I’ve been looking at some existing holdings and companies that I do not own, specifically what has been doing well and not doing well year-to-date. Some miscellaneous thoughts that are not so illuminating:
1. Natural gas has been getting killed lately. I’ve been looking at Birchcliff Energy (TSX: BIR) (I own the preferred shares but not the common shares), and they are going to face significant revenue compression in relation to past financial statements because AECO natural gas pricing is really, really, really low. We’re seeing continued pain in equity pricing (also looking at Peyto and others) and no signs of this getting better – demand isn’t rising that fast (especially since the dreams of the product being exported across the Pacific is completely dead), and supply is plentiful.
2. Any company with the word “blockchain” in the press release, no matter how junky, is getting a market reaction upwards as it is obvious there is algorithmic trading designed to pick up such releases, hit the “buy” button and sell an hour after.
3. Pulse Seismic (TSX: PSD) is a very interesting business with incredibly lumpy revenues. Their balance sheet is misleading in that they amortize their accumulated data, so the remaining asset is not really present in its monetarily realizable format. I am not interested in them with their existing valuation but from an analytical perspective an interesting business. They made a relatively large sale to a customer and they gave a lot of cash away to shareholders both in the form of a special dividend and a significant share buyback.
4. Other energy service companies have also been hammered. There’s a few that look interesting, although it is clear they are all still suffering from large amounts of overcapacity – it appears revenue margins are still quite low.