Monday, March 3, 2008

Another update on favorite stocks

First update is on China North East Petroleum (CNEH.OB) ->

As mentioned earlier, financing was expected to be announced shortly. And finally, today, the long awaited financing deal has been announced. This has been a major uncertainty for this stock for a few months. Many have expected this to be a toxic financing or a financing with major dillution to the shareholders. It actually turned to be very attractive deal both for the lender and the company.
You can read the PR here -> http://biz.yahoo.com/prnews/080303/cnm030.html?.v=12. Few highlights from the PR that made it look even more attractive:

  • Majority of Proceeds to be Used to Drill 100 New Wells in 2008

  • The average price of the three tranches of warrants is US$2.51 and represents a 17% premium to the closing price on February 27, 2008

  • Of the 4.8 million warrants, 1.5 million are callable at the option of the Company if after one year the stock price is trading at or above US$4.80 which is 150% of the strike price of $3.20, assuming certain liquidity criteria are also met.

  • And one of the most important: In connection with this financing, the Company is required to obtain a listing on a U.S. exchange within one year.



Once again, this was a major uncertainty with the company, that kept the price very low, while oil has been reaching new highs. Now, the company is in position to execute its plans, and I believe the stock could appreciate over 100% within a year or less. Long term projections are even higher.


Second update is on Asia Automotive Acquisition Inc. (AAAC.OB) ->

As expected, the company extended the Equity Acquisition Agreement all the way to April 30th, but in reality April 19th is the deadline to complete the acquisition. Jeff Feinberg just disclosed having 24%+ of O/S, which is 4% higher than he had disclosed previously. As mentioned earlier, he continues to buy the stock.

Third update is on Harbin Electric (HRBN) ->

Rough times in the market usually mean rough times for low float, low volume stocks, as they can be easily manipulated. Notice my last note on HRBN: "Stocks with low float like this can react violent in both directions :), especially if market conditions match; therefore, if you are in for the short term - proceed with caution". Well, HRBN always suffers a lot during rough times like DOW -300 last Friday. We broke through $21-$24 range to the downside, and it may take some time to recover. With earnings coming up within a few days or a week, most will be careful and would not risk entering a position here. Long term, it is still a very good investment, and nothing has changed in its long term outlook.

Good luck out there.
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2 comments:

BipSur said...

AAAC has taken a big hit today. Is there any reason to be concerned about this?

March 10, 2008 at 1:45 PM
Undiscovered_Stocks said...

The hit most likely was due to a few factors - general market weakness causing margin calls to some traders, delays in getting new amended registration statement out (which actually came out after hours today), as well as just panic sellers, who are concerned that the deadline is getting too close.

I was somewhat concerned, but after the filing today, it feels a lot safer. I expect the stock to go back up starting tomorrow.

March 11, 2008 at 6:24 PM

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