It’s so fortunate that the markets are back open finally. Some of us were starting to lose our minds.

I’m getting lit up in BAS. The entire position is being crushed. My losses stand at about 22% from my first purchase. Net losses are lower from averaging in.

That’s what happens when you push into distressed positions. Most of the time, you’re early, and get treated to another 20-30% of downside. You have to know you’re where you’re supposed to be, because if you’re wrong, there’s no coming back.

But the rewards can be tantalizing when you’re right. I laid out my reasoning for a huge resurgence in BAS’ stock price mid to late next year at the earliest. Sooner if speculative money gets interested in natural gas prices reflating.

I offer a hat tip to Po Pimp, who told me I was early to the trade. This one’s to you, sir.

Meanwhile, not all is bad. CCJ is running much higher, in a way that makes me think somebody talked. They’re supposed to be issuing earnings today.

AEC is flat and CLP is getting a nice bid from some positive spin off their earnings release last week. The irony that CLP is more expensive than AEC, while CLP continues to receive more hype, is not lost on me.

And silver is back above $32.

But I have no cash, in large part because I’m betting that the world can be just as irrational this year as it was last year. Or the year before that. There is no buffer between me and a drawdown, and only limited ability to buy in if we get a big selloff.

Hearing market commentators launch into explanations of the dangers coming out of Europe, or developing economies; my exact position this time last year before the huge run; is aggravating.

If this is the year that facts matter, so help me, I will be pissed.

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I must work late tonight, to fix issues for clients who are using data storage methods apparently determined by random analog systems for each and every datum.

No matter. I’ll let today’s gains comfort me – which were mammoth.

BAS was the strongest, now back to profitability. BAS is one of the biggest beneficiaries of this resurgence in natural gas pricing. As pricing picks up, the economics of gas extraction become workable again. BAS is currently pricing in a huge slowdown of business which will not emerge should natty prices continue running higher.

Natural gas is experience a glorious rebound. For the moment, it appears my fears of a double dip are unfounded. We shall readdress this subject at a later point.

Prepare for full steam ahead, into Christmas. Santa is barreling towards us, and no man can stop his mighty sleigh.

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On or around August 28, a series of BLATANT hit pieces on BAS surfaced, portending that a sudden rise in demand for put options revealed a huge reversal imminent. These pieces, mostly disseminated by Yahoo Finance (the market manipulator’s preferred financial news source) and then hyper-linked on Twitter, led to massive losses in the name, cratering the stock by over 15%.

I am here to say, I outlasted you and your villainy. Another 2% and I will be back to even. All this redeeming occurred in a matter of just 3 short days.

What this tells me is that there was no real reason for BAS to have ever traded down in the first place. Demand for BAS shares is strong, and this was nothing shy of a coordinated attack orchestrated by unseen persons.

I can only hope that those of you behind this baleful comportment met your untimely demise, trapped in your own wickedness. However, I know better.

Market manipulators are wonted cowards, spineless from birth and devoid of any of the compulsions necessary for greatness.

Bereft of these qualities, they are forced to lurk in closets, casting aspersions on passerby’s. Rumors, gossip, lies, and all other physiognomies of wretched prevaricators are their haunts, and they lurk slyly out of sight, misleading the ignorant and gullible to their dooms.

The pests who caused this selloff were long gone before now, taking the easy profits, probably within the first 10% of downside, before scampering off back to their rat nests.

So instead I must hope that any who believed this racket learned their lesson – through fire.

This is what you deserve if you’re senseless enough to believe that a sudden demand for put options of all things is a guide to where stocks should be trading.

Funny enough, but in either case of a put or call option, the exact same relationship is being established; whereby one party receives cash with an obligation to transact stocks. The ONLY difference is on which party – long or short – gets to elect whether or not to exercise the terms of the contract.

A sudden demand for put options could be as much a desire to have temporary insurance as any direct evidence that prices of a security should go lower.

Someone played you for a sucker, BAS shorts, getting you to take a position against a company that ALREADY had 20% of their average float tied outstanding.

Now you get what you have coming to you.

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As much fun as it is to lament the impending demise of mortals and ADP’s seeming complete inability to count, none of these things will be affecting asset prices, which are going higher.

Avoid the temptation to short in response to certain eccentric personalities shouting for the end of the world – the world is not slated to end until 2013.

Top Picks: AEC, CLP, CCJ, BAS, Silver, USD

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Well what fun it’s been. After my new position catapulted 5%+ on the first day of entry, BAS has spent the time since grinding lower, making me feel like a fool.

It culminated in today’s movement, as a report that BAS has a large position of put options that would absolutely love nothing more than to see lower prices resulted in people sending BAS to lower prices.

Why is it that “people buying put options” can be a big flashy negative title, when we all know “people writing call options” would never fly??

At any rate, BAS, with its 20% short position and extreme cheapness, is heading lower.

I have thought long and hard about whether or not I should hear the warnings of one “Po Pimp”. I generally think his assessment, as written inside The PPT – that BAS is heading for lower margins and volumes of business – is completely accurate.

However, where I stand my ground is that, even after impairing the company’s revenues, and accounting for impact of leverage, and fixed expenses, and all that hoopla, …the firm is still pretty cheap.

Very bad outcomes seem to result in BAS being fairly priced where it is right now.

Anything less would suggest a value buy here.

So, it looks like I’m going to hold out (ugh, I didn’t want this to turn into another CCJ).

I will be looking, should a correction continue, to crush shorts or buy up cheap call options.

Holdings: 25% (and rising percentage…) cash, AEC, CLP, CCJ, BAS, and physical silver

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When looking for a water services/fracking company, I put out a charge to my readers; bring me stocks that you think are a good buy.

Ultimately, I settled on purchasing my own research with BAS. However, I did want to highlight one of the stocks that was thrown out in the comments section. That’s Poseidon Concepts Corp., a small cap Canadian firm with an aggressive expansion policy.

After first glance of this company, I can say I was mildly intrigued – and so before getting started, I want to say “congratulations”. This is EXACTLY the sort of profile I was looking for and I offer you praise for that. Keep up the good work.

But, this company is uninvestable for me, and now I want to share why with all of you.

The first reason I cannot buy PSN.TO is because of where the majority of their assets are located. $118,641 thousand of their $192,759 thousand of assets are accounts receivables. And 16.7% of all accounts receivables are past due. The natural gas fracking industry is expecting a slowdown; in the event that jobs start to get cancelled, this area of the company could be positively ravished.

The company is worth $1.14 a share now, and that’s optimistic. So the company already has a lot of premium baked into its value. Now, revenues have increased almost five fold, but that’s because the company just made a large acquisition. What’s the real growth rate of this company? I can’t tell yet, and making just $0.76 a share over the last 6 months ($1.52 a year), the company is already looking at 9+ years before hitting fair value. That’s a long time to risk holding a micro cap stock in a volatile, young industry that hinges on natural gas pricing. A few deals can make or break this company.

Second, the earnings look rough to me. Take their latest 3 months of earnings, and 6 months of earnings, and divide them into their respective time periods. In the latest 3 months, the company earned 12.6 cents a month. In the latest 6 months, the company says they made .76 a share, or…12.6 cents a month.

How are those numbers the same? The company just completed a major acquisition in the last 6 months, and allegedly have created all this value, yet their earnings per share over the last half a year are exactly flat? So then why is the stock price up almost 30%? The price for the book is running away, and the earnings are stagnant.

The third thing is that there seems to be some confusion concerning granted options under part C of their filing. In it, they state they have granted certain employees options to purchase 8,110 shares, 7,915 of which have been exercised. Then, they state they have issued 7,915 options.

Typically, at least in American finance, an option is a contract to purchase 100 shares. I’m not sure about Canadian finance I guess, but I’m betting it’s the same. Meaning either they have non-typical financial instruments being disclosed, or they mistated this section. That’s a difference between virtually none of the company being in play, and as much as 1% of the company being in play. Admittedly, it’s not much in the grand scheme of things. But this part of the filing seems sloppy to me – are these options worth 1 share apiece or 100 – and makes me wonder “what else did they miss”? That makes me nervous. I don’t like it.

The fourth reason I don’t want to buy this company is contained in the cash flow section. Over the last 6 months, the company generated $60,822 thousand in cash for a net increase in cash of $12,124 thousand after all other transactions.

Yet, we see that the company issued $78,241 thousand worth of common stock over the same period, 6.5X their total cash accumulation. And, they also gave out a dividend equal to $42,639 thousand, while only investing $19,572 thousand into new property, plant and equipment. They’re raising massive amounts of money is new shares so that they can hand out dividends, while neglecting growing the business.

Why is a company this size paying dividends at all? If the natural gas market was booming so hard at the beginning of this year to compress gas prices this far, explain to me what a $200 million company is doing paying a dividend at all? BAS is a much larger company than PSN.TO, and they are still reinvesting all of their money into the business – that’s what you do in a hot business cycle paying big margins. You grab as much as you can. No one wants to pay this kind of money for a stock that isn’t growing quickly.

And the final reason has to do with why I ultimately selected BAS over PSN.TO. BAS has somewhere between 25-33% of their shareholder value in cash. Over the next few years, before debt comes due, that gives them a great value of opportunity. I continue to forcast higher dollar value, mostly from a continued collapse in Europe and China.

PSN.TO, meanwhile, has only 13% of their (more volatile) shareholder value in cash. And again, since the vast majority of their book is in accounts receivables, that book can collapse in a hurry.

Now, this company is so small, none of it may matter. 11% of consolidated revenues came from just one customer. If they nail a few big deals, this company could skyrocket. But what small company isn’t in that position.

Conversely, just one or two bad moves, and this hundred million dollar company could snuff out of existence rather abrubtly.

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