Casino Capitalism

TheStreet.com Comments on Seitel

There is an interesting post on TheStreet.com today, by Jonathan Moreland, on Seitel (SELA.ob). Seitel is a holding of ours that we have mentioned several times here. It's worth a read if you have a position in Seitel, though as mentioned below, the analysis is somewhat faulty, in our opinion. We think it is worth discussing since it touches on a few key investment ideas.

Savvis (SVVS) Makes Bullish Comments

In another bullish development for the managed hosting and IP Services industry, Savvis (SVVS) announced today that it is appointing Jonathan C. Crane as Chairman of SAVVIS' Board of Directors effective March 29, 2006.

Web.com (WWWW) Strengthens Management Team

Today Web.com (WWWW) added another strong member to its already talented management team. The company announced the appointment of Joseph A. Newcomb as Executive Vice President, Secretary and General Counsel.

IP Services Pricing

We had a chance to quickly read thru Level 3´s (Nasdaq: LVLT) 10-K this weekend. Below are some quotes from the 10-K, which we think are positive for Internap (IIP). Essentially, it appears as if IP services pricing is rising as excess bandwith has been reduced dramatically in the last few years and at the same time demand for bandwith is increasing exponentially as new uses of the Internet emerge (e.g. VOIP, Video etc.). Our feeling is that this could be the start of multi-year double-digit revenue increases for IP services businesses, following many years of unremitting pricing pressure. If that proves to be the case, clearly the stocks in this industry can move alot higher from current levels. We´re not sure these companies, like IIP, have ever really operated (other than in the brief bubble years) in an environment where supply/demand favored their business. It should be interesting to watch this play out.

New Stock Pìck: ActivIdentity (ACTI)

Investment Summary:
We believe that ActivIdentity (Nasdaq: ACTI), at its current price of about $4.37, represents a low-risk investment, with substantial upside price potential in the next two to three years, as the company capitalizes on new growth opportunities in the digital identity assurance market, under the guidance of the new CEO, Jason Hart.

Updated Returns from Our Picks

We have prepared a spreadsheet, which readers might find helpful in tracking the returns from our stock picks on CasinoCapitalism.com. The spreadsheet also contains links to our original write up of each stock pick.

You can access this return spreadsheet by clicking here. As can been seen, since starting this blog in October of 2005, we have given 13 stock picks. Out of those 13, only one has been a losing position thus far, with the average gain clocking in at 53%. Our biggest gainer, even with the recent correction, has been IIP. Please note: That we will soon be updating this spreadsheet with real-time quotes, using Microsoft´s real-time stock Excel tool. If you wish to keep up with these picks, please download the Microsoft tool, by clicking here.

Investing is a Boring Business

We have not posted in a view days, but in the interim we have received several emails asking us for some new picks. Well, we´re sure looking, but we have not find any stocks yet that meet our criteria of low downside risk and high upside appreciation potential. For now we´re just sticking with our  current holdings, which are doing quite nicely. We are of course tracking a couple of potential interesting investment gambles, but they have not gone down enough in price so that downside risk is limited. Which brings us to the topic of this post: Successful Investing is a Boring Business.

Seitel (SELA) Earnings

We finally got a chance to review Seitel´s (SELA) latest earnings report, 10K, and conference call. Overall, the report was very good, as evidenced by the company´s strong cash generation. However, the key to valuing the company lies of course in the future expectations of free cash-flow, which for a variety of reasons are quite unpredictable in the case of (SELA). In our estimation, the valuation of SELA is somewhat high and is based on various best-case growth assumptions, and as such  we do not believe the stock offers above-average risk/reward at the current price, which has appreciated by nearly 50% in the last few months. Nevertheless, we are holding on to our shares, since we think that the seismic business will continue to perform strongly throughout 2006, and we see no real operational risks on the horizon that would prompt a sustained sell-off in the stock. That said, we think it is probably clear that oil and gas stocks in general, and SELA in particular, have slowly started to price in higher crude and gas prices, making many of the shares less attractive from a value standpoint. So if you are looking for good odds, its getting difficult to find in the oil and gas sector.

Pacific Internet (PCNTF) Hires Financial Advisor

Today, Pacific Internet (PCNTF) announced that it has appointed BNP Paribas Peregrine (Singapore) Ltd ("BNP Paribas") to assist the Board in identifying and evaluating options for maximizing shareholder value.

Seismic Stocks Continue to Perform Well

Our picks in the seismic sector continue to perform well, with PGS hitting a new yearly high today. SELA.ob (Seitel) will be out with earnings early this evening. I expect an excellent report and solid guidance.