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Hang On To Your PetroKazakhstan
The ADR Alert
Wednesday, June 30, 2004
By Alexander Green, Investment Director
Email – #18
** Hang On To Your PetroKazakhstan
Our shares of PetroKazakhstan (NYSE: PKZ) are up 5% today. And the prospects for this oil and gas company are still as bright as ever.
However, I’m getting a lot of inquiries from subscribers about whether to participate in the company’s Dutch auction.
Here’s the lowdown.
Last month, PetroKazakhstan said it planned to return $160 million Canadian (roughly $120 million U.S.) to shareholders though a share buyback in the form of a modified Dutch auction. The bid will expire on July 19.
The auction pricing range will set a minimum price of C$40 (approximately US$30). And there will be bid price increments of 10 cents above the minimum price. The company will buy the cheapest stock first, and will keep buying until it has bought a maximum of 4 million shares.
However, I recommend that you NOT participate in this auction. Here’s why…
Firstly sales and earnings at the company are up sharply. And we’re likely to get more positive news from the company in the weeks ahead.
Secondly PetroKazakhstan wants your shares for one fundamental reason: The company has more than $200 million in cash on hand and thinks the best use of it is buying back its own undervalued shares.
That’s exactly why you should keep them instead.
And don’t worry: The repurchase will not leave PetroKazakhstan short of cash. The company still has plenty of liquidity to follow through on its expansion plans, including the 50% interest in the Kazgermunai joint venture that it doesn’t already own.
So hang on to your shares of PetroKazakhstan – or buy a few more. This stock – as well as the other four listed below – are still excellent buys at current prices.
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or 410.223.2679 (e-mail: viptrader@oxfordclub.com), or contact Pillar One Adviser Greg Galloway at 800.438.3040 or 407.667.4729.
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Stock: Smith & Nephew (NYSE: SNN)
Country: Britian
Current Price: $54.94
Comment: Buy. Sell stop is $45.
Stock: Banco Bilbao (NYSE: BBV)
Country: Argentina
Current Price: $13.42
Comment: Buy. Sell stop is $10.75.
Stock: Fuji Photo (Nasdaq: FUJIY)
Country: Japan
Current Price: $31.50
Comment: Buy. Sell stop is $25.
Stock: Diageo (NYSE: DEO)
Country: Britain
Current Price: $54.69
Comment: Buy. Sell stop is $42.
Stock: PetroKazakhstan (NYSE: PKZ)
Country: Canada
Current Price: $27.35
Comment: Buy. Sell stop is $24.
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Bio:
Alexander Green is the Investment Director of The Oxford
Club. A Wall Street veteran, he has over 16 years
experience as a research analyst, investment advisor, and
professional portfolio manager. Mr. Green is also
considered one of the most talented financial writers in
the business. He’s been featured on “The O’Reilly Factor,”
profiled by Forbes and Marketwatch.com, and has written for
Louis Rukeyser and several other leading financial
publications. He currently writes and directs The Oxford
Club Communiqué, the Oxford Insight e-letter, and four
elite trading services: one focused on momentum stocks,
another focused on companies with significant insider
buying, another dedicated to international growth stocks
and another focused on short-selling fundamentally flawed
companies. Mr. Green is also a top-rated speaker at
financial conferences around the country.
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