HNR [Archive]

**jzou** Tue Jun 05, 2007 1:28 pm

HNR
Blast:

What do you think about HNR. Seems it started going up these two days.

It is a oil service company and Venezuela is the customer. They are still in the process of negotiating the service contract that cancelled by Venezuela goverment, although in the last earning report, the management hinted that the contract's passage is just a matter of time. Because of the uncertainty, the stock price has been depressed. Mohnish Pabrai has been buying.

Here's an article posted on the message board:
http://hcmthoughts.blogspot.com/

Thanks.

**blast_investor** Tue Jun 05, 2007 3:32 pm

Hi jzou,

I agree that HNR is an attrative value pick.

It is worth noting that PABRAI MOHNISH had excellent past performance on value investing and he is buying aggressively.

In a simple word, due to large cash position and past VZ government handling, the down side risk is limited on HNR. The uncertainty is the upside reward. However, the most important issue in value investing is margin of safety on downside, not on upside, therefore, this pick HNR is very attractive.

**forestforever** Wed Jun 20, 2007 10:59 pm

really impressed!

**baczhou** Sat Oct 27, 2007 5:46 pm

Hi, Blast, the recent announcement by HNR has cleared the potential political risk of HNR's operation in Venezuela, and made HNR a very attractive value investment (as you also mentioned above). Do you think its current pps ($13.3) would make you to consider it as one of your picks? Do you have any estimation to its fair value? Thx!

**blast_investor** Tue Oct 30, 2007 1:12 am

Hi baczhou,

I don't know how much HNR is worth.

HNR valuation is controled by Venezuelan government and Hugo Chavez. Hugo Chavez's policy is very extreme and he nationalized foreign oil companies' private ownership by force. Venezuelan government is also in dispute with Exxon Mobile and ConocoPhilips on the nationalized property's value.

This kind of stock typically is not my type because this stock upside is a political play. Venezuelan politics is something I don't understand. This automatically would exclude this stock for my own consideration.