequently their Common Stock shares.  Of course, there could be multiple classes of Common Stock (not a common practice, but we have seen it, most notably with Colorado Goldfields Corp, website, who has two different classes of Common Stock, Class A and B) and multiple classes of Preferred Stock as well.  Some large capitalization stocks not only have Common Stock but also have multiple Preferred Stock shares and bonds.  If these are traded in the public markets, each class of stock or bond will have its own unique identifier – in this case its CUSIP number, which stands for Committee on Uniform Securities Identification Procedures (see the SEC.gov definition below).

“A CUSIP number identifies most securities, including: stocks of all registered U.S. and Canadian companies, and U.S. government and municipal bonds. The CUSIP system—owned by the American Bankers Association and operated by Standard & Poor’s—facilitates the clearing and settlement process of securities…”

QUESTION -

How do I get a CUSIP for a new security?

ANSWER -

Your SEC counsel will most likely do this for you, but they will go through CUSIP.com to receive one.

QUESTION -

How do I find out what the CUSIP is for my shares?

ANSWER -

The quick answer is look on the face of your paper certificate if you have one.  Most certificates come with the CUSIP on its face as do most bonds.  Transfer agents usually subscribe to a service that provides all this information and they will probably be happy to help you find out the CUSIP number.  If you’re looking for the online equivalent, we haven’t found one lately – if you know of one, please post it here.

Common stock issued in 1967

Common stock issued in 1967 (Photo credit: Wikipedia)


NOBO and OBO Lists

Building upon our knowledge of securities at this point, the next step will be doing due diligence on who your shareholder base is.  This will come in three forms:

  1. Paper certificate holders
  2. Non objecting beneficial shareholders (‘NOBO’)
  3. Objecting beneficial shareholders (‘OBO’)

If you have every opened a brokerage account, you will have filled out countless forms and one of them asked, “Do you object to the brokerage releasing your name to the company?”  If you replied in the affirmative, you became an OBO for all the stocks held in your brokerage account.  If you replied in the negative, you became a NOBO.

To understand more about this, all the brokerage houses subscribe to a service called the Depository Trust & Clearing Corporation or DTCC for short (sometimes people still use DTC for short).  Basically all the brokerage houses deposit their stock certificates and shares with the DTCC and their holdings become a book entry in the DTCC accounts.  Each brokerage account holder at the brokerage is held in “street name”, or more precisely only the brokerage’s name is held at the DTCC.  The DTCC then takes the certificate and holds this in its vaults (interesting aside – their vault is in lower Manhatten Island and was flooded out during the last hurricane that swept through.  Many of the paper certificates were lost, and the public markets are still coming to grips with what that means).

So, when an officer or professional associated with a public company wants to get a list of the shareholders of the company, they would ask a company called Broadridge Financial Solutions, Inc. to provide a NOBO list.  This NOBO list ties all the DTCC street name entries to the brokerage account holders that have not objected.  You can find more information on receiving these lists at Broadridge’s website page for Corporate Issuer Solutions.

Remember though, it requires two days at least to receive so you have to plan ahead (it always takes me about a week though).


© 2014 by Rhodes Holdings LLC, all rights reserved.

 
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Posted by on September 30, 2014 in BLOG, Business, Public markets

 

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American Liberty Petroleum Corp. signs LOI with Avant Diagnostics Inc.

English: Most common cancers in the United Sta...

English: Most common cancers in the United States 2008. See Epidemiology of cancer (Photo credit: Wikipedia)

Houston, Texas (Monday, September 15, 2014) – American Liberty Petroleum Corp. announces the signing of a Letter of Intent (‘LOI’) with Avant Diagnostics Inc., a medical technology company developing cutting edge medical diagnostic tests, including OvaDx®, a Pre-Symptomatic Ovarian Cancer Screening Test.

Throughout 2014, American Liberty Petroleum Corp.’s management team focused on the acquisition of operations to accelerate shareholder value. The proposed acquisition of Avant Diagnostics Inc. not only has the opportunity to bring value to our shareholders, but its test OvaDx® has the opportunity to change and save lives,” said Robert C. Rhodes, American Liberty Petroleum Corp.’s Chief Executive Officer. “Upon closing the acquisition, we plan to accelerate the development of Avant Diagnostic Inc.’s first test as well as start development of new tests.

The letter of intent for acquisition of Avant Diagnostics Inc. contemplates a closing date by October 1st, 2014, based upon successful conclusion of due diligence by both parties. As due diligence progresses, we expect to provide further details to our shareholders.

 

About American Liberty Petroleum Corp.

American Liberty Petroleum Corp. (‘OREO’, http://americanlibertypetroleum.com) is a fully reporting, development stage publicly traded company seeking acquisitions in the Gulf Coast oil & gas services business segment. OREO’s current management team, Robert C. Rhodes (CEO) and Steven M. Plumb (CFO), are actively involved in the search for acquisitions.

 

About Avant Diagnostics Inc.

Avant Diagnostics, Inc. (‘Avant’, http://avantdiagnostics.com) is a medical technology company based on the completion of the human genome sequencing project. Avant is developing specialized tests that are cutting edge in medical diagnostic testing and the OvaDx® Pre-Symptomatic Ovarian Cancer Screening Test is a leading breakthrough in commercializing these tests.

Genetic research is increasingly focused on identifying the variations of the specific genes in the genome. These variations are what define individual characteristics, including disease states or a statistical propensity for disease. The implications are far-reaching and impact not only the research community, but also the individual patients and the medical providers. Diagnostic tests that detect diseases very early in their progression will provide options for earlier treatments that may improve the patient’s quality of life and prognosis by delaying or preventing disease progression or even death. Medical providers will incur major cost savings by avoiding costly late stage disease treatments.

 

Safe Harbor

The statements in this press release that relate to American Liberty Petroleum Corp.’s expectations with regard to the future impact on American Liberty Petroleum Corp.’s results from new products and services in development, including any planned acquisitions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The results anticipated by any or all of these forward-looking statements might not occur. American Liberty Petroleum Corp. undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in American Liberty Petroleum Corp.’s plans or expectations.

 

Investor Contact

Robert C. Rhodes
American Liberty Petroleum Corp.
investors@americanlibertypetroleum.com

Steven Scott or Gregg Linn
Avant Diagnostics, Inc.
investors@avantdiagnostics.com


© 2014 by American Liberty Petroleum Corp., all rights reserved. Some excerpts © 2013 by Avant Diagnostics, Inc.

 
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Posted by on September 15, 2014 in News

 

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Just when you thought John O’Quinn couldn’t get any more interesting…

…even when he died in 2009, his legacy continues to live on.  John O’Quinn is remembered for his large litigation win against tobacco and is thought to have won over $1.5 billion for his law firm over his career (Wikipedia’s biography).

In the news this week, a former client of John O’Quinn sued O’Quinn’s law firm.  You’re hearing about it here as the client, Eagletech Communications, Inc., was in litigation to stop “naked short selling”, which is a huge institutionalized problem that we are still dealing with today.  Here are the stories that came out this week:

To get more information on the Eagletech Communications, Inc. case and the issues involved, take a look at this movie, The Wall Street Conspiracy:

More information available:

 

 
 

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