Exercise in marketing

Cam Hui‘s thoughts on re-branding the oil sands is brilliant, especially the following:

* The jungle (think hot, steamy and snake infested) has now become the rain forest.
* Swamps (aligators and mosquito infested, etc.) are now wetlands.

I will add another example: Global warming becoming Climate Change. This way you do not necessarily have to have the climate warming in order to score your political points.

More relevantly to the financial domain, perhaps “Financial Advisers” should be re-branded to “Financial Salespeople”.

Priszm Income Fund declares bankruptcy

Priszm Income Fund (TSX: QSR.UN) has finally bit the bullet and gone into creditor protection. They will be liquidating the assets of their business.

Units of the trust and debentures (TSX: QSR.DB) have been suspended and will be delisted out of the TSX. They were last trading at around 9 cents on the dollar and as you might glean, does not anticipate much, if any recovery whatsoever.

I had written on the episode of my quick trade in and out of the debentures in earlier posts on this site; I retained the minimum face value ($1,000) of debentures as a “lottery ticket” ($90 market value) that evidently will not be winning. I eagerly anticipate the huge stack of documents in the mail that will politely inform me that my debentures are worthless.

Lulu – Gaga

Although I like looking at fashion companies for their financial statements, when it comes to the wares they are selling, I am absolutely clueless. I have to ask others that know much more about the fashion aspect of clothing companies for their anecdotal opinions.

Never have I been so wrong about Lululemon:

Obviously this train ride has to end somewhere, but I just look at this chart with my jaw open. Reference my December 2010 post when I was questioning the high $2.8 billion valuation. Today: $6.3 billion.

Canada hits the polls

Canadians will be subject to relentless federal election advertising over the next 5 weeks as the major parties try to win seats in the House of Commons.

The big financial question will be: Can the Conservative government achieve a majority government? The House of Commons has 308 seats and thus 155 seats are required for a majority. The Conservatives were able to win 143 seats in the prior election.

If the Conservatives do not win a majority, it is more likely than not that the Liberals, NDP and Bloc Quebecois will try to form a coalition government. One of the first items on their legislative agenda will be to raise corporate income taxes, which will have a negative effect on valuations of profitable Canadian companies, in addition to causing capital outflows.

This uncertainty will have some indirect impact on the Canadian markets, and the Canadian currency. In essence, some proxy bets can be made on the outcome of this election. Now that the UBC Election Stock Market is unfortunately not open to allow people to take direct bets on the election, there will only be a limited way for investors to speculate on the outcome.

Just as a word of warning for readers – I do have heavy political involvement and because of this my writing will slow down considerably until the beginning of May (when I presumably will have recovered). There is zero chance of me finding suitable investment candidates in the meantime!

He has power to move markets

John Hempton of Bronte Capital writes very entertaining articles. Most of his extensive postings are about companies that have “issues”, such as his strong suspicions of financial wrongdoing at the Chinese company Universal Travel Group (NYSE: UTA).

His latest spread is regarding Northern Oil and Gas (NYSE: NOG), which I found thoroughly fascinating, for a few reasons.

The first reason is that my earlier article on Petrobakken (TSX: PBN) and its steep decay rate of oil flowing from newly drilled Bakken-shale wells assisted his thinking with respect to NOG’s depletion rates. He is very gracious to link to my article.

The second reason is that apparently the rest of the market has “picked up” on Northern Oil and Gas’ low rate of expending of depletion and has decided to price this in (note the article hit the wires on Tuesday, although it seemingly was digested on Wednesday):

Interestingly enough, before this all hit the wires, NOG had about 20,000 shares available for borrowing at Interactive Brokers. Today there are none.

Thirdly, he writes good analysis. There is good reason to be skeptical of NOG’s management and their intentions. Even disregarding that, it does appear the valuation of the company is well above fair value. That said, the company’s balance sheet does show a net cash position (assuming those balances are truly there!), so the shares are most certainly worth something, unlike most of the other likely frauds that Hempton has been writing about.

Disclosure: No positions in any stocks mentioned in this article, nor do I intend on opening any. I’m watching this purely for entertainment value, although others likely have money on the line.