BAS executives gave a press release this morning containing select operational data from November. Here’s the quick recap; drilling projects for natural gas are real weak and demand for their services was kicked in the teeth in November.

BAS is off more than 7% before the open.

They are now forecasting an even deeper slowdown in the first quarter of 2013.

Now let me tell you how December is going to go. Worse than November, leaving expectations for the first quarter of 2013 even lower than they are now.

But at these prices, BAS remains cheap. And as companies go, it’s flush with cash in a sea of dying competitors.

I expect drilling for natural gas to pick up in 2013, provided we continue to witness natural gas prices holding onto recent gains (no double dipping into the $2 spot prices again, if you please).

That will lead to a second half spaz run in BAS shares, assuming all goes roughly according to plan.

The North America energy revolution is underway. It has not stopped. It has merely been delayed in wait for better pricing.

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Well, CCJ reported earnings and the stock is getting the homo hammer, off 6% on the open (7% on completion of this post). Yesterday’s price ramp is all gone, and whichever trolls were pushing that purchase are now a pool of putrefaction.

The problem with CCJ is this: if you believe that $0.21 quarters are the new normal, this stock is ridiculously expensive. We’re talking somewhere between 20-30X earnings expensive. To rectify that, you’d have to bring CCJ’s price down. A lot.

CCJ would need to be a $13 stock to justify this pricing with the earnings they’ve been reporting.

But here’s the thing. They’ve been reporting these earnings for two years now.

So the real issue is that the stock market is a medium of instant gratification. People want to make money. And they want to make money right now. There is no patience to wait for developments, or to stick out a rough patch. That’s the entire thesis behind buying CCJ is the first place.

Now, I’ve read their release, and I feel the developments were good. CCJ is taking their foot off the pedal on projects. They are forcing the economics to work. And they’re big enough to affect uranium prices.

Now, a reactor only has to refuel once every few years. So CCJ has to be calm and wait. They can get higher prices by one of two means – Wall Street can accommodate them with higher pricing, or they can force higher pricing (they’re something crazy like 20% of global production, on their own). Uranium prices ARE going higher. It’s a matter of when, not if.

That’s what’s happening here, I think. Cameco is intentionally dropping their revenues, with the goal of increasing spot price, which will make the economics of their new mines work which will lead to higher sales volumes and superior pricing. They have the weight to pull it off.

Now, the second point I want to address is their assessment of global demand by 2021. I feel it’s conservative.

For instance, it includes such projections as assuming that net reactors in Europe decrease by 3 over the next 10 years.

Not going to happen.

To assume that, you’d have to take Germany at their word when they say they intend to close down all their nuclear plants. But this same Germany just shuttered any new development of wind energy (throwing in the towel). Solar is next. So what’s taking nuclear’s place? Natural gas? Yeah, Russia would love that – natty is expensive enough in Europe as it is.

Coal? Oil? There’s only so many places the load displacement can come from. Germany’s going to cave, just like Japan is in the process of caving now.

Now, looking at CCJ’s gross profits and sales volumes, it looks like they have a cost of $30 per pound of uranium produced (before expense cuts, which CCJ says they’re looking into). So let’s say that they can push uranium prices back to $50. That would increase their revenues by 43% by itself. Now you’re talking earnings closer to $0.30, putting the company at a more reasonable 15X earnings.

If they can get uranium back to $55, their earnings are going to blow out by 78%.

If uranium hits $60, they’re looking at a 114% increase in earnings. It’s worth noting that $60 is the long term delivery price of uranium right now (Ux LT 308); it’s only the spot price that’s really hemorrhaging – the long term price (which is used for multi-year contracts) has floored at the $60 price.

And it’s here that Cameco looks cheap. This is the situation where I look at CCJ and say, “this company is going back to $27 a share”.

But I don’t think the long term price of $60 is fair. I think the price is going higher.

The long term price of uranium in 2009 was over $90. The spot price was right around $50. If Cameco can force the spot to $60 and start locking in long term contracts for $90, you’re golden. In this situation, you’re talking about Cameco going for $40 to $50 a share.

And I think it’s totally feasible. The supply and demand aren’t matching up here. The expectations for weaning off nuclear energy are just too rosy, and the price is way too low, even if no new reactors come on line. We don’t have enough fuel right now – higher prices are warranted to expand production.

That is the only thesis for owning CCJ right now. But it’s a good one.

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Needless to say, I decided to edge long at exactly the wrong time. Ben suckered me in, and my once strong 30% cash position has been whittled away to a mere 10%.

This selloff is going to hurt, delivering its full force directly against the 9th floor, shaking the very walls.

But I find that I am willing to wait it out. The concerns that are driving this selloff are immaterial.

Spanish insolvency, fiscal cliffs, Chinese communists and Ben’s retirement – the four horsemen are dotting the sky and Twitter is like a dumping ground for snarky comments.

Earnings and growth are slowing and Bob Pisani is nowhere to be found.

The funny thing is I was sitting around in exactly the position of the bears this time last year, guffawing in between comments of doom and chugging from a golden chalice.

Let me tell you how this ends for the shorts.

First, they get run over by a stampeding flock of turkey’s. Seasonality adjustments and earnings projections tick up with bad modeling methods. A bottom in housing prices is called for the spring. Employment looks extra rosy with the holiday shopping.

Then Santa comes and mows the surviving shorts down with his sleigh.

This is how the holiday season works.

Let’s review the “impending demise” of civilization. Spanish insolvency can be flooded with EU money. The EU collapse comes from price inflation and manufacturing contraction, not outright defaults. Chinese communists are scary but China can’t exactly afford to have foreign investment flee the country at this precise moment. The fiscal cliff can be voted away.

And after his presidential inauguration, Mitt Romney is going to be ushered into a back room where central bankers will begin the process of extorting him. But even if they fail, Ben has plenty of time to sink so much money into dark pools there’s no chance of reversing his policies.

Why do we need to embrace the end of humanity right now? It’s the holidays. Can’t it wait until next June?

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I want you all to take a minute and listen to what a prudent management team sounds like. The speaker is Jeff Friedman, AEC’s Chairman, President and CEO:

Thank you, Jeremy. We appreciate everyone taking the time to participate on our call. If in the long run the stock market is a weighing machine, why then do we continue to trade at such a discount? Is it because 40% of our NOI comes from the Midwest? Is it because we are a small cap company?

It can’t be, (sic) because we haven’t executed on our strategic objectives, we have, year in and year out. It can’t be because we haven’t been clear about how we plan to execute, we have, as demonstrated by our 2010 acquisitions, our 2010 equity raises, the limited use of our ATM and by allowing our internal growth from our 2010 and 2011 acquisitions to prove that we once again delivered on what we said we would do.

A long-term property level performance has led most of the publicly traded apartment REITs. Since 1998 when we decided to expand outside of the Midwest, we have repeatedly demonstrated our ability to recognize when to buy and when to sell. Our portfolio today is among the youngest of all of the apartment REITs. Our properties outside of the Midwest are in many of the strongest and fastest growing submarkets in the country. Our Midwest properties continue to produce strong results. Still, our stock trades at a discount.

We’ve repeatedly explained that we will not lever back up and that we need to raise $0.50 of equity for every dollar we spend. We said on our earnings calls in February and April that the midpoint of our acquisition guidance of $75 million could be accomplished while staying in our targeted debt-to-book value range of 48% to 52%, without needing to issue any additional equity.

In a very short period of time, we were able to tie up both marketed and off-market deals that we expect will generate strong returns for many years to come. These properties were under managed and we bought them below replacement cost. We are at a point in the cycle at these properties where we expect strong operating performance for quite some time.

Our re-entry into Raleigh-Durham is consistent with our objectives on all fronts. So why does our stock continue to trade at such a discount? We have delivered sector-leading results over multiple cycles. We have been clear about our strategy. In our case, the market has not been efficient and there is a major disconnect between our stock price, our multiple and the value per share.

Our job is to narrow that gap. We are confident that our continued execution will do just that. We are focused on the long term and every decision we make, every step we take is with that in mind. We have a strong experienced management team committed and focused on creating long-term value and sustainable and predictable earnings. We can’t be swayed by opinions about where we should buy or build and where we shouldn’t.

Would we have wanted our stock price to be higher when we did the follow-on last month? Absolutely. We expect our acquisitions to more than make up for the FFO and NAV dilution associated with our recent follow-on.

We will continue to execute our strategic objective of growing through acquisitions and development. We will allow the organic growth from our same-community properties and our recent acquisitions to drive results. This will position the company to deliver strong and sustainable earnings for years to come.

We urge you to visit our properties. We are confident that their high quality and sub-market-leading positioning will be obvious. We will not lever back up. That’s how we will expand the multiple, the old fashioned way, through continued hard work, focus and continuing to put up the numbers.

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AEC had funds from operations of $0.32 a share, after accounting for dilution. That’s about in line with earnings expectations of $0.33 a share. And before adding back in a $0.039 one time charge used to prepay loans.

Let me rephrase that; AEC pulled as much money from operations alone as analysts expected from ALL earnings, before counting any one time line items.

With one time line items, AEC made $0.54 a share, beating earnings expectations by a wide 63.6%. After that dreaded dilution, that’s still pulling an easy $0.46 a share without the company expanding their operation (the company WILL be expanding its operation).

Those line items that produced the excess gains came from the sale of some of their properties. Here’s the thing; those properties have already been replaced, so their sale will not impact operations either.

In fact, the replacement properties are easily 20 years younger than those that have been disposed of. And they probably bring in more money. Average rents of same communities for AEC are up to $1,024 a month, versus $969 a month this time last year.

Oh, yeah, and occupancy of same communities stands at 97.0%

Anyone want to bet that AEC isn’t buying apartments that it can charge more for and fill up quicker than its standard operation?

That’s the entire strategy of management; roll over the existing operation into younger buildings, that are more easily serviced, and pocket the difference, while still growing.

The only one of my key assumptions I listed yesterday that was violated was the “no earnings” prediction. The company had earnings – a ton of them. At their current earnings, AEC is going for just 6.7X their earnings. And trading pretty close to book value.

That’s crazy.

I sort of wish they were still booking losses, because while they were doing that, they were acquiring like mad. They still seem to be interested in acquisitions, but those acquisitions will not be financed by tax free revenue now, it seems.

Their new interest is – credit.

AEC’s management raised just under $100 million in cash in the last 6 months BEFORE counting lower payments from restructured debt. Uh, hi, yeah, AEC is only a $1.1 billion company with $700 million in debt. If they took that money and hit their debt, that’d add another $0.11 onto FFO by itself (although admittedly lowering FFO per share on net after factoring in dilution from not expanding the business).

So we have a company that is continuing to be graced by strong secular trends in housing pushing people into rentals, strong secular trends raising rental rates, strong secular trends in mortgage rates, who have used this opportunity to restructure their operation into signficantly younger properties in easier to maintain, higher desirability locations, and who now are preparing to lower costs even further by improving the company’s credit rating.

And you want to value such a company at 6.7X earnings and par for book value? What the hell is wrong with you?

But the best part is, I KNOW I am completely on mark when I say the downgrades and earnings commentary on this company are completely, 100% algorithm driven, and totally off the mark. One of the first announcements that followed the company’s own disclosure tried saying earnings were $0.32.

No! FFO was $0.32. Earnings were $0.54.

But hey, thanks for playing. I now am completely convinced that the overall majority of opinion on this company is completely off base, created by computers who’s builders never bother to check the drivel that they spit out.

I will continue to hold AEC, and to accumulate it on all dips, much like the one it is experiencing now.

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Off 1% again, but seemingly recovering, as idiots slowly start to figure out that FFO and EPS are not the same thing.

[Forrest Gump Voice]: HWh-at doo you meen, the thurdy sent numba ‘s nawt ernings? Je-anny??

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