Raphaël Moreau presented his in-depth investment thesis on Pine Cliff Energy (Canada: PNE) at Best Ideas 2015.
Pine Cliff Energy: Three year-old Canada-focused natural gas producer with a strongly rational capital allocation focus and contrarian approach. Uses the current low price environment to acquire robust low decline natural gas assets from forced sellers. Same board (led by George Fink) as Bonterra Energy, one of the strongest performing stock over the last 15 years in Canada. Significant insider ownership (>15%). Patient and disciplined. Strong balance sheet and high free cash flow generation. The company can and will book undeveloped reserves only when it has the intent to drill for them. Once natural gas prices recover (probably not before several years), the value of the asset base will come to light. Valuation can easily be done on FCF metrics, however, a more realistic approach consists in using a long term natural gas equilibrium price to value the existing assets. Valued at a premium, however really worth the work considering the strong value creation potential.
About the instructor:
Raphaël made his first investment in the stock market in 1998, when the French State listed a portion of its shares in France Telecom. Progressively, being won over by a passion for investing and reading the writings of Warren Buffett, he joined Amiral Gestion in 2008 following the completion of his Master at ESSEC Business School and experiences in sell-side research at UBS and fixed income analysis at CACIB. Founded by François Badelon, Amiral is an independent asset management firm based in Paris. Amiral’s single goal is sustained performance with minimum risk based on the firm’s value investing approach.
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