Thoughts for Today

I've got a bunch of random this to blog on today.

1.

Here's a headline from Bloomberg today: "Citigroup May Sell German Retail
Unit to Raise Cash".My thought: here we see Citi selling a good business in order to save their bad ones.

2.

Here's some great info on IPSU today from Mark Krieger at Seekingalpha.com. He points out that IPSU has more than enough insurance to cover rebuilding their Port Wentworth refinery, as well as losses due to business interruption losses. IPSU reported a one-time loss of $12 million due to losses above insurance payments. However, it is possible that some or all of that loss may be offset by future insurance payments. Here's the best part of the article:

The question arises, if they sustained $28 million worth of damages, why are they potentially receiving between $180-230 million? It’s simply due to the fact that the most of the machinery/facilities being replaced had already been nearly fully depreciated. The insurance coverage provides for replacement value. The business interruption portion of the policy could provide additional proceeds ranging from $120 to $170 million.

This article prompted me to take another look, and I was reminded of the fact that they have $8.80/share in cash. It's too cheap. Also, with the shares hitting a 52-week low, I expect some short covering. The short ratio is 21%.

3.

"Saudi Arabia Declines Bush Request to Supply More Oil"- Bloomberg. Not surprisingly, oil jumped over $127/barrel. I see this as comfirmation of Hussman's brilliant insight that oil producers are keeping oil in the ground as part of monetary policy to fight inflation.

4.

I've been thinking about increasing my natural gas exposure recently, and my slightly more focused idea is this: Look at smaller Canadian natural gas royalty trusts, for two reasons. First, most pay higher dividends than PWE, and second, I believe that they are takeover targets as PWE takes advantage of low prices in the industry to consolidate the industry.