Thursday, February 28, 2013

The Eric Nuttall Delphi flip-flop

Eric Nuttall is a portfolio manager at Sprott Assett Management and a regular on BNN's Market Call. This guy knows very detail about every Canadian energy company. Unfortunately if you followed is picks over the past year you were frustrated. That is because there is no relationship between a stock’s fundamentals and a stock’s price performance. Technical analysts know the price always leads the known fundamentals. I clipped the following Nuttall’s Delphi Energy Corp comments from

THE BUY: Delphi Energy Corp. (DEE) $1.95 “2011-10-13 BUY Eric Nuttall Gapped down on the volume and on very little volume. Drilling the first Montne well with strong liquids, which increases the economic value of the gas stream. Has recently been buying.”

The price of natural gas (nearest contract) on Oct 13, 2011 was 3.70 mcf

THE HOLD: Delphi Energy Corp. (DEE) $2.00          “2011-11-30 TOP PICK Eric Nuttall Have an extremely exciting drilling catalyst coming up. Their 1st Montne well will have results before Christmas and is an incredibly important play because stock has languished under the perception that is that slow 10% growth type of company.”

The price of natural gas (nearest contract) on Nov 30, 2011 was 3.52 mcf

THE NOT TOO SURE: Delphi Energy Corp. (DEE) $1.26    “2012-09-19 Comment Eric Nuttall     If you are a Buy and Hold investor, he would say this is good for 2-3 years. If you believe we are going to have a strong recovery in natural gas about $4, it’s a great investment. Their wells are very expensive. They are going to cash flow around $40-$45 million in 2013, using $3.50 gas.”

The price of natural gas (nearest contract) on Sept 19, 2012 was 2.98 mcf

THE BAIL OUT: Delphi Energy Corp. (DEE) $1.03    “2013-01-09 DON'T BUY Eric Nuttall Largely a liquids rich play and they get pretty good liquids cuts so they get a lot of condensate which sells at a slight premium to Edmonton light. Stock is down 10% today and thinks we are beginning to see a “trade out of the have-nots” which he would put this company in. Because of its market, he doesn’t think this will be the 1st company that people will buy. There are better buys out there.”

The price of natural gas (nearest contract) on January 09, 2013 was 3.33 mcf – and a As of this writing the price is 3.42 per mcf.

So what is the lesson here? We have an expert who is sincere and has detailed knowledge of a company and is passionate about his convictions - so much so to be drawn into his own compelling story. What makes him toxic is the use a national TV platform to draw in investors much like a moth to a flame. In the end they all get burned. Never forget – a stock price is based on what will be and not what we know today. The weekly chart of DEE tells all.


Anonymous said...

Sadly, it`s true. I like his views but the pics are not performing

Anonymous said...

Hi Bill,

Was wondering how many days do you use for your money flow index?

And why do you use that?