The Barrett Edge

Blog

3rd
July

Hunting For Energy Stocks

Energy Stocks

One of the key things I’ve learned from my mentor Dave Anderson at Palo Alto Investors is how to find Undervalued  Oil and Gas stocks  as well as how to figure out a way to monetize on their hidden value. Rule number one in the stock market is- have a GOOD MENTOR. So I share with you one of the most important lessons that I have learned from my mentor.
The most important element that Dave always looks for when evaluating an investment in an oil and gas exploration and production (E&P) company, is the ability to economically replace reserves at a rate of over 200% of annual production. That is, for every barrel a company produces, they should be able to replace that barrel with two more barrels. It’s important to make sure that these funds are generated from internal cash flow without raising capital and diluting investors. For example, if someone told you to give him  $1 and he will return $2 you will think he is an alchemist as he promises to create money. The same concept applies to energy, it’s important to find the right companies that can realistically generate a sufficient Internal Rate of Return.

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3rd
July

Arena Pharmaceuticals Receives FDA Approval

Biotech Investing

Arena Pharmaceuticals (NASDAQ:ARNA) received FDA approval for its weight-loss drug Belviq. The interest in weight loss drugs is going to grow, at least for a while. It’s important to realize that this particular segment of healthcare is primarily driven by consumers who are willing to spend Billions of their own money to lose wait and look fit, consequently causing revenue and profits to increase from drugs like Belviq. However, it’s important to be cautious as it’s uncertain if insurance companies will be willing to subsidize payment for these drugs.

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29th
June

Are You Getting Dizzy

Investing

Investors, hold on tight: We are constantly hearing negative Financial news (i.e high unemployment, inflation, tension in the middle east, the poor housing market…  Or — wait! — the clearing clouds over Europe point to brighter days ahead. And look at all those tech IPOs that are resulting in Fund Managers begging for tech college students to take their money. Surely that’s a sign of expansion — or is it just another bubble?!

All these mixed signals are enough to make even the savviest investors dizzy. After a three-year bull run, the stock market lately seems stuck at a crossroads, not clearly headed up, nor clearly headed for the double-dip some have predicted. The bond market hasn’t crashed — but neither has the housing market come back. As a result, investors have embraced a wide range of strategies.  

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29th
June

Hunting For Investment Ideas: Information Overload

Investing

For many investors the process of finding investment ideas can be confusing and overwhelming, especially in the stock market.  Everyone wants to pick winners and stocks of successful companies, or companies that will become successful.  But there are just so many choices and a lot of information out there.  Many investors don’t know where to start looking or how to sort through the vast amount of companies listed on the exchanges.  There are also many types of investments other than stocks. Ideas can be drawn from your knowledge and experience.

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